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» Group 1 Automotive, Inc. Q4 2009 Earnings Call Transcript
» Group 1 Automotive Inc. Q1 2009 Earnings Call Transcript
» Group 1 Automotive Inc. Q4 2008 Earnings Call Transcript
In addition, certain non-GAAP financial measures as defined under the SEC rules may be discussed on this call. As required by applicable SEC rules, the company provides reconciliations of any such non-GAAP financial measures to the most directly comparable GAAP measures on its website.Participating on today’s call is Mr. Earl Hesterberg, our President and CEO; John Rickel, our Senior Vice President and Chief Financial Officer; and Lance Parker, our Vice President and Corporate Controller; and myself. I would now hand the call over to Earl. Earl Hesterberg Thank you Pete and good morning everyone. In a moment, I’ll turn the call over to John Rickel, so he can provide details of our first quarter financial results. So let me first touch on some of the operational highlights during the quarter. We improved our new vehicle sales by 18% despite a very poor start to the quarter resulting from the Toyota recall challenges numerous selling days lost to extreme winter weather and January and February. Industry selling activity for both new and used vehicles dramatically improved in March. While manufacture incentive activity in March certainly contributed to the improving sales environment, it’s our sense that consumers are starting to gain confidence and we are seeing the beginning of a recovery in new vehicle sales. We saw improvements in most markets and brands in March. According to J.D. Power the March start came in 11.7 million units reflecting a 38% increase in retail sales in February in 2010. This was the best showing since the Cash for Clunkers didn’t result in August last year and we are continuing to see signs of market strength in April. In association with this improved new car sales environment we saw a significant double-digit improvement in our new vehicle revenues, gross profit and gross profit for unit results compared with the same period a year ago. New vehicle gross margin increased 70 basis points to 6.1% on a year-over-year basis.
Turning to our largest manufacture partner, clearly Toyota’s recall issues dominated the automotive news during the first quarter. And we talked about this on our fourth quarter call but not sure how much of an impact these issues would have on our sales particularly the stop sale on models that represented about 60% of our Toyota volume. We found that the stop sale was short lived and following that period Toyota began to introduce aggressive financing incentive and pre-maintenance programs to restart their sales. This worked well in March and gave consumers a reason to come back to Toyota dealerships.The Toyota brand remains a powerful one and the attractive offers generated substantial increase in customer traffic at our Toyota dealerships. As a result we’ve seen Toyota sales re-bounce strongly. For the quarter our Toyota sales increased 14% over the same period a year ago. And then the other operating highlights of the first quarter were improved used vehicle sales 24% on a year-over-year basis, increased gross profit in all business segments, expanded new vehicle and parts and service gross margins from the prior year period, better retail use vehicle margins on a sequential quarter basis, improved SG&A as a percentage of gross profit by 250 basis points (inaudible) car structuring increased gross profits. Operating income increased 38% and earnings on an adjusted basis more than doubled. And regarding our brand mix during the first quarter, a percentage of our sales from Toyota sign on Lexus brands was down a bit from the fourth quarter accounting for 35% of our new vehicle units. Whereas Nissan Infiniti and Honda Acura increased their percent of the mix to 16% and 13% respectively. Grounding out our new vehicle unit sales for BMW and Mini with 10%, Ford at 9%, Mercedes-Benz accounted for 5% and GM and Chrysler accounted for 4 and 3% of unit sales respectively. Read the rest of this transcript for free on seekingalpha.com