Group 1 Automotive, Inc., an international, Fortune 500 automotive retailer, reported 2018 first-quarter net income of $35.8 million and diluted earnings per common share of $1.70. There were no non-GAAP adjustments for the first quarter of 2018.
In comparison, Group 1 generated $33.9 million of net income, $32.8 million of adjusted net income (a non-GAAP measure), $1.58 of diluted earnings per common share and $1.53 of adjusted diluted earnings per common share (a non-GAAP measure) for the first quarter of 2017. First quarter 2017 adjusted net income and diluted earnings per share exclude a non-core benefit of approximately $1.1 million after-tax, or $0.05 per share, related to a settlement with an Original Equipment Manufacturer (OEM). Reconciliations of non-GAAP financial measures are included in the attached financial tables.
"An acceleration of our U.S. business in March allowed us to deliver record first-quarter revenue of $2.9 billion, which coupled with the benefits from the new U.S. tax law, drove record first quarter earnings per share of $1.70," said Earl J. Hesterberg, Group 1's president and chief executive officer. "We also received a major contribution from our U.K. operations despite an extremely weak new vehicle sales market, which declined 12.4 percent in the first quarter. We generated a 26 percent increase in overall gross profit for the quarter in the U.K. on a constant currency basis, driven by an impressive 5 percent increase in same-store used vehicle unit sales and the efficient integration of two recent dealer group acquisitions. Additionally, we are pleased to report continued recovery in the Brazilian market, where Same Store total revenue increased 20 percent on a constant currency basis."
Consolidated Results for First Quarter 2018 (year-over-year comparable basis)
For ease of comparison, we have included constant currency metrics (a non-GAAP measure) both below (shown in parenthesis) and in the financial tables that follow:
SG&A expenses as a percent of gross profit increased 170 basis points to 75.4 percent and operating margin decreased 40 basis points to 3.3 percent. These costs include $3 million for the one-time bonus paid to our U.S. non-managerial staff, as well as approximately $3 million associated with our new initiatives in used and parts and service.
"As we announced in March, we have launched several important strategic initiatives in our U.S. market that are designed to expand our used car sales and further strengthen our parts and service operations. Although it is still very early, we are encouraged by the initial results," said Daryl Kenningham, Group 1's president of U.S. operations. "Same Store used retail unit sales increased 7.7 percent in the U.S. during the quarter, the highest growth we have seen in ten quarters. In addition, we have installed our new work schedule in 65 of our U.S. dealerships as of March 31, 2018, and we are already seeing an improvement in retention and hiring, with a 17 percent increase in our service advisor headcount from the same period last year. Although these actions have added some costs in the near-term, we remain confident these investments will allow us to accelerate growth later this year and going forward."
For the first quarter of 2018, the Company repurchased 135,605 shares at an average price per common share of $67.83for a total of $9.2 million. As of April 26, 2018, $40.4 million remains available under the Company's common stock share repurchase authorization.
Future repurchases may be made from time to time, based on market conditions, legal requirements and other corporate considerations, in the open market or in privately negotiated transactions, and subject to Board approval and covenant restrictions.
As previously announced in 2018, the Company:
First Quarter 2018 Earnings Conference Call Details
Group 1's senior management will host a conference call today at 10 a.m. ET to discuss the first 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/events. A webcast replay will be available for 30 days.
The conference call will also be available live by dialing in 15 minutes prior to the start of the call at:
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