Group 1 Automotive Reports Solid First-Quarter Earnings On Strong Revenue Growth

Group 1 Automotive, Inc. (NYSE: GPI), a Fortune 500 automotive retailer, today reported first-quarter adjusted net income of $10.4 million, or $0.44 per diluted share, for the period ended March 31, 2010, as compared to adjusted net income of $4.7 million, or $0.20 per diluted share, for the first quarter of 2009.

For comparison purposes, as shown in the attached reconciliation table, the adjusted first-quarter 2010 results exclude net after-tax losses of $2.5 million, or $0.10 per diluted share, associated with the early redemption of the company’s 8.25 percent senior subordinated notes in 2010. The adjusted first-quarter 2009 results exclude net after-tax gains of $3.7 million, or $0.17 per diluted share, comprised of gains on debt redemptions partially offset by a loss incurred on a dealership disposition. Including these items, net income for the first quarter of 2010 was $8.0 million, or $0.34 per diluted share.

First-Quarter Operating Highlights

• Group 1’s total consolidated revenues grew 16.8 percent, with new vehicle and used vehicle retail sales increasing 18.1 percent and 24.3 percent, respectively.
• Same-store revenues reflected even stronger increases, with total revenue growth of 17.4 percent compared to the prior year.
• Group 1’s same-store gross margin was 17.2 percent, largely driven by a significant sequential improvement in used retail vehicle margins to 9.5 percent, as well as improvements in both new vehicle and parts and service margins.
• On a same-store per-retail-unit basis, new vehicle gross profit improved 13.6 percent to $1,891, and finance and insurance gross profit grew to $1,063.
• Same-store wholesale used vehicle gross profit increased 58.9 percent to $251 per unit sold, as wholesale used vehicle auction prices continue to be strong.
• Group 1’s consolidated selling, general and administrative (SG&A) expenses as a percent of gross profit improved 250 basis points, to 81.4 percent, compared to the prior-year period.

“Fueled by an improved industry selling environment late in the first quarter, we were successful in delivering a strong start to 2010 with adjusted earnings per share more than doubling from the same period a year ago,” said Earl J. Hesterberg, Group 1’s president and chief executive officer. “These solid results reflect the benefits of an improved business structure coupled with a strengthening auto retail market.”