Company Overview - Group 1 Automotive, Inc. is a leading automotive retailer with operations primarily in the United States and the U.K. [11] - The company's retail network includes 150 dealerships in the U.S. and 55 in the U.K., selling new and used cars and light trucks [11] - In addition to vehicle sales, the company offers vehicle financing, insurance, service contracts, maintenance, repair services, and aftermarket automotive products [11] Investment Analysis - Group 1 Automotive has a Zacks Rank of 3 (Hold) and a VGM Score of A, indicating a solid investment potential [12] - The company has a Momentum Style Score of A, with shares increasing by 7% over the past four weeks [12] - For fiscal 2025, five analysts have revised their earnings estimates upwards in the last 60 days, with the Zacks Consensus Estimate rising by $1.32 to $42.23 per share [12] - Group 1 Automotive boasts an average earnings surprise of +6.3%, suggesting strong performance relative to expectations [12] - With a solid Zacks Rank and top-tier Momentum and VGM Style Scores, Group 1 Automotive is recommended for investors' consideration [13]

Core Insights - Group 1 Automotive, Inc. has recently acquired Mercedes-Benz of South Austin and will celebrate the grand opening on August 18, 2025 [1][4] - The dealership features a next-generation layout emphasizing luxury and modern customer experience, spanning 80,000 square feet with 40 service bays and 28 EV charging stations [3] Company Overview - Group 1 operates 259 automotive dealerships, 324 franchises, and 39 collision centers across the U.S. and the U.K., offering 36 automobile brands [6] - The company engages in selling new and used cars, arranging vehicle financing, and providing maintenance and repair services [6] Event Details - The grand opening event will include a ribbon-cutting ceremony at 5:45 p.m. and main festivities from 6:00 to 8:00 p.m. [4] - Key executives, including Group 1 President and CEO Daryl Kenningham and Mercedes-Benz USA CEO Adam Chamberlain, will attend the event [4] Community Engagement - Group 1 has a philanthropic commitment, exemplified by a $10,000 donation to the Abigail E. Keller Foundation, supporting medically fragile and terminally ill children [5]

Core Points - Group 1 Automotive, Inc. declared a quarterly dividend of $0.50 per share, consistent with a previously announced 6% increase in its annualized dividend rate from $1.88 per share in 2024 to $2.00 per share in 2025 [1][2] Share Repurchase Activity - The company reported year-to-date share repurchase activity of 447,373 shares at an average price of $416.60, totaling $186 million, which is approximately 3.4% of its outstanding common shares as of January 1, 2025 [3] - As of August 12, 2025, Group 1 had $290 million available under its current share repurchase authorization, with purchases to be made based on market conditions and other corporate considerations [3] Company Overview - Group 1 operates 259 automotive dealerships, 324 franchises, and 39 collision centers in the U.S. and U.K., offering 36 brands of automobiles [4] - The company sells new and used cars, arranges vehicle financing, sells service and insurance contracts, and provides automotive maintenance and repair services [4]

Core Insights - Group 1 Automotive, Inc. has appointed Melkeya McDuffie as Senior Vice President and Chief Human Resources Officer, effective August 11, 2025 [1] - Ms. McDuffie brings over 20 years of executive human resources leadership experience across various industries, focusing on talent attraction and retention for sustainable growth [2] - The CEO of Group 1, Daryl Kenningham, emphasized the importance of a people-first culture in achieving business objectives and expressed excitement about Ms. McDuffie's leadership [3] Company Overview - Group 1 Automotive operates 259 dealerships and 324 franchises in the U.S. and U.K., offering 36 automobile brands and various related services [7] - The company engages in selling new and used cars, arranging vehicle financing, and providing maintenance and repair services [7] Leadership Background - Prior to joining Group 1, Ms. McDuffie served as Chief People Officer for Bright Horizons, overseeing 30,000 employees globally [4] - She has held significant HR roles at Clean Harbors, The Wallace Foundation, and Waste Management, showcasing a diverse background in talent management [4] - Ms. McDuffie holds a B.A. and M.B.A. from York St. John University and has completed advanced executive programs at prestigious institutions [5] Recognition and Contributions - Throughout her career, Ms. McDuffie has received multiple accolades, including recognition as one of the "Most Powerful and Influential Women" in Texas [6]

Core Insights - Group 1 Automotive has acquired Mercedes-Benz of Buckhead, enhancing its luxury brand portfolio and expanding its dealership presence in the Southeastern U.S. to 29 locations [1][2] - The newly acquired dealership is projected to generate $210 million in annual revenues, contributing to Group 1's total estimated annual revenues of $640 million for 2025, following $3.9 billion in acquired revenues in 2024 [2] Company Overview - Group 1 Automotive operates 259 automotive dealerships, 324 franchises, and 39 collision centers across the U.S. and the U.K., offering 36 automobile brands [3] - The company engages in selling new and used cars, arranging vehicle financing, and providing maintenance and repair services, among other automotive-related services [3]

Core Insights - Group 1 Automotive (GPI) reported strong second-quarter 2025 results with adjusted earnings per share (EPS) of $11.52, exceeding the Zacks Consensus Estimate of $10.31 and reflecting a 17.5% year-over-year increase [1] - The company achieved net sales of $5.7 billion, surpassing the Zacks Consensus Estimate of $5.55 billion and up from $4.7 billion in the same quarter last year [1] Q2 Highlights - New vehicle retail sales increased by 15.7% year-over-year to $2.74 billion, although it fell short of the projected $2.83 billion due to lower-than-expected volumes [2] - Total retail new vehicles sold reached 55,763 units, a 17% increase year-over-year, but missed the forecast of 57,290 units [2] - The average selling price per new vehicle was $50,557, up 1.1% year-over-year, with gross profit from new vehicle retail totaling $198.4 million, a 16.6% increase year-over-year [2] Used-Vehicle Performance - Used-vehicle retail sales rose 27.2% year-over-year to $1.85 billion, exceeding the forecast of $1.72 billion due to higher-than-anticipated unit sales [3] - Total retail used vehicles sold were 60,240 units, up 22.3% year-over-year, surpassing the expectation of 58,438 units [3] - The average selling price per used vehicle was $30,713, up 4.1% year-over-year, with gross profit from used vehicles at $96.4 million, a 19.5% increase year-over-year [3] Wholesale and Other Segments - Used-vehicle wholesale sales surged 57% year-over-year to $163.8 million, beating the expectation of $115.7 million, with a gross profit of $0.5 million compared to a gross loss of $1.1 million in the prior year [4] - Parts and Service revenues increased by 25% to $718.4 million, with gross profit rising 27.1% to $402.8 million year-over-year [4] - Finance and Insurance revenues were $237.8 million, up 18.8% from the previous year [4] Segment Performance - U.S. business segment revenues rose 6.5% year-over-year to $4.18 billion, although it missed the forecast of $4.22 billion [5] - Gross profit for the U.S. segment increased by 9.1% to $728.7 million, falling short of the prediction of $732.4 million [5] - In the U.K. business segment, revenues jumped 96.9% year-over-year to $1.53 billion, exceeding the estimate of $1.28 billion, with gross profit surging 109.6% to $207.1 million [6] Financial Position - Selling, general and administrative expenses rose 29.9% year-over-year to $646.1 million [7] - Cash and cash equivalents increased to $52.7 million as of June 30, 2025, up from $34.4 million at the end of 2024 [7] - Total debt rose to $3.2 billion as of June 30, 2025, from $2.91 billion at the end of 2024 [7] Share Repurchase - During the quarter, GPI repurchased 114,918 shares at an average price of $387.39 per share, totaling $44.5 million [8] - The company has $308.8 million remaining on its authorized stock buyback program [8] Overall Performance - GPI's Q2 results exceeded earnings and revenue estimates, with significant growth in both new and used vehicle retail sales [9] - The U.K. segment's nearly doubled revenues significantly contributed to the overall gross profit increase [9]

Core Points - Lexus of Albuquerque is set to unveil a newly renovated, state-of-the-art dealership after a 20-month, multi-million dollar renovation [1] - The grand reopening will feature activities including food, drink, and entertainment, showcasing the latest Lexus models [2] - The new dealership aims to enhance the customer experience with modern amenities and increased service capacity [3][4] Company Overview - Lexus of Albuquerque is part of Group 1 Automotive, Inc., which operates 258 automotive dealerships and 322 franchises in the U.S. and the U.K. [6] - Group 1 Automotive offers a range of services including vehicle financing, maintenance, and repair services [6] Facility Enhancements - The new dealership includes a car wash, an increase in service bays from 16 to 32, and plans to expand the number of service technicians from 21 to 30 [3] - The showroom features a design inspired by Albuquerque city themes, accommodating 22 salespeople and more vehicles [4] - Over 17,000 square feet of additional space has been created for parts and service, enhancing guest convenience [4] Community Engagement - Lexus of Albuquerque is contributing $10,000 to Girls on the Run, a nonprofit organization focused on youth development through physical activity [5]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) Presents Group 1 Automotive's unaudited Condensed Consolidated Financial Statements as of June 30, 2025, including balance sheets, income statements, cash flows, and detailed notes Condensed Consolidated Balance Sheet Highlights (June 30, 2025 vs. Dec 31, 2024) | Account | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :--- | :--- | :--- | | **Total Assets** | **$10,229.9** | **$9,824.2** | | Total Current Assets | $3,433.7 | $3,497.3 | | Goodwill | $2,268.8 | $2,057.9 | | **Total Liabilities** | **$7,093.9** | **$6,849.9** | | Total Current Liabilities | $3,279.3 | $3,396.8 | | Long-term debt | $3,056.5 | $2,737.9 | | **Total Stockholders' Equity** | **$3,136.0** | **$2,974.3** | Condensed Consolidated Statements of Operations Highlights | Metric | Three Months Ended June 30, 2025 (in millions) | Three Months Ended June 30, 2024 (in millions) | Six Months Ended June 30, 2025 (in millions) | Six Months Ended June 30, 2024 (in millions) | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | **$5,703.5** | **$4,696.4** | **$11,208.8** | **$9,166.9** | | **Gross Profit** | **$935.8** | **$766.5** | **$1,827.7** | **$1,509.1** | | **Income from Operations** | **$253.0** | **$241.1** | **$486.9** | **$483.8** | | **Net Income** | **$140.5** | **$138.2** | **$268.6** | **$286.1** | | **Diluted EPS** | **$10.82** | **$10.17** | **$20.48** | **$20.97** | Condensed Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30) | Cash Flow Activity | 2025 (in millions) | 2024 (in millions) | | :--- | :--- | :--- | | Net cash provided by operating activities | $410.3 | $129.8 | | Net cash used in investing activities | ($371.3) | ($669.0) | | Net cash (used in) provided by financing activities | ($27.2) | $546.4 | | **Net increase in cash and cash equivalents** | **$18.3** | **$7.2** | [Note 2. Revenues](index=12&type=section&id=Note%202.%20Revenues) Revenues are disaggregated by U.S. and U.K. geographical segments and business lines, totaling **$11.21 billion** for the six months ended June 30, 2025, with the U.S. contributing **$8.10 billion** and the U.K. **$3.11 billion** Revenues by Geographical Segment (Six Months Ended June 30, 2025) | Revenue Source | U.S. (in millions) | U.K. (in millions) | Total (in millions) | | :--- | :--- | :--- | :--- | | New vehicle retail sales | $4,101.6 | $1,313.8 | $5,415.4 | | Used vehicle retail sales | $2,347.6 | $1,256.0 | $3,603.6 | | Parts and service sales | $1,086.8 | $323.7 | $1,410.4 | | Finance, insurance and other, net | $384.5 | $79.5 | $464.0 | | **Total Revenues** | **$8,098.9** | **$3,109.9** | **$11,208.8** | [Note 3. Acquisitions and Dispositions](index=12&type=section&id=Note%203.%20Acquisitions%20and%20Dispositions) Details the acquisition of Inchcape Retail in the U.K. for **$517.0 million**, contributing **$1.3 billion** in revenue, alongside other dealership acquisitions and dispositions in the U.S. and U.K. - Completed the acquisition of Inchcape Retail in the U.K. for aggregate consideration of approximately **$517.0 million**, adding 54 dealerships[41](index=41&type=chunk)[44](index=44&type=chunk) - The Inchcape acquisition contributed revenues of **$1.3 billion** and a net loss of **$1.1 million** for the six months ended June 30, 2025, with the loss impacted by restructuring charges[45](index=45&type=chunk) - During the first six months of 2025, the company also acquired three dealerships in the U.S. for **$305.8 million** and four in the U.K. for **$16.4 million**[48](index=48&type=chunk)[49](index=49&type=chunk) - In the same period, the company disposed of three U.S. dealerships, recording a net pre-tax gain of **$0.7 million** and reducing goodwill by **$19.6 million**[53](index=53&type=chunk) [Note 4. Restructuring](index=14&type=section&id=Note%204.%20Restructuring) Outlines the U.K.-wide restructuring plan initiated in Q4 2024 for Inchcape Retail integration, incurring **$18.7 million** in charges for the six months ended June 30, 2025 Restructuring Charges (Six Months Ended June 30, 2025) | Cost Category | Amount (in millions) | | :--- | :--- | | Contract termination costs | $4.1 | | Facility closure costs | $3.4 | | Employee related costs | $7.5 | | Asset impairments | $3.7 | | Systems integration costs | $0.1 | | **Total restructuring charges** | **$18.7** | - The restructuring plan is related to the integration of Inchcape Retail and is expected to continue throughout 2025[57](index=57&type=chunk) [Note 5. Segment Information](index=16&type=section&id=Note%205.%20Segment%20Information) Provides segment performance for U.S. and U.K. operations, with the U.S. generating **$335.7 million** income before taxes on **$8.1 billion** revenue, and the U.K. **$15.7 million** on **$3.1 billion** revenue for the six months ended June 30, 2025 Segment Performance (Six Months Ended June 30, 2025) | Metric | U.S. (in millions) | U.K. (in millions) | Total (in millions) | | :--- | :--- | :--- | :--- | | Total revenues | $8,098.9 | $3,109.9 | $11,208.8 | | SG&A expenses | $919.0 | $344.3 | $1,263.4 | | Income before income taxes | $335.7 | $15.7 | $351.4 | | Total assets (as of June 30, 2025) | $7,816.0 | $2,393.5 | $10,209.5 | [Note 9. Debt](index=20&type=section&id=Note%209.%20Debt) Details total debt of **$3.23 billion** as of June 30, 2025, an increase from **$2.93 billion**, primarily due to higher borrowings on the Acquisition Line Long-Term Debt Composition (in millions) | Debt Component | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | 4.00% Senior Notes | $750.0 | $750.0 | | 6.375% Senior Notes | $500.0 | $500.0 | | Acquisition Line | $410.0 | $95.0 | | Real estate related | $1,218.1 | $1,253.9 | | **Total debt** | **$3,230.8** | **$2,929.3** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 2025 operational and financial performance, covering legislative impacts, strong revenue growth from acquisitions and same-store sales, liquidity, and capital allocation strategies [Recent Events](index=24&type=section&id=Recent%20Events) Details recent legislative and trade policy developments, including the 'One Big Beautiful Bill Act' affecting EV tax credits and new tariffs on imported vehicles and parts, impacting the automotive industry - The 'One Big Beautiful Bill Act' (OBBBA) was signed into law, providing consumer tax deductions for interest on loans for certain U.S.-assembled vehicles and eliminating federal EV tax credits after September 30, 2025[106](index=106&type=chunk) - A U.S.-U.K. trade agreement established an annual quota for **100,000 U.K.-made vehicles** to enter the U.S. at a reduced **10% tariff**, with a standard **25% tariff** on additional vehicles[107](index=107&type=chunk) - The Trump administration imposed a **10% baseline tariff** on imports and a **25% tariff** on imported automobiles and parts, the impacts of which remain uncertain but could significantly increase vehicle prices[109](index=109&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) Consolidated Q2 2025 results show **21.4%** revenue growth to **$5.7 billion**, driven by acquisitions and **7.1%** same-store revenue increase, with SG&A rising to **69.0%** of gross profit Consolidated Reported Operating Data Highlights (Three Months Ended June 30) | Metric | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | **Total Revenues** | **$5,703.5 M** | **$4,696.4 M** | **21.4%** | | **Total Gross Profit** | **$935.8 M** | **$766.5 M** | **22.1%** | | Retail new vehicles sold (units) | 55,763 | 47,661 | 17.0% | | Retail used vehicles sold (units) | 60,240 | 49,260 | 22.3% | | SG&A as % gross profit | 69.0% | 64.9% | 4.2% | Consolidated Same Store Operating Data Highlights (Three Months Ended June 30) | Metric | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | **Total Revenues** | **$4,964.5 M** | **$4,634.2 M** | **7.1%** | | **Total Gross Profit** | **$831.7 M** | **$755.1 M** | **10.1%** | | SG&A as % gross profit | 66.6% | 67.1% | (0.5)% | [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources) Maintains strong liquidity of **$1.11 billion** as of June 30, 2025, with net cash from operations at **$410.3 million**, compliance with debt covenants, and capital allocation including share repurchases and dividends Available Liquidity Resources (as of June 30, 2025) | Source | Amount (in millions) | | :--- | :--- | | Cash and cash equivalents | $52.7 | | Floorplan offset accounts | $321.0 | | Available capacity under Acquisition Line | $738.6 | | **Total liquidity** | **$1,112.3** | - The company was in compliance with all debt covenants, with a total adjusted leverage ratio of **2.72** (required < 5.75) and a fixed charge coverage ratio of **3.52** (required > 1.20)[204](index=204&type=chunk) - During the first six months of 2025, the company repurchased **401,649 shares** for **$167.3 million** and had **$308.8 million** remaining under its share repurchase authorization[206](index=206&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) States that market risk exposure has not materially changed since December 31, 2024, referring investors to the 2024 Form 10-K for detailed disclosures - The company's exposure to market risk has not changed materially since December 31, 2024[209](index=209&type=chunk) [Controls and Procedures](index=47&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[210](index=210&type=chunk) - There were no changes in the system of internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[212](index=212&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=49&type=section&id=Item%201.%20Legal%20Proceedings) The company is not party to any legal proceedings reasonably expected to have a material adverse effect on its financial condition, results of operations, or cash flows - The company is not party to any legal proceedings that are reasonably expected to have a material adverse effect on its business[215](index=215&type=chunk) [Risk Factors](index=49&type=page&id=Item%201A.%20Risk%20Factors) Updates risk factors, emphasizing potential adverse effects of new trade policies and tariffs, including a **10%** baseline and **25%** automobile tariff, on vehicle prices and supply chains - A key risk factor is the uncertainty surrounding new trade policies and tariffs, which could adversely affect operations, costs, and business[217](index=217&type=chunk) - Specific tariffs mentioned include a **10% baseline tariff** on imports and a **25% tariff** on imported automobiles and parts, which could increase product prices and alter supply and demand[218](index=218&type=chunk)[219](index=219&type=chunk)[220](index=220&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=49&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Details Q2 2025 stock repurchase activity, with **114,918 shares** repurchased at **$387.39** per share, and **$308.8 million** remaining under authorization Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Approximate Dollar Value of Shares Remaining for Purchase (in millions) | | :--- | :--- | :--- | :--- | | April 2025 | 114,918 | $387.39 | $308.8 | | May 2025 | — | $— | $308.8 | | June 2025 | — | $— | $308.8 | | **Total** | **114,918** | | **$308.8** | [Other Information](index=50&type=section&id=Item%205.%20Other%20Information) Reports no director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the second quarter of 2025 - No director or officer of the Company adopted or terminated a Rule 10b5-1 trading arrangement during the quarter[225](index=225&type=chunk) [Exhibits](index=51&type=section&id=Item%206.%20Exhibits) Provides an index of exhibits filed with the Form 10-Q, including supplemental indentures, credit agreements, and CEO/CFO certifications - Lists exhibits filed with the report, including supplemental indentures, an amended credit agreement, and Sarbanes-Oxley certifications[227](index=227&type=chunk)[228](index=228&type=chunk)

Core Insights - Group 1 Automotive (GPI) reported a revenue of $5.7 billion for the quarter ended June 2025, reflecting a year-over-year increase of 21.4% and surpassing the Zacks Consensus Estimate by 2.71% [1] - The earnings per share (EPS) for the quarter was $11.52, up from $9.80 in the same quarter last year, resulting in an EPS surprise of 11.74% compared to the consensus estimate of $10.31 [1] Financial Performance Metrics - Retail new vehicles sold totaled 55,763, slightly below the four-analyst average estimate of 55,942 [4] - Retail used vehicles sold reached 60,240, exceeding the average estimate of 56,854 [4] - Average sales price for new vehicle retail in the U.S. was $51,938, close to the average estimate of $51,981.75 [4] - Average sales price for used vehicle retail in the U.S. was $30,335, slightly above the average estimate of $30,182.89 [4] - Revenues from new vehicle retail sales in the U.S. were $2.13 billion, below the average estimate of $2.2 billion, but showed a year-over-year increase of 6.1% [4] - Revenues from used vehicle retail sales in the U.S. were $1.2 billion, slightly below the average estimate of $1.21 billion, with a year-over-year increase of 4.5% [4] - Revenues from new vehicle retail sales in the U.K. were $602.5 million, exceeding the average estimate of $589.26 million, representing a significant year-over-year increase of 69.9% [4] - Revenues from finance and insurance (F&I) in the U.K. were $38.8 million, surpassing the average estimate of $24.95 million, with a remarkable year-over-year increase of 138% [4] - Total revenues from new vehicle retail sales were $2.74 billion, slightly below the average estimate of $2.78 billion, with a year-over-year change of 15.7% [4] - Revenues from finance, insurance, and other net were $237.8 million, exceeding the average estimate of $221.58 million, reflecting an 18.8% year-over-year increase [4] - Total revenues from used vehicle sales were $2.01 billion, surpassing the average estimate of $1.82 billion, with a year-over-year increase of 29.2% [4] - Revenues from used vehicle wholesale sales were $163.8 million, exceeding the average estimate of $123.8 million, with a year-over-year increase of 57.1% [4] Stock Performance - Shares of Group 1 Automotive have returned -5.6% over the past month, contrasting with the Zacks S&P 500 composite's increase of 5.7% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - Adjusted net income from continuing operations improved by 12.4% in the second quarter, with EPS increasing by 17.5% on the same basis [6] - Quarterly record revenues reached $5.7 billion, with gross profit at $936 million and adjusted diluted EPS from continuing operations at $11.52 [22] - Same store gross profit increased by 4.35% compared to the prior year, despite a slight decline in GPUs of 0.3% to 0.9% [23][24] Business Line Data and Key Metrics Changes - U.S. new car sales increased by 6% on a same store basis, with parts and service revenues growing by 11.7% to 12.8% [7][22] - Used car volumes were up nearly 4% year over year, with gross profits increasing by $29 [8][24] - Aftersales gross profit rose by 14.3%, with customer pay revenue up 13.6% and warranty revenue up 31.9% [8][25] Market Data and Key Metrics Changes - U.S. inventories were flat compared to the previous quarter and down nearly 15% from the end of 2024, with a healthy day supply of 48 days [7] - In the UK, revenues and gross profit increased by 96.9% to 109.6% year over year due to acquisition activity, with used vehicles, parts and service, and F&I growing by 16% and 12% to 28.7% respectively [28] - Same store retail used vehicle units sold in the UK increased over 8% year over year [28] Company Strategy and Development Direction - The company is focusing on improving productivity and operational efficiency, with plans to invest in technology and artificial intelligence to enhance customer experience [20] - Continued investment in aftersales business is seen as a significant opportunity, with plans to increase technician headcount and improve service capacity [9][10] - The company is balancing acquisitions and share repurchases, having acquired three dealerships in the quarter and repurchased 3% of its shares for $167.3 million [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed caution moving forward due to pressures on consumers from rising car prices and interest rates, while also noting the potential for new and used vehicle GPUs to elevate as inventories tighten [12][13] - The UK market is facing macroeconomic challenges, but the company is confident in its long-term growth prospects and has made significant progress in cost reductions [14][15] - Management believes that retailers who can drive scale, productivity, and lower transaction costs will be the winners in the future [19] Other Important Information - The company incurred $7.6 million in restructuring costs related to ongoing UK restructuring plans [30] - As of June 30, the company had liquidity of $1.1 billion, with $374 million in accessible cash and $739 million available to borrow [31] Q&A Session Summary Question: How did new car GPUs progress through the quarter? - Management indicated that new car GPUs were strong throughout the quarter, with no significant spikes due to inventory changes or manufacturer incentives [34][36] Question: What are the key factors affecting the UK cost target increase? - The increase in cost targets is primarily due to government-imposed costs and additional headcount reductions, with a total of approximately 800 positions cut [37][38] Question: How does the company view competition from online retailers in the used car market? - Management acknowledged the opportunity to consolidate and grow within their existing footprint, while also learning from online competitors [49][50] Question: What impact do BEV mandates in the UK have on gross margins? - Management noted that BEV sales are primarily going to corporate fleets, which yield lower margins compared to retail sales [58][60] Question: What is the outlook for lease returns and their impact on traffic? - Management indicated that predicting lease returns is challenging, but they are actively acquiring off-lease vehicles as part of their strategy [70] Question: What are the expectations for warranty work and customer pay growth? - Management expressed confidence in customer pay growth, although they do not expect to fully offset a slowdown in warranty work with customer pay alone [81]