Item 1. Financial Statements
GROUP 1 AUTOMOTIVE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions, except share data)
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June 30, 2021
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December 31, 2020
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ASSETS
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CURRENT ASSETS:
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Cash and cash equivalents
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$
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198.7
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$
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87.3
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Contracts-in-transit and vehicle receivables, net
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222.5
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211.2
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Accounts and notes receivable, net
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196.8
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200.0
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Inventories
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1,030.2
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1,468.0
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Prepaid expenses
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22.3
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19.4
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Other current assets
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19.4
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18.4
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TOTAL CURRENT ASSETS
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1,689.8
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2,004.2
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Property and equipment, net of accumulated depreciation of $491.1 and $460.2, respectively
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1,645.9
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1,608.2
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Operating lease assets
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213.2
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209.9
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Goodwill
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1,018.7
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997.1
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Intangible franchise rights
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236.4
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232.8
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Other long-term assets
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51.7
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37.2
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TOTAL ASSETS
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$
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4,855.9
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$
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5,089.4
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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CURRENT LIABILITIES:
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Floorplan notes payable — credit facility and other, net of offset account of $326.1 and $160.4, respectively
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$
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224.5
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$
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767.6
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Floorplan notes payable — manufacturer affiliates, net of offset account of $— and $16.0, respectively
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274.0
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327.5
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Current maturities of long-term debt
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59.4
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56.7
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Current operating lease liabilities
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22.0
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21.5
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Accounts payable
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424.4
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442.6
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Accrued expenses and other current liabilities
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267.8
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226.9
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TOTAL CURRENT LIABILITIES
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1,272.0
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1,842.7
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Long-term debt
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1,322.0
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1,294.7
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Long-term operating lease liabilities
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208.1
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207.6
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Deferred income taxes
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156.4
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141.0
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Other long-term liabilities
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143.4
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153.8
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Commitments and Contingencies (Note 11)
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STOCKHOLDERS’ EQUITY:
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Common stock, $0.01 par value, 50,000,000 shares authorized; 25,357,677 and 25,433,048 shares issued, respectively
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0.3
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0.3
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Additional paid-in capital
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313.6
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308.3
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Retained earnings
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2,099.1
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1,817.9
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Accumulated other comprehensive income (loss)
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(155.9)
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(184.0)
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Treasury stock, at cost; 7,282,827 and 7,342,546 shares, respectively
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(503.1)
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(492.8)
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TOTAL STOCKHOLDERS’ EQUITY
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1,754.0
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1,449.6
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
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$
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4,855.9
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$
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5,089.4
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See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)
2
GROUP 1 AUTOMOTIVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In millions, except per share data)
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Three Months Ended June 30,
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Six Months Ended June 30,
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2021
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2020
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2021
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2020
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REVENUES:
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New vehicle retail sales
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$
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1,855.3
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$
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1,062.7
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$
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3,398.7
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$
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2,404.8
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Used vehicle retail sales
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1,195.6
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641.2
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2,094.4
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1,420.3
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Used vehicle wholesale sales
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96.4
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48.7
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176.6
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135.2
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Parts and service sales
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392.1
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282.0
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752.8
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652.6
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Finance, insurance and other, net
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161.0
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96.7
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288.0
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209.2
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Total revenues
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3,700.4
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2,131.2
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6,710.5
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4,822.0
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COST OF SALES:
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New vehicle retail sales
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1,690.0
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998.9
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3,134.4
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2,278.3
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Used vehicle retail sales
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1,086.5
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594.9
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1,925.7
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1,331.8
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Used vehicle wholesale sales
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87.2
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46.6
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163.5
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132.1
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Parts and service sales
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175.4
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132.0
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335.0
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304.5
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Total cost of sales
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3,039.2
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1,772.4
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5,558.5
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4,046.7
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GROSS PROFIT
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661.3
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358.8
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1,151.9
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775.3
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Selling, general and administrative expenses
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376.7
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237.2
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695.2
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565.1
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Depreciation and amortization expense
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18.8
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18.8
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38.3
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37.4
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Asset impairments
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—
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23.8
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—
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23.8
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INCOME FROM OPERATIONS
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265.8
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79.0
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418.5
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148.9
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Floorplan interest expense
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8.8
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10.1
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16.4
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23.0
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Other interest expense, net
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13.7
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16.2
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27.5
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34.3
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Loss on extinguishment of debt
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—
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10.4
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—
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10.4
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INCOME BEFORE INCOME TAXES
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243.2
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42.3
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374.6
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81.2
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Provision for income taxes
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52.3
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12.2
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81.7
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21.3
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NET INCOME
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$
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191.0
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$
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30.2
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$
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292.9
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$
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60.0
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BASIC EARNINGS PER SHARE
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$
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10.40
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$
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1.64
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$
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15.94
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$
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3.25
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Weighted average common shares outstanding
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17.7
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17.8
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17.8
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17.8
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DILUTED EARNINGS PER SHARE
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$
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10.35
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$
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1.63
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$
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15.88
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$
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3.25
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Weighted average dilutive common shares outstanding
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17.8
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17.8
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17.8
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17.8
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See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)
3
GROUP 1 AUTOMOTIVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(In millions)
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Three Months Ended June 30,
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Six Months Ended June 30,
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2021
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2020
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2021
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2020
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NET INCOME
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$
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191.0
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$
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30.2
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$
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292.9
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$
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60.0
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Other comprehensive income (loss), net of taxes:
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Foreign currency translation adjustment
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7.2
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(2.5)
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4.9
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(30.4)
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Net unrealized gain (loss) on interest rate risk management activities, net of tax:
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Unrealized gain (loss) arising during the period, net of tax benefit (provision) of $3.4, $1.5, $(5.1) and $11.2, respectively
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(11.1)
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(7.0)
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16.7
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(38.6)
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Reclassification adjustment for loss included in interest expense, net of tax benefit of $0.6, $0.7, $1.3 and $0.9, respectively
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1.9
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2.1
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4.2
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2.7
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Reclassification related to de-designated interest rate swaps net of tax benefit of $0.7, $—, $0.7 and $—, respectively
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2.4
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—
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2.4
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—
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Unrealized gain (loss) on interest rate risk management activities, net of tax
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(6.9)
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(4.9)
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23.3
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(36.0)
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OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX
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0.3
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(7.3)
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28.1
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(66.4)
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COMPREHENSIVE INCOME (LOSS)
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$
|
191.2
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$
|
22.8
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$
|
321.0
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$
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(6.4)
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See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)
4
GROUP 1 AUTOMOTIVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
(In millions, except share data)
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Common Stock
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Additional
Paid-in Capital
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Retained Earnings
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Accumulated
Other
Comprehensive Income (Loss)
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Treasury Stock
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Total
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Shares
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Amount
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BALANCE, MARCH 31, 2021
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25,367,736
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$
|
0.3
|
|
|
$
|
305.7
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|
|
$
|
1,914.2
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|
|
$
|
(156.2)
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|
$
|
(487.3)
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|
$
|
1,576.6
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|
|
Net income
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—
|
|
|
—
|
|
|
—
|
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|
191.0
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|
—
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|
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—
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|
191.0
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|
Other comprehensive income, net of taxes
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—
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|
—
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|
|
—
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|
|
—
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|
0.3
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—
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0.3
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Purchases of treasury stock
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—
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—
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—
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—
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—
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(18.6)
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(18.6)
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Net issuance of treasury shares to stock compensation plans
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(10,059)
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|
—
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|
1.1
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|
—
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|
|
—
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|
|
2.9
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|
4.0
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Stock-based compensation
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—
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|
|
—
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|
|
6.8
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|
|
—
|
|
|
—
|
|
|
—
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|
6.8
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|
Dividends declared ($0.33 per share)
|
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—
|
|
|
—
|
|
|
—
|
|
|
(6.0)
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|
—
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|
|
—
|
|
|
(6.0)
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BALANCE, JUNE 30, 2021
|
|
25,357,677
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|
|
$
|
0.3
|
|
|
$
|
313.6
|
|
|
$
|
2,099.1
|
|
|
$
|
(155.9)
|
|
|
$
|
(503.1)
|
|
|
$
|
1,754.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
Additional
Paid-in Capital
|
|
Retained Earnings
|
|
Accumulated
Other
Comprehensive Income (Loss)
|
|
Treasury Stock
|
|
Total
|
|
|
|
Shares
|
|
Amount
|
|
|
|
|
|
|
BALANCE, DECEMBER 31, 2020
|
|
25,433,048
|
|
|
$
|
0.3
|
|
|
$
|
308.3
|
|
|
$
|
1,817.9
|
|
|
$
|
(184.0)
|
|
|
$
|
(492.8)
|
|
|
$
|
1,449.6
|
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
292.9
|
|
|
—
|
|
|
—
|
|
|
292.9
|
|
|
Other comprehensive income, net of taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28.1
|
|
|
—
|
|
|
28.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of treasury stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18.6)
|
|
|
(18.6)
|
|
|
Net issuance of treasury shares to stock compensation plans
|
|
(75,371)
|
|
|
—
|
|
|
(7.9)
|
|
|
—
|
|
|
—
|
|
|
8.4
|
|
|
0.5
|
|
|
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
13.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13.2
|
|
|
Dividends declared ($0.64 per share)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11.7)
|
|
|
—
|
|
|
—
|
|
|
(11.7)
|
|
|
BALANCE, JUNE 30, 2021
|
|
25,357,677
|
|
|
$
|
0.3
|
|
|
$
|
313.6
|
|
|
$
|
2,099.1
|
|
|
$
|
(155.9)
|
|
|
$
|
(503.1)
|
|
|
$
|
1,754.0
|
|
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)
5
GROUP 1 AUTOMOTIVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
(In millions, except share data)
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
Additional
Paid-in Capital
|
|
Retained Earnings
|
|
Accumulated
Other
Comprehensive Income (Loss)
|
|
Treasury Stock
|
|
Total
|
|
|
|
Shares
|
|
Amount
|
|
|
|
|
|
|
BALANCE, MARCH 31, 2020
|
|
25,448,275
|
|
|
$
|
0.3
|
|
|
$
|
287.8
|
|
|
$
|
1,566.7
|
|
|
$
|
(206.0)
|
|
|
$
|
(474.1)
|
|
|
$
|
1,174.6
|
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30.2
|
|
|
—
|
|
|
—
|
|
|
30.2
|
|
|
Other comprehensive loss, net of taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7.3)
|
|
|
—
|
|
|
(7.3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net issuance of treasury shares to stock compensation plans
|
|
(8,693)
|
|
|
—
|
|
|
(4.4)
|
|
|
—
|
|
|
—
|
|
|
6.2
|
|
|
1.8
|
|
|
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
16.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE, JUNE 30, 2020
|
|
25,439,581
|
|
|
$
|
0.3
|
|
|
$
|
300.0
|
|
|
$
|
1,596.9
|
|
|
$
|
(213.3)
|
|
|
$
|
(467.9)
|
|
|
$
|
1,215.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
Additional
Paid-in Capital
|
|
Retained Earnings
|
|
Accumulated
Other
Comprehensive Income (Loss)
|
|
Treasury Stock
|
|
Total
|
|
|
|
Shares
|
|
Amount
|
|
|
|
|
|
|
BALANCE, DECEMBER 31, 2019
|
|
25,486,711
|
|
|
$
|
0.3
|
|
|
$
|
295.3
|
|
|
$
|
1,542.4
|
|
|
$
|
(147.0)
|
|
|
$
|
(435.3)
|
|
|
$
|
1,255.7
|
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
60.0
|
|
|
—
|
|
|
—
|
|
|
60.0
|
|
|
Other comprehensive loss, net of taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(66.4)
|
|
|
—
|
|
|
(66.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of treasury stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(48.9)
|
|
|
(48.9)
|
|
|
Net issuance of treasury shares to stock compensation plans
|
|
(47,129)
|
|
|
—
|
|
|
(17.0)
|
|
|
—
|
|
|
—
|
|
|
16.3
|
|
|
(0.7)
|
|
|
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
21.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21.7
|
|
|
Dividends declared ($0.30 per share)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5.5)
|
|
|
—
|
|
|
—
|
|
|
(5.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE, JUNE 30, 2020
|
|
25,439,581
|
|
|
$
|
0.3
|
|
|
$
|
300.0
|
|
|
$
|
1,596.9
|
|
|
$
|
(213.3)
|
|
|
$
|
(467.9)
|
|
|
$
|
1,215.9
|
|
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)
6
GROUP 1 AUTOMOTIVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
2021
|
|
2020
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
Net income
|
|
$
|
292.9
|
|
|
$
|
60.0
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
Depreciation and amortization
|
|
38.3
|
|
|
37.4
|
|
|
Change in operating lease assets
|
|
11.8
|
|
|
12.9
|
|
|
Deferred income taxes
|
|
4.4
|
|
|
(3.0)
|
|
|
Asset impairments
|
|
—
|
|
|
23.8
|
|
|
Stock-based compensation
|
|
13.2
|
|
|
21.7
|
|
|
Amortization of debt discount and issuance costs
|
|
1.2
|
|
|
1.9
|
|
|
Gain on disposition of assets
|
|
(2.1)
|
|
|
—
|
|
|
Loss on extinguishment of debt
|
|
—
|
|
|
10.4
|
|
|
Unrealized loss on derivative instruments
|
|
2.3
|
|
|
—
|
|
|
Other
|
|
0.3
|
|
|
1.7
|
|
|
Changes in assets and liabilities, net of acquisitions and dispositions:
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
28.9
|
|
|
(48.0)
|
|
|
Accounts and notes receivable
|
|
3.7
|
|
|
64.8
|
|
|
Inventories
|
|
444.4
|
|
|
536.7
|
|
|
Contracts-in-transit and vehicle receivables
|
|
(10.7)
|
|
|
77.2
|
|
|
Prepaid expenses and other assets
|
|
(7.2)
|
|
|
(4.8)
|
|
|
Floorplan notes payable — manufacturer affiliates
|
|
(56.6)
|
|
|
(90.3)
|
|
|
Deferred revenues
|
|
(1.0)
|
|
|
(0.3)
|
|
|
Operating lease liabilities
|
|
(11.8)
|
|
|
(13.8)
|
|
|
Net cash provided by operating activities
|
|
752.1
|
|
|
688.2
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
Cash paid for acquisitions, net of cash received
|
|
(49.9)
|
|
|
(1.3)
|
|
|
Proceeds from disposition of franchises, property and equipment
|
|
19.8
|
|
|
0.6
|
|
|
Purchases of property and equipment
|
|
(63.8)
|
|
|
(60.5)
|
|
|
|
|
|
|
|
|
Other
|
|
0.1
|
|
|
—
|
|
|
Net cash used in investing activities
|
|
(93.8)
|
|
|
(61.2)
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
Borrowings on credit facility — floorplan line and other
|
|
4,207.3
|
|
|
2,946.3
|
|
|
Repayments on credit facility — floorplan line and other
|
|
(4,750.8)
|
|
|
(3,381.4)
|
|
|
Borrowings on credit facility — acquisition line
|
|
60.4
|
|
|
284.0
|
|
|
Repayments on credit facility — acquisition line
|
|
(32.2)
|
|
|
(215.2)
|
|
|
Debt issuance costs
|
|
—
|
|
|
(1.2)
|
|
|
|
|
|
|
|
|
Repayments of senior notes
|
|
—
|
|
|
(307.9)
|
|
|
Borrowings on other debt
|
|
89.9
|
|
|
229.8
|
|
|
Principal payments on other debt
|
|
(91.9)
|
|
|
(78.2)
|
|
|
Proceeds from employee stock purchase plan
|
|
8.0
|
|
|
4.5
|
|
|
Payments of tax withholding for stock-based awards
|
|
(7.5)
|
|
|
(5.1)
|
|
|
|
|
|
|
|
|
Repurchases of common stock, amounts based on settlement date
|
|
(18.6)
|
|
|
(48.9)
|
|
|
|
|
|
|
|
|
Dividends paid
|
|
(11.7)
|
|
|
(5.5)
|
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
(547.1)
|
|
|
(579.0)
|
|
|
Effect of exchange rate changes on cash
|
|
0.2
|
|
|
(3.4)
|
|
|
Net increase in cash and cash equivalents
|
|
111.4
|
|
|
44.6
|
|
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period
|
|
87.3
|
|
|
28.1
|
|
|
CASH AND CASH EQUIVALENTS, end of period
|
|
$
|
198.7
|
|
|
$
|
72.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)
7
GROUP 1 AUTOMOTIVE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. INTERIM FINANCIAL INFORMATION
Business
Group 1 Automotive, Inc., a Delaware corporation, is a leading operator in the automotive retailing industry with business activities in 15 states in the U.S., 33 towns in the U.K. and three states in Brazil. Group 1 Automotive, Inc. and its subsidiaries are collectively referred to as the “Company” in these Notes to Condensed Consolidated Financial Statements. Through its dealerships, the Company sells new and used cars and light trucks; arranges related vehicle financing; sells service and insurance contracts; provides automotive maintenance and repair services; and sells vehicle parts.
As of June 30, 2021, the Company’s retail network consisted of 117 dealerships in the U.S., 48 dealerships in the U.K. and 16 dealerships in Brazil. The U.S. and Brazil are led by the President, U.S. and Brazilian Operations, and the U.K. is led by an Operations Director, each reporting directly to the Company's Chief Executive Officer. The President, U.S. and Brazilian Operations, and the U.K. Operations Director are responsible for the overall performance of their respective regions, as well as for overseeing field level management.
The Company’s operating results are generally subject to seasonal variations, as well as changes in the economic environment. In the U.S., the Company generally experiences higher volumes of vehicle sales and service in the second and third calendar quarters of each year. In addition, in some regions of the U.S., vehicle purchases decline during the winter months due to inclement weather. In the U.K., the first and third quarters tend to be stronger, driven by the vehicle license plate change months of March and September. In Brazil, the first quarter is generally the weakest, driven by more consumer vacations and activities associated with Carnival, while the third and fourth quarters tend to be stronger. Other factors unrelated to seasonality, such as the COVID-19 pandemic, changes in economic conditions, manufacturer incentive programs, supply issues, seasonal weather events and/or changes in currency exchange rates may exaggerate seasonal or cause counter-seasonal fluctuations in the Company’s revenues and operating income.
Basis of Presentation
The accompanying Condensed Consolidated Financial Statements and notes thereto, have been prepared in accordance with U.S. GAAP for interim financial information and in accordance with the rules and regulations of the SEC. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. Results for interim periods are not necessarily indicative of the results that can be expected for a full year and therefore should be read in conjunction with the Company’s audited Financial Statements and notes thereto included within the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 (the “2020 Form 10-K”).
The accompanying Condensed Consolidated Financial Statements reflect the consolidated accounts of the parent company, Group 1 Automotive, Inc., and its subsidiaries, all of which are wholly owned. All intercompany balances and transactions have been eliminated in consolidation.
During the three months ended June 30, 2020, the Company recorded an out-of-period adjustment of $10.6 million resulting in an increase to Selling, general and administrative expenses and Additional paid-in capital to correct stock-based compensation for awards granted in prior years to retirement eligible employees not recognized timely due to the incorrect treatment of a non-substantive service condition. The impact to the three months ended June 30, 2020 was a decrease to net income of $9.7 million resulting in a decrease to diluted earnings per common share of $0.53. The effect of this adjustment on any previously reported periods was not material based on a quantitative and qualitative evaluation.
Certain prior-period amounts have been reclassified to conform to current-period presentation. Specifically, the long-term liabilities associated with the Company’s interest rate swaps have been combined into the caption Other long-term liabilities in the Condensed Consolidated Balance Sheets. The reclassification within the Condensed Consolidated Balance Sheets had no effect on any subtotal in the statements. Additionally, repayments and borrowings on the Company’s real estate related and other debt have been combined within the captions Repayments on other debt and Borrowings on other debt, respectively, in the Condensed Consolidated Statements of Cash Flows. The reclassification within the Condensed Consolidated Statements of Cash Flows had no effect on any subtotal in the statements.
Certain amounts in the Condensed Consolidated Financial Statements and the accompanying notes may not compute due to rounding. All computations have been calculated using unrounded amounts for all periods presented. These Condensed Consolidated Financial Statements reflect, in the opinion of management, all normal recurring adjustments necessary to fairly state, in all material respects, the Company’s financial position and results of operations for the periods presented.
GROUP 1 AUTOMOTIVE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)
Use of Estimates
The preparation of the Company’s financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the balance sheet date and the amounts of revenues and expenses recognized during the reporting period. Management analyzes the Company’s estimates based on historical experience and other assumptions that are believed to be reasonable under the circumstances, however, actual results could differ materially from such estimates. The significant estimates made by management in the accompanying Condensed Consolidated Financial Statements include, but are not limited to, inventory valuation adjustments, reserves for future chargebacks on finance, insurance and vehicle service contract fees, self-insured property and casualty insurance exposure, the fair value of assets acquired and liabilities assumed in business combinations, the valuation of goodwill and intangible franchise rights and reserves for potential litigation.
Recent Accounting Pronouncements
Reference Rate Reform
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The ASU provides optional expedients and exceptions for companies that have contracts, hedging relationships and other transactions that reference LIBOR or other reference rates expected to be discontinued because of reference rate reform. The optional expedients and exceptions are intended to ease the financial reporting burdens mainly related to contract modification accounting, hedge accounting and lease accounting. In January 2021, the FASB issued ASU 2021-01 which clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. The guidance is effective for all entities as of March 12, 2020 and will apply through December 31, 2022. LIBOR is used as an interest rate “benchmark” in the majority of the Company’s floorplan notes payable, as well as its mortgages, other debt and lease contracts. Additionally, the Company’s derivative instruments are benchmarked to LIBOR. The Company will apply the relief described as its arrangements are modified and does not expect the adoption will have an impact on the Company’s consolidated financial statements due to the relief provided.
2. REVENUES
The following tables present the Company’s revenues disaggregated by its geographical segments (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2021
|
|
|
Six Months Ended June 30, 2021
|
|
|
|
U.S.
|
|
U.K.
|
|
Brazil
|
|
Total
|
|
|
U.S.
|
|
U.K.
|
|
Brazil
|
|
Total
|
|
New vehicle retail sales
|
|
$
|
1,504.4
|
|
|
$
|
301.2
|
|
|
$
|
49.8
|
|
|
$
|
1,855.3
|
|
|
|
$
|
2,750.4
|
|
|
$
|
564.3
|
|
|
$
|
83.9
|
|
|
$
|
3,398.7
|
|
|
Used vehicle retail sales
|
|
882.9
|
|
|
300.9
|
|
|
11.8
|
|
|
1,195.6
|
|
|
|
1,579.4
|
|
|
492.5
|
|
|
22.5
|
|
|
2,094.4
|
|
|
Used vehicle wholesale sales
|
|
61.2
|
|
|
32.5
|
|
|
2.6
|
|
|
96.4
|
|
|
|
111.6
|
|
|
60.4
|
|
|
4.6
|
|
|
176.6
|
|
|
Total new and used vehicle sales
|
|
2,448.4
|
|
|
634.6
|
|
|
64.3
|
|
|
3,147.3
|
|
|
|
4,441.4
|
|
|
1,117.2
|
|
|
111.1
|
|
|
5,669.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parts and service sales (1)
|
|
332.6
|
|
|
50.3
|
|
|
9.2
|
|
|
392.1
|
|
|
|
628.9
|
|
|
106.8
|
|
|
17.1
|
|
|
752.8
|
|
|
Finance, insurance and other, net (2)
|
|
143.9
|
|
|
15.7
|
|
|
1.4
|
|
|
161.0
|
|
|
|
259.0
|
|
|
26.3
|
|
|
2.8
|
|
|
288.0
|
|
|
Total revenues
|
|
$
|
2,924.9
|
|
|
$
|
700.7
|
|
|
$
|
74.8
|
|
|
$
|
3,700.4
|
|
|
|
$
|
5,329.3
|
|
|
$
|
1,250.3
|
|
|
$
|
130.9
|
|
|
$
|
6,710.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2020
|
|
|
Six Months Ended June 30, 2020
|
|
|
|
U.S.
|
|
U.K.
|
|
Brazil
|
|
Total
|
|
|
U.S.
|
|
U.K.
|
|
Brazil
|
|
Total
|
|
New vehicle retail sales
|
|
$
|
915.7
|
|
|
$
|
127.2
|
|
|
$
|
19.8
|
|
|
$
|
1,062.7
|
|
|
|
$
|
1,904.1
|
|
|
$
|
423.5
|
|
|
$
|
77.3
|
|
|
$
|
2,404.8
|
|
|
Used vehicle retail sales
|
|
540.9
|
|
|
92.8
|
|
|
7.5
|
|
|
641.2
|
|
|
|
1,111.2
|
|
|
281.6
|
|
|
27.4
|
|
|
1,420.3
|
|
|
Used vehicle wholesale sales
|
|
30.5
|
|
|
15.3
|
|
|
2.9
|
|
|
48.7
|
|
|
|
77.3
|
|
|
51.1
|
|
|
6.7
|
|
|
135.2
|
|
|
Total new and used vehicle sales
|
|
1,487.1
|
|
|
235.3
|
|
|
30.1
|
|
|
1,752.5
|
|
|
|
3,092.6
|
|
|
756.2
|
|
|
111.4
|
|
|
3,960.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parts and service sales (1)
|
|
254.2
|
|
|
21.8
|
|
|
5.9
|
|
|
282.0
|
|
|
|
558.9
|
|
|
78.3
|
|
|
15.5
|
|
|
652.6
|
|
|
Finance, insurance and other, net (2)
|
|
89.8
|
|
|
6.4
|
|
|
0.6
|
|
|
96.7
|
|
|
|
187.2
|
|
|
19.7
|
|
|
2.3
|
|
|
209.2
|
|
|
Total revenues
|
|
$
|
1,831.1
|
|
|
$
|
263.5
|
|
|
$
|
36.6
|
|
|
$
|
2,131.2
|
|
|
|
$
|
3,838.7
|
|
|
$
|
854.2
|
|
|
$
|
129.1
|
|
|
$
|
4,822.0
|
|
(1) The Company has applied the optional exemption not to disclose revenues related to remaining performance obligations on its maintenance and repair services as the duration of these contracts is less than one year.
(2) Includes variable consideration recognized of $7.7 million and $5.4 million during the three months ended June 30, 2021 and 2020, respectively, and $13.7 million and $9.3 million during the six months ended June 30, 2021 and 2020, respectively, relating to performance obligations satisfied in previous periods on the Company’s retrospective commission income contracts. Refer to Note 7. Receivables, Net and Contract Assets for additional information on the Company’s contract assets associated with revenues from the arrangement of financing and sale of service and insurance contracts.
GROUP 1 AUTOMOTIVE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)
3. ACQUISITIONS AND DISPOSITIONS
Acquisitions
The Company accounts for business combinations under the acquisition method of accounting, under which the Company allocates the purchase price to the assets and liabilities assumed based on an estimate of fair value.
During the six months ended June 30, 2021, the Company acquired two dealerships representing two franchises in the U.S. Aggregate consideration paid for these dealerships, which were accounted for as business combinations, totaled $49.9 million. Goodwill associated with these acquisitions totaled $22.6 million and is deductible for U.S. income tax purposes.
During the six months ended June 30, 2020, the Company acquired a collision center in the U.S., which was integrated into an existing dealership. Aggregate consideration paid was $1.3 million. Goodwill associated with this acquisition was not material.
In July 2021, the Company announced the acquisition of seven dealerships representing nine franchises in the U.K. Aggregate consideration paid was approximately $36 million.
Dispositions
The Company’s dispositions generally consist of dealership assets and related real estate. Gains and losses on dispositions are recorded in Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.
During the six months ended June 30, 2021, the Company’s dispositions included two dealerships representing two franchises and one franchise disposition within an existing dealership in the U.S. The Company recorded a net pre-tax gain totaling $1.8 million related to these dispositions. The dispositions reduced goodwill by $2.2 million. The Company also terminated one franchise representing one dealership in the U.K.
During the six months ended June 30, 2020, the Company had no activity related to dispositions.
4. SEGMENT INFORMATION
As of June 30, 2021 and 2020, the Company had three reportable segments: the U.S., U.K. and Brazil. The U.S. and Brazil segments are led by the President, U.S. and Brazilian Operations, and the U.K. segment is led by an Operations Director, each reporting directly to the Company's Chief Executive Officer, who is the CODM. The President, U.S. and Brazilian Operations, and the U.K. Operations Director are responsible for the overall performance of their respective regions, as well as for overseeing field level management. Each region engages in business activities and their respective operating results are regularly reviewed by the CODM to make decisions about resources to be allocated to the region and to assess performance. Each segment is comprised of retail automotive franchises that sell new and used cars and light trucks; arrange related vehicle financing; sell service and insurance contracts; provide automotive maintenance and repair services; and sell vehicle parts.
Selected reportable segment data is as follows for the three and six months ended June 30, 2021 and 2020 (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2021
|
|
|
Six Months Ended June 30, 2021
|
|
|
U.S.
|
|
U.K.
|
|
Brazil
|
|
Total
|
|
|
U.S.
|
|
U.K.
|
|
Brazil
|
|
Total
|
|
Total revenues
|
$
|
2,924.9
|
|
|
$
|
700.7
|
|
|
$
|
74.8
|
|
|
$
|
3,700.4
|
|
|
|
$
|
5,329.3
|
|
|
$
|
1,250.3
|
|
|
$
|
130.9
|
|
|
$
|
6,710.5
|
|
|
Income before income taxes (1)
|
$
|
215.1
|
|
|
$
|
25.2
|
|
|
$
|
3.0
|
|
|
$
|
243.2
|
|
|
|
$
|
336.6
|
|
|
$
|
33.6
|
|
|
$
|
4.3
|
|
|
$
|
374.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2020
|
|
|
Six Months Ended June 30, 2020
|
|
|
U.S.
|
|
U.K.
|
|
Brazil
|
|
Total
|
|
|
U.S.
|
|
U.K.
|
|
Brazil
|
|
Total
|
|
Total revenues
|
$
|
1,831.1
|
|
|
$
|
263.5
|
|
|
$
|
36.6
|
|
|
$
|
2,131.2
|
|
|
|
$
|
3,838.7
|
|
|
$
|
854.2
|
|
|
$
|
129.1
|
|
|
$
|
4,822.0
|
|
|
Income (loss) before income taxes (2)
|
$
|
74.8
|
|
|
$
|
(19.7)
|
|
|
$
|
(12.8)
|
|
|
$
|
42.3
|
|
|
|
$
|
117.0
|
|
|
$
|
(22.3)
|
|
|
$
|
(13.4)
|
|
|
$
|
81.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) For the three months ended June 30, 2021, income before income taxes includes the following: in the U.S. segment, $2.3 million non-cash loss associated with certain interest rate swaps and $0.8 million net gain on dealership and real estate transactions. For the six months ended June 30, 2021, income before income taxes includes the following: in the U.S. segment, $2.3 million non-cash loss associated with certain interest rate swaps, $2.2 million in expenses related to a winter storm, $1.7 million net gain on dealership and real estate transactions and $1.0 million net gain on legal matters; and in the U.K. segment, $0.6 million net loss on dealership and real estate transactions.
GROUP 1 AUTOMOTIVE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)
(2) For the three months ended June 30, 2020, income (loss) before income taxes includes the following: in the U.S. segment, $10.6 million in stock-based compensation expense related to an out-of-period adjustment and a $10.4 million loss on debt extinguishment; in the U.K. segment, $12.8 million in asset impairments and $1.2 million in severance expense; and in the Brazil segment, $11.1 million in asset impairments. For the six months ended June 30, 2020, income (loss) before income taxes includes the following: in the U.S. segment, $10.6 million in stock-based compensation expense related to an out-of-period adjustment and a $10.4 million loss on debt extinguishment; in the U.K. segment, $12.8 million in asset impairments and $1.2 million in severance expense; and in the Brazil segment, $11.1 million in asset impairments and $0.9 million in severance expense.
5. EARNINGS PER SHARE
The two-class method is utilized for the computation of the Company’s EPS. The two-class method requires a portion of net income to be allocated to participating securities, which are unvested awards of share-based payments with non-forfeitable rights to receive dividends that are paid in cash. The Company’s RSAs are participating securities. Income allocated to these participating securities is excluded from net earnings available to common shares, as shown in the table below. Basic EPS is computed by dividing net income available to basic common shares by the weighted average number of basic common shares outstanding during the period. Diluted EPS is computed by dividing net income available to diluted common shares by the weighted average number of dilutive common shares outstanding during the period.
The following table sets forth the calculation of EPS for the three and six months ended June 30, 2021 and 2020 (in millions, except share and per share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
Weighted average basic common shares outstanding
|
|
17,747,518
|
|
|
17,771,447
|
|
|
17,752,577
|
|
|
17,767,449
|
|
|
Dilutive effect of stock-based awards and employee stock purchases
|
|
81,952
|
|
|
40,166
|
|
|
74,217
|
|
|
42,488
|
|
|
Weighted average dilutive common shares outstanding
|
|
17,829,470
|
|
|
17,811,613
|
|
|
17,826,794
|
|
|
17,809,937
|
|
|
Basic:
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
191.0
|
|
|
$
|
30.2
|
|
|
$
|
292.9
|
|
|
$
|
60.0
|
|
|
Less: Earnings allocated to participating securities
|
|
6.4
|
|
|
1.1
|
|
|
9.9
|
|
|
2.2
|
|
|
Net income available to basic common shares
|
|
$
|
184.5
|
|
|
$
|
29.1
|
|
|
$
|
283.0
|
|
|
$
|
57.8
|
|
|
Basic earnings per common share
|
|
$
|
10.40
|
|
|
$
|
1.64
|
|
|
$
|
15.94
|
|
|
$
|
3.25
|
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
191.0
|
|
|
$
|
30.2
|
|
|
$
|
292.9
|
|
|
$
|
60.0
|
|
|
Less: Earnings allocated to participating securities
|
|
6.4
|
|
|
1.1
|
|
|
9.9
|
|
|
2.1
|
|
|
Net income available to diluted common shares
|
|
$
|
184.5
|
|
|
$
|
29.1
|
|
|
$
|
283.0
|
|
|
$
|
57.8
|
|
|
Diluted earnings per common share
|
|
$
|
10.35
|
|
|
$
|
1.63
|
|
|
$
|
15.88
|
|
|
$
|
3.25
|
|
GROUP 1 AUTOMOTIVE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)
6. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
Accounting standards define fair value as the price that would be received from selling an asset or paid to transfer a liability in the most advantageous market in an orderly transaction between market participants at the measurement date. Accounting standards establish a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value and also establishes the following three levels of inputs that may be used to measure fair value:
•Level 1 — Quoted prices for identical assets or liabilities in active markets.
•Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets and liabilities; quoted prices in markets that are not active; or model-derived valuations or other inputs that are observable or that can be corroborated by observable market data for substantially the full term of the assets or liabilities.
•Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
Cash and Cash Equivalents, Contracts-In-Transit and Vehicle Receivables, Accounts and Notes Receivable, Accounts Payable, Variable Rate Long-Term Debt and Floorplan Notes Payable
The fair values of these financial instruments approximate their carrying values due to the short-term nature of the instruments and/or the existence of variable interest rates.
Demand Notes
The Company periodically invests in demand notes with manufacturer-affiliated finance companies that bear interest at variable rates determined by the manufacturers and represent unsecured, unsubordinated and unguaranteed debt obligations of the manufacturers. The instruments are redeemable on demand by the Company and therefore the Company has classified these instruments as Cash and cash equivalents in the accompanying Condensed Consolidated Balance Sheets. As of June 30, 2021 and December 31, 2020, the carrying value of these instruments was $100.1 million and $60.0 million, respectively. The Company determined that the valuation measurement inputs of these instruments include inputs other than quoted market prices, that are observable or that can be corroborated by observable data by correlation. Accordingly, the Company has classified these instruments within Level 2 of the hierarchy framework.
Fixed Rate Long-Term Debt
The Company’s fixed rate long-term debt primarily consists of amounts outstanding under its senior unsecured notes and certain mortgage facilities. In August 2020, the Company issued $550.0 million in aggregate principal of 4.00% Senior Notes due August 2028 (“4.00% Senior Notes”). The Company estimates the fair value of its 4.00% Senior Notes using quoted prices for the identical liability (Level 1) and estimates the fair value of its fixed-rate mortgage facilities using a present value technique based on current market interest rates for similar types of financial instruments (Level 2). Refer to Note 8. Debt for further discussion of the Company’s long-term debt arrangements.
The carrying value and fair value of the Company’s 4.00% Senior Notes and fixed rate mortgages were as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
December 31, 2020
|
|
|
|
Carrying Value (1)
|
|
Fair Value
|
|
Carrying Value (1)
|
|
Fair Value
|
|
4.00% Senior Notes
|
|
$
|
550.0
|
|
|
$
|
559.3
|
|
|
$
|
550.0
|
|
|
$
|
567.0
|
|
|
Real estate related
|
|
81.0
|
|
|
73.9
|
|
|
84.3
|
|
|
77.0
|
|
|
Total
|
|
$
|
631.0
|
|
|
$
|
633.2
|
|
|
$
|
634.3
|
|
|
$
|
644.0
|
|
(1) Carrying value excludes unamortized debt issuance costs.
GROUP 1 AUTOMOTIVE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)
Derivative Financial Instruments
The Company holds interest rate swaps to hedge against variability of interest payments indexed to LIBOR. The Company’s interest rate swaps are measured at fair value utilizing a one-month LIBOR forward yield curve matched to the identical maturity term of the instrument being measured. Observable inputs utilized in the income approach valuation technique incorporate identical contractual notional amounts, fixed coupon rates, periodic terms for interest payments and contract maturity. The fair value of the interest rate swaps also considers the credit risk of the Company for instruments in a liability position or the counterparty for instruments in an asset position. The credit risk is calculated using the spread between the one-month LIBOR yield curve and the relevant interest rate according to rating agencies. The inputs to the fair value measurements reflect Level 2 inputs.
Assets and liabilities associated with the Company’s interest rate swaps as reflected gross in the Condensed Consolidated Balance Sheets were as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
December 31, 2020
|
|
Assets:
|
|
|
|
|
|
Other current assets
|
|
$
|
—
|
|
|
$
|
1.9
|
|
|
Other long-term assets
|
|
10.8
|
|
|
0.3
|
|
|
Total assets
|
|
$
|
10.8
|
|
|
$
|
2.3
|
|
|
Liabilities:
|
|
|
|
|
|
Accrued expenses and other current liabilities (1)
|
|
$
|
2.1
|
|
|
$
|
4.2
|
|
|
Other long-term liabilities
|
|
23.0
|
|
|
40.6
|
|
|
Total liabilities
|
|
$
|
25.1
|
|
|
$
|
44.8
|
|
(1) As of June 30, 2021, the entire balance consisted of the gross fair value of the de-designated swaps as described below.
Interest Rate Swaps De-designated as Cash Flow Hedges
All interest rate swaps had previously been designated as cash flow hedges. During the three months ended June 30, 2021, the Company de-designated five interest rate swaps due to the continued decline in the net floorplan liability balance as a result of decreased vehicle inventory levels as the Company’s manufacturers’ production is currently at reduced levels as a result of a global semiconductor chip shortage. The realized and unrealized gains or losses on the de-designated swaps for each period after de-designation are recognized within income as Floorplan interest expense in the Company’s Condensed Consolidated Statements of Operations.
The Company reclassified the entire previously deferred loss associated with the de-designated swaps of $2.4 million, net of tax of $0.7 million, from Accumulated other comprehensive income (loss) into income as an adjustment to Floorplan interest expense as the remaining forecasted hedged transactions associated with these swaps were probable of not occurring due to the reduced inventory levels described above. Additionally, the Company recorded an unrealized mark-to-market gain of $1.0 million and a realized $1.0 million loss associated with these swaps within Floorplan interest expense during the three months ended June 30, 2021.
As of June 30, 2021, the aggregate notional amount of these de-designated interest rate swaps was $250.0 million that fixed the underlying one-month LIBOR at a weighted average rate of 1.76%. These interest rate swaps will mature on December 31, 2021.
GROUP 1 AUTOMOTIVE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)
Interest Rate Swaps Designated as Cash Flow Hedges
Interest rate swaps designated as cash flow hedges and the related gains or losses are deferred in stockholders’ equity as a component of Accumulated other comprehensive income (loss). The deferred gains or losses are recognized in income in the period in which the related items being hedged are recognized in expense. Monthly contractual settlements of the positions are recognized as Floorplan interest expense or Other interest expense, net, in the Company’s Condensed Consolidated Statements of Operations. Gains or losses for periods where future forecasted hedged transactions are deemed probable of not occurring are reclassified from Accumulated other comprehensive income (loss) into income. Amounts reclassified related to the portion of forecasted transactions deemed probable of not occurring were immaterial for the three and six months ended June 30, 2021.
As of June 30, 2021, the Company held 34 interest rate swaps designated as cash flow hedges with a total notional value of $700.4 million that fixed the underlying one-month LIBOR at a weighted average rate of 1.38%. The Company also held 8 additional interest rate swaps designated as cash flow hedges with forward start dates beginning December 2021, that had an aggregate notional value of $425.0 million and a weighted average interest rate of 1.20% as of June 30, 2021. The maturity dates of the Company’s designated interest rate swaps with forward start dates range between January 2025 and December 2031.
The following tables present the impact of the Company’s interest rate swaps designated as cash flow hedges (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Unrealized Income (Loss), Net of Tax, Recognized in Other Comprehensive Income (Loss)
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
Derivatives in Cash Flow Hedging Relationship
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
Interest rate swaps
|
|
$
|
(11.1)
|
|
|
$
|
(7.0)
|
|
|
$
|
16.7
|
|
|
$
|
(38.6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Loss Reclassified from Other Comprehensive Income (Loss) into Statements of Operations
|
|
Income Statement Classification
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
Floorplan interest expense
|
|
$
|
(1.4)
|
|
|
$
|
(2.1)
|
|
|
$
|
(3.7)
|
|
|
$
|
(2.7)
|
|
|
Other interest expense, net
|
|
$
|
(1.0)
|
|
|
$
|
(0.7)
|
|
|
$
|
(1.9)
|
|
|
$
|
(0.8)
|
|
The amount of loss expected to be reclassified out of Accumulated other comprehensive income (loss) into earnings as an offset to Floorplan interest expense or Other interest expense, net in the next twelve months is $9.8 million.
GROUP 1 AUTOMOTIVE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)
7. RECEIVABLES, NET AND CONTRACT ASSETS
The Company’s receivables, net and contract assets consisted of the following (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
December 31, 2020
|
|
Contracts-in-transit and vehicle receivables, net:
|
|
|
|
|
|
Contracts-in-transit
|
|
$
|
141.6
|
|
|
$
|
147.1
|
|
|
Vehicle receivables
|
|
81.2
|
|
|
64.5
|
|
|
Total contracts-in-transit and vehicle receivables
|
|
222.8
|
|
|
211.5
|
|
|
Less: allowance for doubtful accounts
|
|
0.3
|
|
|
0.3
|
|
|
Total contracts-in-transit and vehicle receivables, net
|
|
$
|
222.5
|
|
|
$
|
211.2
|
|
|
|
|
|
|
|
|
Accounts and notes receivable, net:
|
|
|
|
|
|
Manufacturer receivables
|
|
$
|
94.5
|
|
|
$
|
108.7
|
|
|
Parts and service receivables
|
|
59.7
|
|
|
53.2
|
|
|
F&I receivables
|
|
30.1
|
|
|
27.4
|
|
|
Other
|
|
15.3
|
|
|
13.8
|
|
|
Total accounts and notes receivable
|
|
199.6
|
|
|
203.1
|
|
|
Less: allowance for doubtful accounts
|
|
2.8
|
|
|
3.2
|
|
|
Total accounts and notes receivable, net
|
|
$
|
196.8
|
|
|
$
|
200.0
|
|
|
|
|
|
|
|
|
Within Other current assets and Other long-term assets:
|
|
|
|
|
|
Total contract assets (1)
|
|
$
|
39.1
|
|
|
$
|
35.3
|
|
(1) Refer to Note 2. Revenues for further discussion of the Company’s contract asset balance. No allowance for doubtful accounts was recorded for Contract assets as of June 30, 2021 or December 31, 2020.
8. DEBT
Long-term debt consisted of the following (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
December 31, 2020
|
|
4.00% Senior Notes due August 15, 2028
|
|
$
|
550.0
|
|
|
$
|
550.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition Line
|
|
76.1
|
|
|
47.8
|
|
|
Other Debt:
|
|
|
|
|
|
Real estate related
|
|
623.9
|
|
|
619.8
|
|
|
Finance leases
|
|
122.4
|
|
|
124.8
|
|
|
Other
|
|
19.3
|
|
|
20.0
|
|
|
Total other debt
|
|
765.6
|
|
|
764.6
|
|
|
Total debt
|
|
1,391.7
|
|
|
1,362.4
|
|
|
|
|
|
|
|
|
Less: unamortized debt issuance costs
|
|
10.4
|
|
11.0
|
|
Less: current maturities
|
|
59.4
|
|
56.7
|
|
Total long-term debt
|
|
$
|
1,322.0
|
|
|
$
|
1,294.7
|
|
Acquisition Line
The proceeds of the Acquisition Line (as defined in Note 9. Floorplan Notes Payable) are used for working capital, general corporate and acquisition purposes. As of June 30, 2021, borrowings under the Acquisition Line, a component of the Revolving Credit Facility (as defined in Note 9. Floorplan Notes Payable), totaled $76.1 million. The average interest rate on this facility was 1.05% during the three months ended June 30, 2021.
Real Estate Related
The Company has mortgage loans in the U.S., U.K. and Brazil that are paid in installments. As of June 30, 2021, borrowings outstanding under these facilities totaled $623.9 million, gross of debt issuance costs, comprised of $513.0 million in the U.S., $98.4 million in the U.K. and $12.6 million in Brazil.
GROUP 1 AUTOMOTIVE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)
9. FLOORPLAN NOTES PAYABLE
The Company’s floorplan notes payable consisted of the following (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
December 31, 2020
|
|
Revolving credit facility — floorplan notes payable
|
|
$
|
511.5
|
|
|
$
|
901.6
|
|
|
Revolving credit facility — floorplan notes payable offset account
|
|
(326.1)
|
|
|
(160.4)
|
|
|
Revolving credit facility — floorplan notes payable, net
|
|
185.4
|
|
|
741.2
|
|
|
Other non-manufacturer facilities
|
|
39.1
|
|
|
26.4
|
|
|
Floorplan notes payable — credit facility and other, net
|
|
$
|
224.5
|
|
|
$
|
767.6
|
|
|
|
|
|
|
|
|
FMCC Facility
|
|
$
|
26.8
|
|
|
$
|
111.2
|
|
|
FMCC Facility offset account
|
|
—
|
|
|
(16.0)
|
|
|
FMCC Facility, net
|
|
26.8
|
|
|
95.2
|
|
|
Other manufacturer affiliate facilities
|
|
247.2
|
|
|
232.3
|
|
|
Floorplan notes payable — manufacturer affiliates, net
|
|
$
|
274.0
|
|
|
$
|
327.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Floorplan Notes Payable — Credit Facility
Revolving Credit Facility
In the U.S., the Company has a $1.75 billion revolving syndicated credit arrangement with 22 participating financial institutions that matures on June 27, 2024 (“Revolving Credit Facility”). The Revolving Credit Facility consists of two tranches: (i) a $1.70 billion maximum capacity tranche for U.S. vehicle inventory floorplan financing (“U.S. Floorplan Line”) which the outstanding balance, net of offset account discussed below, is reported in Floorplan notes payable — credit facility and other, net; and (ii) a $349.0 million maximum capacity and $50.0 million minimum capacity tranche (“Acquisition Line”), which is not due until maturity of the Revolving Credit Facility and is therefore classified in Long-term debt — refer to Note 8. Debt for additional discussion. The capacity under these two tranches can be re-designated within the overall $1.75 billion commitment, subject to the aforementioned limits. The Acquisition Line includes a $100 million sub-limit for letters of credit. As of June 30, 2021 and December 31, 2020, the Company had $17.8 million in outstanding letters of credit.
The U.S. Floorplan Line bears interest at rates equal to LIBOR plus 110 basis points for new vehicle inventory and LIBOR plus 140 basis points for used vehicle inventory. The weighted average interest rate on the U.S. Floorplan Line was 1.18% as of June 30, 2021, excluding the impact of the Company’s interest rate derivative instruments. The Acquisition Line bears interest at LIBOR or a LIBOR equivalent plus 100 to 200 basis points, depending on the Company’s total adjusted leverage ratio, on borrowings in USD, Euros or GBP. The U.S. Floorplan Line requires a commitment fee of 0.15% per annum on the unused portion. Amounts borrowed by the Company under the U.S. Floorplan Line for specific vehicle inventory are to be repaid upon the sale of the vehicle financed and in no case is a borrowing for a vehicle to remain outstanding for greater than one year. The Acquisition Line requires a commitment fee ranging from 0.15% to 0.40% per annum, depending on the Company’s total adjusted leverage ratio, based on a minimum commitment of $50.0 million less outstanding borrowings.
In conjunction with the Revolving Credit Facility, the Company had $3.1 million and $3.6 million of related unamortized debt issuance costs as of June 30, 2021 and December 31, 2020, respectively, which are included in Prepaid expenses and Other long-term assets in the Company’s Condensed Consolidated Balance Sheets and amortized over the term of the facility.
Floorplan Notes Payable — Manufacturer Affiliates
FMCC Facility
The Company has a $300.0 million floorplan arrangement with FMCC for financing of new Ford vehicles in the U.S. (the “FMCC Facility”). This facility bears interest at the higher of the actual U.S. Prime rate or a Prime floor of 4.00%, plus 150 basis points minus certain incentives. The interest rate on the FMCC Facility was 5.50% before considering the applicable incentives as of June 30, 2021.
GROUP 1 AUTOMOTIVE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)
Other Manufacturer Facilities
The Company has other credit facilities in the U.S., U.K. and Brazil with financial institutions affiliated with manufacturers for financing of new, used and rental vehicle inventories. As of June 30, 2021, borrowings outstanding under these facilities totaled $247.2 million, comprised of $91.7 million in the U.S., with annual interest rates ranging from less than 1% to approximately 5%, $131.2 million in the U.K., with annual interest rates ranging from approximately 1% to 4%, and $24.3 million in Brazil, with annual interest rates ranging from approximately 4% to 12%.
Offset Accounts
Offset accounts consist of immediately available cash used to pay down the U.S. Floorplan Line and FMCC Facility, and therefore offset the respective outstanding balances in the Company’s Condensed Consolidated Balance Sheets. The offset accounts are the Company’s primary options for the short-term investment of excess cash.
10. CASH FLOW INFORMATION
Non-Cash Activities
The accrual for capital expenditures increased $1.4 million and decreased $2.7 million from fiscal year-end for the six months ended June 30, 2021 and 2020, respectively.
Interest and Income Taxes Paid
Cash paid for interest, including the monthly settlement of the Company’s interest rate derivatives, was $38.6 million and $57.0 million for the six months ended June 30, 2021 and 2020, respectively. Cash paid for income taxes, net of refunds, was $53.5 million for the six months ended June 30, 2021. Cash received for income taxes, net of tax payments, was $6.8 million for the six months ended June 30, 2020.
11. COMMITMENTS AND CONTINGENCIES
From time to time, the Company’s dealerships are named in various types of litigation involving customer claims, employment matters, class action claims, purported class action claims, claims involving the manufacturers of automobiles, contractual disputes and other matters arising in the ordinary course of business. The Company may be involved in legal proceedings or suffer losses that could have a material adverse effect on the Company’s business. In the normal course of business, the Company is required to respond to customer, employee and other third-party complaints. In addition, the manufacturers of the vehicles that the Company sells and services have audit rights allowing them to review the validity of amounts claimed for incentive, rebate or warranty-related items and charge the Company back for amounts determined to be invalid payments under the manufacturers’ programs, subject to the Company’s right to appeal any such decision.
Legal Proceedings
As of June 30, 2021, the Company was not party to any legal proceedings that, individually or in the aggregate, are reasonably expected to have a material adverse effect on the Company’s results of operations, financial condition or cash flows, including class action lawsuits. However, the results of current or future matters cannot be predicted with certainty and an unfavorable resolution of one or more of such matters could have a material adverse effect on the Company’s results of operations, financial condition or cash flows.
Other Matters
From time to time, the Company sells its dealerships to third parties. In those instances where the Company did not own the real estate and was a tenant, it assigned the lease to the purchaser but remained liable as a guarantor for the remaining lease payments in the event of non-payment by the purchaser. Although the Company has no reason to believe that it will be called upon to perform under any such assigned leases, the Company estimates that lessee remaining rental obligations were $26.4 million as of June 30, 2021. In certain instances, the Company obtains collateral support for the rental obligations that the Company remains obligated for upon sale of a dealership to a lessee. Total associated letters of credit issued on behalf of the lessee where the Company is the beneficiary was $4.7 million as of June 30, 2021.
GROUP 1 AUTOMOTIVE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)
12. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Changes in the balances of each component of Accumulated other comprehensive income (loss) were as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2021
|
|
|
|
Accumulated Income (Loss) On Foreign Currency Translation
|
|
Accumulated Income (Loss) On Interest Rate Swaps
|
|
Total
|
|
Balance, December 31, 2020
|
|
$
|
(151.6)
|
|
|
$
|
(32.5)
|
|
|
$
|
(184.0)
|
|
|
Other comprehensive income (loss) before reclassifications:
|
|
|
|
|
|
|
|
Pre-tax
|
|
4.9
|
|
|
21.8
|
|
|
26.6
|
|
|
Tax effect
|
|
—
|
|
|
(5.1)
|
|
|
(5.1)
|
|
|
Amount reclassified from accumulated other comprehensive income (loss):
|
|
|
|
|
|
|
|
Floorplan interest expense (pre-tax)
|
|
—
|
|
|
3.7
|
|
|
3.7
|
|
|
Other interest expense, net (pre-tax)
|
|
—
|
|
|
1.9
|
|
|
1.9
|
|
|
Reclassification related to de-designated interest rate swaps (pre-tax)
|
|
—
|
|
|
3.1
|
|
|
3.1
|
|
|
|
|
|
|
|
|
|
|
Benefit for income taxes
|
|
—
|
|
|
(2.0)
|
|
|
(2.0)
|
|
|
Net current period other comprehensive income
|
|
4.9
|
|
|
23.3
|
|
|
28.1
|
|
|
Balance, June 30, 2021
|
|
$
|
(146.7)
|
|
|
$
|
(9.2)
|
|
|
$
|
(155.9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2020
|
|
|
|
Accumulated Income (Loss) On Foreign Currency Translation
|
|
Accumulated Income (Loss) On Interest Rate Swaps
|
|
Total
|
|
Balance, December 31, 2019
|
|
$
|
(142.9)
|
|
|
$
|
(4.1)
|
|
|
$
|
(147.0)
|
|
|
Other comprehensive income (loss) before reclassifications:
|
|
|
|
|
|
|
|
Pre-tax
|
|
(30.4)
|
|
|
(49.8)
|
|
|
(80.2)
|
|
|
Tax effect
|
|
—
|
|
|
11.2
|
|
|
11.2
|
|
|
Amount reclassified from accumulated other comprehensive income (loss):
|
|
|
|
|
|
|
|
Floorplan interest expense (pre-tax)
|
|
—
|
|
|
2.7
|
|
|
2.7
|
|
|
Other interest expense (pre-tax)
|
|
—
|
|
|
0.8
|
|
|
0.8
|
|
|
|
|
|
|
|
|
|
|
Benefit for income taxes
|
|
—
|
|
|
(0.8)
|
|
|
(0.8)
|
|
|
Net current period other comprehensive loss
|
|
(30.4)
|
|
|
(36.0)
|
|
|
(66.4)
|
|
|
Balance, June 30, 2020
|
|
$
|
(173.2)
|
|
|
$
|
(40.1)
|
|
|
$
|
(213.3)
|
|
CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this “Form 10-Q”) includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (“Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). Forward-looking statements may appear throughout this report including, but not limited to, the following sections: Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Quantitative and Qualitative Disclosures About Market Risk. This information includes statements regarding our strategy, plans, goals or current expectations with respect to, among other things:
•our future operating performance;
•our ability to maintain or improve our margins;
•our ability to accomplish and sustain SG&A expense decreases;
•operating cash flows and availability of capital;
•the completion of future acquisitions and divestitures;
•the future revenues of acquired dealerships;
•future stock repurchases, refinancing of debt and dividends;
•future capital expenditures;
•changes in sales volumes and availability of credit for customer financing in new and used vehicles and sales volumes in the parts and service markets;
•business trends in the retail automotive industry, including the level of manufacturer incentives, new and used vehicle retail sales volume and pricing, customer demand, interest rates and changes in industry-wide or manufacturer specific inventory levels;
•manufacturer quality issues, including the recall of vehicles and any related negative impact on vehicle sales and brand reputation;
•availability of financing for inventory, working capital, real estate and capital expenditures;
•changes in regulatory practices, tariffs and taxes, including Brexit;
•the impacts of any potential global recession;
•our ability to meet our financial covenants in our debt obligations and to maintain sufficient liquidity to operate; and
•the impacts of the COVID-19 pandemic on our business.
Although we believe that the expectations reflected in these forward-looking statements are reasonable when and as made, we cannot assure you that these expectations will prove to be correct. When used in this Form 10-Q, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may” and similar expressions are intended to identify forward-looking statements. These forward-looking statements are based on our expectations and beliefs as of the date of this Form 10-Q concerning future developments and their potential effect on us. 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. All comments concerning our expectations for future revenues and operating results are based on our forecasts for our existing operations and do not include the potential impact of any future acquisitions. Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections. Known material factors that could cause actual results to differ from those in the forward-looking statements include:
•adverse developments in the global economy as well as the public health crisis related to the COVID-19 pandemic and the resulting impact on the demand for and supply of new and used vehicles and related parts and services;
•uncertainty regarding the length of time it will take for the U.S. and the rest of the world to slow the spread of the COVID-19 virus, the actions to be taken by governments to contain and combat the pandemic and the timing, pace and extent of an economic recovery in the U.S. and elsewhere, which in turn will likely affect demand for our vehicles, parts and services;
•future deterioration in the economic environment, including consumer confidence, consumer preferences, interest rates, the prices of oil and gasoline, the level of manufacturer incentives, the implementation of international and domestic trade tariffs and the availability of consumer credit may affect the demand for new and used vehicles, replacement parts, maintenance and repair services and F&I products;
•adverse domestic and international developments such as war, terrorism, political conflicts, social protests or other hostilities may adversely affect the demand for our products and services;
• uncertainty of the potential impact of Brexit on the overall U.K. economy and, more specifically, the potential adverse effect on retail automotive industry sales could have a material adverse effect on our revenues and business operations;
•the existing and future regulatory environment, including legislation related to the Dodd-Frank Wall Street Reform and Consumer Protection Act, climate control legislation, changes to U.S. federal, U.S. state, U.K. or Brazil tax laws, rates and regulations and unexpected litigation or adverse legislation, including changes in U.S. state franchise laws, may impose additional costs on us or otherwise adversely affect us;
•a concentration of risk associated with our principal automobile manufacturers, especially Toyota, Nissan, Honda, BMW, Ford, Daimler, General Motors, Chrysler, Hyundai, Volkswagen and Jaguar-Land Rover, because of financial distress, bankruptcy, natural disasters or pandemics, such as the COVID-19 pandemic, that disrupt production, or other reasons, may not continue to produce or make available to us vehicles that are in high demand by our customers or provide financing, insurance, advertising or other assistance to us;
•restructuring by one or more of our principal manufacturers, up to and including bankruptcy, may cause us to suffer financial loss in the form of uncollectible receivables, devalued inventory or loss of franchises;
•requirements imposed on us by our manufacturers may require dispositions, limit our acquisitions or require increases in the level of capital expenditures related to our dealership facilities;
•our existing and/or new dealership operations may not perform at our or manufacturer expected levels or achieve expected improvements;
•our ability to realize attractive margins or volumes for our vehicle sales or services;
•our failure to achieve expected future cost savings or future costs may be higher than we expect;
•manufacturer quality issues, including the recall of vehicles, may negatively impact vehicle sales and brand reputation;
•available capital resources, increases in cost of financing (such as higher interest rates) and our various debt agreements may limit our ability to complete acquisitions, complete construction of new or expanded facilities, repurchase shares, or pay dividends;
•our ability to refinance or obtain financing in the future may be limited and the cost of financing could increase significantly;
•our ability to facilitate credit for consumers;
•foreign exchange controls and currency fluctuations;
•new accounting standards could materially impact our reported EPS;
•our ability to acquire new dealerships and successfully integrate those dealerships into our business;
•the impairment of our goodwill, our indefinite-lived intangibles and our other long-lived assets;
•natural disasters, adverse weather events and other catastrophic events;
•a cybersecurity event of our systems or a third party partners’ systems, including a breach of personally identifiable information about our customers or employees or a shutdown of our operating systems;
•our foreign operations and sales in the U.K. and Brazil, which pose additional risks;
•the inability to adjust our cost structure and inventory levels to offset any reduction in the demand for our products and services;
•our loss of key personnel;
•availability of trained workforce;
•our losses may not be fully covered by insurance or may only be fully covered with a significant increase to our insurance costs;
•our inability to obtain inventory of new and used vehicles and parts, including imported inventory, at the cost, or in the volume, we expect due to supply chain disruptions or other factors; and
•advancements in vehicle technology and changes in vehicle ownership models/consumer preferences.
For additional information regarding known material factors that could cause our actual results to differ from our projected results, please see Item 1A. Risk Factors in our 2020 Form 10-K and this Form 10-Q, as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures About Market Risk.
Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We undertake no responsibility and expressly disclaim any duty, to update any such statements, whether as a result of new information, new developments or otherwise, or to publicly release the result of any revision of our forward-looking statements after the date they are made, except to the extent required by law.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties. Actual results of Group 1 Automotive, Inc. may differ materially from those discussed in the forward-looking statements because of various factors. See “Cautionary Statement about Forward-Looking Statements.” Unless the context requires otherwise, references to “we,” “us” and “our” are intended to mean the business and operations of Group 1 Automotive, Inc. and its subsidiaries.
Overview
We are a leading operator in the automotive retail industry. Through our dealerships, we sell new and used cars and light trucks; arrange related vehicle financing; sell service and other insurance contracts; provide automotive maintenance and repair services; and sell vehicle parts. Our operations are aligned into three regions, which comprise our reportable segments: the U.S., U.K. and Brazil. The U.S. and Brazil segments are led by the President, U.S. and Brazilian Operations, and the U.K. segment is led by an Operations Director, each reporting directly to our Chief Executive Officer, who is the CODM. The President, U.S. and Brazilian Operations and the U.K. Operations Director are responsible for the overall performance of their respective regions, as well as for overseeing field level management.
As of June 30, 2021, our retail network consisted of 117 dealerships in the U.S., 48 dealerships in the U.K. and 16 dealerships in Brazil. Our operations are primarily located in major metropolitan areas in 15 states in the U.S., 33 towns in the U.K. and three states in Brazil.
Long-Term Strategy
Our business strategy focuses on improving the performance of our existing dealerships and enhancing our dealership portfolio through strategic acquisitions and dispositions to achieve growth, capture market share and maximize the investment return to our stockholders. We constantly evaluate opportunities to improve the overall profitability of our dealerships. We believe that as of June 30, 2021, we have sufficient financial resources to support additional acquisitions. Further, we intend to continue to critically evaluate our return on invested capital in our current dealership portfolio for disposition opportunities.
For 2021, our priorities are growing our company through acquisitions, improving and growing sales penetration in our digital retailing platform, AcceleRide®, continuing to grow our parts and service gross profit through numerous initiatives, increasing our market share in the highly fragmented used vehicle business, continuing to leverage our SG&A as a percentage of gross profit and focusing on the retention and training of our talented dealership employees.
Strategic Acquisitions and Dispositions
We will continue to focus on opportunities to enhance our current dealership portfolio through strategic acquisitions and improving or disposing of underperforming dealerships. We believe that substantial opportunities for growth through acquisitions remain in our industry in the U.S., U.K. and Brazil. Acquisitions capitalize on economies of scale and cost savings opportunities in our existing markets in areas such as used vehicle sourcing, advertising, purchasing, data processing and personnel utilization, thereby increasing operating efficiency.
We seek to acquire dealerships where we have strategic opportunities that represent growing brands in growth markets. We evaluate all brands and geographies to expand our brand, product and service offerings in our existing markets or expand into growing geographic areas we currently do not serve. During the first quarter of 2021, we acquired two Toyota dealerships in the U.S. In July, we announced the acquisition of seven dealerships in the U.K. The expected aggregate annualized revenues, estimated at the time of acquisition, for both the U.S. and U.K. acquisitions, were $420.0 million. Further, we intend to continue to critically evaluate our return on invested capital in our current dealership portfolio for disposition opportunities. Refer to Note 3. Acquisitions and Dispositions within our Notes to Condensed Consolidated Financial Statements for further discussion.
Digital Initiatives to Enhance the Customer Experience
Our omnichannel platforms focus on ensuring that we can do business with our customers where and when they want to do business. Our online retail platform, AcceleRide®, which was deployed to all of our U.S. dealerships in 2019, allows a customer to complete a vehicle transaction entirely online or start the sales process online and complete the transaction at one of our dealerships. The customer also has the ability to apply for financing and review and select F&I products as part of the online process. During the three months ended June 30, 2021, U.S. total online retail unit sales increased 111.3% compared to the same period in 2020. We also completed the roll out of AcceleRide® to our U.K. dealerships in the first quarter of 2021. Our parts and service digital efforts focus on our online customer scheduling appointment system. We have seen continued growth in the percentage of appointments scheduled online over the past few years as we have continued to enhance this tool. We have also focused on improved interaction with our parts and service customers by offering preferred communication options via dealership apps, phone, text or email and online payment options. We are capitalizing on technology advances in robotic process automation and artificial intelligence to improve our marketing, call center and back office efficiency. These digital platforms were instrumental in allowing us to connect with and service our customers during the social distancing requirements imposed as a result of the COVID-19 pandemic.
Parts and Service Growth
We remain focused on sustained growth in our higher margin parts and service operations which continue to hinge on the retention and hiring of skilled service technicians and advisors. Our U.S. service operations are reimplementing a four-day work week for service technicians and advisors which allows us to expand our hours of operations during the week. This change has resulted in increased service technician and advisor retention, thereby expanding our service capacity without investing additional capital in facilities. Our online service appointment platform and centralized call centers have improved the customer experience. We seek to increase the retention of our customers through more convenient service hours, training of our service advisors, selling service contracts with vehicles sales and customer relationship management software that allows us to provide targeted marketing to our customers. The increasing complexity of vehicles, especially in the area of electronics and technological advancements, is making it increasingly difficult for independent repair shops to maintain the expertise and technology to work on these vehicles and provides us the opportunity to increase our market share well into the future.
Used Vehicle Retail Growth
Used vehicle gross profit depends primarily on a dealership’s ability to obtain a high-quality supply of used vehicles at reasonable prices. Our new vehicle operations generally provide our used vehicle operations with a large supply of high-quality trade-ins and off-lease vehicles, which are our best source of used vehicle inventory. In October 2020, we introduced “Sell A Ride” to our AcceleRide® platform to increase our ability to purchase used vehicle inventory directly from customers with a cash offer within 30 minutes during business hours, home pickup and immediate payment through Zelle. Our dealerships supplement their used vehicle inventory with purchases at auctions, including manufacturer-sponsored auctions available only to franchised dealers.
Our data driven pricing strategies ensure that our used vehicles are priced at market to generate more traffic to our websites. We review our market pricing on a constant basis and work to limit discounting from our advertised prices.
Cost Management
We continue our efforts to fully leverage our scale and cost structure. As our business evolves, we will manage our costs carefully and look for additional opportunities to improve our processes and disseminate best practices. We believe that our management structure supports rapid decision making and facilitates an efficient and effective roll-out of new processes. As part of the digital efforts discussed above, we have improved our productivity for our sales and service departments.
Employee Training and Retention
A key to the execution of our business strategy is the leverage of what we believe to be one of our key strengths — the talent of our people. We are focused on the retention and training of our talented dealership employees. We believe that we have developed a distinguished management team with substantial industry expertise. With our management structure and level of executive talent, we plan to continue empowering the operators of our dealerships to make appropriate decisions to grow their respective dealership operations and to control fixed and variable costs. We believe this approach allows us to provide the best possible service to our customers, as well as attract and retain talented employees.
Diversity, Equity and Inclusion (“DEI”)
We have a DEI council that is chaired by our Chief Diversity Officer. The council’s mission is to foster a diverse and inclusive culture where employees of all backgrounds are respected, valued and developed. We enhance employee engagement in the areas of diversity, equity and inclusion by offering innovative training, recruitment and career path development where a sense of belonging is apparent throughout the organization. The council has four primary areas of focus: Workforce, Workplace, Community Involvement and Women’s Initiative. The council consists of a diverse group of employees providing representation across the organization. Each area has an employee chairperson as well as an executive sponsor. In addition, employees participate in on-going diversity and inclusion training programs which were developed for us.
COVID-19 Pandemic and New Vehicle Inventory Levels
Our operations have recovered significantly from the COVID-19 pandemic. In the U.K., our dealership showrooms reopened in the second quarter of 2021 and in Brazil, our dealerships were fully open in the second quarter of 2021 after both markets were closed for all or part of prior quarters due to government mandated closures related to the COVID-19 pandemic. Our dealerships adhere to health and safety policies and practices to allow employees to return to work safely. We cannot predict the future impact of COVID-19 pandemic on our business.
Additionally, our manufacturers’ production is currently at reduced levels as a result of global semiconductor chip shortages, which is impacting our new vehicle sales and inventory levels in all our markets. The increased demand for new vehicles and reduced production levels have significantly reduced our new vehicle inventory levels. Our new vehicle days’ supply of inventory was approximately 20 days for the quarter ended June 30, 2021, as compared to 52 days for the quarter ended December 31, 2020 and 61 days for the quarter ended June 30, 2020. Refer to Item 1A. Risk Factors of this Form 10-Q for additional discussion regarding the impact of the decrease in inventory.
Critical Accounting Policies and Accounting Estimates
The preparation of our Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions. For additional discussion of our critical accounting policies and accounting estimates, please see Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2020 Form 10-K.
Results of Operations
The “same store” amounts presented below include the results of dealerships and corporate headquarters for the identical months in each period presented in comparison, commencing with the first full month in which the dealership was owned by us and, in the case of dispositions, ending with the last full month it was owned by us. For example, the results for a dealership acquired on August 15, 2020 will appear in our same store comparison beginning in 2021 for the period September 2021 through December 2021, when comparing to September 2020 through December 2020 results. If we disposed of a store on August 15, 2020, the results from this store would be excluded from same store results beginning in August 2020 as July 2020 was the last full month the dealership was owned by us. Same store results provide a measurement of our ability to grow revenues and profitability of our existing stores and also provide a metric for peer group comparisons. For these reasons, same store results allows management to manage and monitor the performance of the business and is also useful to investors.
We evaluate our results of operations on both an as reported and a constant currency basis. The constant currency presentation, which is a non-GAAP measure, excludes the impact of fluctuations in foreign currency exchange rates. We believe providing constant currency information provides valuable supplemental information regarding our underlying business and results of operations, consistent with how we evaluate our performance. We calculate constant currency percentages by converting our current period reported results for entities reporting in currencies other than USD using comparative period exchange rates rather than the actual exchange rates in effect during the respective periods. The constant currency performance measures should not be considered a substitute for, or superior to, the measures of financial performance prepared in accordance with U.S. GAAP. Additionally, we caution investors not to place undue reliance on non-GAAP measures, but also to consider them with the most directly comparable U.S. GAAP measures. Our management also uses constant currency and adjusted cash flows from operating, investing and financing activities in conjunction with U.S. GAAP financial measures to assess our business, including communication with our Board of Directors, investors and industry analysts concerning financial performance. We disclose these non-GAAP measures and the related reconciliations, because we believe investors use these metrics in evaluating longer-term period-over-period performance. These metrics also allow investors to better understand and evaluate the information used by management to assess operating performance.
Certain amounts in the financial statements may not compute due to rounding. All computations have been calculated using unrounded amounts for all periods presented.
The following tables summarize our operating results on a reported basis and on a same store basis:
Reported Operating Data — Consolidated
(In millions, except unit data)
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Three Months Ended June 30,
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2021
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2020
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Increase/ (Decrease)
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% Change
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Currency Impact on Current Period Results
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Constant Currency % Change
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Revenues:
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New vehicle retail sales
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$
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1,855.3
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$
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1,062.7
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$
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792.6
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74.6
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%
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$
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33.6
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71.4
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%
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Used vehicle retail sales
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1,195.6
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641.2
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554.4
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86.5
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%
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32.8
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81.3
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%
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Used vehicle wholesale sales
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96.4
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48.7
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47.7
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98.0
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%
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3.6
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90.6
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%
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Total used
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1,292.0
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689.9
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602.1
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87.3
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%
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36.5
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82.0
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%
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Parts and service sales
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392.1
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282.0
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110.2
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39.1
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%
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5.6
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37.1
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%
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F&I, net
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161.0
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96.7
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64.3
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66.5
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%
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1.7
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64.7
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%
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Total revenues
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$
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3,700.4
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$
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2,131.2
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$
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1,569.2
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73.6
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%
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$
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77.4
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70.0
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%
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Gross profit:
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New vehicle retail sales
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$
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165.3
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$
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63.8
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$
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101.5
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159.2
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%
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$
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2.1
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155.9
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%
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Used vehicle retail sales
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109.1
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46.3
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62.8
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135.8
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%
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2.3
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130.9
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%
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Used vehicle wholesale sales
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9.1
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2.0
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7.1
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NM
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0.3
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NM
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Total used
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118.2
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48.3
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69.9
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144.7
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%
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2.5
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139.5
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%
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Parts and service sales
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216.7
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|
|
150.0
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66.7
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44.5
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%
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3.4
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42.2
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%
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F&I, net
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161.0
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96.7
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64.3
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66.5
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%
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1.7
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64.7
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%
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Total gross profit
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$
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661.3
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$
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358.8
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$
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302.4
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84.3
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%
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$
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9.8
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81.6
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%
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Gross margin:
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New vehicle retail sales
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8.9
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%
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6.0
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%
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2.9
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%
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Used vehicle retail sales
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9.1
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%
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7.2
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%
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1.9
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%
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Used vehicle wholesale sales
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9.5
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%
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4.2
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%
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5.3
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%
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Total used
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9.2
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%
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7.0
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%
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2.1
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%
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Parts and service sales
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55.3
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%
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53.2
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%
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2.1
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%
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Total gross margin
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17.9
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%
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16.8
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%
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1.0
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%
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Units sold:
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Retail new vehicles sold
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42,893
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26,472
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16,421
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62.0
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%
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Retail used vehicles sold
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45,002
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30,528
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14,474
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47.4
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%
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Wholesale used vehicles sold
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10,965
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7,303
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3,662
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50.1
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%
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Total used
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55,967
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37,831
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18,136
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47.9
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%
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Average sales price per unit sold:
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New vehicle retail
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$
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43,254
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$
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40,143
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$
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3,111
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7.8
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%
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$
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783
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5.8
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%
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Used vehicle retail
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$
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26,568
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$
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21,004
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$
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5,564
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26.5
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%
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$
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729
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23.0
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%
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Gross profit per unit sold:
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New vehicle retail sales
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$
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3,853
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|
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$
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2,409
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|
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$
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1,444
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|
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59.9
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%
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$
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48
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58.0
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%
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|
|
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Used vehicle retail sales
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$
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2,425
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|
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$
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1,516
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|
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$
|
909
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59.9
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%
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$
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50
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56.6
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%
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Used vehicle wholesale sales
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$
|
832
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$
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278
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$
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554
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NM
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$
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24
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NM
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Total used
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$
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2,113
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$
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1,277
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$
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836
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65.4
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%
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$
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45
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61.9
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%
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F&I PRU
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$
|
1,832
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|
|
$
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1,697
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|
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$
|
135
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8.0
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%
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|
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$
|
20
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|
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6.8
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%
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Other:
|
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SG&A expenses
|
$
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376.7
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|
|
$
|
237.2
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|
|
$
|
139.5
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|
58.8
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%
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$
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6.3
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|
56.2
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%
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SG&A as % gross profit
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57.0
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%
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|
66.1
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%
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|
(9.1)
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%
|
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|
|
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|
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Floorplan expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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Floorplan interest expense
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$
|
8.8
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|
|
$
|
10.1
|
|
|
$
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(1.3)
|
|
|
(13.2)
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%
|
|
|
$
|
0.2
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|
|
(14.9)
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%
|
|
|
|
Less: floorplan assistance (1)
|
15.3
|
|
|
9.8
|
|
|
5.4
|
|
|
55.5
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%
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|
|
—
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|
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55.5
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%
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Net floorplan expense
|
$
|
(6.5)
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|
|
$
|
0.3
|
|
|
$
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(6.8)
|
|
|
|
|
|
$
|
0.2
|
|
|
|
|
|
|
|
|
|
|
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|
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(1) Floorplan assistance is included within New vehicle retail sales Gross profit above and New vehicle retail sales Cost of sales in our Condensed Consolidated Statements of Operations.
NM — Not Meaningful
Same Store Operating Data — Consolidated
(In millions, except unit data)
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|
|
|
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|
|
|
|
|
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|
|
Three Months Ended June 30,
|
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|
|
|
2021
|
|
2020
|
|
Increase/ (Decrease)
|
|
% Change
|
|
|
Currency Impact on Current Period Results
|
|
Constant Currency % Change
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|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
$
|
1,837.5
|
|
|
$
|
1,049.8
|
|
|
$
|
787.7
|
|
|
75.0
|
%
|
|
|
$
|
33.6
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|
|
71.8
|
%
|
|
|
|
Used vehicle retail sales
|
1,188.2
|
|
|
632.5
|
|
|
555.7
|
|
|
87.9
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%
|
|
|
32.8
|
|
|
82.7
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%
|
|
|
|
Used vehicle wholesale sales
|
95.8
|
|
|
48.2
|
|
|
47.6
|
|
|
98.7
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%
|
|
|
3.6
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|
|
91.2
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%
|
|
|
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Total used
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1,284.0
|
|
|
680.7
|
|
|
603.3
|
|
|
88.6
|
%
|
|
|
36.5
|
|
|
83.3
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%
|
|
|
|
Parts and service sales
|
385.5
|
|
|
278.5
|
|
|
107.0
|
|
|
38.4
|
%
|
|
|
5.3
|
|
|
36.5
|
%
|
|
|
|
F&I, net
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159.9
|
|
|
95.5
|
|
|
64.4
|
|
|
67.4
|
%
|
|
|
1.7
|
|
|
65.6
|
%
|
|
|
|
Total revenues
|
$
|
3,666.9
|
|
|
$
|
2,104.5
|
|
|
$
|
1,562.4
|
|
|
74.2
|
%
|
|
|
$
|
77.1
|
|
|
70.6
|
%
|
|
|
|
Gross profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
$
|
163.6
|
|
|
$
|
63.1
|
|
|
$
|
100.6
|
|
|
159.4
|
%
|
|
|
$
|
2.1
|
|
|
156.2
|
%
|
|
|
|
Used vehicle retail sales
|
107.8
|
|
|
45.8
|
|
|
62.1
|
|
|
135.6
|
%
|
|
|
2.3
|
|
|
130.7
|
%
|
|
|
|
Used vehicle wholesale sales
|
8.9
|
|
|
2.0
|
|
|
6.9
|
|
|
NM
|
|
|
0.3
|
|
|
NM
|
|
|
|
Total used
|
116.8
|
|
|
47.8
|
|
|
69.0
|
|
|
144.4
|
%
|
|
|
2.5
|
|
|
139.1
|
%
|
|
|
|
Parts and service sales
|
212.9
|
|
|
148.1
|
|
|
64.9
|
|
|
43.8
|
%
|
|
|
3.2
|
|
|
41.6
|
%
|
|
|
|
F&I, net
|
159.9
|
|
|
95.5
|
|
|
64.4
|
|
|
67.4
|
%
|
|
|
1.7
|
|
|
65.6
|
%
|
|
|
|
Total gross profit
|
$
|
653.3
|
|
|
$
|
354.4
|
|
|
$
|
298.8
|
|
|
84.3
|
%
|
|
|
$
|
9.6
|
|
|
81.6
|
%
|
|
|
|
Gross margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
8.9
|
%
|
|
6.0
|
%
|
|
2.9
|
%
|
|
|
|
|
|
|
|
|
|
|
Used vehicle retail sales
|
9.1
|
%
|
|
7.2
|
%
|
|
1.8
|
%
|
|
|
|
|
|
|
|
|
|
|
Used vehicle wholesale sales
|
9.3
|
%
|
|
4.1
|
%
|
|
5.2
|
%
|
|
|
|
|
|
|
|
|
|
|
Total used
|
9.1
|
%
|
|
7.0
|
%
|
|
2.1
|
%
|
|
|
|
|
|
|
|
|
|
|
Parts and service sales
|
55.2
|
%
|
|
53.2
|
%
|
|
2.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gross margin
|
17.8
|
%
|
|
16.8
|
%
|
|
1.0
|
%
|
|
|
|
|
|
|
|
|
|
|
Units sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail new vehicles sold
|
42,409
|
|
|
26,116
|
|
|
16,293
|
|
|
62.4
|
%
|
|
|
|
|
|
|
|
|
Retail used vehicles sold
|
44,659
|
|
|
30,016
|
|
|
14,643
|
|
|
48.8
|
%
|
|
|
|
|
|
|
|
|
Wholesale used vehicles sold
|
10,846
|
|
|
7,217
|
|
|
3,629
|
|
|
50.3
|
%
|
|
|
|
|
|
|
|
|
Total used
|
55,505
|
|
|
37,233
|
|
|
18,272
|
|
|
49.1
|
%
|
|
|
|
|
|
|
|
|
Average sales price per unit sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail
|
$
|
43,329
|
|
|
$
|
40,199
|
|
|
$
|
3,131
|
|
|
7.8
|
%
|
|
|
$
|
792
|
|
|
5.8
|
%
|
|
|
|
Used vehicle retail
|
$
|
26,606
|
|
|
$
|
21,072
|
|
|
$
|
5,534
|
|
|
26.3
|
%
|
|
|
$
|
735
|
|
|
22.8
|
%
|
|
|
|
Gross profit per unit sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
$
|
3,858
|
|
|
$
|
2,415
|
|
|
$
|
1,443
|
|
|
59.8
|
%
|
|
|
$
|
49
|
|
|
57.8
|
%
|
|
|
|
Used vehicle retail sales
|
$
|
2,415
|
|
|
$
|
1,525
|
|
|
$
|
890
|
|
|
58.4
|
%
|
|
|
$
|
51
|
|
|
55.0
|
%
|
|
|
|
Used vehicle wholesale sales
|
$
|
823
|
|
|
$
|
277
|
|
|
$
|
546
|
|
|
NM
|
|
|
$
|
25
|
|
|
NM
|
|
|
|
Total used
|
$
|
2,104
|
|
|
$
|
1,283
|
|
|
$
|
821
|
|
|
64.0
|
%
|
|
|
$
|
46
|
|
|
60.4
|
%
|
|
|
|
F&I PRU
|
$
|
1,837
|
|
|
$
|
1,702
|
|
|
$
|
135
|
|
|
7.9
|
%
|
|
|
$
|
20
|
|
|
6.8
|
%
|
|
|
|
Other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SG&A expenses
|
$
|
372.3
|
|
|
$
|
233.2
|
|
|
$
|
139.1
|
|
|
59.7
|
%
|
|
|
$
|
6.2
|
|
|
57.0
|
%
|
|
|
|
SG&A as % gross profit
|
57.0
|
%
|
|
65.8
|
%
|
|
(8.8)
|
%
|
|
|
|
|
|
|
|
|
|
NM — Not Meaningful
Reported Operating Data - Consolidated
(In millions, except unit data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
|
2021
|
|
2020
|
|
Increase/ (Decrease)
|
|
% Change
|
|
|
Currency Impact on Current Period Results
|
|
Constant Currency % Change
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
$
|
3,398.7
|
|
|
$
|
2,404.8
|
|
|
$
|
993.8
|
|
|
41.3
|
%
|
|
|
$
|
39.9
|
|
|
39.7
|
%
|
|
|
|
Used vehicle retail sales
|
2,094.4
|
|
|
1,420.3
|
|
|
674.1
|
|
|
47.5
|
%
|
|
|
38.4
|
|
|
44.8
|
%
|
|
|
|
Used vehicle wholesale sales
|
176.6
|
|
|
135.2
|
|
|
41.4
|
|
|
30.7
|
%
|
|
|
4.5
|
|
|
27.3
|
%
|
|
|
|
Total used
|
2,271.0
|
|
|
1,555.4
|
|
|
715.6
|
|
|
46.0
|
%
|
|
|
42.9
|
|
|
43.2
|
%
|
|
|
|
Parts and service sales
|
752.8
|
|
|
652.6
|
|
|
100.2
|
|
|
15.4
|
%
|
|
|
6.7
|
|
|
14.3
|
%
|
|
|
|
F&I, net
|
288.0
|
|
|
209.2
|
|
|
78.8
|
|
|
37.7
|
%
|
|
|
1.9
|
|
|
36.8
|
%
|
|
|
|
Total revenues
|
$
|
6,710.5
|
|
|
$
|
4,822.0
|
|
|
$
|
1,888.4
|
|
|
39.2
|
%
|
|
|
$
|
91.9
|
|
|
37.3
|
%
|
|
|
|
Gross profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
$
|
264.3
|
|
|
$
|
126.6
|
|
|
$
|
137.7
|
|
|
108.8
|
%
|
|
|
$
|
2.0
|
|
|
107.2
|
%
|
|
|
|
Used vehicle retail sales
|
168.7
|
|
|
88.4
|
|
|
80.3
|
|
|
90.8
|
%
|
|
|
2.2
|
|
|
88.3
|
%
|
|
|
|
Used vehicle wholesale sales
|
13.1
|
|
|
3.0
|
|
|
10.0
|
|
|
NM
|
|
|
0.2
|
|
|
NM
|
|
|
|
Total used
|
181.8
|
|
|
91.5
|
|
|
90.3
|
|
|
98.7
|
%
|
|
|
2.4
|
|
|
96.1
|
%
|
|
|
|
Parts and service sales
|
417.8
|
|
|
348.0
|
|
|
69.8
|
|
|
20.0
|
%
|
|
|
4.4
|
|
|
18.8
|
%
|
|
|
|
F&I, net
|
288.0
|
|
|
209.2
|
|
|
78.8
|
|
|
37.7
|
%
|
|
|
1.9
|
|
|
36.8
|
%
|
|
|
|
Total gross profit
|
$
|
1,151.9
|
|
|
$
|
775.3
|
|
|
$
|
376.7
|
|
|
48.6
|
%
|
|
|
$
|
10.8
|
|
|
47.2
|
%
|
|
|
|
Gross margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
7.8
|
%
|
|
5.3
|
%
|
|
2.5
|
%
|
|
|
|
|
|
|
|
|
|
|
Used vehicle retail sales
|
8.1
|
%
|
|
6.2
|
%
|
|
1.8
|
%
|
|
|
|
|
|
|
|
|
|
|
Used vehicle wholesale sales
|
7.4
|
%
|
|
2.2
|
%
|
|
5.2
|
%
|
|
|
|
|
|
|
|
|
|
|
Total used
|
8.0
|
%
|
|
5.9
|
%
|
|
2.1
|
%
|
|
|
|
|
|
|
|
|
|
|
Parts and service sales
|
55.5
|
%
|
|
53.3
|
%
|
|
2.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gross margin
|
17.2
|
%
|
|
16.1
|
%
|
|
1.1
|
%
|
|
|
|
|
|
|
|
|
|
|
Units sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail new vehicles sold
|
79,756
|
|
|
61,832
|
|
|
17,924
|
|
|
29.0
|
%
|
|
|
|
|
|
|
|
|
Retail used vehicles sold
|
83,061
|
|
|
67,318
|
|
|
15,743
|
|
|
23.4
|
%
|
|
|
|
|
|
|
|
|
Wholesale used vehicles sold
|
20,777
|
|
|
19,389
|
|
|
1,388
|
|
|
7.2
|
%
|
|
|
|
|
|
|
|
|
Total used
|
103,838
|
|
|
86,707
|
|
|
17,131
|
|
|
19.8
|
%
|
|
|
|
|
|
|
|
|
Average sales price per unit sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail
|
$
|
42,613
|
|
|
$
|
38,893
|
|
|
$
|
3,720
|
|
|
9.6
|
%
|
|
|
$
|
500
|
|
|
8.3
|
%
|
|
|
|
Used vehicle retail
|
$
|
25,215
|
|
|
$
|
21,098
|
|
|
$
|
4,117
|
|
|
19.5
|
%
|
|
|
$
|
462
|
|
|
17.3
|
%
|
|
|
|
Gross profit per unit sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
$
|
3,314
|
|
|
$
|
2,047
|
|
|
$
|
1,267
|
|
|
61.9
|
%
|
|
|
$
|
25
|
|
|
60.6
|
%
|
|
|
|
Used vehicle retail sales
|
$
|
2,031
|
|
|
$
|
1,314
|
|
|
$
|
718
|
|
|
54.6
|
%
|
|
|
$
|
27
|
|
|
52.6
|
%
|
|
|
|
Used vehicle wholesale sales
|
$
|
628
|
|
|
$
|
156
|
|
|
$
|
472
|
|
|
NM
|
|
|
$
|
8
|
|
|
NM
|
|
|
|
Total used
|
$
|
1,751
|
|
|
$
|
1,055
|
|
|
$
|
696
|
|
|
66.0
|
%
|
|
|
$
|
23
|
|
|
63.8
|
%
|
|
|
|
F&I PRU
|
$
|
1,769
|
|
|
$
|
1,620
|
|
|
$
|
149
|
|
|
9.2
|
%
|
|
|
$
|
12
|
|
|
8.5
|
%
|
|
|
|
Other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SG&A expenses
|
$
|
695.2
|
|
|
$
|
565.1
|
|
|
$
|
130.0
|
|
|
23.0
|
%
|
|
|
$
|
7.3
|
|
|
21.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SG&A as % gross profit
|
60.3
|
%
|
|
72.9
|
%
|
|
(12.5)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Floorplan expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Floorplan interest expense
|
$
|
16.4
|
|
|
$
|
23.0
|
|
|
$
|
(6.6)
|
|
|
(28.8)
|
%
|
|
|
$
|
0.3
|
|
|
(30.0)
|
%
|
|
|
|
Less: floorplan assistance (1)
|
28.5
|
|
|
20.4
|
|
|
8.1
|
|
|
39.6
|
%
|
|
|
—
|
|
|
39.6
|
%
|
|
|
|
Net floorplan expense
|
$
|
(12.1)
|
|
|
$
|
2.6
|
|
|
$
|
(14.7)
|
|
|
|
|
|
$
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Floorplan assistance is included within New vehicle retail sales Gross profit above and New vehicle retail sales Cost of sales in our Condensed Consolidated Statements of Operations.
NM — Not Meaningful
Same Store Operating Data - Consolidated
(In millions, except unit data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
|
|
2021
|
|
2020
|
|
Increase/ (Decrease)
|
|
% Change
|
|
|
Currency Impact on Current Period Results
|
|
Constant Currency % Change
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
$
|
3,380.4
|
|
|
$
|
2,381.9
|
|
|
$
|
998.6
|
|
|
41.9
|
%
|
|
|
$
|
39.8
|
|
|
40.3
|
%
|
|
|
|
Used vehicle retail sales
|
2,086.4
|
|
|
1,403.0
|
|
|
683.4
|
|
|
48.7
|
%
|
|
|
38.3
|
|
|
46.0
|
%
|
|
|
|
Used vehicle wholesale sales
|
176.0
|
|
|
133.7
|
|
|
42.2
|
|
|
31.6
|
%
|
|
|
4.5
|
|
|
28.2
|
%
|
|
|
|
Total used
|
2,262.4
|
|
|
1,536.8
|
|
|
725.6
|
|
|
47.2
|
%
|
|
|
42.8
|
|
|
44.4
|
%
|
|
|
|
Parts and service sales
|
743.6
|
|
|
642.6
|
|
|
101.0
|
|
|
15.7
|
%
|
|
|
6.3
|
|
|
14.7
|
%
|
|
|
|
F&I, net
|
286.9
|
|
|
207.0
|
|
|
79.9
|
|
|
38.6
|
%
|
|
|
1.9
|
|
|
37.7
|
%
|
|
|
|
Total revenues
|
$
|
6,673.3
|
|
|
$
|
4,768.3
|
|
|
$
|
1,905.0
|
|
|
40.0
|
%
|
|
|
$
|
91.4
|
|
|
38.0
|
%
|
|
|
|
Gross profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
$
|
262.7
|
|
|
$
|
125.2
|
|
|
$
|
137.5
|
|
|
109.8
|
%
|
|
|
$
|
2.0
|
|
|
108.2
|
%
|
|
|
|
Used vehicle retail sales
|
167.4
|
|
|
87.7
|
|
|
79.8
|
|
|
91.0
|
%
|
|
|
2.2
|
|
|
88.5
|
%
|
|
|
|
Used vehicle wholesale sales
|
12.9
|
|
|
3.0
|
|
|
9.9
|
|
|
NM
|
|
|
0.2
|
|
|
NM
|
|
|
|
Total used
|
180.4
|
|
|
90.7
|
|
|
89.7
|
|
|
98.9
|
%
|
|
|
2.4
|
|
|
96.3
|
%
|
|
|
|
Parts and service sales
|
412.9
|
|
|
342.8
|
|
|
70.1
|
|
|
20.5
|
%
|
|
|
4.2
|
|
|
19.2
|
%
|
|
|
|
F&I, net
|
286.9
|
|
|
207.0
|
|
|
79.9
|
|
|
38.6
|
%
|
|
|
1.9
|
|
|
37.7
|
%
|
|
|
|
Total gross profit
|
$
|
1,142.9
|
|
|
$
|
765.7
|
|
|
$
|
377.2
|
|
|
49.3
|
%
|
|
|
$
|
10.6
|
|
|
47.9
|
%
|
|
|
|
Gross margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
7.8
|
%
|
|
5.3
|
%
|
|
2.5
|
%
|
|
|
|
|
|
|
|
|
|
|
Used vehicle retail sales
|
8.0
|
%
|
|
6.2
|
%
|
|
1.8
|
%
|
|
|
|
|
|
|
|
|
|
|
Used vehicle wholesale sales
|
7.3
|
%
|
|
2.3
|
%
|
|
5.1
|
%
|
|
|
|
|
|
|
|
|
|
|
Total used
|
8.0
|
%
|
|
5.9
|
%
|
|
2.1
|
%
|
|
|
|
|
|
|
|
|
|
|
Parts and service sales
|
55.5
|
%
|
|
53.3
|
%
|
|
2.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gross margin
|
17.1
|
%
|
|
16.1
|
%
|
|
1.1
|
%
|
|
|
|
|
|
|
|
|
|
|
Units sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail new vehicles sold
|
79,260
|
|
|
61,198
|
|
|
18,062
|
|
|
29.5
|
%
|
|
|
|
|
|
|
|
|
Retail used vehicles sold
|
82,686
|
|
|
66,347
|
|
|
16,339
|
|
|
24.6
|
%
|
|
|
|
|
|
|
|
|
Wholesale used vehicles sold
|
20,645
|
|
|
19,138
|
|
|
1,507
|
|
|
7.9
|
%
|
|
|
|
|
|
|
|
|
Total used
|
103,331
|
|
|
85,485
|
|
|
17,846
|
|
|
20.9
|
%
|
|
|
|
|
|
|
|
|
Average sales price per unit sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail
|
$
|
42,650
|
|
|
$
|
38,921
|
|
|
$
|
3,729
|
|
|
9.6
|
%
|
|
|
$
|
503
|
|
|
8.3
|
%
|
|
|
|
Used vehicle retail
|
$
|
25,233
|
|
|
$
|
21,147
|
|
|
$
|
4,086
|
|
|
19.3
|
%
|
|
|
$
|
463
|
|
|
17.1
|
%
|
|
|
|
Gross profit per unit sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
$
|
3,315
|
|
|
$
|
2,046
|
|
|
$
|
1,268
|
|
|
62.0
|
%
|
|
|
$
|
25
|
|
|
60.7
|
%
|
|
|
|
Used vehicle retail sales
|
$
|
2,025
|
|
|
$
|
1,321
|
|
|
$
|
704
|
|
|
53.3
|
%
|
|
|
$
|
27
|
|
|
51.2
|
%
|
|
|
|
Used vehicle wholesale sales
|
$
|
626
|
|
|
$
|
157
|
|
|
$
|
469
|
|
|
NM
|
|
|
$
|
8
|
|
|
NM
|
|
|
|
Total used
|
$
|
1,745
|
|
|
$
|
1,061
|
|
|
$
|
685
|
|
|
64.6
|
%
|
|
|
$
|
23
|
|
|
62.4
|
%
|
|
|
|
F&I PRU
|
$
|
1,772
|
|
|
$
|
1,623
|
|
|
$
|
149
|
|
|
9.2
|
%
|
|
|
$
|
12
|
|
|
8.4
|
%
|
|
|
|
Other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SG&A expenses
|
$
|
689.6
|
|
|
$
|
555.5
|
|
|
$
|
134.2
|
|
|
24.2
|
%
|
|
|
$
|
7.1
|
|
|
22.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SG&A as % gross profit
|
60.3
|
%
|
|
72.5
|
%
|
|
(12.2)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NM — Not Meaningful
Reported Operating Data — U.S.
(In millions, except unit data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
|
|
2021
|
|
2020
|
|
Increase/(Decrease)
|
|
% Change
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
|
$
|
1,504.4
|
|
|
$
|
915.7
|
|
|
$
|
588.7
|
|
|
64.3
|
%
|
|
|
|
Used vehicle retail sales
|
|
882.9
|
|
|
540.9
|
|
|
342.0
|
|
|
63.2
|
%
|
|
|
|
Used vehicle wholesale sales
|
|
61.2
|
|
|
30.5
|
|
|
30.7
|
|
|
100.5
|
%
|
|
|
|
Total used
|
|
944.1
|
|
|
571.4
|
|
|
372.7
|
|
|
65.2
|
%
|
|
|
|
Parts and service sales
|
|
332.6
|
|
|
254.2
|
|
|
78.4
|
|
|
30.8
|
%
|
|
|
|
F&I, net
|
|
143.9
|
|
|
89.8
|
|
|
54.1
|
|
|
60.3
|
%
|
|
|
|
Total revenues
|
|
$
|
2,924.9
|
|
|
$
|
1,831.1
|
|
|
$
|
1,093.8
|
|
|
59.7
|
%
|
|
|
|
Gross profit:
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
|
$
|
141.7
|
|
|
$
|
56.5
|
|
|
$
|
85.2
|
|
|
150.7
|
%
|
|
|
|
Used vehicle retail sales
|
|
87.3
|
|
|
41.0
|
|
|
46.4
|
|
|
113.2
|
%
|
|
|
|
Used vehicle wholesale sales
|
|
6.4
|
|
|
1.6
|
|
|
4.8
|
|
|
NM
|
|
|
|
Total used
|
|
93.7
|
|
|
42.6
|
|
|
51.2
|
|
|
120.2
|
%
|
|
|
|
Parts and service sales
|
|
181.7
|
|
|
135.6
|
|
|
46.1
|
|
|
34.0
|
%
|
|
|
|
F&I, net
|
|
143.9
|
|
|
89.8
|
|
|
54.1
|
|
|
60.3
|
%
|
|
|
|
Total gross profit
|
|
$
|
561.1
|
|
|
$
|
324.5
|
|
|
$
|
236.6
|
|
|
72.9
|
%
|
|
|
|
Gross margin:
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
|
9.4
|
%
|
|
6.2
|
%
|
|
3.2
|
%
|
|
|
|
|
|
Used vehicle retail sales
|
|
9.9
|
%
|
|
7.6
|
%
|
|
2.3
|
%
|
|
|
|
|
|
Used vehicle wholesale sales
|
|
10.5
|
%
|
|
5.2
|
%
|
|
5.2
|
%
|
|
|
|
|
|
Total used
|
|
9.9
|
%
|
|
7.4
|
%
|
|
2.5
|
%
|
|
|
|
|
|
Parts and service sales
|
|
54.6
|
%
|
|
53.3
|
%
|
|
1.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gross margin
|
|
19.2
|
%
|
|
17.7
|
%
|
|
1.5
|
%
|
|
|
|
|
|
Units sold:
|
|
|
|
|
|
|
|
|
|
|
|
Retail new vehicles sold
|
|
34,047
|
|
|
21,937
|
|
|
12,110
|
|
|
55.2
|
%
|
|
|
|
Retail used vehicles sold
|
|
34,008
|
|
|
26,132
|
|
|
7,876
|
|
|
30.1
|
%
|
|
|
|
Wholesale used vehicles sold
|
|
6,606
|
|
|
5,150
|
|
|
1,456
|
|
|
28.3
|
%
|
|
|
|
Total used
|
|
40,614
|
|
|
31,282
|
|
|
9,332
|
|
|
29.8
|
%
|
|
|
|
Average sales price per unit sold:
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail
|
|
$
|
44,185
|
|
|
$
|
41,742
|
|
|
$
|
2,443
|
|
|
5.9
|
%
|
|
|
|
Used vehicle retail
|
|
$
|
25,962
|
|
|
$
|
20,699
|
|
|
$
|
5,263
|
|
|
25.4
|
%
|
|
|
|
Gross profit per unit sold:
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
|
$
|
4,162
|
|
|
$
|
2,576
|
|
|
$
|
1,586
|
|
|
61.6
|
%
|
|
|
|
Used vehicle retail sales
|
|
$
|
2,568
|
|
|
$
|
1,568
|
|
|
$
|
1,000
|
|
|
63.8
|
%
|
|
|
|
Used vehicle wholesale sales
|
|
$
|
969
|
|
|
$
|
311
|
|
|
$
|
658
|
|
|
NM
|
|
|
|
Total used
|
|
$
|
2,308
|
|
|
$
|
1,361
|
|
|
$
|
947
|
|
|
69.6
|
%
|
|
|
|
F&I PRU
|
|
$
|
2,114
|
|
|
$
|
1,868
|
|
|
$
|
247
|
|
|
13.2
|
%
|
|
|
|
Other:
|
|
|
|
|
|
|
|
|
|
|
|
SG&A expenses
|
|
$
|
312.6
|
|
|
$
|
203.3
|
|
|
$
|
109.3
|
|
|
53.8
|
%
|
|
|
|
SG&A as % gross profit
|
|
55.7
|
%
|
|
62.6
|
%
|
|
(6.9)
|
%
|
|
|
|
|
NM — Not Meaningful
Same Store Operating Data — U.S.
(In millions, except unit data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
|
2021
|
|
2020
|
|
Increase/(Decrease)
|
|
% Change
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
$
|
1,486.6
|
|
|
$
|
903.9
|
|
|
$
|
582.7
|
|
|
64.5
|
%
|
|
|
|
Used vehicle retail sales
|
875.5
|
|
|
533.2
|
|
|
342.2
|
|
|
64.2
|
%
|
|
|
|
Used vehicle wholesale sales
|
60.6
|
|
|
30.1
|
|
|
30.5
|
|
|
101.2
|
%
|
|
|
|
Total used
|
936.1
|
|
|
563.4
|
|
|
372.7
|
|
|
66.2
|
%
|
|
|
|
Parts and service sales
|
329.3
|
|
|
251.2
|
|
|
78.1
|
|
|
31.1
|
%
|
|
|
|
F&I, net
|
142.8
|
|
|
88.7
|
|
|
54.1
|
|
|
61.0
|
%
|
|
|
|
Total revenues
|
$
|
2,894.8
|
|
|
$
|
1,807.1
|
|
|
$
|
1,087.7
|
|
|
60.2
|
%
|
|
|
|
Gross profit:
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
$
|
140.1
|
|
|
$
|
55.9
|
|
|
$
|
84.2
|
|
|
150.7
|
%
|
|
|
|
Used vehicle retail sales
|
86.0
|
|
|
40.5
|
|
|
45.5
|
|
|
112.3
|
%
|
|
|
|
Used vehicle wholesale sales
|
6.2
|
|
|
1.6
|
|
|
4.6
|
|
|
NM
|
|
|
|
Total used
|
92.2
|
|
|
42.1
|
|
|
50.2
|
|
|
119.1
|
%
|
|
|
|
Parts and service sales
|
179.6
|
|
|
133.9
|
|
|
45.8
|
|
|
34.2
|
%
|
|
|
|
F&I, net
|
142.8
|
|
|
88.7
|
|
|
54.1
|
|
|
61.0
|
%
|
|
|
|
Total gross profit
|
$
|
554.8
|
|
|
$
|
320.5
|
|
|
$
|
234.3
|
|
|
73.1
|
%
|
|
|
|
Gross margin:
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
9.4
|
%
|
|
6.2
|
%
|
|
3.2
|
%
|
|
|
|
|
|
Used vehicle retail sales
|
9.8
|
%
|
|
7.6
|
%
|
|
2.2
|
%
|
|
|
|
|
|
Used vehicle wholesale sales
|
10.2
|
%
|
|
5.2
|
%
|
|
5.0
|
%
|
|
|
|
|
|
Total used
|
9.9
|
%
|
|
7.5
|
%
|
|
2.4
|
%
|
|
|
|
|
|
Parts and service sales
|
54.6
|
%
|
|
53.3
|
%
|
|
1.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gross margin
|
19.2
|
%
|
|
17.7
|
%
|
|
1.4
|
%
|
|
|
|
|
|
Units sold:
|
|
|
|
|
|
|
|
|
|
|
Retail new vehicles sold
|
33,563
|
|
|
21,631
|
|
|
11,932
|
|
|
55.2
|
%
|
|
|
|
Retail used vehicles sold
|
33,665
|
|
|
25,691
|
|
|
7,974
|
|
|
31.0
|
%
|
|
|
|
Wholesale used vehicles sold
|
6,487
|
|
|
5,084
|
|
|
1,403
|
|
|
27.6
|
%
|
|
|
|
Total used
|
40,152
|
|
|
30,775
|
|
|
9,377
|
|
|
30.5
|
%
|
|
|
|
Average sales price per unit sold:
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail
|
$
|
44,292
|
|
|
$
|
41,786
|
|
|
$
|
2,506
|
|
|
6.0
|
%
|
|
|
|
Used vehicle retail
|
$
|
26,005
|
|
|
$
|
20,756
|
|
|
$
|
5,249
|
|
|
25.3
|
%
|
|
|
|
Gross profit per unit sold:
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
$
|
4,173
|
|
|
$
|
2,583
|
|
|
$
|
1,591
|
|
|
61.6
|
%
|
|
|
|
Used vehicle retail sales
|
$
|
2,556
|
|
|
$
|
1,577
|
|
|
$
|
978
|
|
|
62.0
|
%
|
|
|
|
Used vehicle wholesale sales
|
$
|
956
|
|
|
$
|
309
|
|
|
$
|
648
|
|
|
NM
|
|
|
|
Total used
|
$
|
2,297
|
|
|
$
|
1,368
|
|
|
$
|
930
|
|
|
68.0
|
%
|
|
|
|
F&I PRU
|
$
|
2,125
|
|
|
$
|
1,874
|
|
|
$
|
250
|
|
|
13.4
|
%
|
|
|
|
Other:
|
|
|
|
|
|
|
|
|
|
|
SG&A expenses
|
$
|
309.4
|
|
|
$
|
200.2
|
|
|
$
|
109.2
|
|
|
54.6
|
%
|
|
|
|
SG&A as % gross profit
|
55.8
|
%
|
|
62.5
|
%
|
|
(6.7)
|
%
|
|
|
|
|
NM — Not Meaningful
The following discussion of our U.S. operating results is on actual and same store basis. The difference between reported amounts and same store amounts is related to acquisition and disposition activity, as well as new add-point openings. During 2020, our U.S. dealership operations were impacted by reduced demand caused by the COVID-19 pandemic and the restrictions put in place by local governments to contain the virus.
Revenues
Total revenues in the U.S. during the three months ended June 30, 2021 increased $1,093.8 million, or 59.7%, as compared to the same period in 2020. Total same store revenues in the U.S. during the three months ended June 30, 2021 increased $1,087.7 million, or 60.2%, driven by increases in all of our revenue streams. The increases were the result of a robust recovery during the second quarter of 2021, as consumer demand was extremely strong. During the second quarter of 2020, the COVID-19 pandemic had dampened sales activity as a result of the social distancing restrictions.
Gross Profit
Total gross profit in the U.S. during the three months ended June 30, 2021 increased $236.6 million, or 72.9%, as compared to the same period in 2020. Total same store gross profit in the U.S. during the three months ended June 30, 2021 increased $234.3 million, or 73.1%, as compared to the same period in 2020, driven by increases in all of our operations. New vehicle retail same store gross profit increased 150.7% reflecting a 61.6% increase in new vehicle same store gross profit per unit sold, coupled with a 55.2% increase in new vehicle retail same store unit sales. The increase in new vehicle retail same store gross profit per unit sold reflects strong consumer demand coupled with inventory supply constraints as a result of the OEMs producing and delivering fewer vehicles to dealerships due to a global semiconductor chip shortage. Our U.S. new vehicle inventory stood at a 16 days’ supply, which was 48 days lower than the same period last year and 32 days lower than December 31, 2020 days’ supply of 48. Used vehicle retail same store gross profit increased 112.3% reflecting an increase of 62.0% in used vehicle retail same store gross profit per unit sold, coupled with a 31.0% increase in used vehicle retail same store unit sales over the same period in 2020. The increase in used vehicle retail same store gross profit per unit sold reflects higher market prices stemming from tight inventory levels combined with a strong demand. Used vehicle wholesale gross profit increased as industry supply shortages drove up auction prices as reflected in the Manheim Index, a generally accepted indicator of pricing trends in the used vehicle market. Parts and service same store gross profit increased by 34.2% for the quarter ended June 30, 2021 as compared to the same period in 2020, driven primarily by a 32.4% increase in our customer-pay business. F&I same store gross profit increased 61.0% driven by increases in same store retail unit sales volumes coupled with higher income per contract and penetration rates on most of our finance and insurance product offerings partially offset by an increase in our overall chargeback experience compared to the same period in 2020. Total same store gross margin increased 140 basis points driven by higher vehicle and parts and service margins reflecting vehicle supply constraints, improvements in customer pay and increased internal work as a result of higher new and used sales volumes.
SG&A Expenses
Our SG&A expenses consist primarily of personnel costs, including salaries, commissions and incentive-based compensation, as well as rent and facility costs, advertising and other expenses (which includes legal, professional fees and general corporate expenses). Total SG&A expenses in the U.S. during the three months ended June 30, 2021 increased $109.3 million, or 53.8%, as compared to the same period in 2020. Total same store SG&A expenses in the U.S. during the three months ended June 30, 2021 increased $109.2 million, or 54.6%, as compared to the same period in 2020 primarily driven by increased variable commission payments as a result of improvements in sales volume and margins and an increase in other variable expenses associated with the rise in business activity. Total same store SG&A expenses in the U.S. during the second quarter of 2020 included $10.6 million in expense for an out of period adjustment related to stock compensation. Total same store SG&A as a percent of gross profit decreased from 62.5% in the second quarter of 2020 to 55.8% for the same period of 2021, driven by productivity gains and higher vehicle margins.
Reported Operating Data - U.S.
(In millions, except unit data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
|
|
2021
|
|
2020
|
|
Increase/(Decrease)
|
|
% Change
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
|
$
|
2,750.4
|
|
|
$
|
1,904.1
|
|
|
$
|
846.3
|
|
|
44.4
|
%
|
|
|
|
Used vehicle retail sales
|
|
1,579.4
|
|
|
1,111.2
|
|
|
468.2
|
|
|
42.1
|
%
|
|
|
|
Used vehicle wholesale sales
|
|
111.6
|
|
|
77.3
|
|
|
34.2
|
|
|
44.3
|
%
|
|
|
|
Total used
|
|
1,691.0
|
|
|
1,188.6
|
|
|
502.4
|
|
|
42.3
|
%
|
|
|
|
Parts and service sales
|
|
628.9
|
|
|
558.9
|
|
|
70.0
|
|
|
12.5
|
%
|
|
|
|
F&I, net
|
|
259.0
|
|
|
187.2
|
|
|
71.8
|
|
|
38.3
|
%
|
|
|
|
Total revenues
|
|
$
|
5,329.3
|
|
|
$
|
3,838.7
|
|
|
$
|
1,490.6
|
|
|
38.8
|
%
|
|
|
|
Gross profit:
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
|
$
|
222.6
|
|
|
$
|
103.8
|
|
|
$
|
118.8
|
|
|
114.5
|
%
|
|
|
|
Used vehicle retail sales
|
|
137.6
|
|
|
72.9
|
|
|
64.7
|
|
|
88.8
|
%
|
|
|
|
Used vehicle wholesale sales
|
|
10.3
|
|
|
2.4
|
|
|
7.9
|
|
|
NM
|
|
|
|
Total used
|
|
148.0
|
|
|
75.3
|
|
|
72.6
|
|
|
96.4
|
%
|
|
|
|
Parts and service sales
|
|
346.8
|
|
|
299.1
|
|
|
47.7
|
|
|
16.0
|
%
|
|
|
|
F&I, net
|
|
259.0
|
|
|
187.2
|
|
|
71.8
|
|
|
38.3
|
%
|
|
|
|
Total gross profit
|
|
$
|
976.3
|
|
|
$
|
665.4
|
|
|
$
|
310.9
|
|
|
46.7
|
%
|
|
|
|
Gross margin:
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
|
8.1
|
%
|
|
5.5
|
%
|
|
2.6
|
%
|
|
|
|
|
|
Used vehicle retail sales
|
|
8.7
|
%
|
|
6.6
|
%
|
|
2.2
|
%
|
|
|
|
|
|
Used vehicle wholesale sales
|
|
9.3
|
%
|
|
3.1
|
%
|
|
6.1
|
%
|
|
|
|
|
|
Total used
|
|
8.8
|
%
|
|
6.3
|
%
|
|
2.4
|
%
|
|
|
|
|
|
Parts and service sales
|
|
55.1
|
%
|
|
53.5
|
%
|
|
1.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gross margin
|
|
18.3
|
%
|
|
17.3
|
%
|
|
1.0
|
%
|
|
|
|
|
|
Units sold:
|
|
|
|
|
|
|
|
|
|
|
|
Retail new vehicles sold
|
|
63,199
|
|
|
46,432
|
|
|
16,767
|
|
|
36.1
|
%
|
|
|
|
Retail used vehicles sold
|
|
64,439
|
|
|
53,800
|
|
|
10,639
|
|
|
19.8
|
%
|
|
|
|
Wholesale used vehicles sold
|
|
13,046
|
|
|
12,177
|
|
|
869
|
|
|
7.1
|
%
|
|
|
|
Total used
|
|
77,485
|
|
|
65,977
|
|
|
11,508
|
|
|
17.4
|
%
|
|
|
|
Average sales price per unit sold:
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail
|
|
$
|
43,520
|
|
|
$
|
41,008
|
|
|
$
|
2,512
|
|
|
6.1
|
%
|
|
|
|
Used vehicle retail
|
|
$
|
24,510
|
|
|
$
|
20,655
|
|
|
$
|
3,855
|
|
|
18.7
|
%
|
|
|
|
Gross profit per unit sold:
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
|
$
|
3,522
|
|
|
$
|
2,235
|
|
|
$
|
1,287
|
|
|
57.6
|
%
|
|
|
|
Used vehicle retail sales
|
|
$
|
2,136
|
|
|
$
|
1,355
|
|
|
$
|
781
|
|
|
57.6
|
%
|
|
|
|
Used vehicle wholesale sales
|
|
$
|
792
|
|
|
$
|
199
|
|
|
$
|
592
|
|
|
NM
|
|
|
|
Total used
|
|
$
|
1,910
|
|
|
$
|
1,142
|
|
|
$
|
768
|
|
|
67.3
|
%
|
|
|
|
F&I PRU
|
|
$
|
2,029
|
|
|
$
|
1,868
|
|
|
$
|
161
|
|
|
8.6
|
%
|
|
|
|
Other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SG&A expenses
|
|
$
|
574.3
|
|
|
$
|
460.8
|
|
|
$
|
113.5
|
|
|
24.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SG&A as % gross profit
|
|
58.8
|
%
|
|
69.2
|
%
|
|
(10.4)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NM — Not Meaningful
Same Store Operating Data - U.S.
(In millions, except unit data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
|
2021
|
|
2020
|
|
Increase/(Decrease)
|
|
% Change
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
$
|
2,732.3
|
|
|
$
|
1,883.2
|
|
|
$
|
849.1
|
|
|
45.1
|
%
|
|
|
|
Used vehicle retail sales
|
1,571.9
|
|
|
1,096.1
|
|
|
475.8
|
|
|
43.4
|
%
|
|
|
|
Used vehicle wholesale sales
|
111.0
|
|
|
76.0
|
|
|
35.0
|
|
|
46.0
|
%
|
|
|
|
Total used
|
1,682.9
|
|
|
1,172.1
|
|
|
510.8
|
|
|
43.6
|
%
|
|
|
|
Parts and service sales
|
624.8
|
|
|
553.1
|
|
|
71.7
|
|
|
13.0
|
%
|
|
|
|
F&I, net
|
257.9
|
|
|
185.2
|
|
|
72.6
|
|
|
39.2
|
%
|
|
|
|
Total revenues
|
$
|
5,297.9
|
|
|
$
|
3,793.6
|
|
|
$
|
1,504.3
|
|
|
39.7
|
%
|
|
|
|
Gross profit:
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
$
|
221.0
|
|
|
$
|
102.5
|
|
|
$
|
118.5
|
|
|
115.6
|
%
|
|
|
|
Used vehicle retail sales
|
136.4
|
|
|
72.3
|
|
|
64.1
|
|
|
88.7
|
%
|
|
|
|
Used vehicle wholesale sales
|
10.1
|
|
|
2.4
|
|
|
7.7
|
|
|
NM
|
|
|
|
Total used
|
146.5
|
|
|
74.7
|
|
|
71.8
|
|
|
96.2
|
%
|
|
|
|
Parts and service sales
|
344.3
|
|
|
295.6
|
|
|
48.7
|
|
|
16.5
|
%
|
|
|
|
F&I, net
|
257.9
|
|
|
185.2
|
|
|
72.6
|
|
|
39.2
|
%
|
|
|
|
Total gross profit
|
$
|
969.7
|
|
|
$
|
658.1
|
|
|
$
|
311.6
|
|
|
47.4
|
%
|
|
|
|
Gross margin:
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
8.1
|
%
|
|
5.4
|
%
|
|
2.6
|
%
|
|
|
|
|
|
Used vehicle retail sales
|
8.7
|
%
|
|
6.6
|
%
|
|
2.1
|
%
|
|
|
|
|
|
Used vehicle wholesale sales
|
9.1
|
%
|
|
3.2
|
%
|
|
6.0
|
%
|
|
|
|
|
|
Total used
|
8.7
|
%
|
|
6.4
|
%
|
|
2.3
|
%
|
|
|
|
|
|
Parts and service sales
|
55.1
|
%
|
|
53.5
|
%
|
|
1.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gross margin
|
18.3
|
%
|
|
17.3
|
%
|
|
1.0
|
%
|
|
|
|
|
|
Units sold:
|
|
|
|
|
|
|
|
|
|
|
Retail new vehicles sold
|
62,711
|
|
|
45,902
|
|
|
16,809
|
|
|
36.6
|
%
|
|
|
|
Retail used vehicles sold
|
64,090
|
|
|
52,971
|
|
|
11,119
|
|
|
21.0
|
%
|
|
|
|
Wholesale used vehicles sold
|
12,927
|
|
|
11,981
|
|
|
946
|
|
|
7.9
|
%
|
|
|
|
Total used
|
77,017
|
|
|
64,952
|
|
|
12,065
|
|
|
18.6
|
%
|
|
|
|
Average sales price per unit sold:
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail
|
$
|
43,570
|
|
|
$
|
41,026
|
|
|
$
|
2,544
|
|
|
6.2
|
%
|
|
|
|
Used vehicle retail
|
$
|
24,526
|
|
|
$
|
20,692
|
|
|
$
|
3,835
|
|
|
18.5
|
%
|
|
|
|
Gross profit per unit sold:
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
$
|
3,524
|
|
|
$
|
2,234
|
|
|
$
|
1,291
|
|
|
57.8
|
%
|
|
|
|
Used vehicle retail sales
|
$
|
2,128
|
|
|
$
|
1,364
|
|
|
$
|
764
|
|
|
56.0
|
%
|
|
|
|
Used vehicle wholesale sales
|
$
|
785
|
|
|
$
|
201
|
|
|
$
|
583
|
|
|
NM
|
|
|
|
Total used
|
$
|
1,903
|
|
|
$
|
1,150
|
|
|
$
|
753
|
|
|
65.5
|
%
|
|
|
|
F&I PRU
|
$
|
2,034
|
|
|
$
|
1,874
|
|
|
$
|
160
|
|
|
8.6
|
%
|
|
|
|
Other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SG&A expenses
|
$
|
571.5
|
|
|
$
|
454.1
|
|
|
$
|
117.3
|
|
|
25.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SG&A as % gross profit
|
58.9
|
%
|
|
69.0
|
%
|
|
(10.1)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NM — Not Meaningful
The following discussion of our U.S. operating results is on actual and same store basis. The difference between reported amounts and same store amounts is related to acquisition and disposition activity, as well as new add-point openings. During 2020, our U.S. dealership operations were impacted by reduced demand caused by the COVID-19 pandemic and the restrictions put in place by local governments to contain the virus.
Revenues
Total revenues in the U.S. during the six months ended June 30, 2021 increased $1,490.6 million, or 38.8%, as compared to the same period in 2020. Total same store revenues in the U.S. during the six months ended June 30, 2021 increased $1,504.3 million, or 39.7%, as compared to the same period in 2020 driven by increases in all of our revenue streams. The increases were the result of a robust recovery during the year as consumer demand was extremely strong. During the same period in 2020, the COVID-19 pandemic had dampened sales activity as a result of the social distancing restrictions.
Gross Profit
Total gross profit in the U.S. during the six months ended June 30, 2021 increased $310.9 million, or 46.7%, as compared to the same period in 2020. Total same store gross profit in the U.S. during the six months ended June 30, 2021 increased $311.6 million, or 47.4%, as compared to the same period in 2020 driven by increases in all of our operations. New vehicle retail same store gross profit increased 115.6% driven by a 57.8% increase in new vehicle retail same store gross profit per unit sold, coupled with a 36.6% increase in new vehicle retail unit sales. The increase in new vehicle retail same store gross profit per unit sold reflects higher demand and inventory supply constraints as a result of the global semiconductor chip shortage. Used vehicle retail same store gross profit increased 88.7% driven by a 56.0% increase in used vehicle retail same store gross profit per unit sold, coupled with a 21.0% increase in used vehicle retail unit sales. The increase in used vehicle retail same store gross profit per unit sold reflects inventory constraints and the resulting increase in market prices. Used vehicle wholesale same store gross profit increased as industry supply shortages drove up auction prices as reflected in the Manheim Index. Parts and service same store gross profit increased 16.5% primarily driven by the increase in our customer-pay business reflecting increased business activity. F&I same store gross profit increased 39.2% driven by increases in same store retail unit sales volumes, higher income per contract and improved penetration rates on most of our finance and insurance product offerings, partially offset by an increase in our overall chargeback experience. Total same store gross margin increased 100 basis points driven by higher vehicle and parts and service margins reflecting vehicle supply constraints, improvements in customer pay and an increase in internal work associated with higher vehicle sales volumes.
SG&A Expenses
Our SG&A expenses consist primarily of personnel costs, including salaries, commissions and incentive-based compensation, as well as rent and facility costs, advertising and other expenses (which includes legal, professional fees and general corporate expenses). Total SG&A expenses in the U.S. during the six months ended June 30, 2021 increased $113.5 million, or 24.6%, as compared to the same period in 2020. Total same store SG&A expenses in the U.S. during the six months ended June 30, 2021, increased $117.3 million, or 25.8%, as compared to the same period in 2020, primarily driven by increased variable commission payments as a result of improvements in sales volume and margins and an increase in other variable expenses associated with the rise in business activity. Total same store SG&A expenses in the U.S. in the first six months of 2021 included $2.2 million in disaster pay and insurance deductible expense associated with the February winter storm in Texas and a $1.0 million gain related to a non-core legal settlement. Total same store SG&A expenses in the U.S. in the first six months of 2020 included $10.6 million in expense for an out of period adjustment related to stock compensation. Total same store SG&A as a percent of gross profit decreased from 69.0% for the six months ended 2020 to 58.9% for the same period of 2021 driven by productivity gains and higher vehicle margins.
Reported Operating Data — U.K.
(In millions, except unit data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
|
|
|
2021
|
|
2020
|
|
Increase/ (Decrease)
|
|
% Change
|
|
|
Currency Impact on Current Period Results
|
|
Constant Currency % Change
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
$
|
301.2
|
|
|
$
|
127.2
|
|
|
$
|
174.0
|
|
|
136.8
|
%
|
|
|
$
|
32.9
|
|
|
110.9
|
%
|
|
|
|
|
|
Used vehicle retail sales
|
300.9
|
|
|
92.8
|
|
|
208.1
|
|
|
224.1
|
%
|
|
|
32.7
|
|
|
188.9
|
%
|
|
|
|
|
|
Used vehicle wholesale sales
|
32.5
|
|
|
15.3
|
|
|
17.3
|
|
|
113.2
|
%
|
|
|
3.6
|
|
|
89.9
|
%
|
|
|
|
|
|
Total used
|
333.4
|
|
|
108.1
|
|
|
225.3
|
|
|
208.5
|
%
|
|
|
36.3
|
|
|
174.9
|
%
|
|
|
|
|
|
Parts and service sales
|
50.3
|
|
|
21.8
|
|
|
28.5
|
|
|
130.5
|
%
|
|
|
5.5
|
|
|
105.4
|
%
|
|
|
|
|
|
F&I, net
|
15.7
|
|
|
6.4
|
|
|
9.4
|
|
|
147.1
|
%
|
|
|
1.7
|
|
|
120.3
|
%
|
|
|
|
|
|
Total revenues
|
$
|
700.7
|
|
|
$
|
263.5
|
|
|
$
|
437.2
|
|
|
165.9
|
%
|
|
|
$
|
76.4
|
|
|
136.9
|
%
|
|
|
|
|
|
Gross profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
$
|
18.4
|
|
|
$
|
5.9
|
|
|
$
|
12.5
|
|
|
213.2
|
%
|
|
|
$
|
2.0
|
|
|
179.0
|
%
|
|
|
|
|
|
Used vehicle retail sales
|
20.8
|
|
|
4.9
|
|
|
15.9
|
|
|
326.2
|
%
|
|
|
2.3
|
|
|
280.1
|
%
|
|
|
|
|
|
Used vehicle wholesale sales
|
2.5
|
|
|
0.4
|
|
|
2.2
|
|
|
NM
|
|
|
0.3
|
|
|
NM
|
|
|
|
|
|
Total used
|
23.3
|
|
|
5.2
|
|
|
18.1
|
|
|
345.7
|
%
|
|
|
2.5
|
|
|
297.7
|
%
|
|
|
|
|
|
Parts and service sales
|
31.0
|
|
|
11.9
|
|
|
19.0
|
|
|
159.2
|
%
|
|
|
3.4
|
|
|
131.1
|
%
|
|
|
|
|
|
F&I, net
|
15.7
|
|
|
6.4
|
|
|
9.4
|
|
|
147.1
|
%
|
|
|
1.7
|
|
|
120.3
|
%
|
|
|
|
|
|
Total gross profit
|
$
|
88.4
|
|
|
$
|
29.4
|
|
|
$
|
59.0
|
|
|
200.6
|
%
|
|
|
$
|
9.6
|
|
|
167.9
|
%
|
|
|
|
|
|
Gross margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
6.1
|
%
|
|
4.6
|
%
|
|
1.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Used vehicle retail sales
|
6.9
|
%
|
|
5.3
|
%
|
|
1.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Used vehicle wholesale sales
|
7.7
|
%
|
|
2.3
|
%
|
|
5.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Total used
|
7.0
|
%
|
|
4.8
|
%
|
|
2.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Parts and service sales
|
61.5
|
%
|
|
54.7
|
%
|
|
6.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gross margin
|
12.6
|
%
|
|
11.2
|
%
|
|
1.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Units sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail new vehicles sold
|
7,395
|
|
|
3,841
|
|
|
3,554
|
|
|
92.5
|
%
|
|
|
|
|
|
|
|
|
|
|
Retail used vehicles sold
|
10,494
|
|
|
4,040
|
|
|
6,454
|
|
|
159.8
|
%
|
|
|
|
|
|
|
|
|
|
|
Wholesale used vehicles sold
|
4,124
|
|
|
1,829
|
|
|
2,295
|
|
|
125.5
|
%
|
|
|
|
|
|
|
|
|
|
|
Total used
|
14,618
|
|
|
5,869
|
|
|
8,749
|
|
|
149.1
|
%
|
|
|
|
|
|
|
|
|
|
|
Average sales price per unit sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail
|
$
|
40,727
|
|
|
$
|
33,119
|
|
|
$
|
7,608
|
|
|
23.0
|
%
|
|
|
$
|
4,455
|
|
|
9.5
|
%
|
|
|
|
|
|
Used vehicle retail
|
$
|
28,672
|
|
|
$
|
22,978
|
|
|
$
|
5,694
|
|
|
24.8
|
%
|
|
|
$
|
3,114
|
|
|
11.2
|
%
|
|
|
|
|
|
Gross profit per unit sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
$
|
2,484
|
|
|
$
|
1,527
|
|
|
$
|
957
|
|
|
62.7
|
%
|
|
|
$
|
271
|
|
|
44.9
|
%
|
|
|
|
|
|
Used vehicle retail sales
|
$
|
1,984
|
|
|
$
|
1,209
|
|
|
$
|
775
|
|
|
64.1
|
%
|
|
|
$
|
215
|
|
|
46.3
|
%
|
|
|
|
|
|
Used vehicle wholesale sales
|
$
|
611
|
|
|
$
|
192
|
|
|
$
|
419
|
|
|
NM
|
|
|
$
|
64
|
|
|
NM
|
|
|
|
|
|
Total used
|
$
|
1,597
|
|
|
$
|
892
|
|
|
$
|
705
|
|
|
79.0
|
%
|
|
|
$
|
172
|
|
|
59.7
|
%
|
|
|
|
|
|
F&I PRU
|
$
|
879
|
|
|
$
|
808
|
|
|
$
|
72
|
|
|
8.9
|
%
|
|
|
$
|
95
|
|
|
(2.9)
|
%
|
|
|
|
|
|
Other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SG&A expenses
|
$
|
56.0
|
|
|
$
|
28.3
|
|
|
$
|
27.7
|
|
|
98.0
|
%
|
|
|
$
|
6.2
|
|
|
76.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SG&A as % gross profit
|
63.4
|
%
|
|
96.2
|
%
|
|
(32.8)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NM — Not Meaningful
Same Store Operating Data — U.K.
(In millions, except unit data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
|
|
|
|
|
2021
|
|
2020
|
|
Increase/ (Decrease)
|
|
% Change
|
|
|
Currency Impact on Current Period Results
|
|
Constant Currency % Change
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
$
|
301.2
|
|
|
$
|
126.2
|
|
|
$
|
175.0
|
|
|
138.7
|
%
|
|
|
$
|
32.9
|
|
|
112.6
|
%
|
|
|
|
|
|
|
|
Used vehicle retail sales
|
300.9
|
|
|
91.8
|
|
|
209.1
|
|
|
227.7
|
%
|
|
|
32.7
|
|
|
192.1
|
%
|
|
|
|
|
|
|
|
Used vehicle wholesale sales
|
32.5
|
|
|
15.2
|
|
|
17.3
|
|
|
113.9
|
%
|
|
|
3.6
|
|
|
90.5
|
%
|
|
|
|
|
|
|
|
Total used
|
333.4
|
|
|
107.0
|
|
|
226.4
|
|
|
211.6
|
%
|
|
|
36.3
|
|
|
177.7
|
%
|
|
|
|
|
|
|
|
Parts and service sales
|
47.0
|
|
|
21.4
|
|
|
25.6
|
|
|
119.7
|
%
|
|
|
5.1
|
|
|
95.8
|
%
|
|
|
|
|
|
|
|
F&I, net
|
15.7
|
|
|
6.3
|
|
|
9.5
|
|
|
151.1
|
%
|
|
|
1.7
|
|
|
123.9
|
%
|
|
|
|
|
|
|
|
Total revenues
|
$
|
697.3
|
|
|
$
|
260.9
|
|
|
$
|
436.5
|
|
|
167.3
|
%
|
|
|
$
|
76.0
|
|
|
138.2
|
%
|
|
|
|
|
|
|
|
Gross profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
$
|
18.4
|
|
|
$
|
5.8
|
|
|
$
|
12.6
|
|
|
215.9
|
%
|
|
|
$
|
2.0
|
|
|
181.4
|
%
|
|
|
|
|
|
|
|
Used vehicle retail sales
|
20.8
|
|
|
4.8
|
|
|
16.0
|
|
|
331.9
|
%
|
|
|
2.3
|
|
|
285.1
|
%
|
|
|
|
|
|
|
|
Used vehicle wholesale sales
|
2.5
|
|
|
0.3
|
|
|
2.2
|
|
|
NM
|
|
|
0.3
|
|
|
NM
|
|
|
|
|
|
|
|
Total used
|
23.3
|
|
|
5.2
|
|
|
18.2
|
|
|
351.5
|
%
|
|
|
2.5
|
|
|
302.9
|
%
|
|
|
|
|
|
|
|
Parts and service sales
|
29.2
|
|
|
11.7
|
|
|
17.5
|
|
|
149.3
|
%
|
|
|
3.2
|
|
|
122.2
|
%
|
|
|
|
|
|
|
|
F&I, net
|
15.7
|
|
|
6.3
|
|
|
9.5
|
|
|
151.1
|
%
|
|
|
1.7
|
|
|
123.9
|
%
|
|
|
|
|
|
|
|
Total gross profit
|
$
|
86.7
|
|
|
$
|
29.0
|
|
|
$
|
57.7
|
|
|
199.1
|
%
|
|
|
$
|
9.4
|
|
|
166.6
|
%
|
|
|
|
|
|
|
|
Gross margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
6.1
|
%
|
|
4.6
|
%
|
|
1.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Used vehicle retail sales
|
6.9
|
%
|
|
5.3
|
%
|
|
1.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Used vehicle wholesale sales
|
7.7
|
%
|
|
2.3
|
%
|
|
5.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total used
|
7.0
|
%
|
|
4.8
|
%
|
|
2.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parts and service sales
|
62.2
|
%
|
|
54.8
|
%
|
|
7.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gross margin
|
12.4
|
%
|
|
11.1
|
%
|
|
1.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Units sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail new vehicles sold
|
7,395
|
|
|
3,791
|
|
|
3,604
|
|
|
95.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail used vehicles sold
|
10,494
|
|
|
3,969
|
|
|
6,525
|
|
|
164.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholesale used vehicles sold
|
4,124
|
|
|
1,809
|
|
|
2,315
|
|
|
128.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Total used
|
14,618
|
|
|
5,778
|
|
|
8,840
|
|
|
153.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Average sales price per unit sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail
|
$
|
40,727
|
|
|
$
|
33,284
|
|
|
$
|
7,443
|
|
|
22.4
|
%
|
|
|
$
|
4,455
|
|
|
9.0
|
%
|
|
|
|
|
|
|
|
Used vehicle retail
|
$
|
28,672
|
|
|
$
|
23,131
|
|
|
$
|
5,541
|
|
|
24.0
|
%
|
|
|
$
|
3,114
|
|
|
10.5
|
%
|
|
|
|
|
|
|
|
Gross profit per unit sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
$
|
2,484
|
|
|
$
|
1,533
|
|
|
$
|
950
|
|
|
62.0
|
%
|
|
|
$
|
271
|
|
|
44.3
|
%
|
|
|
|
|
|
|
|
Used vehicle retail sales
|
$
|
1,984
|
|
|
$
|
1,215
|
|
|
$
|
770
|
|
|
63.3
|
%
|
|
|
$
|
215
|
|
|
45.7
|
%
|
|
|
|
|
|
|
|
Used vehicle wholesale sales
|
$
|
611
|
|
|
$
|
192
|
|
|
$
|
419
|
|
|
NM
|
|
|
$
|
64
|
|
|
NM
|
|
|
|
|
|
|
|
Total used
|
$
|
1,597
|
|
|
$
|
895
|
|
|
$
|
702
|
|
|
78.5
|
%
|
|
|
$
|
172
|
|
|
59.2
|
%
|
|
|
|
|
|
|
|
F&I PRU
|
$
|
879
|
|
|
$
|
807
|
|
|
$
|
72
|
|
|
8.9
|
%
|
|
|
$
|
95
|
|
|
(2.9)
|
%
|
|
|
|
|
|
|
|
Other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SG&A expenses
|
$
|
54.9
|
|
|
$
|
27.3
|
|
|
$
|
27.5
|
|
|
100.7
|
%
|
|
|
$
|
6.1
|
|
|
78.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SG&A as % gross profit
|
63.3
|
%
|
|
94.4
|
%
|
|
(31.1)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NM — Not Meaningful
The following discussion of our U.K. operating results is on actual and same store basis. The difference between reported amounts and same store amounts is related to acquisition and disposition activity, as well as new add-point openings. At the end of 2020, the U.K. experienced a surge in COVID-19 cases, which led to a government-mandated closure of all non-essential businesses beginning January 4, 2021 through April 12, 2021. In mid-April 2021, the COVID-19 restrictions affecting our U.K. dealership showrooms were lifted, and our dealerships were able to reopen. In the prior year, beginning March 21, 2020, the government mandated the closure of all U.K. dealerships in efforts to stop the spread of the virus and the government shutdown remained in effect through May 18, 2020 for service, with the exception of emergency vehicle repairs. U.K. showrooms were allowed to reopen June 1, 2020.
Revenues
Total revenues in the U.K. during the three months ended June 30, 2021 increased $437.2 million, or 165.9%, as compared to the same period in 2020. Total same store revenues in the U.K. during the three months ended June 30, 2021 increased $436.5 million, or 167.3%, as compared to the same period in 2020. On a constant currency basis, total same store revenues increased 138.2% driven by increases in all of our revenue streams. These increases were largely the result of COVID-19 lockdown restrictions being lifted in mid-April, allowing our dealership showrooms to reopen and increased consumer demand, which was pent-up over the past several years due to both Brexit and the COVID-19 pandemic.
Gross Profit
Total gross profit in the U.K. during the three months ended June 30, 2021 increased $59.0 million, or 200.6%, as compared to the same period in 2020. Total same store gross profit in the U.K. during the three months ended June 30, 2021 increased $57.7 million, or 199.1%, as compared to the same period in 2020. On a constant currency basis, total same store gross profit increased 166.6%, driven by improvements in all of our operations. New vehicle retail same store gross profit increased 181.4% on a constant currency basis, driven by a 44.3% increase in new vehicle retail same store gross profit per unit, coupled with a 95.1% increase in new vehicle retail same store unit sales. The increase in new vehicle gross profit per unit primarily reflects both higher demand and supply constraints as OEMs are producing fewer vehicles due to the global semiconductor chip shortage. At June 30, 2021, our U.K. new vehicle inventory stood at a 31 days’ supply, which was 18 days lower than the same period last year and 71 days lower than December 31, 2020 days’ supply of 102. On a constant currency basis, used vehicle retail same store gross profit improved 285.1%, reflecting a 164.4% increase in used vehicle retail same store unit sales, coupled with a 45.7% increase in used vehicle retail same store gross profit per unit sold. The increase in used vehicle retail same store gross profit per unit sold was driven by increased consumer demand and new vehicle inventory shortages. Parts and service same store gross profit on a constant currency basis increased 122.2%, as all parts and service businesses increased with the easing of COVID-19 restrictions in mid-April. F&I same store gross profit on a constant currency basis increased 123.9% as an increase in retail unit sales volumes coupled with higher penetration rates were partially offset by lower income per contract on VSC and other product offerings and a higher overall chargeback experience. Total same store gross margin in the U.K. increased 130 basis points driven by improved parts and service margins, reflecting higher internal work as a result of increased new and used sales volumes, and higher new and used vehicle margins because of higher demand and vehicle supply constraints.
SG&A Expenses
Our SG&A expenses consist primarily of personnel costs, including salaries, commissions and incentive-based compensation, as well as rent and facility costs, advertising and other expenses (which includes legal, professional fees and general corporate expenses). Total SG&A expenses in the U.K. during the three months ended June 30, 2021 increased $27.7 million, or 98.0%, as compared to the same period in 2020. Total same store SG&A expenses in the U.K. during the three months ended June 30, 2021, increased $27.5 million, or 100.7%, as compared to the same period in 2020. On a constant currency basis, total same store SG&A expenses increased 78.4%, driven by increased variable commission payments as a result of increased sales and margins during the second quarter of 2021 as compared to last year. We have continued to focus on cost discipline throughout the second quarter of 2021. As a percentage of gross profit, total same store SG&A expenses decreased from 94.4% for the second quarter of 2020 to 63.3% for the same period of 2021 driven by productivity gains and higher vehicle margins realized during the second quarter of 2021 as compared to last year. Total same store SG&A expenses in the second quarter of 2020 included $1.2 million in severance costs for redundancy driven by the COVID-19 pandemic.
Reported Operating Data - U.K.
(In millions, except unit data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
|
|
|
2021
|
|
2020
|
|
Increase/ (Decrease)
|
|
% Change
|
|
|
Currency Impact on Current Period Results
|
|
Constant Currency % Change
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
$
|
564.3
|
|
|
$
|
423.5
|
|
|
$
|
140.8
|
|
|
33.3
|
%
|
|
|
$
|
52.3
|
|
|
20.9
|
%
|
|
|
|
|
|
Used vehicle retail sales
|
492.5
|
|
|
281.6
|
|
|
210.9
|
|
|
74.9
|
%
|
|
|
41.7
|
|
|
60.1
|
%
|
|
|
|
|
|
Used vehicle wholesale sales
|
60.4
|
|
|
51.1
|
|
|
9.3
|
|
|
18.1
|
%
|
|
|
5.0
|
|
|
8.3
|
%
|
|
|
|
|
|
Total used
|
552.8
|
|
|
332.7
|
|
|
220.1
|
|
|
66.2
|
%
|
|
|
46.7
|
|
|
52.1
|
%
|
|
|
|
|
|
Parts and service sales
|
106.8
|
|
|
78.3
|
|
|
28.5
|
|
|
36.5
|
%
|
|
|
8.8
|
|
|
25.2
|
%
|
|
|
|
|
|
F&I, net
|
26.3
|
|
|
19.7
|
|
|
6.6
|
|
|
33.6
|
%
|
|
|
2.4
|
|
|
21.5
|
%
|
|
|
|
|
|
Total revenues
|
$
|
1,250.3
|
|
|
$
|
854.2
|
|
|
$
|
396.1
|
|
|
46.4
|
%
|
|
|
$
|
110.7
|
|
|
33.4
|
%
|
|
|
|
|
|
Gross profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
$
|
33.2
|
|
|
$
|
17.9
|
|
|
$
|
15.2
|
|
|
85.0
|
%
|
|
|
$
|
3.2
|
|
|
66.9
|
%
|
|
|
|
|
|
Used vehicle retail sales
|
29.0
|
|
|
14.0
|
|
|
15.0
|
|
|
106.5
|
%
|
|
|
2.6
|
|
|
88.3
|
%
|
|
|
|
|
|
Used vehicle wholesale sales
|
2.4
|
|
|
0.3
|
|
|
2.0
|
|
|
NM
|
|
|
0.2
|
|
|
NM
|
|
|
|
|
|
Total used
|
31.4
|
|
|
14.4
|
|
|
17.0
|
|
|
118.3
|
%
|
|
|
2.8
|
|
|
99.0
|
%
|
|
|
|
|
|
Parts and service sales
|
63.6
|
|
|
42.3
|
|
|
21.3
|
|
|
50.5
|
%
|
|
|
5.3
|
|
|
37.9
|
%
|
|
|
|
|
|
F&I, net
|
26.3
|
|
|
19.7
|
|
|
6.6
|
|
|
33.6
|
%
|
|
|
2.4
|
|
|
21.5
|
%
|
|
|
|
|
|
Total gross profit
|
$
|
154.4
|
|
|
$
|
94.2
|
|
|
$
|
60.2
|
|
|
63.8
|
%
|
|
|
$
|
13.7
|
|
|
49.3
|
%
|
|
|
|
|
|
Gross margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
5.9
|
%
|
|
4.2
|
%
|
|
1.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Used vehicle retail sales
|
5.9
|
%
|
|
5.0
|
%
|
|
0.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Used vehicle wholesale sales
|
3.9
|
%
|
|
0.6
|
%
|
|
3.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Total used
|
5.7
|
%
|
|
4.3
|
%
|
|
1.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Parts and service sales
|
59.5
|
%
|
|
54.0
|
%
|
|
5.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gross margin
|
12.3
|
%
|
|
11.0
|
%
|
|
1.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Units sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail new vehicles sold
|
13,935
|
|
|
12,735
|
|
|
1,200
|
|
|
9.4
|
%
|
|
|
|
|
|
|
|
|
|
|
Retail used vehicles sold
|
17,606
|
|
|
12,064
|
|
|
5,542
|
|
|
45.9
|
%
|
|
|
|
|
|
|
|
|
|
|
Wholesale used vehicles sold
|
7,262
|
|
|
6,413
|
|
|
849
|
|
|
13.2
|
%
|
|
|
|
|
|
|
|
|
|
|
Total used
|
24,868
|
|
|
18,477
|
|
|
6,391
|
|
|
34.6
|
%
|
|
|
|
|
|
|
|
|
|
|
Average sales price per unit sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail
|
$
|
40,498
|
|
|
$
|
33,255
|
|
|
$
|
7,243
|
|
|
21.8
|
%
|
|
|
$
|
3,750
|
|
|
10.5
|
%
|
|
|
|
|
|
Used vehicle retail
|
$
|
27,973
|
|
|
$
|
23,344
|
|
|
$
|
4,629
|
|
|
19.8
|
%
|
|
|
$
|
2,371
|
|
|
9.7
|
%
|
|
|
|
|
|
Gross profit per unit sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
$
|
2,379
|
|
|
$
|
1,407
|
|
|
$
|
972
|
|
|
69.1
|
%
|
|
|
$
|
233
|
|
|
52.5
|
%
|
|
|
|
|
|
Used vehicle retail sales
|
$
|
1,647
|
|
|
$
|
1,164
|
|
|
$
|
483
|
|
|
41.5
|
%
|
|
|
$
|
145
|
|
|
29.0
|
%
|
|
|
|
|
|
Used vehicle wholesale sales
|
$
|
325
|
|
|
$
|
50
|
|
|
$
|
275
|
|
|
NM
|
|
|
$
|
30
|
|
|
NM
|
|
|
|
|
|
Total used
|
$
|
1,261
|
|
|
$
|
777
|
|
|
$
|
483
|
|
|
62.2
|
%
|
|
|
$
|
111
|
|
|
47.9
|
%
|
|
|
|
|
|
F&I PRU
|
$
|
834
|
|
|
$
|
794
|
|
|
$
|
40
|
|
|
5.0
|
%
|
|
|
$
|
75
|
|
|
(4.5)
|
%
|
|
|
|
|
|
Other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SG&A expenses
|
$
|
105.7
|
|
|
$
|
88.2
|
|
|
$
|
17.5
|
|
|
19.9
|
%
|
|
|
$
|
9.2
|
|
|
9.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SG&A as % gross profit
|
68.4
|
%
|
|
93.5
|
%
|
|
(25.1)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NM — Not Meaningful
Same Store Operating Data - U.K.
(In millions, except unit data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
|
|
|
|
|
2021
|
|
2020
|
|
Increase/ (Decrease)
|
|
% Change
|
|
|
Currency Impact on Current Period Results
|
|
Constant Currency % Change
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
$
|
564.2
|
|
|
$
|
421.4
|
|
|
$
|
142.8
|
|
|
33.9
|
%
|
|
|
$
|
52.2
|
|
|
21.5
|
%
|
|
|
|
|
|
|
|
Used vehicle retail sales
|
492.0
|
|
|
279.6
|
|
|
212.4
|
|
|
76.0
|
%
|
|
|
41.7
|
|
|
61.1
|
%
|
|
|
|
|
|
|
|
Used vehicle wholesale sales
|
60.3
|
|
|
51.0
|
|
|
9.3
|
|
|
18.3
|
%
|
|
|
5.0
|
|
|
8.5
|
%
|
|
|
|
|
|
|
|
Total used
|
552.3
|
|
|
330.6
|
|
|
221.7
|
|
|
67.1
|
%
|
|
|
46.7
|
|
|
53.0
|
%
|
|
|
|
|
|
|
|
Parts and service sales
|
101.8
|
|
|
74.1
|
|
|
27.7
|
|
|
37.3
|
%
|
|
|
8.4
|
|
|
25.9
|
%
|
|
|
|
|
|
|
|
F&I, net
|
26.3
|
|
|
19.5
|
|
|
6.8
|
|
|
35.0
|
%
|
|
|
2.4
|
|
|
22.8
|
%
|
|
|
|
|
|
|
|
Total revenues
|
$
|
1,244.5
|
|
|
$
|
845.5
|
|
|
$
|
399.0
|
|
|
47.2
|
%
|
|
|
$
|
110.2
|
|
|
34.2
|
%
|
|
|
|
|
|
|
|
Gross profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
$
|
33.1
|
|
|
$
|
17.8
|
|
|
$
|
15.3
|
|
|
86.1
|
%
|
|
|
$
|
3.2
|
|
|
67.9
|
%
|
|
|
|
|
|
|
|
Used vehicle retail sales
|
29.0
|
|
|
13.9
|
|
|
15.1
|
|
|
108.3
|
%
|
|
|
2.5
|
|
|
90.0
|
%
|
|
|
|
|
|
|
|
Used vehicle wholesale sales
|
2.4
|
|
|
0.3
|
|
|
2.1
|
|
|
NM
|
|
|
0.2
|
|
|
NM
|
|
|
|
|
|
|
|
Total used
|
31.4
|
|
|
14.2
|
|
|
17.2
|
|
|
120.7
|
%
|
|
|
2.8
|
|
|
101.2
|
%
|
|
|
|
|
|
|
|
Parts and service sales
|
61.2
|
|
|
40.5
|
|
|
20.7
|
|
|
51.2
|
%
|
|
|
5.1
|
|
|
38.6
|
%
|
|
|
|
|
|
|
|
F&I, net
|
26.3
|
|
|
19.5
|
|
|
6.8
|
|
|
35.0
|
%
|
|
|
2.4
|
|
|
22.8
|
%
|
|
|
|
|
|
|
|
Total gross profit
|
$
|
152.0
|
|
|
$
|
92.0
|
|
|
$
|
60.0
|
|
|
65.3
|
%
|
|
|
$
|
13.5
|
|
|
50.6
|
%
|
|
|
|
|
|
|
|
Gross margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
5.9
|
%
|
|
4.2
|
%
|
|
1.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Used vehicle retail sales
|
5.9
|
%
|
|
5.0
|
%
|
|
0.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Used vehicle wholesale sales
|
4.0
|
%
|
|
0.6
|
%
|
|
3.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total used
|
5.7
|
%
|
|
4.3
|
%
|
|
1.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parts and service sales
|
60.2
|
%
|
|
54.6
|
%
|
|
5.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gross margin
|
12.2
|
%
|
|
10.9
|
%
|
|
1.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Units sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail new vehicles sold
|
13,927
|
|
|
12,631
|
|
|
1,296
|
|
|
10.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail used vehicles sold
|
17,580
|
|
|
11,922
|
|
|
5,658
|
|
|
47.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholesale used vehicles sold
|
7,249
|
|
|
6,358
|
|
|
891
|
|
|
14.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Total used
|
24,829
|
|
|
18,280
|
|
|
6,549
|
|
|
35.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Average sales price per unit sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail
|
$
|
40,509
|
|
|
$
|
33,363
|
|
|
$
|
7,146
|
|
|
21.4
|
%
|
|
|
$
|
3,750
|
|
|
10.2
|
%
|
|
|
|
|
|
|
|
Used vehicle retail
|
$
|
27,988
|
|
|
$
|
23,452
|
|
|
$
|
4,536
|
|
|
19.3
|
%
|
|
|
$
|
2,370
|
|
|
9.2
|
%
|
|
|
|
|
|
|
|
Gross profit per unit sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
$
|
2,379
|
|
|
$
|
1,409
|
|
|
$
|
969
|
|
|
68.8
|
%
|
|
|
$
|
232
|
|
|
52.3
|
%
|
|
|
|
|
|
|
|
Used vehicle retail sales
|
$
|
1,648
|
|
|
$
|
1,167
|
|
|
$
|
481
|
|
|
41.3
|
%
|
|
|
$
|
145
|
|
|
28.8
|
%
|
|
|
|
|
|
|
|
Used vehicle wholesale sales
|
$
|
333
|
|
|
$
|
49
|
|
|
$
|
284
|
|
|
NM
|
|
|
$
|
31
|
|
|
NM
|
|
|
|
|
|
|
|
Total used
|
$
|
1,264
|
|
|
$
|
778
|
|
|
$
|
486
|
|
|
62.5
|
%
|
|
|
$
|
112
|
|
|
48.1
|
%
|
|
|
|
|
|
|
|
F&I PRU
|
$
|
834
|
|
|
$
|
793
|
|
|
$
|
41
|
|
|
5.2
|
%
|
|
|
$
|
75
|
|
|
(4.3)
|
%
|
|
|
|
|
|
|
|
Other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SG&A expenses
|
$
|
103.1
|
|
|
$
|
85.1
|
|
|
$
|
17.9
|
|
|
21.0
|
%
|
|
|
$
|
9.0
|
|
|
10.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SG&A as % gross profit
|
67.8
|
%
|
|
92.6
|
%
|
|
(24.8)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NM — Not Meaningful
The following discussion of our U.K. operating results is on actual and same store basis. The difference between reported amounts and same store amounts is related to acquisition and disposition activity, as well as new add-point openings. At the end of 2020, the U.K. experienced a surge in COVID-19 cases, which led to a government-mandated closure of all non-essential businesses beginning January 4, 2021 through April 12, 2021. The COVID-19 restrictions affecting our U.K. dealership showrooms were lifted in mid-April, resulting in increased business activity during the second quarter of 2021. In the prior year, beginning March 21, 2020, the government mandated the closure of all U.K. dealerships in efforts to stop the spread of the virus and the government shutdown remained in effect through May 18, 2020 for service, with the exception of emergency vehicle repairs. U.K. showrooms were allowed to reopen June 1, 2020.
Revenues
Total revenues in the U.K. during the six months ended June 30, 2021 increased $396.1 million, or 46.4%, as compared to the same period in 2020. Total same store revenues in the U.K. during the six months ended June 30, 2021 increased $399.0 million, or 47.2%, as compared to the same period in 2020. On a constant currency basis, total same store revenues increased 34.2%, driven by increases in all of our revenue streams. These increases were largely the result of COVID-19 lockdown restrictions being lifted in mid-April, allowing our dealership showrooms to reopen and increased consumer demand, which was pent-up over the past several years due to both Brexit and the COVID-19 pandemic.
Gross Profit
Total gross profit in the U.K. during the six months ended June 30, 2021 increased $60.2 million, or 63.8%, as compared to the same period in 2020. Total same store gross profit in the U.K. during the six months ended June 30, 2021 increased $60.0 million, or 65.3%, as compared to the same period in 2020. On a constant currency basis, total same store gross profit increased 50.6%, driven by improvements in all of our operations. New vehicle retail same store gross profit on a constant currency basis increased 67.9%, driven by a 52.3% increase in new vehicle retail same store average gross profit per unit sold, coupled with a 10.3% increase in new vehicle retail same store unit sales. The increase in new vehicle retail same store gross profit per unit sold reflects both increased demand and supply constraints related to the COVID-19 pandemic as many manufacturers had put a hold on production due to the global semiconductor chip shortage. Used vehicle retail same store gross profit on a constant currency basis increased 90.0% on a 28.8% increase in used vehicle retail same store average gross profit per unit sold, coupled with a 47.5% increase in used vehicle retail same store unit sales. The increase in used vehicle retail same store average gross profit per unit sold reflects higher demand and new vehicle supply shortages. Parts and service same store gross profit on a constant currency basis increased 38.6% as all parts and service businesses increased with the reduction of COVID-19 restrictions. F&I same store gross profit on a constant currency basis increased 22.8% as an increase in retail unit sales volumes was partially offset with lower penetration rates, lower income per contract on VSC and other product offerings and an overall increase in our chargeback experience. Total same store gross margin in the U.K. increased 130 basis points driven by improved parts and service margins, reflecting higher internal work as a result of increased new and used sales volumes, and higher new and used vehicle margins because of increased demand and vehicle supply constraints.
SG&A Expenses
Our SG&A expenses consist primarily of personnel costs, including salaries, commissions and incentive-based compensation, as well as rent and facility costs, advertising and other expenses (which includes legal, professional fees and general corporate expenses). Total SG&A expenses in the U.K. during the six months ended June 30, 2021 increased $17.5 million, or 19.9%, as compared to the same period in 2020. Total same store SG&A expenses in the U.K. during the six months ended June 30, 2021, increased $17.9 million, or 21.0%, as compared to the same period in 2020. On a constant currency basis, total same store SG&A expenses increased 10.5%, driven by the increase of business activity as COVID-19 restrictions were lifted early in the second quarter of 2021. We have continued to focus on cost discipline throughout the year. As a percentage of gross profit, total same store SG&A expenses decreased from 92.6% for the six months ended 2020 to 67.8% for the same period of 2021 driven by productivity gains and higher vehicle margins achieved during the six months ended June 30, 2021 as compared to the same period in 2020. Total same store SG&A expenses in 2020 included $1.2 million in severance costs for redundancy due to the COVID-19 pandemic.
Reported Operating Data — Brazil
(In millions, except unit data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
|
|
|
2021
|
|
2020
|
|
Increase/ (Decrease)
|
|
% Change
|
|
|
Currency Impact on Current Period Results
|
|
Constant Currency % Change
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
$
|
49.8
|
|
|
$
|
19.8
|
|
|
$
|
30.0
|
|
|
151.8
|
%
|
|
|
$
|
0.6
|
|
|
148.5
|
%
|
|
|
|
|
|
Used vehicle retail sales
|
11.8
|
|
|
7.5
|
|
|
4.4
|
|
|
58.4
|
%
|
|
|
0.1
|
|
|
56.6
|
%
|
|
|
|
|
|
Used vehicle wholesale sales
|
2.6
|
|
|
2.9
|
|
|
(0.2)
|
|
|
(8.3)
|
%
|
|
|
0.1
|
|
|
(10.9)
|
%
|
|
|
|
|
|
Total used
|
14.5
|
|
|
10.3
|
|
|
4.1
|
|
|
39.9
|
%
|
|
|
0.2
|
|
|
37.7
|
%
|
|
|
|
|
|
Parts and service sales
|
9.2
|
|
|
5.9
|
|
|
3.3
|
|
|
55.9
|
%
|
|
|
0.1
|
|
|
53.4
|
%
|
|
|
|
|
|
F&I, net
|
1.4
|
|
|
0.6
|
|
|
0.8
|
|
|
139.1
|
%
|
|
|
—
|
|
|
136.2
|
%
|
|
|
|
|
|
Total revenues
|
$
|
74.8
|
|
|
$
|
36.6
|
|
|
$
|
38.2
|
|
|
104.5
|
%
|
|
|
$
|
1.0
|
|
|
101.6
|
%
|
|
|
|
|
|
Gross profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
$
|
5.2
|
|
|
$
|
1.4
|
|
|
$
|
3.8
|
|
|
274.3
|
%
|
|
|
$
|
0.1
|
|
|
270.4
|
%
|
|
|
|
|
|
Used vehicle retail sales
|
1.0
|
|
|
0.4
|
|
|
0.5
|
|
|
126.0
|
%
|
|
|
—
|
|
|
124.6
|
%
|
|
|
|
|
|
Used vehicle wholesale sales
|
0.2
|
|
|
0.1
|
|
|
0.1
|
|
|
149.8
|
%
|
|
|
—
|
|
|
145.5
|
%
|
|
|
|
|
|
Total used
|
1.2
|
|
|
0.5
|
|
|
0.7
|
|
|
129.7
|
%
|
|
|
—
|
|
|
127.9
|
%
|
|
|
|
|
|
Parts and service sales
|
4.0
|
|
|
2.5
|
|
|
1.6
|
|
|
63.9
|
%
|
|
|
0.1
|
|
|
61.5
|
%
|
|
|
|
|
|
F&I, net
|
1.4
|
|
|
0.6
|
|
|
0.8
|
|
|
139.1
|
%
|
|
|
—
|
|
|
136.2
|
%
|
|
|
|
|
|
Total gross profit
|
$
|
11.8
|
|
|
$
|
4.9
|
|
|
$
|
6.8
|
|
|
138.6
|
%
|
|
|
$
|
0.2
|
|
|
135.5
|
%
|
|
|
|
|
|
Gross margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
10.4
|
%
|
|
7.0
|
%
|
|
3.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Used vehicle retail sales
|
8.2
|
%
|
|
5.8
|
%
|
|
2.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Used vehicle wholesale sales
|
7.6
|
%
|
|
2.8
|
%
|
|
4.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Total used
|
8.1
|
%
|
|
4.9
|
%
|
|
3.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Parts and service sales
|
43.9
|
%
|
|
41.8
|
%
|
|
2.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gross margin
|
15.7
|
%
|
|
13.5
|
%
|
|
2.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Units sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail new vehicles sold
|
1,451
|
|
|
694
|
|
|
757
|
|
|
109.1
|
%
|
|
|
|
|
|
|
|
|
|
|
Retail used vehicles sold
|
500
|
|
|
356
|
|
|
144
|
|
|
40.4
|
%
|
|
|
|
|
|
|
|
|
|
|
Wholesale used vehicles sold
|
235
|
|
|
324
|
|
|
(89)
|
|
|
(27.5)
|
%
|
|
|
|
|
|
|
|
|
|
|
Total used
|
735
|
|
|
680
|
|
|
55
|
|
|
8.1
|
%
|
|
|
|
|
|
|
|
|
|
|
Average sales price per unit sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail
|
$
|
34,313
|
|
|
$
|
28,495
|
|
|
$
|
5,818
|
|
|
20.4
|
%
|
|
|
$
|
438
|
|
|
18.9
|
%
|
|
|
|
|
|
Used vehicle retail
|
$
|
23,671
|
|
|
$
|
20,983
|
|
|
$
|
2,687
|
|
|
12.8
|
%
|
|
|
$
|
271
|
|
|
11.5
|
%
|
|
|
|
|
|
Gross profit per unit sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
$
|
3,578
|
|
|
$
|
1,999
|
|
|
$
|
1,579
|
|
|
79.0
|
%
|
|
|
$
|
38
|
|
|
77.1
|
%
|
|
|
|
|
|
Used vehicle retail sales
|
$
|
1,951
|
|
|
$
|
1,213
|
|
|
$
|
739
|
|
|
60.9
|
%
|
|
|
$
|
12
|
|
|
59.9
|
%
|
|
|
|
|
|
Used vehicle wholesale sales
|
$
|
850
|
|
|
$
|
247
|
|
|
$
|
603
|
|
|
NM
|
|
|
$
|
15
|
|
|
NM
|
|
|
|
|
|
Total used
|
$
|
1,599
|
|
|
$
|
752
|
|
|
$
|
847
|
|
|
112.6
|
%
|
|
|
$
|
13
|
|
|
110.8
|
%
|
|
|
|
|
|
F&I PRU
|
$
|
707
|
|
|
$
|
550
|
|
|
$
|
158
|
|
|
28.7
|
%
|
|
|
$
|
8
|
|
|
27.1
|
%
|
|
|
|
|
|
Other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SG&A expenses
|
$
|
8.1
|
|
|
$
|
5.6
|
|
|
$
|
2.5
|
|
|
44.0
|
%
|
|
|
$
|
0.1
|
|
|
42.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SG&A as % gross profit
|
68.8
|
%
|
|
114.0
|
%
|
|
(45.2)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NM — Not Meaningful
Same Store Operating Data — Brazil
(In millions, except unit data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
|
|
|
|
|
2021
|
|
2020
|
|
Increase/ (Decrease)
|
|
% Change
|
|
|
Currency Impact on Current Period Results
|
|
Constant Currency % Change
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
$
|
49.8
|
|
|
$
|
19.8
|
|
|
$
|
30.0
|
|
|
151.8
|
%
|
|
|
$
|
0.6
|
|
|
148.5
|
%
|
|
|
|
|
|
|
|
Used vehicle retail sales
|
11.8
|
|
|
7.4
|
|
|
4.4
|
|
|
59.0
|
%
|
|
|
0.1
|
|
|
57.2
|
%
|
|
|
|
|
|
|
|
Used vehicle wholesale sales
|
2.6
|
|
|
2.9
|
|
|
(0.2)
|
|
|
(8.3)
|
%
|
|
|
0.1
|
|
|
(10.9)
|
%
|
|
|
|
|
|
|
|
Total used
|
14.5
|
|
|
10.3
|
|
|
4.2
|
|
|
40.3
|
%
|
|
|
0.2
|
|
|
38.1
|
%
|
|
|
|
|
|
|
|
Parts and service sales
|
9.2
|
|
|
5.9
|
|
|
3.3
|
|
|
55.9
|
%
|
|
|
0.1
|
|
|
53.4
|
%
|
|
|
|
|
|
|
|
F&I, net
|
1.4
|
|
|
0.6
|
|
|
0.8
|
|
|
139.1
|
%
|
|
|
—
|
|
|
136.2
|
%
|
|
|
|
|
|
|
|
Total revenues
|
$
|
74.8
|
|
|
$
|
36.6
|
|
|
$
|
38.3
|
|
|
104.6
|
%
|
|
|
$
|
1.0
|
|
|
101.8
|
%
|
|
|
|
|
|
|
|
Gross profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
$
|
5.2
|
|
|
$
|
1.4
|
|
|
$
|
3.8
|
|
|
274.3
|
%
|
|
|
$
|
0.1
|
|
|
270.4
|
%
|
|
|
|
|
|
|
|
Used vehicle retail sales
|
1.0
|
|
|
0.4
|
|
|
0.6
|
|
|
128.5
|
%
|
|
|
—
|
|
|
127.1
|
%
|
|
|
|
|
|
|
|
Used vehicle wholesale sales
|
0.2
|
|
|
0.1
|
|
|
0.1
|
|
|
149.8
|
%
|
|
|
—
|
|
|
145.5
|
%
|
|
|
|
|
|
|
|
Total used
|
1.2
|
|
|
0.5
|
|
|
0.7
|
|
|
131.8
|
%
|
|
|
—
|
|
|
130.0
|
%
|
|
|
|
|
|
|
|
Parts and service sales
|
4.0
|
|
|
2.5
|
|
|
1.6
|
|
|
63.9
|
%
|
|
|
0.1
|
|
|
61.5
|
%
|
|
|
|
|
|
|
|
F&I, net
|
1.4
|
|
|
0.6
|
|
|
0.8
|
|
|
139.1
|
%
|
|
|
—
|
|
|
136.2
|
%
|
|
|
|
|
|
|
|
Total gross profit
|
$
|
11.8
|
|
|
$
|
4.9
|
|
|
$
|
6.9
|
|
|
138.8
|
%
|
|
|
$
|
0.2
|
|
|
135.7
|
%
|
|
|
|
|
|
|
|
Gross margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
10.4
|
%
|
|
7.0
|
%
|
|
3.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Used vehicle retail sales
|
8.3
|
%
|
|
5.8
|
%
|
|
2.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Used vehicle wholesale sales
|
7.6
|
%
|
|
2.8
|
%
|
|
4.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total used
|
8.2
|
%
|
|
4.9
|
%
|
|
3.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parts and service sales
|
43.9
|
%
|
|
41.8
|
%
|
|
2.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gross margin
|
15.8
|
%
|
|
13.5
|
%
|
|
2.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Units sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail new vehicles sold
|
1,451
|
|
|
694
|
|
|
757
|
|
|
109.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail used vehicles sold
|
500
|
|
|
356
|
|
|
144
|
|
|
40.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholesale used vehicles sold
|
235
|
|
|
324
|
|
|
(89)
|
|
|
(27.5)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Total used
|
735
|
|
|
680
|
|
|
55
|
|
|
8.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Average sales price per unit sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail
|
$
|
34,313
|
|
|
$
|
28,495
|
|
|
$
|
5,818
|
|
|
20.4
|
%
|
|
|
$
|
438
|
|
|
18.9
|
%
|
|
|
|
|
|
|
|
Used vehicle retail
|
$
|
23,671
|
|
|
$
|
20,905
|
|
|
$
|
2,766
|
|
|
13.2
|
%
|
|
|
$
|
273
|
|
|
11.9
|
%
|
|
|
|
|
|
|
|
Gross profit per unit sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
$
|
3,578
|
|
|
$
|
1,999
|
|
|
$
|
1,579
|
|
|
79.0
|
%
|
|
|
$
|
38
|
|
|
77.1
|
%
|
|
|
|
|
|
|
|
Used vehicle retail sales
|
$
|
1,959
|
|
|
$
|
1,204
|
|
|
$
|
755
|
|
|
62.7
|
%
|
|
|
$
|
12
|
|
|
61.7
|
%
|
|
|
|
|
|
|
|
Used vehicle wholesale sales
|
$
|
850
|
|
|
$
|
247
|
|
|
$
|
603
|
|
|
NM
|
|
|
$
|
15
|
|
|
NM
|
|
|
|
|
|
|
|
Total used
|
$
|
1,605
|
|
|
$
|
748
|
|
|
$
|
856
|
|
|
114.5
|
%
|
|
|
$
|
13
|
|
|
112.8
|
%
|
|
|
|
|
|
|
|
F&I PRU
|
$
|
707
|
|
|
$
|
550
|
|
|
$
|
158
|
|
|
28.7
|
%
|
|
|
$
|
8
|
|
|
27.1
|
%
|
|
|
|
|
|
|
|
Other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SG&A expenses
|
$
|
8.0
|
|
|
$
|
5.6
|
|
|
$
|
2.3
|
|
|
41.7
|
%
|
|
|
$
|
0.1
|
|
|
39.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SG&A as % gross profit
|
67.6
|
%
|
|
114.0
|
%
|
|
(46.4)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NM — Not Meaningful
The following discussion of our Brazil operating results is on actual and same store basis. The difference between reported amounts and same store amounts is related to acquisition and disposition activity, as well as new add-point openings. During the second quarter of 2021, as a result of the COVID-19 pandemic, our dealership showrooms in São Paulo were required to close from April 1, 2021 through April 18, 2021, however our parts and service operations remained open for essential services. Our dealerships located outside of São Paulo were fully operational unlike the comparable period in 2020 where all of our showrooms in Brazil were closed the entire month of April and then only open limited hours for the remainder of the quarter.
Revenues
Total revenues in Brazil during the three months ended June 30, 2021 increased $38.2 million, or 104.5%, as compared to the same period in 2020. Total same store revenues in Brazil during the three months ended June 30, 2021 increased $38.3 million, or 104.6%, as compared to the same period in 2020. On a constant currency basis, total same store revenues increased 101.8% driven by increases in all business lines except used vehicle wholesale sales. This increase in revenue was the result of the lifting of COVID-19 restrictions and increased customer demand in 2021 as compared to last year.
Gross Profit
Total gross profit in Brazil during the three months ended June 30, 2021 increased $6.8 million, or 138.6%, as compared to the same period in 2020. Total same store gross profit during the three months ended June 30, 2021 increased $6.9 million, or 138.8%, as compared to the same period in 2020. On a constant currency basis, total same store gross profit increased 135.7% driven by increases in all business lines. New vehicle retail same store gross profit on a constant currency basis increased 270.4% driven by a 109.1% increase in new vehicle retail same store units sales and a 77.1% increase in new vehicle retail same store average gross profit per unit sold. The increase in new vehicle same store gross profit per retail unit sold was the result of increased consumer demand and inventory constraints as OEM’s are producing and delivering fewer vehicles due to the global semiconductor chip shortage. At June 30, 2021, our Brazil new vehicle inventory stood at a 32 days’ supply, which was 49 days lower than the same period last year and 5 days higher than December 31, 2020 days’ supply of 27. Used vehicle retail same store gross profit on a constant currency basis increased 127.1%, reflecting the 61.7% increase in used vehicle retail same store average gross profit per unit sold coupled with a 40.4% increase in used vehicle retail same store unit sales. The improvement in used same store retail gross profit per retail unit was driven by new vehicle inventory shortages, which drove customers to purchase used vehicles and an improved selling environment as compared to 2020. Parts and service same store gross profit on a constant currency basis increased 61.5% driven by increases in our customer-pay, warranty and collision operations reflecting the increase in business activity over the prior year. F&I same store gross profit on a constant currency basis increased 136.2%, driven by increases in same store retail unit sales and penetration rates partially offset by a decline in income per contract for our retail finance fees. Total same store gross margin increased 230 basis points in the second quarter of 2021 compared to the same period of 2020 as a result of increases in all of our business lines resulting from the improved selling environment, consumer demand and supply constraints.
SG&A Expenses
Our SG&A expenses consist primarily of personnel costs, including salaries, commissions and incentive-based compensation, as well as rent and facility costs, advertising and other expenses (which includes legal, professional fees and general corporate expenses). Total SG&A expenses in Brazil during the three months ended June 30, 2021 increased $2.5 million, or 44.0%, as compared to the same period in 2020. Total same store SG&A expenses in Brazil during the three months ended June 30, 2021 increased $2.3 million, or 41.7%, as compared to the same period in 2020. On a constant currency basis, total same store SG&A expenses increased 39.9%, driven by increased variable commission payments as a result of increased sales and margins during the second quarter of 2021 as compared to last year. SG&A as a percentage of gross profit decreased from 114.0% in 2020 to 67.6% in 2021 reflecting the 135.7% increase in total same store gross profit driven by productivity gains and higher vehicle margins realized during the second quarter of 2021. We continued to focus on cost discipline throughout the second quarter of 2021.
Reported Operating Data - Brazil
(In millions, except unit data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
|
|
|
2021
|
|
2020
|
|
Increase/ (Decrease)
|
|
% Change
|
|
|
Currency Impact on Current Period Results
|
|
Constant Currency % Change
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
$
|
83.9
|
|
|
$
|
77.3
|
|
|
$
|
6.7
|
|
|
8.6
|
%
|
|
|
$
|
(12.4)
|
|
|
24.7
|
%
|
|
|
|
|
|
Used vehicle retail sales
|
22.5
|
|
|
27.4
|
|
|
(4.9)
|
|
|
(17.9)
|
%
|
|
|
(3.4)
|
|
|
(5.6)
|
%
|
|
|
|
|
|
Used vehicle wholesale sales
|
4.6
|
|
|
6.7
|
|
|
(2.1)
|
|
|
(30.8)
|
%
|
|
|
(0.5)
|
|
|
(23.3)
|
%
|
|
|
|
|
|
Total used
|
27.1
|
|
|
34.1
|
|
|
(7.0)
|
|
|
(20.5)
|
%
|
|
|
(3.9)
|
|
|
(9.1)
|
%
|
|
|
|
|
|
Parts and service sales
|
17.1
|
|
|
15.5
|
|
|
1.6
|
|
|
10.4
|
%
|
|
|
(2.1)
|
|
|
24.2
|
%
|
|
|
|
|
|
F&I, net
|
2.8
|
|
|
2.3
|
|
|
0.5
|
|
|
20.1
|
%
|
|
|
(0.4)
|
|
|
38.8
|
%
|
|
|
|
|
|
Total revenues
|
$
|
130.9
|
|
|
$
|
129.1
|
|
|
$
|
1.8
|
|
|
1.4
|
%
|
|
|
$
|
(18.8)
|
|
|
15.9
|
%
|
|
|
|
|
|
Gross profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
$
|
8.6
|
|
|
$
|
4.9
|
|
|
$
|
3.7
|
|
|
75.1
|
%
|
|
|
$
|
(1.2)
|
|
|
100.2
|
%
|
|
|
|
|
|
Used vehicle retail sales
|
2.1
|
|
|
1.5
|
|
|
0.6
|
|
|
40.6
|
%
|
|
|
(0.3)
|
|
|
61.1
|
%
|
|
|
|
|
|
Used vehicle wholesale sales
|
0.4
|
|
|
0.3
|
|
|
0.1
|
|
|
30.0
|
%
|
|
|
(0.1)
|
|
|
47.8
|
%
|
|
|
|
|
|
Total used
|
2.5
|
|
|
1.8
|
|
|
0.7
|
|
|
38.9
|
%
|
|
|
(0.4)
|
|
|
59.0
|
%
|
|
|
|
|
|
Parts and service sales
|
7.4
|
|
|
6.7
|
|
|
0.7
|
|
|
10.8
|
%
|
|
|
(0.9)
|
|
|
25.0
|
%
|
|
|
|
|
|
F&I, net
|
2.8
|
|
|
2.3
|
|
|
0.5
|
|
|
20.1
|
%
|
|
|
(0.4)
|
|
|
38.8
|
%
|
|
|
|
|
|
Total gross profit
|
$
|
21.2
|
|
|
$
|
15.6
|
|
|
$
|
5.5
|
|
|
35.5
|
%
|
|
|
$
|
(2.9)
|
|
|
54.3
|
%
|
|
|
|
|
|
Gross margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
10.2
|
%
|
|
6.3
|
%
|
|
3.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Used vehicle retail sales
|
9.3
|
%
|
|
5.4
|
%
|
|
3.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Used vehicle wholesale sales
|
7.9
|
%
|
|
4.2
|
%
|
|
3.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Total used
|
9.0
|
%
|
|
5.2
|
%
|
|
3.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Parts and service sales
|
43.3
|
%
|
|
43.1
|
%
|
|
0.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gross margin
|
16.2
|
%
|
|
12.1
|
%
|
|
4.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Units sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail new vehicles sold
|
2,622
|
|
|
2,665
|
|
|
(43)
|
|
|
(1.6)
|
%
|
|
|
|
|
|
|
|
|
|
|
Retail used vehicles sold
|
1,016
|
|
|
1,454
|
|
|
(438)
|
|
|
(30.1)
|
%
|
|
|
|
|
|
|
|
|
|
|
Wholesale used vehicles sold
|
469
|
|
|
799
|
|
|
(330)
|
|
|
(41.3)
|
%
|
|
|
|
|
|
|
|
|
|
|
Total used
|
1,485
|
|
|
2,253
|
|
|
(768)
|
|
|
(34.1)
|
%
|
|
|
|
|
|
|
|
|
|
|
Average sales price per unit sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail
|
$
|
32,011
|
|
|
$
|
28,994
|
|
|
$
|
3,017
|
|
|
10.4
|
%
|
|
|
$
|
(4,728)
|
|
|
26.7
|
%
|
|
|
|
|
|
Used vehicle retail
|
$
|
22,143
|
|
|
$
|
18,847
|
|
|
$
|
3,296
|
|
|
17.5
|
%
|
|
|
$
|
(3,331)
|
|
|
35.2
|
%
|
|
|
|
|
|
Gross profit per unit sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
$
|
3,273
|
|
|
$
|
1,839
|
|
|
$
|
1,434
|
|
|
78.0
|
%
|
|
|
$
|
(469)
|
|
|
103.5
|
%
|
|
|
|
|
|
Used vehicle retail sales
|
$
|
2,051
|
|
|
$
|
1,019
|
|
|
$
|
1,032
|
|
|
101.2
|
%
|
|
|
$
|
(300)
|
|
|
130.6
|
%
|
|
|
|
|
|
Used vehicle wholesale sales
|
$
|
788
|
|
|
$
|
356
|
|
|
$
|
432
|
|
|
NM
|
|
|
$
|
(108)
|
|
|
NM
|
|
|
|
|
|
Total used
|
$
|
1,652
|
|
|
$
|
784
|
|
|
$
|
868
|
|
|
110.7
|
%
|
|
|
$
|
(239)
|
|
|
141.2
|
%
|
|
|
|
|
|
F&I PRU
|
$
|
758
|
|
|
$
|
557
|
|
|
$
|
200
|
|
|
35.9
|
%
|
|
|
$
|
(118)
|
|
|
57.2
|
%
|
|
|
|
|
|
Other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SG&A expenses
|
$
|
15.2
|
|
|
$
|
16.2
|
|
|
$
|
(1.0)
|
|
|
(6.4)
|
%
|
|
|
$
|
(1.9)
|
|
|
5.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SG&A as % gross profit
|
71.7
|
%
|
|
103.8
|
%
|
|
(32.1)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NM — Not Meaningful
Same Store Operating Data - Brazil
(In millions, except unit data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
|
|
|
|
|
2021
|
|
2020
|
|
Increase/ (Decrease)
|
|
% Change
|
|
|
Currency Impact on Current Period Results
|
|
Constant Currency % Change
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
$
|
83.9
|
|
|
$
|
77.3
|
|
|
$
|
6.7
|
|
|
8.6
|
%
|
|
|
$
|
(12.4)
|
|
|
24.7
|
%
|
|
|
|
|
|
|
|
Used vehicle retail sales
|
22.5
|
|
|
27.4
|
|
|
(4.9)
|
|
|
(17.8)
|
%
|
|
|
(3.4)
|
|
|
(5.4)
|
%
|
|
|
|
|
|
|
|
Used vehicle wholesale sales
|
4.6
|
|
|
6.7
|
|
|
(2.1)
|
|
|
(30.8)
|
%
|
|
|
(0.5)
|
|
|
(23.3)
|
%
|
|
|
|
|
|
|
|
Total used
|
27.1
|
|
|
34.1
|
|
|
(7.0)
|
|
|
(20.4)
|
%
|
|
|
(3.9)
|
|
|
(9.0)
|
%
|
|
|
|
|
|
|
|
Parts and service sales
|
17.1
|
|
|
15.5
|
|
|
1.6
|
|
|
10.4
|
%
|
|
|
(2.1)
|
|
|
24.2
|
%
|
|
|
|
|
|
|
|
F&I, net
|
2.8
|
|
|
2.3
|
|
|
0.5
|
|
|
20.1
|
%
|
|
|
(0.4)
|
|
|
38.8
|
%
|
|
|
|
|
|
|
|
Total revenues
|
$
|
130.9
|
|
|
$
|
129.1
|
|
|
$
|
1.8
|
|
|
1.4
|
%
|
|
|
$
|
(18.8)
|
|
|
16.0
|
%
|
|
|
|
|
|
|
|
Gross profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
$
|
8.6
|
|
|
$
|
4.9
|
|
|
$
|
3.7
|
|
|
75.1
|
%
|
|
|
$
|
(1.2)
|
|
|
100.2
|
%
|
|
|
|
|
|
|
|
Used vehicle retail sales
|
2.1
|
|
|
1.5
|
|
|
0.6
|
|
|
41.1
|
%
|
|
|
(0.3)
|
|
|
61.8
|
%
|
|
|
|
|
|
|
|
Used vehicle wholesale sales
|
0.4
|
|
|
0.3
|
|
|
0.1
|
|
|
30.0
|
%
|
|
|
(0.1)
|
|
|
47.8
|
%
|
|
|
|
|
|
|
|
Total used
|
2.5
|
|
|
1.8
|
|
|
0.7
|
|
|
39.3
|
%
|
|
|
(0.4)
|
|
|
59.5
|
%
|
|
|
|
|
|
|
|
Parts and service sales
|
7.4
|
|
|
6.7
|
|
|
0.7
|
|
|
10.8
|
%
|
|
|
(0.9)
|
|
|
25.0
|
%
|
|
|
|
|
|
|
|
F&I, net
|
2.8
|
|
|
2.3
|
|
|
0.5
|
|
|
20.1
|
%
|
|
|
(0.4)
|
|
|
38.8
|
%
|
|
|
|
|
|
|
|
Total gross profit
|
$
|
21.2
|
|
|
$
|
15.6
|
|
|
$
|
5.6
|
|
|
35.5
|
%
|
|
|
$
|
(2.9)
|
|
|
54.3
|
%
|
|
|
|
|
|
|
|
Gross margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
10.2
|
%
|
|
6.3
|
%
|
|
3.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Used vehicle retail sales
|
9.3
|
%
|
|
5.4
|
%
|
|
3.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Used vehicle wholesale sales
|
7.9
|
%
|
|
4.2
|
%
|
|
3.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total used
|
9.1
|
%
|
|
5.2
|
%
|
|
3.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parts and service sales
|
43.3
|
%
|
|
43.1
|
%
|
|
0.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gross margin
|
16.2
|
%
|
|
12.1
|
%
|
|
4.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Units sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail new vehicles sold
|
2,622
|
|
|
2,665
|
|
|
(43)
|
|
|
(1.6)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail used vehicles sold
|
1,016
|
|
|
1,454
|
|
|
(438)
|
|
|
(30.1)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholesale used vehicles sold
|
469
|
|
|
799
|
|
|
(330)
|
|
|
(41.3)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Total used
|
1,485
|
|
|
2,253
|
|
|
(768)
|
|
|
(34.1)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Average sales price per unit sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail
|
$
|
32,011
|
|
|
$
|
28,994
|
|
|
$
|
3,017
|
|
|
10.4
|
%
|
|
|
$
|
(4,728)
|
|
|
26.7
|
%
|
|
|
|
|
|
|
|
Used vehicle retail
|
$
|
22,143
|
|
|
$
|
18,828
|
|
|
$
|
3,315
|
|
|
17.6
|
%
|
|
|
$
|
(3,334)
|
|
|
35.3
|
%
|
|
|
|
|
|
|
|
Gross profit per unit sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicle retail sales
|
$
|
3,273
|
|
|
$
|
1,839
|
|
|
$
|
1,434
|
|
|
78.0
|
%
|
|
|
$
|
(469)
|
|
|
103.5
|
%
|
|
|
|
|
|
|
|
Used vehicle retail sales
|
$
|
2,055
|
|
|
$
|
1,018
|
|
|
$
|
1,037
|
|
|
101.9
|
%
|
|
|
$
|
(301)
|
|
|
131.5
|
%
|
|
|
|
|
|
|
|
Used vehicle wholesale sales
|
$
|
788
|
|
|
$
|
356
|
|
|
$
|
432
|
|
|
NM
|
|
|
$
|
(108)
|
|
|
NM
|
|
|
|
|
|
|
|
Total used
|
$
|
1,655
|
|
|
$
|
783
|
|
|
$
|
872
|
|
|
111.4
|
%
|
|
|
$
|
(240)
|
|
|
142.0
|
%
|
|
|
|
|
|
|
|
F&I PRU
|
$
|
758
|
|
|
$
|
557
|
|
|
$
|
200
|
|
|
35.9
|
%
|
|
|
$
|
(118)
|
|
|
57.2
|
%
|
|
|
|
|
|
|
|
Other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SG&A expenses
|
$
|
15.1
|
|
|
$
|
16.2
|
|
|
$
|
(1.0)
|
|
|
(6.5)
|
%
|
|
|
$
|
(1.9)
|
|
|
5.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SG&A as % gross profit
|
71.4
|
%
|
|
103.5
|
%
|
|
(32.1)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NM — Not Meaningful
The following discussion of our Brazil operating results is on actual and same store basis. The difference between reported amounts and same store amounts is related to acquisition and disposition activity, as well as new add-point openings. Brazil saw a rise in COVID-19 cases due to the Brazilian variant in the first quarter of 2021, which led the government to cancel Carnival in 2021 and implemented various lockdowns for non-essential businesses. As such, many of our showrooms were closed periodically throughout the first and second quarters of 2021 impacting our ability to sell new and used vehicles. In the prior year, beginning March 20, 2020, all our dealerships were required to close in efforts to stop the spread of the virus and while our service centers reopened and operated throughout the second quarter, our showrooms did not reopen until May 2020 with reduced hours.
Revenues
Total and same store revenues in Brazil during the six months ended June 30, 2021 increased $1.8 million, or 1.4%, as compared to the same period in 2020. On a constant currency basis, total same store revenues increased 16.0% driven by increases in new vehicle, parts and services and F&I sales which were partially offset by declines in used vehicle and used vehicle wholesale revenues. The increases in new vehicle, parts and service, and F&I revenues were driven by improved business conditions and increased business activity as the COVID-19 pandemic had a lesser impact in 2021 compared to a year ago. Used vehicle retail same store revenues on a constant currency basis decreased 5.4%, as a 30.1% decrease in used vehicle retail same store unit sales more than offset a 35.3% increase in used vehicle retail same store average sales price per unit sold. Used vehicle wholesale same store revenues decreased 23.3% on a constant currency basis reflecting the 41.3% decline in used vehicle wholesale units. The decline in used retail and wholesale same store units sold reflects challenges with the availability of inventory. The improvement in used vehicle retail same store average sales price per unit sold reflect higher demand in a supply constraint environment.
Gross Profit
Total gross profit in Brazil during the six months ended June 30, 2021 increased $5.5 million, or 35.5%, as compared to the same period in 2020. Total same store gross profit in Brazil during the six months ended June 30, 2021 increased $5.6 million, or 35.5%, as compared to the same period in 2020. On a constant currency basis, total same store gross profit increased 54.3% driven by increases in all business lines. New vehicle retail same store gross profit on a constant currency basis increased 100.2%, driven by a 103.5% increase in new vehicle retail same store average gross profit per unit sold partially offset by a 1.6% decrease in new vehicle retail same store units sold. Used vehicle retail same store gross profit on a constant currency basis increased 61.8%, reflecting a 131.5% increase in used vehicle retail same store average gross profit per unit sold partially offset by a 30.1% decrease in used vehicle retail same store unit sales. The improvement in new and used vehicle retail same store gross profit and gross profit per unit reflects increased consumer demand and inventory constraints experienced during the COVID-19 pandemic as OEMs are producing and delivering fewer vehicles due to global semiconductor chip shortage and have not returned to normal production levels. Parts and service same store gross profit increased 25.0% on a constant currency basis, driven by improvements in customer-pay and warranty reflecting the increase in business activity over the prior year. F&I same store gross profit on a constant currency basis increased 38.8% driven by an increase in penetration rates partially offset by a decline in retail unit sales. Total same store gross margin increased 410 basis points in the first six months of 2021 compared to the same period on 2020 as a result of increases in all of our business lines resulting from the improved selling environment, consumer demand and supply constraints.
SG&A Expenses
Our SG&A expenses consist primarily of personnel costs, including salaries, commissions and incentive-based compensation, as well as rent and facility costs, advertising and other expenses (which includes legal, professional fees and general corporate expenses). Total SG&A expenses in Brazil during the six months ended June 30, 2021 decreased $1.0 million, or 6.4%, as compared to the same period in 2020. Total same store SG&A expenses in Brazil during the six months ended June 30, 2021, decreased $1.0 million, or 6.5%, as compared to the same period in 2020. On a constant currency basis, total same store SG&A expenses increased 5.3%, driven by increased variable commission payments as a result of increased sales and margins during the second quarter of 2021 as compared to last year. Total same store SG&A as a percentage of gross profit decreased from 103.5% in 2020 to 71.4% in 2021 driven by productivity gains and higher vehicle margins realized during the second quarter of 2021. We continued to focus on cost discipline throughout the first six months of 2021. Total same store SG&A expenses in 2020 included $0.9 million of severance costs associated with the termination of employees as a result of the COVID-19 pandemic.
The following tables (in millions) and discussion of our results of operations are on a consolidated basis, unless otherwise noted.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
2021
|
|
2020
|
|
Increase/ (Decrease)
|
|
% Change
|
|
|
Depreciation and amortization expense
|
$
|
18.8
|
|
|
$
|
18.8
|
|
|
$
|
—
|
|
|
0.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Floorplan interest expense
|
$
|
8.8
|
|
|
$
|
10.1
|
|
|
$
|
(1.3)
|
|
|
(13.2)
|
%
|
|
|
Other interest expense, net
|
$
|
13.7
|
|
|
$
|
16.2
|
|
|
$
|
(2.5)
|
|
|
(15.3)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
$
|
52.3
|
|
|
$
|
12.2
|
|
|
$
|
40.1
|
|
|
329.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
2021
|
|
2020
|
|
Increase/ (Decrease)
|
|
% Change
|
|
|
Depreciation and amortization expense
|
$
|
38.3
|
|
|
$
|
37.4
|
|
|
$
|
0.9
|
|
|
2.4
|
%
|
|
|
Floorplan interest expense
|
$
|
16.4
|
|
|
$
|
23.0
|
|
|
$
|
(6.6)
|
|
|
(28.8)
|
%
|
|
|
Other interest expense, net
|
$
|
27.5
|
|
|
$
|
34.3
|
|
|
$
|
(6.8)
|
|
|
(19.9)
|
%
|
|
|
Provision for income taxes
|
$
|
81.7
|
|
|
$
|
21.3
|
|
|
$
|
60.4
|
|
|
284.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and Amortization Expense
Total depreciation and amortization expense during the three and six months ended June 30, 2021 as compared to the same periods in 2020 had no material changes.
Floorplan Interest Expense
Total floorplan interest expense during the three months ended June 30, 2021 decreased $1.3 million, or 13.2%, as compared to the same period in 2020. For the six months ended June 30, 2021, floorplan interest expense decreased $6.6 million, or 28.8%, as compared to the same period in 2020. Our floorplan interest expense fluctuates with changes in our borrowings outstanding and interest rates, which are based on LIBOR, Prime rate or a benchmark rate. To mitigate the impact of interest rate fluctuations, we employ an interest rate hedging strategy, whereby we swap variable interest rate exposure on a portion of our borrowings for a fixed interest rate. The decrease in both comparative periods is primarily due to lower floorplan borrowings as a result of lower inventory levels and lower weighted average interest rates mainly due to a decline in LIBOR, partially offset by higher realized expense on our interest rate swaps and unrealized loss on interest rate swaps of $2.3 million recognized during the three months ended June 30, 2021, primarily resulting from the impact of the de-designation of certain interest rate swaps due to lower inventory levels. Refer to Note 6. Financial Instruments and Fair Value Measurements within our Notes to Condensed Consolidated Financial Statements for additional details of the interest rate swaps.
Other Interest Expense, Net
Total other interest expense, net during the three months ended June 30, 2021 decreased $2.5 million, or 15.3%, as compared to the same period in 2020. For the six months ended June 30, 2021, other interest expense decreased $6.8 million, or 19.9%, as compared to the same period 2020. Other interest expense, net consists of interest charges primarily on our Senior Notes, real estate related debt and other debt, partially offset by interest income. The decrease in both comparative periods was primarily attributable to lower interest rates achieved through refinancing our debt in the previous year, including the redemption of $300.0 million in aggregate principal of our 5.25% Senior Notes on April 2, 2020, which was funded at lower interest rates through increased borrowings on our real estate related debt, and the redemption of $550.0 million aggregate principal of our 5.00% Senior Notes on September 2, 2020, which was funded through the issuance of $550.0 million aggregate principal amount of our 4.00% Senior Notes on August 17, 2020.
Provision for Income Taxes
Provision for income taxes of $52.3 million during the three months ended June 30, 2021 increased by $40.1 million, or 329.9%, as compared to the same period in 2020. For the six months ended June 30, 2021, our provision for income taxes of $81.7 million increased $60.4 million, or 284.1%, as compared to the same period in 2020. These increases were primarily due to higher pre-tax book income. For the three months ended June 30, 2021, our effective tax rate decreased to 21.5% from 28.7% as compared to the same period in 2020. This decrease was primarily due to the increase of deferred tax assets based on a U.K. tax rate increase enacted in June 2021 effective beginning April 1, 2023, and losses incurred in the U.K. and Brazil during the three months ended June 30, 2020 that were benefited at a tax rate lower than the U.S. statutory rate.
We expect our effective tax rate for the remainder of 2021 will be between 22.5 % and 23.5%. We believe that it is more-likely-than-not that our deferred tax assets, net of valuation allowances provided, will be realized, based primarily on assumptions of our future taxable income, considering future reversals of existing taxable temporary differences.
Liquidity and Capital Resources
Our liquidity and capital resources are primarily derived from cash on hand, cash temporarily invested as a pay down of our U.S. Floorplan Line and FMCC Facility levels (refer to Note 9. Floorplan Notes Payable in our Notes to Condensed Consolidated Financial Statements for additional information), cash from operations, borrowings under our credit facilities, which provide vehicle floorplan financing, working capital, dealership and real estate acquisition financing and proceeds from debt and equity offerings. Based on current facts and circumstances, we believe we will have adequate cash flow, coupled with available borrowing capacity, to fund our current operations, capital expenditures and acquisitions for the next 12 months. If economic and business conditions deteriorate or if our capital expenditures or acquisition plans for 2021 change, we may need to access the private or public capital markets to obtain additional funding. Refer to Sources and Uses of Liquidity from Investing Activities below for further discussion of expectations regarding future capital expenditures.
Cash on Hand
As of June 30, 2021, our total cash on hand was $198.7 million. The balance of cash on hand excludes $326.1 million of immediately available funds used to pay down our U.S. Floorplan Line as of June 30, 2021. We use the pay down of our U.S. Floorplan Line and FMCC Facility as a channel for the short-term investment of excess cash.
Cash Flows
We utilize various credit facilities to finance the purchase of our new and used vehicle inventory. With respect to all new vehicle floorplan borrowings in the normal course of business, the manufacturers of the vehicles draft our credit facilities directly with no cash flows to or from us. With respect to borrowings for used vehicle financing, we finance up to 85% of the value of our used vehicle inventory in the U.S., and the funds flow directly between us and the lender.
We categorize the cash flows associated with borrowings and repayments on these various credit facilities as Cash Flows from Operating Activities or Cash Flows from Financing Activities in our Condensed Consolidated Statements of Cash Flows. All borrowings from, and repayments to, lenders affiliated with our vehicle manufacturers (excluding the cash flows from or to manufacturer-affiliated lenders participating in our syndicated lending group) are presented within Cash Flows from Operating Activities in the Condensed Consolidated Statements of Cash Flows in conformity with U.S. GAAP. All borrowings from, and repayments to, the Revolving Credit Facility (refer to Note 9. Floorplan Notes Payable in the Notes to Condensed Consolidated Financial Statements for additional information) (including the cash flows from or to manufacturer-affiliated lenders participating in the facility) and other credit facilities in the U.K. and Brazil unaffiliated with our manufacturer partners (collectively, “Non-OEM Floorplan Credit Facilities”), are presented within Cash Flows from Financing Activities in conformity with U.S. GAAP. However, the incurrence of all floorplan notes payable represents an activity necessary to acquire inventory for resale, resulting in a trade payable. Our decision to utilize our Revolving Credit Facility does not substantially alter the process by which our vehicle inventory is financed, nor does it significantly impact the economics of our vehicle procurement activities. Therefore, we believe that all floorplan financing of inventory purchases in the normal course of business should correspond with the related inventory activity and be classified as an operating activity. As a result, we use the non-GAAP measure “Adjusted net cash provided by/used in operating activities” and “Adjusted net cash provided by/used in financing activities” to further evaluate our cash flows. We believe that this classification eliminates excess volatility in our operating cash flows prepared in accordance with U.S. GAAP and avoids the potential to mislead the users of our financial statements.
In addition, for dealership acquisitions and dispositions that are negotiated as asset purchases, we do not assume transfer of liabilities for floorplan financing in the execution of the transactions. Therefore, borrowings and repayments of all floorplan financing associated with dealership acquisitions and dispositions are characterized as either Cash Flow from Operating Activities or Cash Flow from Financing Activities in our Condensed Consolidated Statements of Cash Flows presented in conformity with U.S. GAAP, depending on the relationship described above. However, the floorplan financing activity is so closely related to the inventory acquisition process that we believe the presentation of all acquisition and disposition related floorplan financing activities should be classified as investing activity to correspond with the associated inventory activity, which more closely reflects the cash flows associated with our acquisition and disposition strategy and eliminates excess volatility in our operating cash flows prepared in accordance with U.S. GAAP. We have made such adjustments in our adjusted operating cash flow presentations.
The following table reconciles cash flows provided by (used in) operating, investing and financing activities on a U.S. GAAP basis to the corresponding adjusted amounts (in millions):
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
2021
|
|
2020
|
|
% Change
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
Net cash provided by operating activities:
|
|
$
|
752.1
|
|
|
$
|
688.2
|
|
|
9.3
|
%
|
|
Change in Floorplan notes payable — credit facilities and other, excluding floorplan offset and net acquisitions and dispositions
|
|
(376.8)
|
|
|
(450.8)
|
|
|
|
|
Change in Floorplan notes payable — manufacturer affiliates associated with net acquisitions and dispositions and floorplan offset activity
|
|
(16.0)
|
|
|
0.2
|
|
|
|
|
Adjusted net cash provided by operating activities
|
|
$
|
359.4
|
|
|
$
|
237.6
|
|
|
51.3
|
%
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
Net cash used in investing activities:
|
|
$
|
(93.8)
|
|
|
$
|
(61.2)
|
|
|
(53.3)
|
%
|
|
Change in cash paid for acquisitions, associated with Floorplan notes payable
|
|
5.3
|
|
|
—
|
|
|
|
|
Change in proceeds from disposition of franchises, property and equipment, associated with Floorplan notes payable
|
|
(6.4)
|
|
|
—
|
|
|
|
|
Adjusted net cash used in investing activities
|
|
$
|
(94.9)
|
|
|
$
|
(61.2)
|
|
|
(55.1)
|
%
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
Net cash used in financing activities:
|
|
$
|
(547.1)
|
|
|
$
|
(579.0)
|
|
|
5.5
|
%
|
|
Change in Floorplan notes payable, excluding floorplan offset
|
|
393.9
|
|
|
450.7
|
|
|
|
|
Adjusted net cash used in financing activities
|
|
$
|
(153.3)
|
|
|
$
|
(128.3)
|
|
|
(19.4)
|
%
|
Sources and Uses of Liquidity from Operating Activities
For the six months ended June 30, 2021, we generated $752.1 million of net cash flows from operating activities. On an adjusted basis for the same period, we generated $359.4 million in net cash flows from operating activities, primarily consisting of $292.9 million in net income, coupled with non-cash adjustments related to depreciation and amortization of $38.3 million, stock-based compensation of $13.2 million and operating lease assets of $11.8 million. Adjusted net cash flows from operating activities also included a $3.1 million adjusted net change in operating assets and liabilities, primarily due to $449.4 million of adjusted net floorplan repayments, partially offset by $444.4 million from decreases in inventory levels as a result of global semiconductor chip shortages.
For the six months ended June 30, 2020, we generated $688.2 million of net cash flows from operating activities. On an adjusted basis for the same period, we generated $237.6 million in net cash flows from operating activities, primarily consisting of $60.0 million in net income, coupled with non-cash adjustments related to depreciation and amortization of $37.4 million, asset impairments of $23.8 million, stock-based compensation of $21.7 million, operating lease assets of $12.9 million and a loss on extinguishment of $10.4 million related to the 5.25% Senior Notes. Adjusted net cash flows from operating activities also included a $70.9 million adjusted net change in operating assets and liabilities, including cash inflows of $536.7 million from decreases in inventory levels, $77.2 million from net decreases in contracts-in-transit and vehicle receivables and $64.8 million from decreases in accounts and notes receivable. These cash inflows were partially offset by cash outflows of $540.9 million from an adjusted net decrease of floorplan borrowings and $48.0 million from decreases in accounts payable and accrued expenses.
Working Capital
At June 30, 2021, we had a $417.9 million surplus of working capital. This represents an increase of $256.4 million from December 31, 2020, when we had a $161.5 million surplus of working capital. Changes in our working capital are typically explained by changes in floorplan notes payable outstanding. Borrowings on our new vehicle floorplan notes payable, subject to agreed-upon pay-off terms, are equal to 100% of the factory invoice of the vehicles. Borrowings on our used vehicle floorplan notes payable, subject to agreed-upon pay-off terms, are limited to 85% of the aggregate book value of our used vehicle inventory, except in the U.K. and Brazil. At times, we have made payments on our floorplan notes payable using excess cash flows from operations and the proceeds of debt and equity offerings. As needed, we re-borrow the amounts later, up to the limits on the floorplan notes payable discussed above, for working capital, acquisitions, capital expenditures or general corporate purposes.
Sources and Uses of Liquidity from Investing Activities
During the six months ended June 30, 2021, we used $93.8 million in net cash flow from investing activities. On an adjusted basis for the same period, we used $94.9 million in net cash flows from investing activities, primarily consisting of $63.8 million used for purchases of property and equipment and to construct new and improve existing facilities and $44.6 million used for acquisition activity, partially offset by cash inflows of $13.4 million related to the disposition of franchises and property and equipment. Of the $63.8 million in property and equipment purchases, $47.7 million was used for non-real estate related capital expenditures, $17.5 million was used for the purchase of real estate associated with existing dealership operations, partially offset by the $1.4 million net increase in the accrual for capital expenditures from fiscal year-end.
During the six months ended June 30, 2020, we used $61.2 million in net cash flows from investing activities on both unadjusted and adjusted basis, which represents $60.5 million used for purchases of property and equipment and to construct new and improve existing facilities and $1.3 million used for acquisition activity, partially offset by cash inflows of $0.6 million related to the disposition of property and equipment. Of the $60.5 million in property and equipment purchases, $35.3 million was used for non-real estate related capital expenditures, $22.4 million was used for the purchase of real estate associated with existing dealership operations and $2.7 million represented the net decrease in the accrual for capital expenditures from fiscal year-end.
Capital Expenditures
Our capital expenditures include costs to extend the useful lives of current facilities, as well as to start or expand operations. In general, expenditures relating to the construction or expansion of dealership facilities are driven by dealership acquisition activity, new franchises being granted to us by a manufacturer, significant growth in sales at an existing facility, relocation opportunities or manufacturer imaging programs. We critically evaluate all planned future capital spending, working closely with our manufacturer partners to maximize the return on our investments. We forecast our capital expenditures for the full year of 2021 will be approximately $110 million excluding expenditures related to real estate purchases and future acquisitions, which could generally be funded from excess cash.
Acquisitions
We evaluate the expected return on investment in our consideration of potential business purchases. Cash needed to complete our acquisitions generally comes from excess working capital, operating cash flows of our dealerships and borrowings under our floorplan facilities, term loans and our Acquisition Line.
Sources and Uses of Liquidity from Financing Activities
For the six months ended June 30, 2021, we used $547.1 million in net cash flows from financing activities. On an adjusted basis for the same period, we used $153.3 million in net cash flows from financing activities, primarily related to cash outflows of $149.7 million in net repayments on our U.S. Floorplan Line (representing the net cash activity in our floorplan offset account), $18.6 million related to the repurchase of our common stock and $11.7 million in dividend payments, partially offset by $28.2 million net borrowings on our Acquisition Line.
For the six months ended June 30, 2020, we used $579.0 million in net cash flows from financing activities. On an adjusted basis for the same period, we used $128.3 million in net cash flows from financing activities, primarily related to cash outflows of $307.9 million related to the extinguishment of our 5.25% Senior Notes, $48.9 million related to the repurchase of our common stock and $5.5 million in dividend payments. These cash outflows were partially offset by $160.1 million net borrowings on other debt, which primarily reflected increased mortgage borrowings in the U.S. to partially fund the redemption of the 5.25% Senior Notes, as well as $68.8 million net borrowings on our Acquisition Line.
Credit Facilities, Debt Instruments and Other Financing Arrangements
Our various credit facilities, debt instruments and other financing arrangements are used to finance the purchase of inventory and real estate, provide acquisition funding and provide working capital for general corporate purposes.
The following table summarizes the commitment of our credit facilities as of June 30, 2021 (in millions):
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Commitment
|
|
Outstanding
|
|
Available
|
|
U.S. Floorplan Line (1)
|
|
$
|
1,396.0
|
|
|
$
|
185.4
|
|
|
$
|
1,210.6
|
|
|
Acquisition Line (2)
|
|
349.0
|
|
|
94.3
|
|
|
254.7
|
|
|
Total revolving credit facility
|
|
1,745.0
|
|
|
279.8
|
|
|
1,465.2
|
|
|
FMCC Facility (3)
|
|
300.0
|
|
|
26.8
|
|
|
273.2
|
|
|
Total U.S. credit facilities (4)
|
|
$
|
2,045.0
|
|
|
$
|
306.6
|
|
|
$
|
1,738.4
|
|
(1) The available balance at June 30, 2021 includes $326.1 million of immediately available funds. The remaining available balance can be used for inventory financing.
(2) The outstanding balance of $94.3 million is related to outstanding letters of credit of $17.8 million and $76.5 million in borrowings as of June 30, 2021. The borrowings outstanding under the Acquisition Line included no USD borrowings and £55 million of GBP borrowings translated at the spot rate on the day borrowed, solely for the purpose of calculating the outstanding and available borrowings under the Acquisition Line. The available borrowings may be limited from time to time, based on certain debt covenants.
(3) The available balance at June 30, 2021 does not include any immediately available funds. The available balance can be used for Ford new vehicle inventory financing.
(4) The outstanding balance excludes $286.3 million of borrowings with manufacturer-affiliates and third-party financial institutions for foreign and rental vehicle financing not associated with any of our U.S. credit facilities.
We have other credit facilities in the U.S., U.K. and Brazil with third-party financial institutions, most of which are affiliated with the automobile manufacturers that provide financing for portions of our new, used and rental vehicle inventories. In addition, we have outstanding debt instruments, including our 4.00% Senior Notes, as well as real estate related and other debt instruments. Refer to Note 8. Debt in our Notes to Condensed Consolidated Financial Statements for further information.
Covenants
Our Revolving Credit Facility, indentures governing our senior notes and certain mortgage term loans contain customary financial and operating covenants that place restrictions on us, including our ability to incur additional indebtedness, create liens or to sell or otherwise dispose of assets and to merge or consolidate with other entities. Certain of our mortgage agreements contain cross-default provisions that in the event of a default of certain mortgage agreements and of our Revolving Credit Facility, could trigger an uncured default.
As of June 30, 2021, we were in compliance with the requirements of the financial covenants under our debt agreements. We are required to maintain the ratios detailed in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2021
|
|
|
Required
|
|
Actual
|
|
Total adjusted leverage ratio
|
< 5.50
|
|
1.71
|
|
Fixed charge coverage ratio
|
> 1.20
|
|
5.35
|
As of June 30, 2021, we had $198.7 million of cash on hand and an additional $326.1 million invested in our floorplan offset accounts, bringing total cash liquidity to $524.8 million. In addition, we had $254.7 million of additional borrowing capacity on our Acquisition Line, bringing total immediate liquidity to $779.5 million as of June 30, 2021. Based on our position as of June 30, 2021 and our outlook as discussed within Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, we have sufficient liquidity currently and do not anticipate any material liquidity constraints or issues with our ability to remain in compliance with our debt covenants.
Refer to Note 8. Debt and Note 9. Floorplan Notes Payable in our Notes to Condensed Consolidated Financial Statements for further discussion of our debt instruments, credit facilities and other financing arrangements existing as of June 30, 2021.
Share Repurchases and Dividends
Our Board of Directors from time to time, authorizes the repurchase of shares of our common stock up to a certain monetary limit. During the six months ended June 30, 2021, 125,069 shares were repurchased at an average price of $148.79 per share, for a total of $18.6 million. As of June 30, 2021, we had $150.1 million available under our current share repurchase authorization.
During the three months ended June 30, 2021, our Board of Directors approved a quarterly cash dividend of $0.33 per share on all shares of our common stock, which resulted in $5.8 million paid to common shareholders and $0.2 million to unvested RSA holders. During the six months ended June 30, 2021, we have declared cash dividends of $0.64 per share on all shares of our common stock, for a total of $11.3 million paid to common shareholders and $0.4 million to unvested RSA holders.
Future share repurchases and the payment of any future dividends are subject to the business judgment of our Board of Directors, taking into consideration our historical and projected results of operations, financial condition, cash flows, capital requirements, covenant compliance, current economic environment and other factors considered relevant.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to a variety of market risks, including interest rate risk and foreign currency exchange rate risk. We address interest rate risks primarily through the use of interest rate swaps. We do not currently hedge foreign exchange risk, as discussed further below. The following quantitative and qualitative information is provided regarding our foreign currency exchange rates and financial instruments to which we are a party at June 30, 2021 and from which we may incur future gains or losses from changes in market interest rates and/or foreign currency rates. We do not enter into derivative or other financial instruments for speculative or trading purposes.
Interest Rates
We have interest rate risk on our variable-rate debt obligations, primarily consisting of our U.S. Floorplan Line. Based on the amount of variable-rate borrowings outstanding of $1.1 billion and $1.6 billion as of June 30, 2021 and 2020, respectively, a 100 basis-point change in interest rates would have resulted in an approximate $0.9 million and $7.5 million change to our annual interest expense, respectively, after consideration of the interest rate swaps in effect.
Our exposure to changes in interest rates with respect to our variable-rate floorplan borrowings is partially mitigated by manufacturers’ interest assistance, which in some cases is influenced by changes in market based variable interest rates. We reflect interest assistance as a reduction of new vehicle inventory cost until the associated vehicle is sold. During the six months ended June 30, 2021 and 2020, we recognized $28.5 million and $20.4 million of interest assistance as a reduction of new vehicle cost of sales, respectively.
For additional information about the potential impact of LIBOR phase out on our results of operations, see Item 1A. Risk Factors of our 2020 Form 10-K.
Foreign Currency Exchange Rates
The functional currency of our U.K. subsidiaries is the GBP and of our Brazil subsidiaries is the BRL. Our exposure to fluctuating exchange rates relates to the effects of translating financial statements of those subsidiaries into our reporting currency, which we do not hedge against based on our investment strategy in these foreign operations. A 10% devaluation in average exchange rates for the GBP to the USD would have resulted in a $113.7 million and $77.7 million decrease to our revenues for the six months ended June 30, 2021 and 2020, respectively. A 10% devaluation in average exchange rates for the BRL to the USD would have resulted in a $11.9 million and $11.7 million decrease to our revenues for the six months ended June 30, 2021 and 2020, respectively.
For additional information about our market sensitive financial instruments, refer to Note 6. Financial Instruments and Fair Value Measurements in our Notes to Condensed Consolidated Financial Statements.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15(b) under the Exchange Act, we have evaluated, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this quarterly report. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Based upon that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of June 30, 2021 at the reasonable assurance level.
Our management, including our principal executive officer and our principal financial officer, does not expect that our disclosure controls and procedures can prevent all possible errors or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that objectives of the control system are met. There are inherent limitations in all control systems, including the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes. Additionally, controls can be circumvented by the intentional acts of one or more persons. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events and while our disclosure controls and procedures are designed to be effective under circumstances where they should reasonably be expected to operate effectively, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of the inherent limitations in any control system, misstatements due to possible errors or fraud may occur and not be detected.
Changes in Internal Control over Financial Reporting
During the three months ended June 30, 2021, there were no changes in our system of internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.