GROUP 1 AUTOMOTIVE INC - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - FORM 8-K - GROUP 1 AUTOMOTIVE INC	d488293d8k.htm

Exhibit 99.1

LOGO

FOR IMMEDIATE RELEASE

Group 1 Automotive Reports Record Full-Year 2012 Financial Results

HOUSTON, Feb. 19, 2013 — Group 1 Automotive, Inc. (NYSE: GPI), a Fortune 500 automotive retailer, today reported adjusted 2012 fourth-quarter net income of $24.0 million and diluted earnings per common share of $0.99 for the period ended Dec. 31, 2012. Full-year 2012 adjusted net income increased 25.8 percent, to a record $108.2 million, and adjusted diluted earnings per common share were an all-time high of $4.53.

Fourth-Quarter 2012 Results (on a year-over-year basis unless otherwise noted)

•

Total gross profit grew 14.0 percent on 19.3 percent higher revenues of $1.9 billion.

•	New vehicle revenues increased 22.3 percent on 20.8 percent more unit sales. New vehicle gross profit increased 12.4 percent on an average vehicle selling price increase of 1.2 percent, to $34,872.

•	Retail used vehicle gross profit increased 13.9 percent on 16.6 percent higher revenues, as the average selling price increased 2.7 percent, to $20,977, and the company retailed 13.5 percent more units.

•	Parts and service gross profit increased 8.6 percent on 8.3 percent higher revenues.

•	Finance and insurance gross profit per retail unit increased $87, to an all-time record $1,270, as penetration rates improved in both finance and vehicle service contracts.

•	Selling, general and administrative (SG&A) expenses (adjusted) as a percent of revenues improved 40 basis points, to 11.1 percent.

•	SG&A expenses (adjusted) as a percent of gross profit increased 60 basis points, to 76.7 percent.

Full-Year 2012 Results (on a year-over-year basis unless otherwise noted)

•	Total gross profit grew 16.3 percent on 23.0 percent higher revenues of $7.5 billion, representing increases in all operating segments and new all-time records.

•	New vehicle gross profit grew 17.6 percent on 26.1 percent higher revenues, as the company retailed 128,550 new vehicles in 2012.

•	Retail used vehicle gross profit was 17.3 percent higher on a 24.0 percent revenue increase.

•	Parts and service revenues grew 8.1 percent.

•	Finance and insurance revenues increased 32.8 percent on 24.0 percent more retail unit sales; gross profit per unit was a record-setting $1,215.

•	SG&A expenses (adjusted) as a percent of gross profit improved 100 basis points on a comparable basis, to 75.4 percent.

•	Operating margin (adjusted) was 3.2 percent.

“Overall, 2012 was a great year for Group 1 Automotive with total revenue growth of 23 percent and all-time record net income and earnings per diluted share,” said Earl J. Hesterberg, Group 1’s president and chief executive officer. “Despite continuing the strong growth pace in the fourth quarter with 19 percent revenue growth, we missed some opportunities to maximize profits via complete leveraging of our cost structure. We began taking actions in this regard on Jan. 1 and I am confident that we can return to the type of cost leverage we generated in the first three quarters of the year. I believe 2013 will be another great year for the industry as a whole and Group 1 Automotive in particular.”

Corporate Development

During the fourth quarter, Group 1 purchased a Hyundai dealership in Oklahoma, a Ford dealership in Georgia and a Kia dealership in Kansas that are estimated to generate $180.0 million in annual revenues. The company also disposed of two Nissan dealerships and a Mazda dealership in Massachusetts, an Audi dealership in the United Kingdom and its Maybach franchise in California. In total the fourth quarter dispositions generated trailing-12-month revenues of $110.3 million.

During 2012, Group 1 acquired a total of 16 franchises that are expected to generate $715.0 million in annual revenues and disposed of six franchises that generated $128.0 million of annual revenues.

Group 1 Automotive, Inc.

In January 2013, Group 1 disposed of a Nissan dealership in California that generated $35.0 million in annual revenues during the last 12 months.

Fourth-Quarter Earnings Conference Call

Group 1’s senior management will host a conference call today at 10 a.m. ET to discuss the fourth-quarter financial results and the company’s outlook and strategy.

The conference call will be simulcast live on the Internet at www.group1auto.com, then click on ‘Investor Relations’ and then ‘Events’ or through this link: http://www.group1corp.com/news/events.aspx. A replay will be available for 30 days.

The conference call will also be available live by dialing in 10 minutes prior to the start of the call at:

Domestic: 1.877.317.6789

International: 1.412.317.6789

Conference ID: 10023527

A telephonic replay will be available following the call through Feb. 27 at 9 a.m. ET by dialing:

Domestic: 1.877.344.7529

International: 1.412.317.0088

Conference ID: 10023527

About Group 1 Automotive, Inc.

Group 1 owns and operates 120 automotive dealerships, 156 franchises, and 31 collision centers in the United States and the United Kingdom that offer 31 brands of automobiles. Through its dealerships, the company sells new and used cars and light trucks; arranges related vehicle financing, service and insurance contracts; provides automotive maintenance and repair services; and sells vehicle parts.

Group 1 Automotive can be reached on the Internet at www.group1auto.com.

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, which are statements related to future, not past, events and are based on our current expectations and assumptions regarding our business, the economy and other future conditions. In this context, the forward-looking statements often include statements regarding our goals, plans, projections and guidance regarding our financial position, results of operations, market position, pending and potential future acquisitions and business strategy, and often contain words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “should,” “foresee,” “may” or “will” and similar expressions. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. Any such forward-looking statements are not assurances of future performance and involve risks and uncertainties that may cause actual results to differ materially from those set forth in the statements. These risks and uncertainties include, among other things, (a) general economic and business conditions, (b) the level of manufacturer incentives, (c) the future regulatory environment, (d) our ability to obtain an inventory of desirable new and used vehicles, (e) our relationship with our automobile manufacturers and the willingness of manufacturers to approve future acquisitions, (f) our cost of financing and the availability of credit for consumers, (g) our ability to complete acquisitions and dispositions and the risks associated therewith, (h) foreign exchange controls and currency fluctuations, and (i) our ability to retain key personnel. For additional information regarding known material factors that could cause our actual results to differ from our projected results, please see our filings with the SEC, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.

Group 1 Automotive, Inc.

SOURCE: Group 1 Automotive, Inc.

Investor Contacts:

Kim Paper Canning

Manager, Investor Relations

Group 1 Automotive, Inc.

713-647-5741 | kpaper@group1auto.com

Media Contacts:

Pete DeLongchamps

V.P. Financial Services and Manufacturer Relations

Group 1 Automotive, Inc.

713-647-5770 | pdelongchamps@group1auto.com

Clint Woods

Pierpont Communications, Inc.

713-627-2223 | cwoods@piercom.com

Group 1 Automotive, Inc.

Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share amounts)


	Three Months Ended December 31,
	2012			2011			% Change
REVENUES:
New vehicle retail sales	$	1,156,507		$	945,392			22.3
Used vehicle retail sales		423,315			362,911			16.6
Used vehicle wholesale sales		69,724			59,434			17.3
Parts and service		221,666			204,711			8.3
Finance and insurance		67,745			53,481			26.7

Total revenues		1,938,957			1,625,929			19.3

COST OF SALES:
New vehicle retail sales		1,092,280			888,252			23.0
Used vehicle retail sales		390,284			333,902			16.9
Used vehicle wholesale sales		69,664			59,312			17.5
Parts and service		106,476			98,602			8.0

Total cost of sales		1,658,704			1,380,068			20.2

GROSS PROFIT		280,253			245,861			14.0

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		218,925			188,109			16.4

DEPRECIATION AND AMORTIZATION EXPENSE		8,460			7,182			17.8

ASSET IMPAIRMENTS		6,988			797			776.8

OPERATING INCOME		45,880			49,773			(7.8	)

OTHER EXPENSE:
Floorplan interest expense		(8,372	)		(7,442	)		12.5

Other interest expense, net		(9,616	)		(8,911	)		7.9

INCOME BEFORE INCOME TAXES		27,892			33,420			(16.5	)

PROVISION FOR INCOME TAXES		(10,760	)		(12,565	)		(14.4	)

NET INCOME	$	17,132		$	20,855			(17.9	)


DILUTED INCOME PER SHARE	$	0.70		$	0.90			(22.2	)

Weighted average dilutive common shares outstanding		23,244			22,040			5.5
Weighted average participating securities		1,091			1,276			(14.5	)

Total weighted average shares outstanding		24,335			23,316			4.4


	Twelve Months Ended December 31,
	2012			2011			% Change
REVENUES:
New vehicle retail sales	$	4,291,098		$	3,402,647			26.1
Used vehicle retail sales		1,756,918			1,416,520			24.0
Used vehicle wholesale sales		288,139			251,043			14.8
Parts and service		880,070			813,819			8.1
Finance and insurance		259,875			195,736			32.8

Total revenues		7,476,100			6,079,765			23.0

COST OF SALES:
New vehicle retail sales		4,043,659			3,192,309			26.7
Used vehicle retail sales		1,610,912			1,291,996			24.7
Used vehicle wholesale sales		285,695			246,963			15.7
Parts and service		418,582			387,897			7.9

Total cost of sales		6,358,848			5,119,165			24.2

GROSS PROFIT		1,117,252			960,600			16.3

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		848,446			735,229			15.4

DEPRECIATION AND AMORTIZATION EXPENSE		31,534			27,063			16.5

ASSET IMPAIRMENTS		7,276			4,805			51.4

OPERATING INCOME		229,996			193,503			18.9

OTHER EXPENSE:
Floorplan interest expense		(31,796	)		(27,687	)		14.8

Other interest expense, net		(37,465	)		(33,722	)		11.1

INCOME BEFORE INCOME TAXES		160,735			132,094			21.7

PROVISION FOR INCOME TAXES		(60,526	)		(49,700	)		21.8

NET INCOME	$	100,209		$	82,394			21.6


DILUTED INCOME PER SHARE	$	4.19		$	3.47			20.7

Weighted average dilutive common shares outstanding		22,688			22,409			1.2
Weighted average participating securities		1,215			1,377			(11.8	)

Total weighted average shares outstanding		23,903			23,786			0.5

Group 1 Automotive, Inc.

Consolidated Balance Sheets

(Dollars in thousands)


	December 31,			December 31,
	2012			2011			% Change
ASSETS:

CURRENT ASSETS:
Cash and cash equivalents	$	4,650		$	14,895			(68.8	)
Contracts in transit and vehicle receivables, net		204,396			167,507			22.0
Accounts and notes receivable, net		111,228			92,775			19.9
Inventories, net		1,194,288			867,470			37.7
Deferred income taxes		19,750			16,012			23.3
Prepaid expenses and other current assets		31,869			16,925			88.3

Total current assets		1,566,181			1,175,584			33.2
PROPERTY AND EQUIPMENT, net		667,768			585,633			14.0
GOODWILL AND INTANGIBLE FRANCHISE RIGHTS		778,442			702,145			10.9
OTHER ASSETS		10,624			12,981			(18.2	)

Total assets	$	3,023,015		$	2,476,343			22.1


LIABILITIES AND STOCKHOLDERS’ EQUITY:

CURRENT LIABILITIES:
Floorplan notes payable - credit facility	$	968,959		$	718,945			34.8
Offset account related to floorplan notes payable - credit facility		(112,261	)		(109,207	)		2.8
Floorplan notes payable - manufacturer affiliates		211,965			155,980			35.9
Current maturities of long-term debt and short-term financing		31,358			14,663			113.9
Current liabilities from interest rate risk management activities		—			7,273			(100.0	)
Accounts payable		167,439			148,048			13.1
Accrued expenses		128,118			109,245			17.3

Total current liabilities		1,395,578			1,044,947			33.6
2.25% CONVERTIBLE SENIOR NOTES (aggregate principal of $182,753 at December 31, 2012 and December 31, 2011)		152,363			144,985			5.1
3.00% CONVERTIBLE SENIOR NOTES (aggregate principal of $115,000 at December 31, 2012 and December 31, 2011)		80,706			77,401			4.3
MORTGAGE FACILITY, net of current maturities		53,643			38,873			38.0
OTHER REAL ESTATE RELATED AND LONG-TERM DEBT, net of current maturities		232,285			184,237			26.1
CAPITAL LEASE OBLIGATIONS RELATED TO REAL ESTATE, net of current maturities		36,019			37,105			(2.9	)
DEFERRED INCOME TAXES		94,130			78,459			20.0
LIABILITIES FROM INTEREST RATE RISK MANAGEMENT ACTIVITIES		43,089			26,766			61.0
OTHER LIABILITIES		42,413			36,470			16.3
COMMITMENTS AND CONTINGENCIES

TEMPORARY EQUITY - REDEEMABLE EQUITY PORTION OF THE 3.00% CONVERTIBLE SENIOR NOTES		32,505			—			100.0

STOCKHOLDERS’ EQUITY:
Common stock		258			260			(0.8	)
Additional paid-in capital		332,836			363,375			(8.4	)
Retained earnings		677,864			591,037			14.7
Accumulated other comprehensive loss		(33,057	)		(29,236	)		13.1
Treasury stock		(117,617	)		(118,336	)		(0.6	)

Total stockholders’ equity		860,284			807,100			6.6

Total liabilities and stockholders’ equity	$	3,023,015		$	2,476,343			22.1


KEY DEBT COVENANT METRICS:

Senior secured adjusted leverage ratio (must be less than 3.75)		2.35			2.46
Total adjusted leverage ratio (must be less than 5.50)		3.38			3.65
Fixed charge coverage ratio (must be greater than 1.35)		2.00			1.94

Group 1 Automotive, Inc.

Consolidated Statements of Adjusted Cash Flows from Operating Activities

(Unaudited)

(In thousands)


	Three Months Ended December 31,
	2012			2011			% Change

Net income	$	17,132		$	20,855			(17.9	)
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Asset impairments		6,988			797			776.8
Depreciation and amortization		8,460			7,182			17.8
Deferred income taxes		2,527			8,544			(70.4	)
(Gain) loss on disposition of assets and franchise		(2,810	)		6			(46,933.3	)
Stock-based compensation		2,988			2,586			15.5
Amortization of debt discount and issue costs		3,331			3,119			6.8
Other		495			292			69.5
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
Accounts payable and accrued expenses		10,580			37,305			(71.6	)
Accounts and notes receivable		(13,457	)		(21,783	)		(38.2	)
Inventories		(85,087	)		(119,114	)		(28.6	)
Contracts-in-transit and vehicle receivables		(54,226	)		(67,346	)		(19.5	)
Prepaid expenses and other assets		(4,127	)		(7,792	)		(47.0	)
Floorplan notes payable - credit facility ⁽¹⁾		69,749			143,307			(51.3	)
Floorplan notes payable - manufacturer affiliates ⁽²⁾		28,199			26,595			6.0
Deferred revenues		(52	)		(182	)		(71.4	)

Adjusted net cash provided by (used in) operating activities	$	(9,310	)	$	34,371			(127.1	)

⁽¹⁾	Excludes net acquisition/(disposition) related activity of $(11,638) and $21,384 for the three months ended December 31, 2012 and 2011, respectively.

⁽²⁾	Excludes net acquisition/(disposition) related activity of $11,028 and $7,134 for the three months ended December 31, 2012 and 2011, respectively.


	Twelve Months Ended December 31,
	2012			2011			% Change

Net income	$	100,209		$	82,394			21.6
Adjustments to reconcile net income to net cash provided by operating activities:
Asset impairments		7,276			4,805			51.4
Depreciation and amortization		31,534			27,063			16.5
Deferred income taxes		13,282			24,824			(46.5	)
Gain on disposition of assets and franchise		(4,941	)		(961	)		414.2
Stock-based compensation		11,931			10,919			9.3
Amortization of debt discount and issue costs		12,990			11,990			8.3
Other		1,090			277			293.5
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
Accounts payable and accrued expenses		29,874			77,027			(61.2	)
Accounts and notes receivable		(6,777	)		(17,875	)		(62.1	)
Inventories		(278,232	)		(7,410	)		3,654.8
Contracts-in-transit and vehicle receivables		(29,091	)		(53,821	)		(45.9	)
Prepaid expenses and other assets		2,448			(11,246	)		121.8
Floorplan notes payable - credit facility ⁽¹⁾		245,544			(13,350	)		1,939.3
Floorplan notes payable - manufacturer affiliates ⁽²⁾		22,220			19,045			16.7
Deferred revenues		(163	)		(1,427	)		(88.6	)

Adjusted net cash provided by operating activities	$	159,194		$	152,254			4.6

⁽¹⁾	Excludes net acquisition/(disposition) related activity of $4,471 and $41,860 for the twelve months ended December 31, 2012 and 2011, respectively.

⁽²⁾	Excludes net acquisition/(disposition) related activity of $11,028 and $33,712 for the twelve months ended December 31, 2012 and 2011, respectively.

Group 1 Automotive, Inc.

Additional Information - Consolidated

(Unaudited)


		Three Months Ended				Twelve Months Ended
		December 31,				December 31,
		2012 (%)		2011 (%)		2012 (%)		2011 (%)
NEW VEHICLE UNIT SALES GEOGRAPHIC MIX:
Region	Geographic Market
East	Massachusetts		6.6		10.0		9.1		11.3
	New Jersey		5.4		5.3		5.1		5.5
	New York		4.2		4.2		3.3		3.8
	Georgia		4.0		3.3		3.6		3.4
	New Hampshire		2.6		2.8		2.8		3.0
	Louisiana		2.5		2.5		2.5		2.8
	South Carolina		2.0		1.7		1.8		1.5
	Florida		1.9		0.8		1.4		0.7
	Mississippi		1.8		2.0		2.0		2.0
	Alabama		1.0		1.3		1.0		1.2
	Maryland		0.8		0.8		0.7		0.8

			32.8		34.7		33.3		36.0

West	Texas		36.8		38.6		36.7		36.0
	California		14.9		13.7		14.6		13.9
	Oklahoma		7.5		8.0		7.8		8.2
	Kansas		1.5		0.9		1.4		0.9

			60.7		61.2		60.5		59.0

International	United Kingdom		6.5		4.1		6.2		5.0

			100.0		100.0		100.0		100.0

NEW VEHICLE UNIT SALES BRAND MIX:
Toyota/Scion/Lexus			28.6		29.8		30.3		30.4
BMW/MINI			13.0		12.7		11.3		13.1
Honda/Acura			11.0		9.4		11.1		10.7
Nissan/Infiniti			10.0		12.7		11.4		13.7
Ford			9.5		9.9		9.3		8.9
Volkswagen/Audi/Porsche			6.8		3.4		6.6		2.7
Daimler			6.7		6.8		5.1		5.9
GM			5.2		6.4		5.6		5.6
Chrysler			4.3		4.8		4.4		4.5
Hyundai/Kia			3.5		2.0		3.1		2.2
Other			1.4		2.1		1.8		2.3

			100.0		100.0		100.0		100.0

NEW VEHICLE UNIT SALES OTHER MIX:
Import			49.8		50.4		53.7		53.2
Luxury			31.9		29.4		27.8		28.1
Domestic			18.3		20.2		18.5		18.7

			100.0		100.0		100.0		100.0

Car			56.5		51.4		56.8		54.1
Truck			43.5		48.6		43.2		45.9

			100.0		100.0		100.0		100.0

Group 1 Automotive, Inc.

Additional Information - Consolidated

(Unaudited)

(Dollars in thousands, except per unit amounts)


	Three Months Ended December 31,
	2012			2011			% Change
REVENUES:
New vehicle retail sales	$	1,156,507		$	945,392			22.3

Used vehicle retail sales		423,315			362,911			16.6
Used vehicle wholesale sales		69,724			59,434			17.3

Total used		493,039			422,345			16.7
Parts and service		221,666			204,711			8.3
Finance and insurance		67,745			53,481			26.7

Total	$	1,938,957		$	1,625,929			19.3

GROSS MARGIN %:
New vehicle retail sales		5.6			6.0
Used vehicle retail sales		7.8			8.0
Used vehicle wholesale sales		0.1			0.2
Total used		6.7			6.9
Parts and service		52.0			51.8
Finance and insurance		100.0			100.0
Total		14.5			15.1

GROSS PROFIT:
New vehicle retail sales	$	64,227		$	57,140			12.4

Used vehicle retail sales		33,031			29,009			13.9
Used vehicle wholesale sales		60			122			(50.8	)

Total used		33,091			29,131			13.6
Parts and service		115,190			106,109			8.6
Finance and insurance		67,745			53,481			26.7

Total	$	280,253		$	245,861			14.0

UNITS SOLD:
Retail new vehicles sold		33,164			27,444			20.8

Retail used vehicles sold		20,180			17,775			13.5
Wholesale used vehicles sold		10,469			8,751			19.6

Total used		30,649			26,526			15.5

AVERAGE RETAIL SALES PRICE:
New vehicle retail	$	34,872		$	34,448			1.2
Used vehicle retail	$	20,977		$	20,417			2.7

GROSS PROFIT PER UNIT SOLD:
New vehicle retail sales	$	1,937		$	2,082			(7.0	)
Used vehicle retail sales		1,637			1,632			0.3
Used vehicle wholesale sales		6			14			(57.1	)
Total used		1,080			1,098			(1.6	)
Finance and insurance (per retail unit)	$	1,270		$	1,183			7.4

OTHER: ⁽¹⁾
SG&A expenses	$	214,895		$	187,109			14.9
SG&A as % revenues		11.1			11.5
SG&A as % gross profit		76.7			76.1
Operating margin %		2.9			3.2
Pretax margin %		2.0			2.2

FLOORPLAN EXPENSE:
Floorplan interest	$	(8,372	)	$	(7,442	)		12.5
Floorplan assistance		8,639			7,308			18.2

Net floorplan income (expense)	$	267		$	(134	)		299.3


	Twelve Months Ended December 31,
	2012			2011			% Change
REVENUES:
New vehicle retail sales	$	4,291,098		$	3,402,647			26.1

Used vehicle retail sales		1,756,918			1,416,520			24.0
Used vehicle wholesale sales		288,139			251,043			14.8

Total used		2,045,057			1,667,563			22.6
Parts and service		880,070			813,819			8.1
Finance and insurance		259,875			195,736			32.8
Total	$	7,476,100		$	6,079,765			23.0


GROSS MARGIN %:
New vehicle retail sales		5.8			6.2
Used vehicle retail sales		8.3			8.8
Used vehicle wholesale sales		0.8			1.6
Total used		7.3			7.7
Parts and service		52.4			52.3
Finance and insurance		100.0			100.0
Total		14.9			15.8

GROSS PROFIT:
New vehicle retail sales	$	247,439		$	210,338			17.6

Used vehicle retail sales		146,006			124,524			17.3
Used vehicle wholesale sales		2,444			4,080			(40.1	)

Total used		148,450			128,604			15.4
Parts and service		461,488			425,922			8.4
Finance and insurance		259,875			195,736			32.8

Total	$	1,117,252		$	960,600			16.3

UNITS SOLD:
Retail new vehicles sold		128,550			102,022			26.0

Retail used vehicles sold		85,366			70,475			21.1
Wholesale used vehicles sold		43,756			35,997			21.6

Total used		129,122			106,472			21.3

AVERAGE RETAIL SALES PRICE:
New vehicle retail	$	33,381		$	33,352			0.1
Used vehicle retail	$	20,581		$	20,100			2.4

GROSS PROFIT PER UNIT SOLD:
New vehicle retail sales	$	1,925		$	2,062			(6.6	)
Used vehicle retail sales		1,710			1,767			(3.2	)
Used vehicle wholesale sales		56			113			(50.4	)
Total used		1,150			1,208			(4.8	)
Finance and insurance (per retail unit)	$	1,215		$	1,135			7.0

OTHER: ⁽¹⁾
SG&A expenses	$	842,837		$	734,229			14.8
SG&A as % revenues		11.3			12.1
SG&A as % gross profit		75.4			76.4
Operating margin %		3.2			3.3
Pretax margin %		2.3			2.3

FLOORPLAN EXPENSE:
Floorplan interest	$	(31,796	)	$	(27,687	)		14.8
Floorplan assistance		33,915			26,144			29.7

Net floorplan income (expense)	$	2,119		$	(1,543	)		237.3

(1)

These amounts have been adjusted to exclude the impact of certain items to provide additional information regarding the performance of our operations and improve period-to-period comparability. Refer to our Reconciliation of Certain Non-GAAP Financial Measures for a description of the aforementioned adjustments.

Group 1 Automotive, Inc.

Additional Information - Same Store⁽¹⁾

(Unaudited)

(Dollars in thousands, except per unit amounts)


	Three Months Ended December 31,
	2012			2011			% Change
REVENUES:
New vehicle retail sales	$	1,075,585		$	928,761			15.8

Used vehicle retail sales		389,675			357,441			9.0
Used vehicle wholesale sales		61,465			58,165			5.7

Total used		451,140			415,606			8.5
Parts and service		210,572			201,899			4.3
Finance and insurance		63,935			52,781			21.1

Total	$	1,801,232		$	1,599,047			12.6

GROSS MARGIN %:
New vehicle retail sales		5.4			6.1
Used vehicle retail sales		7.8			8.0
Used vehicle wholesale sales		0.4			0.2
Total used		6.8			6.9
Parts and service		51.8			51.8
Finance and insurance		100.0			100.0
Total		14.6			15.1

GROSS PROFIT:
New vehicle retail sales	$	58,365		$	56,273			3.7

Used vehicle retail sales		30,565			28,462			7.4
Used vehicle wholesale sales		227			138			64.5

Total used		30,792			28,600			7.7
Parts and service		108,995			104,527			4.3
Finance and insurance		63,935			52,781			21.1

Total	$	262,087		$	242,181			8.2

UNITS SOLD:
Retail new vehicles sold		30,762			26,851			14.6

Retail used vehicles sold		18,697			17,463			7.1
Wholesale used vehicles sold		9,397			8,449			11.2

Total used		28,094			25,912			8.4

AVERAGE RETAIL SALES PRICE:
New vehicle retail	$	34,965		$	34,590			1.1
Used vehicle retail	$	20,842		$	20,469			1.8

GROSS PROFIT PER UNIT SOLD:
New vehicle retail sales	$	1,897		$	2,096			(9.5	)
Used vehicle retail sales		1,635			1,630			0.3
Used vehicle wholesale sales		24			16			50.0
Total used		1,096			1,104			(0.7	)
Finance and insurance (per retail unit)	$	1,293		$	1,191			8.6

OTHER: ⁽²⁾
SG&A expenses	$	198,054		$	183,621			7.9
SG&A as % revenues		11.0			11.5
SG&A as % gross profit		75.6			75.8
Operating margin %		3.1			3.2

FLOORPLAN EXPENSE:
Floorplan interest	$	(7,840	)	$	(7,321	)		7.1
Floorplan assistance		8,200			7,080			15.8

Net floorplan income (expense)	$	360		$	(241	)		249.4


	Twelve Months Ended December 31,
	2012			2011			% Change
REVENUES:
New vehicle retail sales	$	3,932,266		$	3,381,216			16.3

Used vehicle retail sales		1,618,272			1,409,253			14.8
Used vehicle wholesale sales		254,052			249,693			1.7

Total used		1,872,324			1,658,946			12.9
Parts and service		826,119			809,632			2.0
Finance and insurance		242,706			194,775			24.6

Total	$	6,873,415		$	6,044,569			13.7

GROSS MARGIN %:
New vehicle retail sales		5.7			6.2
Used vehicle retail sales		8.3			8.8
Used vehicle wholesale sales		1.1			1.6
Total used		7.3			7.7
Parts and service		52.3			52.4
Finance and insurance		100.0			100.0
Total		15.1			15.8

GROSS PROFIT:
New vehicle retail sales	$	223,503		$	209,136			6.9

Used vehicle retail sales		134,656			123,708			8.8
Used vehicle wholesale sales		2,671			4,078			(34.5	)

Total used		137,327			127,786			7.5
Parts and service		432,415			423,853			2.0
Finance and insurance		242,706			194,775			24.6

Total	$	1,035,951		$	955,550			8.4

UNITS SOLD:
Retail new vehicles sold		117,916			101,265			16.4

Retail used vehicles sold		79,095			70,069			12.9
Wholesale used vehicles sold		39,322			35,681			10.2

Total used		118,417			105,750			12.0

AVERAGE RETAIL SALES PRICE:
New vehicle retail	$	33,348		$	33,390			(0.1	)
Used vehicle retail	$	20,460		$	20,112			1.7

GROSS PROFIT PER UNIT SOLD:
New vehicle retail sales	$	1,895		$	2,065			(8.2	)
Used vehicle retail sales		1,702			1,766			(3.6	)
Used vehicle wholesale sales		68			114			(40.4	)
Total used		1,160			1,208			(4.0	)
Finance and insurance (per retail unit)	$	1,232		$	1,137			8.4

OTHER: ⁽²⁾
SG&A expenses	$	776,672		$	730,036			6.4
SG&A as % revenues		11.3			12.1
SG&A as % gross profit		75.0			76.4
Operating margin %		3.3			3.3

FLOORPLAN EXPENSE:
Floorplan interest	$	(29,383	)	$	(27,486	)		6.9
Floorplan assistance		31,216			25,886			20.6

Net floorplan income (expense)	$	1,833		$	(1,600	)		214.6

⁽¹⁾

Same store amounts include the results for the identical months in each period presented in the comparison, commencing with the first full month we owned the dealership and, in the case of dispositions, ending with the last full month we owned it. Same store results also include the activities of our corporate office.

⁽²⁾

Group 1 Automotive, Inc.

Reconciliation of Certain Non-GAAP Financial Measures

(Unaudited)

(Dollars in thousands, except per share amounts)


	Three Months Ended December 31,
	2012			2011			% Change
NET INCOME RECONCILIATION:

As reported	$	17,132		$	20,855			(17.9	)
After-tax adjustments:
Non-cash asset impairment charges⁽²⁾		4,277			461
Net gain on dealership and real estate transactions ⁽³⁾		(276	)		—
Severance costs ⁽⁴⁾		548			—
Insurance deductibles for Hurricane Sandy damage ⁽⁵⁾		1,219			—
Deal costs ⁽⁶⁾		1,111			—
Accrual for pending legal matters ⁽⁷⁾		—			641

Adjusted net income ⁽¹⁾	$	24,011		$	21,957			9.4

ADJUSTED NET INCOME ATTRIBUTABLE TO DILUTED COMMON SHARES RECONCILIATION:

Adjusted net income	$	24,011		$	21,957			9.4
Less: Adjusted earnings allocated to participating securities		1,066			1,182			(9.8	)

Adjusted net income available to diluted common shares	$	22,945		$	20,775			10.4

DILUTED INCOME PER COMMON SHARE RECONCILIATION:

As reported	$	0.70		$	0.90			(22.2	)
After-tax adjustments:
Non-cash asset impairment charges		0.18			0.02
Net gain on dealership and real estate transactions		(0.01	)		—
Severance costs		0.02			—
Insurance deductibles for Hurricane Sandy damage		0.05			—
Deal costs		0.05			—
Accrual for pending legal matters		—			0.02

Adjusted diluted income per share ⁽¹⁾	$	0.99		$	0.94			5.3

SG&A RECONCILIATION:

As reported	$	218,925		$	188,109			16.4
Pre-tax adjustments:
Accrual for pending legal matters		—			(1,000	)
Net gain on dealership and real estate transactions		437			—
Severance costs		(774	)		—
Insurance deductibles for Hurricane Sandy damage		(1,916	)		—
Deal costs		(1,777	)		—

Adjusted SG&A ⁽¹⁾	$	214,895		$	187,109			14.9

SG&A AS % REVENUES:

Unadjusted		11.3			11.6
Adjusted ⁽¹⁾		11.1			11.5

SG&A AS % OF GROSS PROFIT:

Unadjusted		78.1			76.5
Adjusted ⁽¹⁾		76.7			76.1



OPERATING MARGIN %:

Unadjusted		2.4			3.1
Adjusted ^{(1), (9)}		2.9			3.2

PRETAX MARGIN %:

Unadjusted		1.4			2.1
Adjusted ^{(1), (9)}		2.0			2.2

SAME STORE SG&A RECONCILIATION:

As reported
Pre-tax adjustments:	$	201,930		$	184,621		9.4
Accrual for pending legal matters		—			(1,000	)
Net gain on dealership and real estate transactions		153			—
Severance costs		(336	)		—
Insurance deductibles for Hurricane Sandy damage		(1,916	)		—
Deal costs		(1,777	)		—

Adjusted Same Store SG&A ⁽¹⁾	$	198,054		$	183,621		7.9

SAME STORE SG&A AS % REVENUES:

Unadjusted		11.2			11.5
Adjusted ⁽¹⁾		11.0			11.5

SAME STORE SG&A AS % OF GROSS PROFIT:

Unadjusted		77.0			76.2
Adjusted ⁽¹⁾		75.6			75.8

SAME STORE OPERATING MARGIN %:

Unadjusted		2.5			3.1
Adjusted ^{(1), (10)}		3.1			3.2

CASH FLOWS FROM OPERATING ACTIVITIES RECONCILIATION:
Net cash used in operating activities	$	(68,031	)	$	(101,802	)	(33.2	)
Change in floorplan notes payable-credit facility, excluding floorplan offset account and net acquisition and disposition related activity		69,749			143,307
Change in floorplan notes payable-manufacturer affiliates associated with net acquisition and disposition related activity		(11,028	)		(7,134	)

Adjusted net cash provided by (used in) operating activities⁽¹⁾	$	(9,310	)	$	34,371		(127.1	)


	Twelve Months Ended December 31,
	2012			2011			% Change
NET INCOME RECONCILIATION:

As reported	$	100,209		$	82,394			21.6
After-tax adjustments:
Non-cash asset impairment charges⁽²⁾		4,392			2,994
Net gain on dealership and real estate transactions ⁽³⁾		(935	)		—
Severance costs ⁽⁴⁾		548			—
Insurance deductibles for Hurricane Sandy damage ⁽⁵⁾		1,219			—
Deal costs ⁽⁶⁾		1,111			—
Accrual for pending legal matters ⁽⁷⁾		—			641
Hail storm insurance deductible ⁽⁸⁾		1,658			—

Adjusted net income ⁽¹⁾	$	108,202		$	86,029			25.8

ADJUSTED NET INCOME ATTRIBUTABLE TO DILUTED COMMON SHARES RECONCILIATION:

Adjusted net income	$	108,202		$	86,029			25.8
Less: Adjusted earnings allocated to participating securities		5,469			4,931			10.9

Adjusted net income available to diluted common shares	$	102,733		$	81,098			26.7

DILUTED INCOME PER COMMON SHARE RECONCILIATION:

As reported	$	4.19		$	3.47			20.7
After-tax adjustments:
Non-cash asset impairment charges		0.19			0.13
Net gain on dealership and real estate transactions		(0.04	)		—
Severance costs		0.02			—
Insurance deductibles for Hurricane Sandy damage		0.05			—
Deal costs		0.05			—
Accrual for pending legal matters		—			0.02
Hail storm insurance deductible		0.07			—

Adjusted diluted income per share ⁽¹⁾	$	4.53		$	3.62			25.1

SG&A RECONCILIATION:

As reported	$	848,446		$	735,229			15.4
Pre-tax adjustments:
Accrual for pending legal matters		—			(1,000	)
Net gain on dealership and real estate transactions		1,508			—
Severance costs		(774	)		—
Insurance deductibles for Hurricane Sandy damage		(1,916	)		—
Deal costs		(1,777	)		—
Hail storm insurance deductible		(2,650	)		—

Adjusted SG&A ⁽¹⁾	$	842,837		$	734,229			14.8

SG&A AS % REVENUES:

Unadjusted		11.3			12.1
Adjusted ⁽¹⁾		11.3			12.1

SG&A AS % OF GROSS PROFIT:

Unadjusted		75.9			76.5
Adjusted ⁽¹⁾		75.4			76.4

OPERATING MARGIN %:

Unadjusted		3.1			3.2
Adjusted ^{(1), (9)}		3.2			3.3

PRETAX MARGIN %:

Unadjusted		2.1			2.2
Adjusted ^{(1), (9)}		2.3			2.3


SAME STORE SG&A RECONCILIATION:

As reported
Pre-tax adjustments:	$	783,702		$	731,036		7.2
Accrual for pending legal matters		—			(1,000	)
Net gain on dealership and real estate transactions		(351	)		—
Severance costs		(336	)		—
Insurance deductibles for Hurricane Sandy damage		(1,916	)		—
Deal costs		(1,777	)		—
Hail storm insurance deductible		(2,650	)		—

Adjusted Same Store SG&A ⁽¹⁾	$	776,672		$	730,036		6.4

SAME STORE SG&A AS % REVENUES:

Unadjusted		11.4			12.1
Adjusted ⁽¹⁾		11.3			12.1

SAME STORE SG&A AS % OF GROSS PROFIT:

Unadjusted		75.7			76.5
Adjusted ⁽¹⁾		75.0			76.4

SAME STORE OPERATING MARGIN %:

Unadjusted		3.1			3.2
Adjusted ^{(1), (10)}		3.3			3.3

CASH FLOWS FROM OPERATING ACTIVITIES RECONCILIATION:
Net cash provided by (used in) operating activities	$	(75,322	)	$	199,316		(137.8	)
Change in floorplan notes payable-credit facility, excluding floorplan offset account and net acquisition and disposition related activity		245,544			(13,350	)
Change in floorplan notes payable-manufacturer affiliates associated with net acquisition and disposition related activity		(11,028	)		(33,712	)

Adjusted net cash provided by operating activities⁽¹⁾	$	159,194		$	152,254		4.6

⁽¹⁾

We have included certain non-GAAP financial measures as defined under SEC rules, which exclude certain items. These adjusted measures are not measures of financial performance under GAAP. As required by SEC rules, we provide reconciliations of these adjusted measures to the most directly comparable GAAP measures. We believe that these adjusted financial measures are relevant and useful to investors because they improve the transparency of our disclosure, provide a meaningful presentation of results from our core business operations and improve period-to-period comparability of our results from our core business operations.

⁽²⁾

Adjustment is net of tax benefit of $2,711 and $2,783 for the three and twelve months ended December 31, 2012, respectively, and net of tax benefit of $336 and $1,811 for the three and twelve months ended December 31, 2011, respectively, calculated utilizing the applicable federal and state tax rates for the adjustment.

⁽³⁾	Adjustment is net of tax provision of $161 and $573 for the three and twelve months ended December 31, 2012, respectively, calculated utilizing the applicable federal and state tax rates for the adjustment.

⁽⁴⁾	Adjustment is net of tax benefit of $226 for the three and twelve months ended December 31, 2012, respectively, calculated utilizing the applicable federal and state tax rates for the adjustment.

⁽⁵⁾	Adjustment is net of tax benefit of $697 for the three and twelve months ended December 31, 2012, respectively, calculated utilizing the applicable federal and state tax rates for the adjustment.

⁽⁶⁾	Adjustment is net of tax benefit of $666 for the three and twelve months ended December 31, 2012, respectively, calculated utilizing the applicable federal and state tax rates for the adjustment.

⁽⁷⁾	Adjustment is net of tax benefit of $359 for the three and twelve months ended December 31, 2011, calculated utilizing the applicable federal and state tax rates for the adjustment.

⁽⁸⁾	Adjustment is net of tax benefit of $992 for the twelve months ended December 31, 2012, calculated utilizing the applicable federal and state tax rates for the adjustment.

⁽⁹⁾	Excludes the impact of SG&A reconciling items above, as well as asset impairments.

⁽¹⁰⁾	Excludes the impact of Same Store SG&A reconciling items, as well as Same Store asset impairments. Adjusted Same Store Operating Income was $56,081, $51,448, $229,354, and $198,548 for the periods presented respectively.

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