Group 1 posts 16% gain in Q2 net income with all segments rising
Earl Hesterberg: "Even with the impact of a major hailstorm that severely damaged about 2,200 units at seven of Group 1's Oklahoma dealerships during the quarter, we outpaced the industry unit sales rate and further improved our expense leverage."
Higher vehicle volume and record finance-and-insurance income drove Group 1 Automotive Inc. to a 16 percent gain in second-quarter net income.
The nation's fourth-largest dealership group today reported net income of $28.6 million, up from $24.7 million a year ago. Revenues jumped 29 percent to $1.9 billion, a record high for any quarter for the company.
"Even with the impact of a major hailstorm that severely damaged about 2,200 units at seven of Group 1's Oklahoma dealerships during the quarter, we outpaced the industry unit sales rate and further improved our expense leverage," CEO Earl Hesterberg said in a statement.
Group 1's gross profit for the quarter increased 17 percent to an all-time record of $285.3 million. Profits rose in all categories of the business: new-vehicle sales, used-vehicle sales, parts and service and finance and insurance.
Overall, Group 1 exceeded Wall Street analysts' expectations for the ninth consecutive quarter, Reuters reported. Excluding one-time items, it generated net income of $1.25 per share while analysts expected $1.16 a share, Reuters reported.
Though per-vehicle profit margins slipped for both new and used vehicles, volume drove revenues and overall gross profits higher in both categories.
New-vehicle retail revenue rose 33 percent, and new-vehicle retail gross profit jumped 18 percent. Group 1 reported per-vehicle gross profit in that category of $1,939, down 14 percent from $2,252 a year ago.
Used-vehicle retail revenue increased 29 percent, and used-vehicle retail gross profit rose 12 percent. Group 1 reported gross profit per retail used vehicle of $1,765, down 12 percent from $2,009 a year ago.
Finance-and-insurance gross profits soared 41 percent to $65.4 million for the quarter. On a per-retail-vehicle basis, finance-and-insurance gross profit jumped 6 percent to a record $1,191.
Parts-and-service revenues increased 8 percent. Group 1 credited it to continued improvement in customer-pay business, wholesale parts and collision sales.
Group 1 shares, which have gained more than 50 percent in value since touching a year-low in October, traded flat today, falling 12 cents to $51.15 on the New York Stock Exchange.
The company, based in Houston, ranks No. 4 on the Automotive News list of the top 125 U.S. dealership groups with new-vehicles sales of 102,022 in 2011.
Reuters contributed to this report.
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