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Group 1 Automotive, Inc. : Group 1 Automotive Reports Record Fourth-Quarter and Best-Ever Full-Year Financial Results; Full-Year Revenues Increase to $6.1 Billion

02/09/2012 | 07:00am US/Eastern
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HOUSTON, Feb. 9, 2012 /PRNewswire/ -- Group 1 Automotive, Inc. (NYSE: GPI), a Fortune 500 automotive retailer, today reported record fourth-quarter adjusted net income of $22.0 million, a 49.3 percent increase from the prior-year period, and adjusted diluted earnings per common share of $0.94 for the period ended Dec. 31, 2011. As shown in the attached reconciliation table, the company recognized $1.1 million net after-tax adjustments for non-cash asset impairment charges and an accrual for a pending legal matter in the quarter ended Dec. 31, 2011. Before adjusting for these items, reported net income was $20.9 million, and diluted earnings per common share were $0.90.

Full-year 2011 adjusted net income increased 38.3 percent, to a record $86.0 million. Adjusted diluted earnings per common share were $3.62, making this the best full-year results in the company's history.

Fourth-Quarter 2011 Highlights

    --  Total revenues increased 13.1 percent to $1.6 billion, and gross profit
        grew 13.3 percent to $245.9 million from the prior-year period.
    --  New vehicle gross profit grew 23.6 percent on 13.5 percent higher
        revenues, as unit sales were 8.1 percent higher and the average selling
        price increased to $34,448.
    --  Retail used vehicle gross profit grew 14.0 percent on 16.8 percent
        higher revenues, as the average selling price increased 3.7 percent, to
        $20,417, and the company retailed 12.7 percent more units.
    --  Parts and service revenues increased 7.0 percent, reflecting increases
        in customer-pay, wholesale parts and collision businesses.
    --  Finance and insurance gross profit per retail unit of $1,183 set another
        all-time record high for any quarter.
    --  Selling, general and administrative (SG&A) expenses as a percent of
        gross profit (adjusted) improved 260 basis points on a comparable basis,
        to 76.1 percent, from the prior-year period.
    --  Same-store operating margin (adjusted) improved to 3.2 percent, as
        higher gross profit outpaced expenses.

Full-Year 2011 Results

    --  Total revenues increased 10.4 percent to $6.1 billion, and gross profit
        grew 9.5 percent, representing increases in all operating segments from
        the prior year.
    --  Finance and insurance revenues increased 16.0 percent on 5.5 percent
        more retail unit sales; gross profit per unit of $1,135 was an all-time
        record.
    --  Same-store new vehicle gross profit grew 15.0 percent on 6.4 percent
        higher revenues.
    --  Same-store used vehicle gross profit was 5.6 percent higher on an 8.6
        percent revenue increase.
    --  Same-store parts and service revenues grew 2.5 percent.
    --  Same-store SG&A expenses as a percent of gross profit (adjusted)
        improved 180 basis points on a comparable basis, to 76.2 percent.

"I am proud of the record fourth-quarter and full-year results that Group 1 reported today," said Earl J. Hesterberg, Group 1's president and chief executive officer, "especially given the supply challenges we faced with most of our Japanese brand stores for the majority of the year and in a sales environment that was about 25 percent lower than our previous record year in 2006. The strong results reflect the strength of our operating team as well as the significant improvements we have made to our operating model during the past several years. These improvements should continue to deliver operating leverage as new vehicle sales increase to a more normalized 15 million to 16 million unit selling environment in the next few years. Looking ahead, we anticipate new vehicle industry sales will increase by more than one million, to 14 million, units in 2012."

Corporate Development Recap

During the fourth quarter, Group 1 added six franchises to its portfolio including Lincoln, Cadillac, Buick, GMC and two Volkswagen franchises that are expected to add $218.0 million in annual revenues.

For the full year 2011, Group 1 added 14 franchises with total estimated annual revenues of $563.0 million and disposed of two franchises with trailing-12-month revenues of $4.1 million in 2011.

Thus far in 2012, Group 1 has acquired Volkswagen and BMW franchises with estimated aggregate annual revenues of $93.4 million.

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: 10008954

Domestic: 1.877.344.7529

International: 1.412.317.0088

Conference ID: 10008954

A telephonic replay will be available following the call through Feb. 17 at 9 a.m. ET by dialing:

About Group 1 Automotive, Inc.

Group 1 owns and operates 111 automotive dealerships, 143 franchises, and 28 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 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.

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

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 December 31,             Twelve Months Ended December 31,
                         -------------------------------             --------------------------------
                          2011           2010      % Change            2011            2010      % Change
                          ----           ----      --------            ----            ----      --------
    REVENUES:
    New vehicle
     retail sales     $945,392       $832,714          13.5      $3,402,647      $3,086,807          10.2
    Used vehicle
     retail sales      362,911        310,663          16.8       1,416,520       1,271,039          11.4
    Used vehicle
     wholesale sales    59,434         58,877           0.9         251,043         215,530          16.5
    Parts and
     service           204,711        191,242           7.0         813,819         767,004           6.1
    Finance and
     insurance          53,481         44,256          20.8         195,736         168,789          16.0
                        ------         ------          ----         -------         -------          ----
      Total revenues 1,625,929      1,437,752          13.1       6,079,765       5,509,169          10.4

    COST OF SALES:
    New vehicle
     retail sales      888,252        786,479          12.9       3,192,309       2,909,012           9.7
    Used vehicle
     retail sales      333,902        285,212          17.1       1,291,996       1,156,035          11.8
    Used vehicle
     wholesale sales    59,312         59,268           0.1         246,963         212,833          16.0
    Parts and
     service            98,602         89,772           9.8         387,897         354,256           9.5
                        ------         ------           ---         -------         -------           ---
      Total cost of
       sales         1,380,068      1,220,731          13.1       5,119,165       4,632,136          10.5


    GROSS PROFIT       245,861        217,021          13.3         960,600         877,033           9.5

    SELLING, GENERAL
     AND
      ADMINISTRATIVE
       EXPENSES        188,109        170,839          10.1         735,229         693,635           6.0

    DEPRECIATION AND
      AMORTIZATION
       EXPENSE           7,182          6,519          10.2          27,063          26,455           2.3

    ASSET
     IMPAIRMENTS           797          7,719         (89.7)          4,805          10,840         (55.7)


    OPERATING INCOME    49,773         31,944          55.8         193,503         146,103          32.4

    OTHER EXPENSE:
    Floorplan
     interest
     expense            (7,442)        (8,890)        (16.3)        (27,687)        (34,110)        (18.8)

    Other interest
     expense, net       (8,911)        (6,952)         28.2         (33,722)        (27,217)         23.9

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


    INCOME BEFORE
     INCOME TAXES       33,420         16,102         107.6         132,094          80,904          63.3

    PROVISION FOR
     INCOME TAXES      (12,565)        (5,533)        127.1         (49,700)        (30,600)         62.4


    NET INCOME         $20,855        $10,569          97.3         $82,394         $50,304          63.8
                       =======        =======          ====         =======         =======          ====

    DILUTED INCOME
     PER COMMON
     SHARE               $0.90          $0.45         101.0           $3.47           $2.09          65.8

    Weighted average
     dilutive common
     shares
     outstanding        22,040         22,467          (1.9)         22,409          22,788          (1.7)
    Weighted average
     participating
     securities          1,276          1,284          (0.6)          1,377           1,284           7.3
                         -----          -----          ----           -----           -----           ---
    Total weighted
     average shares
     outstanding        23,316         23,751          (1.8)         23,786          24,072          (1.2)



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

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

    CURRENT ASSETS:
              Cash and cash equivalents                                  $14,895       $19,843    (24.9)
               Contracts in transit and
               vehicle receivables, net                                  167,507       113,846     47.1
               Accounts and notes
               receivable, net                                            92,775        75,623     22.7
              Inventories                                                867,470       777,771     11.5
              Deferred income taxes                                       16,012        14,819      8.1
               Prepaid expenses and other
               current assets                                             16,925        17,332     (2.3)
                                                                          ------
              Total current assets                                     1,175,584     1,019,234     15.3
    PROPERTY AND EQUIPMENT, net                                          585,633       506,288     15.7
    GOODWILL AND INTANGIBLE FRANCHISE
     RIGHTS                                                              702,145       666,656      5.3
    OTHER ASSETS                                                          12,981         9,786     32.6
                                                                          ------         -----     ----
              Total assets                                            $2,476,343    $2,201,964     12.5
                                                                      ==========    ==========     ====

    LIABILITIES AND STOCKHOLDERS'
     EQUITY:

    CURRENT LIABILITIES:
               Floorplan notes payable -
               credit facility                                          $718,945      $690,051      4.2
               Offset account related to
               floorplan notes payable
               -credit facility                                         (109,207)     (129,211)   (15.5)
               Floorplan notes payable -
               manufacturer affiliates                                   155,980       103,345     50.9
               Current maturities of long-
               term debt                                                  14,663        53,189    (72.4)
               Current liabilities from
               interest rate risk
               management activities                                       7,273         1,098    562.4
              Accounts payable                                           148,048        92,799     59.5
              Accrued expenses                                           109,245        83,663     30.6
                                                                         -------
              Total current liabilities                                1,044,947       894,934     16.8
    2.25% CONVERTIBLE SENIOR NOTES
     (aggregate principal of
              $182,753 at December 31, 2011 and December 31, 2010)       144,985       138,155      4.9
    3.00% CONVERTIBLE SENIOR NOTES
     (aggregate principal of
              $115,000 at December 31, 2011 and December 31, 2010)        77,401        74,365      4.1
    MORTGAGE FACILITY, net of current
     maturities                                                           38,873             -    100.0
    OTHER REAL ESTATE RELATED AND
     LONG-TERM DEBT,
              net of current maturities                                  184,237       161,611     14.0
    CAPITAL LEASE OBLIGATIONS RELATED
     TO REAL ESTATE,
              net of current maturities                                   37,105        38,819     (4.4)
    DEFERRED INCOME TAXES                                                 78,459        58,970     33.0
    LIABILITIES FROM INTEREST RATE
     RISK MANAGEMENT ACTIVITIES                                           26,766        16,426     62.9
    OTHER LIABILITIES                                                     36,470        34,316      6.3
    COMMITMENTS AND CONTINGENCIES

    STOCKHOLDERS' EQUITY:
              Common stock                                                   260           261     (0.4)
              Additional paid-in capital                                 363,375       363,966     (0.2)
              Retained earnings                                          591,037       519,843     13.7
               Accumulated other
               comprehensive loss                                        (29,236)      (18,755)    55.9
              Treasury stock                                            (118,336)      (80,947)    46.2
                                                                       ---------
               Total stockholders'
               equity                                                    807,100       784,368      2.9
                                                                         -------       -------      ---
               Total liabilities and
               stockholders' equity                                   $2,476,343    $2,201,964     12.5
                                                                      ==========    ==========     ====



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

                             Three Months Ended December                Twelve Months Ended December
                                             31,                                          31,
                                ----------------------------                -----------------------------
                              2011           2010      % Change           2011            2010      % Change
                              ----           ----      --------           ----            ----      --------

    Net
     income                $20,855        $10,569          97.3        $82,394         $50,304          63.8
     Adjustments
     to
     reconcile
     net
     income
     to
     net
     cash
     provided
       by
        operating
        activities:
      Asset
       impairments             797          7,719         (89.7)         4,805          10,840         (55.7)
       Depreciation
       and
       amortization          7,182          6,519          10.2         27,063          26,455           2.3
       Deferred
       income
       taxes                 8,544          1,050         713.7         24,824          23,274           6.7
      Loss
       on
       redemption
       of
       long-
       term
       debt                      -           -          -           -        3,872     (100.0)
      (Gain)
       loss
       on
       disposition
       of
       assets
       and
       franchise                 6      (2,322)     100.3        (961)         848     (213.3)
      Stock-
       based
       compensation          2,586          2,437           6.1         10,919           9,942           9.8
       Amortization
       of
       debt
       discount
       and
       issue
       costs                 3,119       3,986      (21.8)     11,990       10,322       16.2
      Other                    292            (30)      1,073.3            277             824         (66.4)
     Changes
     in
     operating
     assets
     and
     liabilities,
     net
     of
     effects
       of
        acquisitions
        and
        dispositions:
       Accounts
       payable
       and
       accrued
       expenses             37,305       6,506      473.4      77,027       16,130      377.5
       Accounts
       and
       notes
       receivable          (21,783)        (9,097)        139.5        (17,875)        (13,844)         29.1
      Inventories         (119,114)       (21,302)        459.2         (7,410)       (174,249)        (95.7)
       Contracts-
       in-
       transit
       and
       vehicle
       receivables         (67,346)    (21,330)     215.7     (53,821)     (27,218)      97.7
       Prepaid
       expenses
       and
       other
       assets               (7,792)       (138)   5,546.4     (11,246)       6,922     (262.5)
       Floorplan
       notes
       payable
       -
       credit
       facility
       (1)                 143,307      33,350      329.7     (13,350)     193,430     (106.9)
       Floorplan
       notes
       payable
       -
       manufacturer
       affiliates
       (2)                  26,595        (299)   8,994.6      19,045      (12,790)     248.9
       Deferred
       revenues               (182)          (549)        (66.8)        (1,427)         (2,308)        (38.2)
                              ----           ----         -----         ------          ------         -----
     Adjusted
     net
     cash
     provided
     by
     operating
     activities            $34,371     $17,069      101.4    $152,254     $122,754       24.0
                           -------        -------         -----       --------        --------          ----



        Excludes net acquisition/(disposition) related activity of $41,860 for the twelve months ended
    (1) December 31, 2011, and $4,729 for the twelve months ended December 31, 2010.
        Excludes net acquisition/(disposition) related activity of $33,712 for the twelve months ended
    (2) December 31, 2011, and $2,210 for the twelve months ended December 31, 2010.



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

                                               Three Months               Twelve Months
                                                                      Ended                 Ended
                                              December 31,                December 31,
                                              ------------                ------------
                                            2011         2010         2011         2010
                                                                 (%)         (%)        (%)    (%)
                                           -----        -----        -----        -----
    NEW
     VEHICLE
     UNIT
     SALES
     GEOGRAPHIC
     MIX:
      Region        Geographic Market
      ------        -----------------
      East          Massachusetts          10.0         12.2         11.3         14.3
                    New Jersey              5.3          5.9          5.5          6.3
                    New York                4.2          3.9          3.8          3.8
                    Georgia                 3.3          3.8          3.4          3.9
                    New Hampshire           2.8          3.7          3.0          4.0
                    Louisiana               2.5          3.6          2.8          3.2
                    Mississippi             2.0          1.7          2.0          1.7
                    South Carolina          1.7          1.9          1.5          1.3
                    Alabama                 1.3          1.1          1.2          1.2
                    Maryland                0.8          0.8          0.8          0.8
                    Florida                 0.8          0.7          0.7          1.2
                                           34.7         39.3         36.0         41.7

      West          Texas                  38.6         32.6         36.0         31.2
                    California             13.7         14.5         13.9         13.7
                    Oklahoma                8.0          7.4          8.2          7.8
                    Kansas                  0.9          0.9          0.9          0.9
                                           61.2         55.4         59.0         53.6

      International United Kingdom          4.1          5.3          5.0          4.7
                                          100.0        100.0        100.0        100.0

    NEW
     VEHICLE
     UNIT
     SALES
     BRAND
     MIX:
      Toyota/
       Scion/
       Lexus                               29.8         35.5         30.4         35.5
      Nissan/
       Infiniti                            12.7         12.6         13.7         14.1
      BMW/
       MINI                                12.7         13.3         13.1         11.9
      Ford                                  9.9          7.4          8.9          7.8
      Honda/
       Acura                                9.4         11.6         10.7         12.0
      Daimler                               6.8          6.3          5.9          5.8
      GM                                    6.4          4.3          5.6          4.0
      Chrysler                              4.8          3.3          4.5          3.0
      Other                                 7.5          5.7          7.2          5.9
                                          100.0        100.0        100.0        100.0

    NEW
     VEHICLE
     UNIT
     SALES
     OTHER
     MIX:
      Import                               50.4         55.1         53.2         57.5
      Luxury                               29.4         30.1         28.1         27.8
      Domestic                             20.2         14.8         18.7         14.7
                                          100.0        100.0        100.0        100.0

      Car                                  51.4         56.4         54.1         58.2
      Truck                                48.6         43.6         45.9         41.8
                                          100.0        100.0        100.0        100.0



                                          Group 1 Automotive, Inc.
                                    Additional Information - Consolidated
                                                 (Unaudited)
                               (Dollars in thousands, except per unit amounts)

                                                                            Twelve Months Ended December
                            Three Months Ended December 31,                                                    31,
                            -------------------------------                 -----------------------------
                             2011            2010      % Change            2011            2010      % Change
                             ----            ----      --------            ----            ----      --------
    REVENUES:
      New vehicle
       retail sales      $945,392        $832,714          13.5      $3,402,647      $3,086,807          10.2
      Used vehicle
       retail sales       362,911         310,663          16.8       1,416,520       1,271,039          11.4
      Used vehicle
       wholesale sales     59,434          58,877           0.9         251,043         215,530          16.5
                           ------          ------                       -------         -------
        Total used        422,345         369,540          14.3       1,667,563       1,486,569          12.2
      Parts and
       service            204,711         191,242           7.0         813,819         767,004           6.1
      Finance and
       insurance           53,481          44,256          20.8         195,736         168,789          16.0
                           ------          ------                       -------         -------
        Total          $1,625,929      $1,437,752          13.1      $6,079,765      $5,509,169          10.4

    GROSS MARGIN %:
      New vehicle
       retail sales           6.0             5.6                           6.2             5.8
      Used vehicle
       retail sales           8.0             8.2                           8.8             9.0
      Used vehicle
       wholesale sales        0.2            (0.7)                          1.6             1.3
        Total used            6.9             6.8                           7.7             7.9
      Parts and
       service               51.8            53.1                          52.3            53.8
      Finance and
       insurance            100.0           100.0                         100.0           100.0
        Total                15.1            15.1                          15.8            15.9

    GROSS PROFIT:
      New vehicle
       retail sales       $57,140         $46,235          23.6        $210,338        $177,795          18.3
      Used vehicle
       retail sales        29,009          25,451          14.0         124,524         115,004           8.3
      Used vehicle
       wholesale sales        122            (391)        131.2           4,080           2,697          51.3
                              ---            ----                         -----           -----
        Total used         29,131          25,060          16.2         128,604         117,701           9.3
      Parts and
       service            106,109         101,470           4.6         425,922         412,748           3.2
      Finance and
       insurance           53,481          44,256          20.8         195,736         168,789          16.0
                           ------          ------                       -------         -------
        Total            $245,861        $217,021          13.3        $960,600        $877,033           9.5

    UNITS SOLD:
      Retail new
       vehicles sold       27,444          25,383           8.1         102,022          97,511           4.6
      Retail used
       vehicles sold       17,775          15,771          12.7          70,475          66,001           6.8
      Wholesale used
       vehicles sold        8,751           8,808          (0.6)         35,997          33,524           7.4
                            -----           -----                        ------          ------
        Total used         26,526          24,579           7.9         106,472          99,525           7.0

    AVERAGE RETAIL
     SALES PRICE:
      New vehicle
       retail             $34,448         $32,806           5.0         $33,352         $31,656           5.4
      Used vehicle
       retail             $20,417         $19,698           3.7         $20,100         $19,258           4.4

    GROSS PROFIT PER
     UNIT SOLD:
      New vehicle
       retail sales        $2,082          $1,821          14.3          $2,062          $1,823          13.1
      Used vehicle
       retail sales         1,632           1,614           1.1           1,767           1,742           1.4
      Used vehicle
       wholesale sales         14             (44)        131.8             113              80          41.3
        Total used          1,098           1,020           7.6           1,208           1,183           2.1
      Finance and
       insurance (per
       retail unit)        $1,183          $1,075          10.0          $1,135          $1,032          10.0

    OTHER (1):
      SG&A expenses      $187,109        $170,839           9.5        $734,229        $689,320           6.5
      SG&A as %
       revenues              11.5            11.9                          12.1            12.5
      SG&A as % gross
       profit                76.1            78.7                          76.4            78.6
    Operating margin
     %                        3.2             2.8                           3.3             2.9
    Pretax margin %          2.2             1.7                           2.3             1.8

    FLOORPLAN
     EXPENSE:
      Floorplan
       interest           $(7,442)        $(8,890)        (16.3)       $(27,687)       $(34,110)        (18.8)
      Floorplan
       assistance           7,308           6,162          18.6          26,144          23,998           8.9
                            -----           -----                        ------          ------
        Net floorplan
         expense            $(134)        $(2,728)        (95.1)        $(1,543)       $(10,112)        (84.7)



        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
    (1) 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,                  Twelve Months Ended December 31,
                            -------------------------------                  --------------------------------
                            2011            2010      % Change             2011            2010      % Change
                            ----            ----      --------             ----            ----      --------
    REVENUES:
      New vehicle
       retail sales     $883,288        $830,877            6.3      $3,252,960      $3,056,307            6.4
      Used vehicle
       retail sales      344,775         309,732           11.3       1,361,006       1,261,856            7.9
      Used vehicle
       wholesale
       sales              55,837          58,443           (4.5)        240,467         212,631           13.1
                          ------          ------                        -------         -------
        Total used       400,612         368,175            8.8       1,601,473       1,474,487            8.6
      Parts and
       service           191,754         190,839            0.5         776,005         757,132            2.5
      Finance and
       insurance          50,346          44,145           14.0         188,105         167,339           12.4
                          ------          ------                        -------         -------
        Total         $1,526,000      $1,434,036            6.4      $5,818,543      $5,455,265            6.7

    GROSS MARGIN %:
      New vehicle
       retail sales          6.1             5.6                            6.2             5.8
      Used vehicle
       retail sales          7.9             8.2                            8.8             9.1
      Used vehicle
       wholesale
       sales                 0.4            (0.4)                           1.8             1.4
        Total used           6.9             6.8                            7.7             8.0
      Parts and
       service              52.6            53.0                           53.0            53.9
      Finance and
       insurance           100.0           100.0                          100.0           100.0
        Total               15.2            15.1                           15.9            15.9

    GROSS PROFIT:
      New vehicle
       retail sales      $53,923         $46,226           16.7        $202,615        $176,202           15.0
      Used vehicle
       retail sales       27,313          25,390            7.6         119,568         114,305            4.6
      Used vehicle
       wholesale
       sales                 205            (229)         189.5           4,301           2,982           44.2
                             ---            ----                          -----           -----
        Total used        27,518          25,161            9.4         123,869         117,287            5.6
      Parts and
       service           100,850         101,237           (0.4)        411,281         407,993            0.8
      Finance and
       insurance          50,346          44,145           14.0         188,105         167,339           12.4
                          ------          ------                        -------         -------
        Total           $232,637        $216,769            7.3        $925,870        $868,821            6.6

    UNITS SOLD:
      Retail new
       vehicles sold      25,688          25,329            1.4          97,495          96,629            0.9
      Retail used
       vehicles sold      16,838          15,718            7.1          67,647          65,417            3.4
      Wholesale used
       vehicles sold       8,185           8,761           (6.6)         34,395          33,176            3.7
                           -----           -----                         ------          ------
        Total used        25,023          24,479            2.2         102,042          98,593            3.5

    AVERAGE RETAIL
     SALES PRICE:
      New vehicle
       retail            $34,385         $32,803            4.8         $33,365         $31,629            5.5
      Used vehicle
       retail            $20,476         $19,706            3.9         $20,119         $19,289            4.3

    GROSS PROFIT
     PER UNIT SOLD:
      New vehicle
       retail sales       $2,099          $1,825           15.0          $2,078          $1,823           14.0
      Used vehicle
       retail sales        1,622           1,615            0.4           1,768           1,747            1.2
      Used vehicle
       wholesale
       sales                  25             (26)         196.2             125              90           38.9
        Total used         1,100           1,028            7.0           1,214           1,190            2.0
      Finance and
       insurance (per
       retail unit)       $1,184          $1,075           10.1          $1,139          $1,033           10.3

    OTHER (2):
      SG&A expenses     $176,588        $169,978            3.9        $705,558        $677,843            4.1
      SG&A as %
       revenues             11.6            11.9                           12.1            12.4
      SG&A as % gross
       profit               75.9            78.4                           76.2            78.0
    Operating
     margin %               3.2             2.8                            3.3             3.0

    FLOORPLAN
     EXPENSE:
      Floorplan
       interest          $(6,917)        $(8,873)         (22.0)       $(26,493)       $(33,756)         (21.5)
      Floorplan
       assistance          6,676           6,129            8.9          24,968          23,663            5.5
                           -----           -----                         ------          ------
        Net floorplan
         expense           $(241)        $(2,744)         (91.2)        $(1,525)       $(10,093)         (84.9)



        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
    (1) the activities of our corporate office.
        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
    (2) 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 December                  Twelve Months Ended
                                                                31,                                 December 31,
                                                   ----------------------------                --------------------
    NET INCOME                                                                 %                                        %
     RECONCILIATION:                              2011           2010       Change           2011          2010      Change
                                                  ----           ----      -------           ----          ----     -------
      As reported                              $20,855        $10,569         97.3        $82,394       $50,304        63.8
        After-tax adjustments:
        Non-cash asset
         impairment charges (2)                    461          4,947                       2,994         6,930
        Loss on dealership
         dispositions (3)                            -              -                           -         3,698
        Loss on debt redemption
         (4)                                         -              -                           -         2,458
        Severance costs related
         to UK-dealership
         acquisitions (5)                            -              -                           -           405
        Income tax benefit
         related to discrete
         items (6)                                   -           (810)                          -          (810)
        Gain on sale of real
         estate (7)                                  -              -                           -          (761)
        Accrual for pending
         legal matter (11)                         641              -                         641             -
                                                   ---            ---                         ---           ---
          Adjusted net income (1)              $21,957        $14,706         49.3        $86,029       $62,224        38.3

    ADJUSTED NET INCOME
     ATTRIBUTABLE TO
     DILUTED
      COMMON SHARES
       RECONCILIATION:
      Adjusted net income                      $21,957        $14,706         49.3        $86,029       $62,224        38.3
      Less: Adjusted earnings
       allocated to
       participating
       securities                                1,182            785                       4,931         3,309
                                                 -----            ---                       -----         -----
      Adjusted net income
       available to diluted
       common shares                           $20,775        $13,921         49.2        $81,098       $58,915        37.7

    DILUTED INCOME PER
     COMMON SHARE
     RECONCILIATION:
      As reported                                $0.90          $0.45        100.0          $3.47         $2.09        66.0
        After-tax adjustments:
        Non-cash asset
         impairment charges                       0.02           0.21                        0.13          0.29
        Loss on dealership
         dispositions                                -              -                           -          0.15
        Loss on debt redemption                      -              -                           -          0.10
        Severance costs related
         to UK-dealership
         acquisitions                                -              -                           -          0.02
        Income tax benefit
         related to discrete
         items                                       -          (0.04)                          -         (0.03)
        Gain on sale of real
         estate                                      -              -                           -         (0.03)
        Accrual for pending
         legal matter                             0.02              -                        0.02             -
                                                  ----            ---                        ----           ---
          Adjusted diluted income
           per share (1)                         $0.94          $0.62         51.6          $3.62         $2.59        39.8

    SG&A RECONCILIATION:
      As reported                             $188,109       $170,839         10.1       $735,229      $693,635         6.0
        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
        Accrual for pending
         legal matter                           (1,000)             -                      (1,000)            -
                                                ------            ---                      ------           ---
          Adjusted SG&A (1)                   $187,109       $170,839          9.5       $734,229      $689,320         6.5

    SG&A AS % REVENUES:
      Unadjusted                                  11.6           11.9                        12.1          12.6
      Adjusted (1)                                11.5           11.9                        12.1          12.5

    SG&A AS % OF GROSS
     PROFIT:
      Unadjusted                                  76.5           78.7                        76.5          79.1
      Adjusted (1)                                76.1           78.7                        76.4          78.6

    OPERATING MARGIN %:
      Unadjusted                                   3.1            2.2                         3.2           2.7
      Adjusted (1), (8)                            3.2            2.8                         3.3           2.9

    PRETAX MARGIN %:
      Unadjusted                                   2.1            1.1                         2.2           1.5
      Adjusted (1), (9)                            2.2            1.7                         2.3           1.8

    SAME STORE SG&A
     RECONCILIATION:
      As reported                             $177,588       $169,978          4.5       $706,558      $678,405         4.1
        Pre-tax adjustments:
        Severance costs related
         to UK-dealership
         acquisitions                                -              -                           -          (562)
        Accrual for pending
         legal matter                           (1,000)             -                      (1,000)            -
                                                ------            ---                      ------           ---
          Adjusted Same Store
           SG&A (1)                           $176,588       $169,978          3.9       $705,558      $677,843         4.1

    SAME STORE SG&A AS %
     REVENUES:
      Unadjusted                                  11.6           11.9                        12.1          12.4
      Adjusted (1)                                11.6           11.9                        12.1          12.4

    SAME STORE SG&A AS % OF
     GROSS PROFIT:
      Unadjusted                                  76.3           78.4                        76.3          78.1
      Adjusted (1)                                75.9           78.4                        76.2          78.0

    SAME STORE OPERATING
     MARGIN %:
      Unadjusted                                   3.1            2.5                         3.2           2.9
      Adjusted (1), (10)                           3.2            2.8                         3.3           3.0

                                                Three Months Ended December                Twelve Months Ended
                                                                31,                                December 31,
                                                   ----------------------------               --------------------
    CASH FLOWS FROM                                                            %                                        %
     OPERATING ACTIVITIES                         2011           2010       Change           2011          2010      Change
                                                  ----           ----      -------           ----          ----     -------
    RECONCILIATION:
      Net cash provided by
       (used in) operating
       activities                            $(101,802)      $(16,281)       525.3       $199,316      $(68,466)      391.1
        Change in floorplan
         notes payable-credit
         facility,                             143,307         33,350                     (13,350)      193,430
            excluding floorplan
             offset account and net
            acquisition and
             disposition related
             activity
        Change in floorplan
         notes payable-
         manufacturer                           (7,134)             -                     (33,712)       (2,210)
           affiliates associated
            with net acquisition
            and                                 ------            ---                     -------        ------
           disposition related
            activity
          Adjusted net cash
           provided by operating               $34,371        $17,069        101.4       $152,254      $122,754        24.0
             activities (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
    (1)   GAAP results to address these limitations.
          Adjustments are net of tax benefit of $336 and $1,811 for the three and twelve months ended December 31, 2011,
          respectively, and $2,772 and $3,910 for the three and twelve months ended December 31, 2010 and are calculated
    (2)   utilizing the applicable federal and state tax rates for the adjustment.
          Adjustment is net of tax benefit of $1,355 for the twelve months ended December 31, 2010, and is calculated
    (3)   utilizing the applicable federal and state tax rates for the adjustment.
          Adjustment is net of tax benefit of $1,414 for the twelve months ended December 31, 2010, and is calculated
    (4)   utilizing the applicable federal and state tax rates for the adjustment.
          Adjustment is net of a tax benefit of $157 for the twelve months ended December 31, 2010, and is calculated
    (5)   utilizing the applicable UK corporate tax rate for the adjustment.
          The $0.8 million income tax benefit for the three and twelve months ended December 31, 2010 relates to the tax
    (6)   deductibility of goodwill written off in conjunction with the termination of a franchise.
          Adjustment is net of a tax provision of $539 for the twelve months ended December 31, 2010, and is calculated
    (7)   utilizing the applicable federal and state tax rates for the adjustment.
    (8)  Excludes the impact of non-cash asset impairment charges.
          Excludes the impact of non-cash asset impairment charges, loss on dealership dispositions, loss on debt
          redemption, severance costs related to UK-dealership acquisitions, gain on sale of real estate and accrual for
    (9)   pending legal matter.
          Excludes the impact of Same Store non-cash asset impairment charges of $341 and $4,038 and accrual for pending
          legal matter of $1,000 for the three and twelve months ended December 31, 2011, respectively, and $4,823 and
          $6,725 for the three and twelve months ended December 31, 2010. Adjusted Same Store operating income was
          $49,126 and $194,124 for the three and twelve months ended December 31, 2011, respectively, and $40,331 and
    (10)  $164,744 for the three and twelve months ended December 31, 2010.
          Adjustment is net of tax benefit of $359 for the three and twelve months ended December 31, 2011, and is
    (11)  calculated utilizing the applicable federal and state tax rates for the adjustment.

SOURCE Group 1 Automotive, Inc.

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