Press Releases

Group 1 Automotive Reports Strong Third-Quarter Earnings Results Despite Ongoing Japanese-Brand Vehicle Supply Shortages

PR Newswire

HOUSTON

PR Newswire

HOUSTON, Oct. 25, 2011 /PRNewswire/ -- Group 1 Automotive, Inc. (NYSE: GPI), a Fortune 500 automotive retailer, today reported a third-quarter adjusted net income increase of 23.6 percent to $23.8 million, or $1.04 per diluted share, for the period ended Sept. 30, 2011. This compares to adjusted net income of $19.3 million, or $0.84 per diluted share, for the third quarter of 2010. Including the $2.3 million net after-tax adjustments for non-cash asset impairment charges shown in the attached reconciliation table, net income for the third quarter of 2011 was $21.5 million, or $0.94 per diluted share.

Third-Quarter Highlights

Total revenues increased 7.4 percent, to $1.6 billion, from the prior-year period.
Total gross profit grew 8.7 percent to $248.8 million.
New vehicle gross profit grew 19.3 percent on 4.9 percent higher revenues, as unit sales fell 2.3 percent.
Retail used vehicle gross profit increased 4.9 percent on 10.7 percent higher revenues, as gross profit per retail unit remained relatively flat.
Parts and service revenues increased 7.0 percent, reflecting increases in wholesale, customer-pay and collision segments of the business.
Record-setting finance and insurance gross profit of $1,156 per retail unit.
Selling, general and administrative expense as a percent of gross profit was 75.7 percent, reflecting continued leverage from cost reduction actions.
Same-store operating margin (adjusted) improved to 3.5 percent on higher gross profit.
Earnings per diluted share (adjusted) of $1.04.

“We are pleased to deliver another record-setting quarter, with growth in every segment of the business,” said Earl J. Hesterberg, Group 1’s president and chief executive officer. “Despite the challenges of the overall economy and continuing inventory shortages in key brands, such as Toyota and Honda, we generated excellent profit growth. This was possible due to a well-balanced performance in all of our businesses with a note-worthy all-time record in our finance and insurance business.”

Year-to-Date Results

On a same-store basis, Group 1 reported 6.3 percent growth in gross profit on 6.7 percent higher revenues, reflecting increases in all operating segments from the prior year. Same-store new vehicle gross profit grew 14.4 percent on 6.5 percent higher revenues; used vehicle gross profit was 4.6 percent higher on an 8.5 percent revenue increase; finance and insurance revenues increased 11.8 percent on 1.3 percent more retail unit sales; and, parts and service revenues were 3.2 percent higher. Selling, general and administrative expenses as a percent of revenues improved 30 basis points to 12.3 percent, as expenses grew at a slower pace than revenues.

Share Repurchases

During the third quarter, Group 1 repurchased 976,701 shares of its common stock at an average price of $37.63. As of Sept. 30, $16.7 million remained under a board authorized $50.0 million share repurchase program.

Corporate Development Update

As previously announced on Oct. 11, Group 1 acquired Buick, Cadillac, Fiat, GMC and Volkswagen franchises that are expected to generate $188.0 million in total estimated annualized revenues. Year to date, the company has acquired 13 franchises estimated to generate $528.0 million in annualized revenues including the third-quarter acquisitions.

Third-Quarter Earnings Conference Call

Group 1’s senior management will host a conference call today at 10 a.m. ET to discuss the third-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: 10004929

A telephonic replay will be available following the call through Nov. 2 at 9 a.m. ET by dialing:

Domestic: 1.877.344.7529
International: 1.412.317.0088
Conference ID: 10004929

About Group 1 Automotive, Inc.

Group 1 owns and operates 108 automotive dealerships, 140 franchises, and 27 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," 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,” “may” or “will” and similar expressions. 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. These factors, as well as additional factors that could affect our forward-looking statements, are described in our Form 10-K under the headings “Business—Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We urge you to carefully consider this information. We undertake no duty to update our forward-looking statements, including our earnings outlook, whether as a result of new information, future developments or otherwise, except as may be required by law.

Investor contacts:
Kim Paper Canning
Manager, Investor Relations
Group 1 Automotive Inc.
713-647-5741 | kpaper@group1auto.com

Media contacts:
Pete DeLongchamps
V.P. Manufacturer Relations and Public Affairs
Group 1 Automotive Inc.
713-647-5770 | pdelongchamps@group1auto.com
or
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 September 30,				Nine Months Ended September 30,
		2011	2010	% Change		2011	2010	% Change
REVENUES:
New vehicle retail sales		$ 862,660	$ 822,121	4.9	%	$ 2,457,255	$ 2,254,093	9.0	%
Used vehicle retail sales		377,115	340,625	10.7		1,053,609	960,376	9.7
Used vehicle wholesale sales		69,051	58,463	18.1		191,609	156,653	22.3
Parts and service		210,067	196,264	7.0		609,108	575,762	5.8
Finance and insurance		51,496	44,282	16.3		142,255	124,533	14.2
	Total revenues	1,570,389	1,461,755	7.4		4,453,836	4,071,417	9.4

COST OF SALES:
New vehicle retail sales		806,498	775,046	4.1		2,304,057	2,122,533	8.6
Used vehicle retail sales		345,048	310,055	11.3		958,094	870,823	10.0
Used vehicle wholesale sales		69,254	58,158	19.1		187,651	153,565	22.2
Parts and service		100,836	89,657	12.5		289,295	264,484	9.4
	Total cost of sales	1,321,636	1,232,916	7.2		3,739,097	3,411,405	9.6

GROSS PROFIT		248,753	228,839	8.7		714,739	660,012	8.3

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		188,185	173,925	8.2		547,120	522,796	4.7

DEPRECIATION AND AMORTIZATION EXPENSE		6,845	6,772	1.1		19,881	19,936	(0.3)

ASSET IMPAIRMENTS		3,644	1,639	122.3		4,008	3,121	28.4

OPERATING INCOME		50,079	46,503	7.7		143,730	114,159	25.9

OTHER EXPENSE:
Floorplan interest expense		(6,964)	(9,021)	(22.8)		(20,245)	(25,220)	(19.7)

Other interest expense, net		(8,644)	(6,894)	25.4		(24,811)	(20,265)	22.4

Loss on redemption of long-term debt		-	-	-		-	(3,872)	(100.0)

INCOME BEFORE INCOME TAXES		34,471	30,588	12.7		98,674	64,802	52.3

PROVISION FOR INCOME TAXES		(12,977)	(11,603)	11.8		(37,135)	(25,067)	48.1

NET INCOME		$ 21,494	$ 18,985	13.2	%	$ 61,539	$ 39,735	54.9	%


DILUTED INCOME PER SHARE		$ 0.94	$ 0.83	13.3	%	$ 2.67	$ 1.70	57.1	%

Weighted average dilutive shares outstanding		22,778	22,926	(0.6)	%	23,073	23,414	(1.5)	%

Dilutive shares outstanding, net of treasury stock, at September 30		21,920	22,860	(4.1)	%	21,920	22,860	(4.1)	%

Group 1 Automotive, Inc.
Consolidated Balance Sheets
(Dollars in thousands)

			September 30,	December 31,
			2011	2010	% Change
ASSETS:			(Unaudited)

CURRENT ASSETS:
	Cash and cash equivalents		$ 11,300	$ 19,843	(43.1)	%
	Contracts in transit and vehicle receivables, net		100,246	113,846	(11.9)
	Accounts and notes receivable, net		71,496	75,623	(5.5)
	Inventories		719,677	777,771	(7.5)
	Deferred income taxes		16,482	14,819	11.2
	Prepaid expenses and other current assets		18,232	17,332	5.2
		Total current assets	937,433	1,019,234	(8.0)
PROPERTY AND EQUIPMENT, net			550,908	506,288	8.8
GOODWILL AND INTANGIBLE FRANCHISE RIGHTS			693,305	666,656	4.0
OTHER ASSETS			13,656	9,786	39.5
		Total assets	$ 2,195,302	$ 2,201,964	(0.3)	%

LIABILITIES AND STOCKHOLDERS' EQUITY:

CURRENT LIABILITIES:
	Floorplan notes payable - credit facility		$ 553,871	$ 690,051	(19.7)	%
		Offset account related to floorplan notes payable - credit facility	(116,819)	(129,211)	(9.6)
	Floorplan notes payable - manufacturer affiliates		122,358	103,345	18.4
	Current maturities of long-term debt		14,003	53,189	(73.7)
	Current liabilities from interest rate risk management activities		7,656	1,098	597.3
	Accounts payable		128,490	92,799	38.5
	Accrued expenses		92,360	83,663	10.4
		Total current liabilities	801,919	894,934	(10.4)
2.25% CONVERTIBLE SENIOR NOTES (aggregate principal of
	$182,753 at September 30, 2011 and December 31, 2010)		143,228	138,155	3.7
3.00% CONVERTIBLE SENIOR NOTES (aggregate principal of
	$115,000 at September 30, 2011 and December 31, 2010)		76,617	74,365	3.0
MORTGAGE FACILITY, net of current maturities			39,405	-	100.0
OTHER REAL ESTATE RELATED AND LONG-TERM DEBT,
	net of current maturities		176,275	161,611	9.1
CAPITAL LEASE OBLIGATIONS RELATED TO REAL ESTATE,
	net of current maturities		37,668	38,819	(3.0)
DEFERRED INCOME TAXES			70,929	58,970	20.3
LIABILITIES FROM INTEREST RATE RISK MANAGEMENT ACTIVITIES			25,112	16,426	52.9
OTHER LIABILITIES			33,252	31,036	7.1
DEFERRED REVENUES			2,133	3,280	(35.0)

STOCKHOLDERS' EQUITY:
	Common stock		262	261	0.4
	Additional paid-in capital		368,776	363,966	1.3
	Retained earnings		573,120	519,843	10.2
	Accumulated other comprehensive loss		(27,986)	(18,755)	49.2
	Treasury stock		(125,408)	(80,947)	54.9
		Total stockholders' equity	788,764	784,368	0.6
		Total liabilities and stockholders' equity	$ 2,195,302	$ 2,201,964	(0.3)	%

Group 1 Automotive, Inc.
Consolidated Statements of Adjusted Cash Flows from Operating Activities
(Unaudited)
(In thousands)

		Three Months Ended September 30,				Nine Months Ended September 30,
		2011	2010	% Change		2011	2010	% Change

Net income		$ 21,494	$ 18,985	13.2	%	$ 61,539	$ 39,735	54.9	%
Adjustments to reconcile net income to net cash provided by operating activities:
	Asset impairments	3,644	1,639	122.3		4,008	3,121	28.4
	Depreciation and amortization	6,845	6,772	1.1		19,881	19,936	(0.3)
	Deferred income taxes	2,170	10,062	(78.4)		16,280	22,224	(26.7)
	Loss on redemption of long-term debt	-	-	-		-	3,872	(100.0)
	(Gain) loss on disposition of assets and franchise	(181)	(1,282)	(85.9)		(967)	3,170	(130.5)
	Stock-based compensation	2,775	2,329	19.1		8,333	7,505	11.0
	Amortization of debt discount and issue costs	3,023	2,379	27.1		8,871	6,336	40.0
	Other	87	416	(79.1)		(15)	854	(101.8)
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
	Accounts payable and accrued expenses	14,833	(6,075)	344.2		39,722	9,624	312.7
	Accounts and notes receivable	(55)	1,572	(103.5)		3,908	(4,747)	182.3
	Inventories	58,901	(58,570)	200.6		111,704	(152,947)	173.0
	Contracts-in-transit and vehicle receivables	5,398	18,893	(71.4)		13,525	(5,888)	329.7
	Prepaid expenses and other assets	(4,477)	5,266	(185.0)		(3,454)	7,060	(148.9)
	Floorplan notes payable - credit facility (1)	(83,371)	52,865	(257.7)		(156,657)	160,080	(197.9)
	Floorplan notes payable - manufacturer affiliates (2)	(13,416)	2,296	(684.3)		(7,550)	(12,491)	(39.6)
	Deferred revenues	(297)	(816)	(63.6)		(1,245)	(1,759)	(29.2)
Adjusted net cash provided by operating activities		$ 17,373	$ 56,731	(69.4)	%	$ 117,883	$ 105,685	11.5	%

(1)	Excludes net acquisition/(disposition) related activity of $20,476 for the nine months ended September 30, 2011, and $4,729 for the nine months ended September 30, 2010.
(2)	Excludes net acquisition/(disposition) related activity of $26,578 for the nine months ended September 30, 2011, and $2,210 for the nine months ended September 30, 2010.

Group 1 Automotive, Inc.
Additional Information - Consolidated
(Unaudited)

			Three Months Ended				Nine Months Ended
			September 30,				September 30,
			2011		2010		2011		2010
NEW VEHICLE UNIT SALES GEOGRAPHIC MIX:
	Region	Geographic Market
	East	Massachusetts	11.2	%	14.6	%	11.6	%	14.8	%
		New Jersey	4.8		6.1		5.5		6.5
		New York	3.5		3.7		3.7		3.8
		Georgia	3.1		4.1		3.5		3.9
		New Hampshire	2.8		4.0		3.1		4.2
		Louisiana	2.7		3.3		3.0		3.1
		Mississippi	2.0		1.7		2.0		1.7
		South Carolina	1.4		1.6		1.4		1.1
		Alabama	1.4		1.2		1.2		1.3
		Maryland	0.7		0.8		0.8		0.8
		Florida	0.7		0.8		0.7		1.4
			34.3		41.9		36.5		42.6

	West	Texas	38.2		30.9		34.9		30.8
		California	12.9		14.0		14.0		13.4
		Oklahoma	8.5		7.7		8.3		7.9
		Kansas	0.9		0.8		1.0		0.9
			60.5		53.4		58.2		53.0

	International	United Kingdom	5.2		4.7		5.3		4.4
			100.0	%	100.0	%	100.0	%	100.0	%

NEW VEHICLE UNIT SALES BRAND MIX:
	Toyota/Scion/Lexus		28.7	%	36.5	%	30.6	%	35.5	%
	Nissan/Infiniti		15.2		14.1		14.0		14.6
	BMW/MINI		13.1		11.9		13.2		11.3
	Ford		10.1		7.2		8.5		8.0
	Honda/Acura		9.3		11.8		11.1		12.2
	GM		6.2		3.9		5.3		4.0
	Daimler		5.0		5.7		5.5		5.6
	Chrysler		5.0		3.0		4.5		2.9
	Other		7.4		5.9		7.3		5.9
			100.0	%	100.0	%	100.0	%	100.0	%

NEW VEHICLE UNIT SALES OTHER MIX:
	Import		52.1	%	58.8	%	54.3	%	58.3	%
	Luxury		26.7		27.1		27.6		27.0
	Domestic		21.2		14.1		18.1		14.7
			100.0	%	100.0	%	100.0	%	100.0	%

	Car		53.5	%	59.4	%	55.1	%	58.8	%
	Truck		46.5		40.6		44.9		41.2
			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 September 30,						Nine Months Ended September 30,
			2011		2010		% Change		2011		2010		% Change
REVENUES:
	New vehicle retail sales		$ 862,660		$ 822,121		4.9	%	$ 2,457,255		$ 2,254,093		9.0	%
	Used vehicle retail sales		377,115		340,625		10.7		1,053,609		960,376		9.7
	Used vehicle wholesale sales		69,051		58,463		18.1		191,609		156,653		22.3
		Total used	446,166		399,088		11.8		1,245,218		1,117,029		11.5
	Parts and service		210,067		196,264		7.0		609,108		575,762		5.8
	Finance and insurance		51,496		44,282		16.3		142,255		124,533		14.2
		Total	$ 1,570,389		$ 1,461,755		7.4	%	$ 4,453,836		$ 4,071,417		9.4	%

GROSS MARGIN:
	New vehicle retail sales		6.5	%	5.7	%			6.2	%	5.8	%
	Used vehicle retail sales		8.5		9.0				9.1		9.3
	Used vehicle wholesale sales		(0.3)		0.5				2.1		2.0
		Total used	7.1		7.7				8.0		8.3
	Parts and service		52.0		54.3				52.5		54.1
	Finance and insurance		100.0		100.0				100.0		100.0
		Total	15.8	%	15.7	%			16.0	%	16.2	%

GROSS PROFIT:
	New vehicle retail sales		$ 56,162		$ 47,075		19.3	%	$ 153,198		$ 131,560		16.4	%
	Used vehicle retail sales		32,067		30,570		4.9		95,515		89,553		6.7
	Used vehicle wholesale sales		(203)		305		(166.6)		3,958		3,088		28.2
		Total used	31,864		30,875		3.2		99,473		92,641		7.4
	Parts and service		109,231		106,607		2.5		319,813		311,278		2.7
	Finance and insurance		51,496		44,282		16.3		142,255		124,533		14.2
		Total	$ 248,753		$ 228,839		8.7	%	$ 714,739		$ 660,012		8.3	%

UNITS SOLD:
	Retail new vehicles sold		25,777		26,396		(2.3)	%	74,578		72,128		3.4	%
	Retail used vehicles sold		18,770		17,601		6.6		52,700		50,230		4.9
	Wholesale used vehicles sold		9,697		9,308		4.2		27,246		24,716		10.2
		Total used	28,467		26,909		5.8	%	79,946		74,946		6.7	%

AVERAGE SALES PRICE:
	New vehicle retail		$ 33,466		$ 31,146		7.4	%	$ 32,949		$ 31,251		5.4	%
	Used vehicle retail		$ 20,091		$ 19,353		3.8	%	$ 19,993		$ 19,120		4.6	%

GROSS PROFIT PER UNIT SOLD:
	New vehicle retail sales		$ 2,179		$ 1,783		22.2	%	$ 2,054		$ 1,824		12.6	%
	Used vehicle retail sales		1,708		1,737		(1.7)		1,812		1,783		1.6
	Used vehicle wholesale sales		(21)		33		(163.6)		145		125		16.0
		Total used	1,119		1,147		(2.4)		1,244		1,236		0.6
	Finance and insurance (per retail unit)		$ 1,156		$ 1,006		14.9	%	$ 1,118		$ 1,018		9.8	%

OTHER (1):
	SG&A expenses		$ 188,185		$ 175,225		7.4	%	$ 547,120		$ 518,481		5.5	%
	SG&A as % revenues		12.0	%	12.0	%			12.3	%	12.7	%
	SG&A as % gross profit		75.7	%	76.6	%			76.5	%	78.6	%
	Operating margin		3.4	%	3.2	%			3.3	%	3.0	%
	Pretax margin		2.4	%	2.1	%			2.3	%	1.9	%

FLOORPLAN EXPENSE:
	Floorplan interest		$ (6,964)		$ (9,021)		(22.8)	%	$ (20,245)		$ (25,220)		(19.7)	%
	Floorplan assistance		6,740		6,512		3.5		18,836		17,836		5.6
		Net floorplan expense	$ (224)		$ (2,509)		(91.1)	%	$ (1,409)		$ (7,384)		(80.9)	%

(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 September 30,						Nine Months Ended September 30,
			2011		2010		% Change		2011		2010		% Change
REVENUES:
	New vehicle retail sales		$ 818,269		$ 818,645		(0.0)	%	$ 2,369,672		$ 2,225,429		6.5	%
	Used vehicle retail sales		361,511		339,094		6.6		1,016,231		952,124		6.7
	Used vehicle wholesale sales		66,018		58,140		13.6		184,630		154,188		19.7
		Total used	427,529		397,234		7.6		1,200,861		1,106,312		8.5
	Parts and service		199,744		195,416		2.2		584,251		566,294		3.2
	Finance and insurance		48,913		44,107		10.9		137,759		123,194		11.8
		Total	$ 1,494,455		$ 1,455,402		2.7	%	$ 4,292,543		$ 4,021,229		6.7	%

GROSS MARGIN:
	New vehicle retail sales		6.6	%	5.7	%			6.3	%	5.8	%
	Used vehicle retail sales		8.5		9.0				9.1		9.3
	Used vehicle wholesale sales		(0.1)		0.6				2.2		2.1
		Total used	7.1		7.7				8.0		8.3
	Parts and service		52.8		54.3				53.1		54.2
	Finance and insurance		100.0		100.0				100.0		100.0
		Total	16.0	%	15.7	%			16.1	%	16.2	%

GROSS PROFIT:
	New vehicle retail sales		$ 54,035		$ 46,832		15.4	%	$ 148,692		$ 129,977		14.4	%
	Used vehicle retail sales		30,572		30,421		0.5		92,255		88,915		3.8
	Used vehicle wholesale sales		(79)		358		(122.1)		4,096		3,211		27.6
		Total used	30,493		30,779		(0.9)		96,351		92,126		4.6
	Parts and service		105,453		106,136		(0.6)		310,431		306,756		1.2
	Finance and insurance		48,913		44,107		10.9		137,759		123,194		11.8
		Total	$ 238,894		$ 227,854		4.8	%	$ 693,233		$ 652,053		6.3	%

UNITS SOLD:
	Retail new vehicles sold		24,427		26,298		(7.1)	%	71,807		71,300		0.7	%
	Retail used vehicles sold		17,939		17,487		2.6		50,809		49,699		2.2
	Wholesale used vehicles sold		9,222		9,264		(0.5)		26,210		24,415		7.4
		Total used	27,161		26,751		1.5	%	77,019		74,114		3.9	%

AVERAGE SALES PRICE:
	New vehicle retail		$ 33,499		$ 31,130		7.6	%	$ 33,001		$ 31,212		5.7	%
	Used vehicle retail		$ 20,152		$ 19,391		3.9	%	$ 20,001		$ 19,158		4.4	%

GROSS PROFIT PER UNIT SOLD:
	New vehicle retail sales		$ 2,212		$ 1,781		24.2	%	$ 2,071		$ 1,823		13.6	%
	Used vehicle retail sales		1,704		1,740		(2.1)		1,816		1,789		1.5
	Used vehicle wholesale sales		(9)		39		(123.1)		156		132		18.2
		Total used	1,123		1,151		(2.4)		1,251		1,243		0.6
	Finance and insurance (per retail unit)		$ 1,155		$ 1,007		14.7	%	$ 1,123		$ 1,018		10.3	%

OTHER:
	SG&A expenses		$180,417		$173,389		4.1	%	$528,971		$508,427		4.0	%
	SG&A as % revenues		12.1	%	11.9	%			12.3	%	12.6	%
	SG&A as % gross profit		75.5	%	76.1	%			76.3	%	78.0	%
	Operating margin (2)		3.5	%	3.3	%			3.4	%	3.1	%

FLOORPLAN EXPENSE:
	Floorplan interest		$ (6,606)		$ (8,961)		(26.3)	%	$ (19,576)		$ (24,884)		(21.3)	%
	Floorplan assistance		6,404		6,462		(0.9)		18,292		17,534		4.3
		Net floorplan expense	$ (202)		$ (2,499)		(91.9)	%	$ (1,284)		$ (7,350)		(82.5)	%


(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)	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.
Reconciliation of Certain Non-GAAP Financial Measures
(Unaudited)
(Dollars in thousands, except per share amounts)

				Three Months Ended September 30,						Nine Months Ended September 30,
NET INCOME RECONCILIATION:				2011		2010		% Change		2011		2010		% Change

	As reported			$ 21,494		$ 18,985		13.2	%	$ 61,539		$ 39,735		54.9	%
	After-tax Adjustments:
		Non-Cash asset impairment charges (2)		2,309		1,033				2,534		1,983
		Loss on dealership dispositions (3)		-		-				-		3,698
		Loss on debt redemption (4)		-		-				-		2,458
		Severance costs related to UK-dealership acquisitions (5)		-		-				-		405
		Gain on sale of real estate (6)		-		(761)						(761)
			Adjusted net income (1)	$ 23,803		$ 19,257		23.6	%	$ 64,073		$ 47,518		34.8	%

DILUTED INCOME PER SHARE RECONCILIATION:

	As reported			$ 0.94		$ 0.83		13.3	%	$ 2.67		$ 1.70		57.1	%
	After-tax Adjustments:
		Non-Cash asset impairment charges		0.10		0.04				0.11		0.08
		Loss on dealership dispositions		-		-				-		0.15
		Loss on debt redemption		-		-				-		0.10
		Severance costs related to UK-dealership acquisitions		-		-				-		0.02
		Gain on sale of real estate		-		(0.03)				-		(0.03)
			Adjusted diluted income per share (1)	$ 1.04		$ 0.84		23.8	%	$ 2.78		$ 2.02		37.6	%

SG&A RECONCILIATION:

	As reported			$ 188,185		$ 173,925		8.2	%	$ 547,120		$ 522,796		4.7	%
	Pre-tax Adjustments:
		Loss on dealership dispositions		-		-				-		(5,053)
		Severance costs related to UK-dealership acquisitions		-		-				-		(562)
		Gain on sale of real estate		-		1,300				-		1,300
			Adjusted SG&A (1)	$ 188,185		$ 175,225		7.4	%	$ 547,120		$ 518,481		5.5	%

SG&A AS % REVENUES:

	Unadjusted			12.0	%	11.9	%			12.3	%	12.8	%
	Adjusted (1)			12.0	%	12.0	%			12.3	%	12.7	%

SG&A AS % OF GROSS PROFIT:

	Unadjusted			75.7	%	76.0	%			76.5	%	79.2	%
	Adjusted (1)			75.7	%	76.6	%			76.5	%	78.6	%

OPERATING MARGIN:

	Unadjusted			3.2	%	3.2	%			3.2	%	2.8	%
	Adjusted (1), (7)			3.4	%	3.2	%			3.3	%	3.0	%

SAME STORE OPERATING MARGIN:

	Unadjusted			3.2	%	3.2	%			3.3	%	3.0	%
	Adjusted (1), (9)			3.5	%	3.3	%			3.4	%	3.1	%

PRETAX MARGIN:

	Unadjusted			2.2	%	2.1	%			2.2	%	1.6	%
	Adjusted (1), (8)			2.4	%	2.1	%			2.3	%	1.9	%

				Three Months Ended September 30,						Nine Months Ended September 30,
CASH FLOWS FROM OPERATING ACTIVITIES				2011		2010		% Change		2011		2010		% Change
RECONCILIATION:
	Net cash provided by (used in) operating activities			$ 100,744		$ 3,866		2,505.9	%	$ 301,118		$ (52,185)		677.0	%
		Change in floorplan notes payable-credit facility, excluding floorplan offset account and net acquisition and disposition related activity		(83,371)		52,865				(156,657)		160,080
		Change in floorplan notes payable-manufacturer affiliates associated with net acquisition and disposition related activity		-		-				(26,578)		(2,210)
			Adjusted net cash provided by operating activities (1)	$ 17,373		$ 56,731		(69.4)	%	$ 117,883		$ 105,685		11.5	%


(1)	We believe that these adjusted financial measures are relevant and useful to investors because they provide additional information regarding the performance of our operations and improve period-to-period comparability. These measures are not measures of financial performance under GAAP. Accordingly, they should not be considered as substitutes for their unadjusted counterparts, which are prepared in accordance with GAAP. Although we find these non-GAAP results useful in evaluating the performance of our business, our reliance on these measures is limited because the adjustments often have a material impact on our financial statements calculated in accordance with GAAP. Therefore, we typically use these adjusted numbers in conjunction with our GAAP results to address these limitations.
(2)	Adjustments are net of tax benefit of $1,335 and $1,474 for the three and nine months ended September 30, 2011, respectively, and $606 and $1,138 for the three and nine months ended September 30, 2010 and are calculated utilizing the applicable federal and state tax rates for the adjustment.
(3)	Adjustment is net of tax benefit of $1,355 for the nine months ended September 30, 2010, and is calculated utilizing the applicable federal and state tax rates for the adjustment.
(4)	Adjustment is net of tax benefit of $1,414 for the nine months ended September 30, 2010, and is calculated utilizing the applicable federal and state tax rates for the adjustment.
(5)	Adjustment is net of a tax benefit of $157 for the nine months ended September 30, 2010 and is calculated utilizing the applicable UK corporate tax rate for the adjustment.
(6)	Adjustment is net of a tax provision of $539 for the three and nine months ended September 30, 2010 and is calculated utilizing the applicable federal and state tax rates for the adjustment.
(7)	Excludes the impact of non-cash asset impairment charges.
(8)	Excludes the impact of non-cash asset impairment charges, loss on dealership dispositions, loss on debt redemption, severance costs related to UK-dealership acquisitions and gain on sale of real estate.
(9)	Excludes the impact of Same Store non-cash asset impairment charges of $3,379 and $3,697 for the three and nine months ended September 30, 2011, respectively, and $1,639 and $1,902 for the three and nine months ended September 30, 2010. Adjusted Same Store operating income was $51,843 and $144,998 for the three and nine months ended September 30, 2011, respectively, and $47,833 and $124,413 for the three and nine months ended September 30, 2010.

SOURCE Group 1 Automotive, Inc.