John Rickel (Group 1's CFO) here.
John, this is Jerry Marks. Did you catch my miscalculation on the potential impact of the Chanlders acquisition?
John: Yeah, but you seemed like you were on such a roll with the Kingdom of Heaven analogy, I thought I would let someone else spoil your fun.
Jerry: They sure did. Good thing my readers are smarter than me.
- Conversation yesterday between Jerry Marks and John Rickel
Now keep in mind, management did not revise their guidance (like I started out saying). And management said the top quartile of BMW dealers generate 3% pre-tax profit margins (which is how you work down to the $0.13). They did not say Chandlers is in the top quartile. But if they look to make improvements (like they said on the call) I think it would be a little dangerous for us to assume that Chandlers is already at the 3% pre-tax, only that is probably something shareholders should expect (hope) the company achieves sometime in the next year or so.
And don't forget, the acquisition is only for some 10 months out of the year (and they missed the all important registration day of March 1), they had some one-time entry costs associated with going international. So if we see half of the $0.13 (kind of ideal world earnings accretion figure) in 2007 (so $0.06 to $0.07 a share in accretion) I think investors should be pretty happy.
The bottom line message of my note from yesterday is unchanged; which is becoming a global player is incredibly important. But you really need to know what you are doing when you go abroad, something I think shareholders are very fortunate given Group 1 senior management's experience in Europe. However, you deserve to have the correct numbers placed in front of you. So I apologize for the miscalculation. And a special thanks to my readers for being so quick to point this out.