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Group 1 Automotive (GPI) Q4 Earnings Miss, Revenues Beat

Group 1 Automotive Inc.GPI reported a 9.6% year-over-year decrease in earnings per share to $1.51 in the fourth quarter of 2015, missing the Zacks Consensus Estimate by 27 cents. Adjusted net income fell 12.3% to $35.7 million from $40.7 million in the year-ago quarter. Earnings declined due to the negative impact of the fall in oil and gas price on the economy in the prime markets of Houston, Oklahoma and Texas.

Including net after-tax charges related to non-cash asset impairments and goodwill for the company's Brazilian operations in the reported quarter, and gain on dealership and real estate transactions, Group 1 Automotive recorded a net loss of $33.4 million or $1.41 per share. In the prior-year quarter, the company recorded a net profit of $18.7 million or 77 cents per share.

Group 1 Automotive Inc. (GPI) Street EPS & Surprise Percent - Last 5 Quarters | FindTheCompany

Revenues increased 5.3% year over year to $2.67 billion and marginally surpassed the Zacks Consensus Estimate of $2.66 billion.

Revenues from new vehicle retail sales rose 3.2% to $1.5 billion on a 3% increase in unit sales to 43,484 vehicles. Revenues from retailed used vehicles improved 11% to $645.8 million on a 10% rise in unit sales to 30,240 vehicles. Revenues from used vehicle wholesale sales inched up 0.4% to $95.1 million. Used vehicles' wholesale volume dropped 0.8% to 13,733 units.

Revenues from the Parts and Service business improved 5.7% to $297.3 million. The company's Finance and Insurance business witnessed a 5.9% rise in revenues to $101.3 million.

Gross profit increased 3.9% to $380.1 million from $366 million in the year-ago quarter. Operating income plunged 94.8% to $2.9 million from $56.4 million in the fourth quarter of 2014.

2015 Performance

Earnings for 2015 increased 17% to $6.87 per share from $5.87 in 2014. However, the figure missed the Zacks Consensus Estimate of $7.13.

Revenues for 2015 rose 7% to $10.6 billion, coming almost in line with the Zacks Consensus Estimate.

Segment Details

Revenues in the U.S. business rose 7.6% to $2.3 billion on the back of better performance in all operations. The segment recorded a 6.2% increase in new vehicle sales to $1.29 billion and an 11.1% rise in total used vehicles' sales to $615.3 million. Parts and Service revenue increased 7.5%, while Finance and Insurance revenues improved 6%.

Revenues in the U.K. business augmented 20.8% to $285.1 million from $236.1 million in the year-ago quarter. Retail new vehicle sales grew 22.6% to $149.5 million and total used vehicle sales escalated 17.6% to $103.7 million. Parts and Service revenue increased 20.6%, while Finance and Insurance revenues improved 32.3%.

Revenues from the Brazil business fell 38% to $123.1 million in the reported quarter. New vehicle retail sales decreased 38.5% to $88.1 million, while total used vehicle sales declined 36.3% to $21.9 million. Parts and Service revenue went down 37.1%, while Finance and Insurance revenues plunged 37.5%.

Financial Details

Group 1 Automotive's cash and cash equivalents decreased 68.2% to $13 million as of Dec 31, 2015, from $41 million as of Dec 31, 2014. Total debt amounted to $347.4 million as of Dec 31, 2015, compared with $392.6 million as of Dec 31, 2014.

Dividend

The board of directors of the company declared a cash dividend of 22 cents per share for the fourth quarter of 2015. The dividend is payable on Mar 15, to shareholders on record as of Mar 1, 2016.

Share Repurchase

The company's board of directors also increased the share repurchase authorization to $150 million from $78.2 million, which was available as of Dec 31, 2015 under the company's prior share repurchase authorization.

During 2015, Group 1 Automotive repurchased 1,176,908 shares at an average price of $82.82 per share, for a total of $97.5 million.

Acquisitions & Dispositions

Group 1 Automotive announced the acquisition of Spire Automotive Group, which consists of 12 dealerships operating in the north and northwest London metropolitan market. The group comprises four Audi dealerships, three BMW/MINI dealerships with a BMW Aftersales centre, two Seat dealerships, one Skoda dealership, one Volkswagen commercial vehicle dealership and one Jaguar dealership. These dealerships are expected to boost Group 1 Automotive's revenues by $575 million per annum.

In addition, Group 1 Automotive announced the divestiture of three U.S. dealerships, including Mercedes-Benz and Volkswagen of Freehold, NJ, and Ira Toyota of Milford, MA. These dealerships generated annual revenue of $160 million.

In 2015, Group 1 Automotive acquired three dealerships that are expected to generate around $340 million in annual revenues. Further, the company disposed of five franchises which generated approximately $115 million in annual revenues.

From Jan 1, 2016 to Feb 11, 2016, the company disposed of two dealerships that generated approximately $75 million in trailing twelve-month revenues.

Zacks Rank

Currently, Group 1 Automotive carries a Zacks Rank #3 (Hold).

Better-ranked automobile stocks include Visteon Corporation VC , Wabash National Corp. WNC and Superior Industries International, Inc. SUP . All the three stocks sport a Zacks Rank #1 (Strong Buy).

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GROUP 1 AUTO (GPI): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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