Industry Trends - Meetings with top management of Group 1 Automotive Inc (GPI) and Penske Automotive Group Inc (PAG) highlighted industry trends in tariff responses by OEMs, new and used vehicle sales, and parts and service trends [1] - Both companies experienced increased buying by OEMs in anticipation of tariffs being imposed [2] Sales Performance - There was a sharp uptick in sales during late March, but the trend began to normalize by mid-April, establishing a new normalized run-rate by mid- to late-May and into June [3] - Consumer health remains resilient with strong in-store traffic [3] - The used car market continues to be challenging for both Group 1 Automotive and Penske Automotive [3] Stock Performance - Shares of Group 1 Automotive declined by 0.48% to $446.20, while Penske Automotive's stock increased by 1.25% to $177.56 at market close on Tuesday [4] Analyst Ratings - Analyst Rajat Gupta reiterated an Overweight rating and price target of $435 for Group 1 Automotive, while maintaining an Underweight rating and price target of $160 for Penske Automotive [1]

Company Overview - Group 1 Automotive, Inc. is a leading automotive retailer with operations primarily in the United States and the U.K., operating 150 dealerships in the U.S. and 55 in the U.K. [12] - The company sells new and used cars and light trucks, and also offers vehicle financing, insurance, service contracts, maintenance, repair services, and aftermarket automotive products [12]. Investment Ratings - Group 1 Automotive has a Zacks Rank of 3 (Hold) and a VGM Score of A, indicating a solid overall rating [13]. - The company has a Value Style Score of A, supported by attractive valuation metrics such as a forward P/E ratio of 10.96, which may appeal to value investors [13]. Earnings Estimates - In the last 60 days, four analysts have revised their earnings estimates upwards for fiscal 2025, with the Zacks Consensus Estimate increasing by $0.24 to $40.91 per share [13]. - Group 1 Automotive has an average earnings surprise of 4.4%, suggesting potential for positive performance [13]. Investment Consideration - With a solid Zacks Rank and top-tier Value and VGM Style Scores, Group 1 Automotive is recommended for investors' consideration [14].

Group 1 - The automotive retailer Group 1 Automotive, Inc. (NYSE: GPI) has been consistently viewed positively in recent years [1] - The focus of Crude Value Insights is on cash flow and companies that generate it, highlighting value and growth prospects in the oil and natural gas sector [1] Group 2 - Subscribers have access to a 50+ stock model account and in-depth cash flow analyses of exploration and production firms [2] - The service includes live chat discussions about the oil and gas sector [2]

Core Viewpoint - Group 1 Automotive, Inc. has expanded its luxury brand portfolio by acquiring three additional dealerships, which are expected to enhance its market presence and generate significant annual revenues [1][2][4]. Group 1 Automotive Expansion - The company has added a Lexus and an Acura dealership in Fort Myers, Florida, and a Mercedes-Benz dealership in South Austin, Texas, increasing its dealership count in these key markets [1][2]. - The new dealerships are projected to generate approximately $330 million in annual revenues [2][8]. Financial Performance and Share Repurchase - As of May 19, 2025, Group 1 has repurchased 401,649 shares at an average price of $416.62, totaling $167.3 million [3]. - The company has acquired an estimated $430 million in annual revenues in 2025, following $3.9 billion in acquired revenues in 2024 [4]. Company Overview - Group 1 operates 263 automotive dealerships, 335 franchises, and 39 collision centers across the U.S. and the U.K., offering a wide range of automotive services and products [5].

Core Viewpoint - Group 1 Automotive (GPI) reported strong first-quarter 2025 results, with adjusted earnings per share (EPS) of $10.17, exceeding estimates and showing a year-over-year increase of 7.17% [1]. Financial Performance - GPI's net sales reached $5.51 billion, surpassing the Zacks Consensus Estimate of $5.34 billion and increasing from $4.47 billion in the same quarter last year [1]. - New vehicle retail sales rose 22.8% year over year to $2.68 billion, exceeding projections, with total retail new vehicles sold increasing 26.6% to 56,099 units [1]. - Used-vehicle retail sales increased 23.9% to $1.76 billion, with total retail used vehicles sold up 21.2% to 59,618 units [2]. - Used-vehicle wholesale sales surged 43% year over year to $151.6 million, with a gross profit of $1.5 million compared to a loss in the previous year [3]. - Parts and Service revenues rose 20.1% to $692.1 million, with gross profit increasing 21.7% to $381 million [3]. - Finance and Insurance revenues were $226.2 million, up 19.8% from the previous year [3]. Segment Analysis - U.S. business segment revenues increased 7.6% year over year to $3.92 billion, though it fell short of forecasts [4]. - The U.K. business segment saw revenues jump 92% year over year to $1.58 billion, significantly exceeding estimates [5]. Financial Position - Selling, general and administrative expenses rose 29.6% year over year to $617.3 million [6]. - Cash and cash equivalents increased to $70.5 million as of March 31, 2025, up from $34.4 million at the end of 2024 [6]. - Total debt decreased to $2.8 billion as of March 31, 2025, down from $2.91 billion [6]. Shareholder Actions - During the quarter, GPI repurchased 286,731 shares at an average price of $428.33, totaling $122.8 million, with $353.3 million remaining in the buyback program [7]. Industry Context - Peer companies such as Sonic Automotive, Lithia Motors, and AutoNation also reported positive earnings and revenue growth, indicating a robust automotive retail environment [9][11][13].

Investment Rating - The report assigns an "Overweight" (OW) rating to General Motors (GM) and Ford, while Tesla and Rivian are rated "Underweight" (UW) [6][7]. Core Insights - The automotive industry is experiencing varied performance metrics across different companies, with GM and Ford showing potential upside in their stock prices, while Tesla and Rivian face significant downside risks [6][7]. - The report highlights the importance of valuation metrics such as EV/EBITDA, P/E ratios, and sales growth projections for assessing investment opportunities within the automotive sector [6][22]. Global Auto OEMs Investment Comparables - General Motors (GM) has a current price of $44.57 with a market cap of $43.067 billion and a target price of $53.00, indicating a 19% upside potential [6]. - Ford (F) is priced at $9.63 with a market cap of $38.294 billion and a target price of $11.00, representing a 14% upside [6]. - Ferrari (RACE) is valued at $439.97 with a target price of $460.00, showing a 5% upside [6]. - Tesla (TSLA) is currently priced at $241.37 with a target price of $120.00, indicating a -50% downside [6]. - Rivian (RIVN) has a price of $11.60 with a target price of $11.00, reflecting a -5% downside [6]. Global Auto Parts Suppliers Valuation Metrics - The average EV/EBITDA for US auto parts suppliers is projected at 1.8x for 2024, with a corresponding EBITDA margin of 12% [22]. - Aptiv (APTV) is rated "Overweight" with a current price of $51.71 and a target price of $102, indicating a 97% upside [22]. - Borg Warner (BWA) is rated "Overweight" with a price of $26.45 and a target price of $46, representing a 74% upside [22]. - Lear Corp (LEA) is rated "Overweight" with a price of $79.42 and a target price of $140, indicating a 76% upside [22]. Performance Metrics - The report indicates that the average revenue CAGR for US auto parts suppliers is projected to be 2% from 2023 to 2025 [74]. - The EBITDA margin for US auto parts suppliers is expected to be around 12% in 2025, with some companies showing higher margins [74][83]. - The report also highlights the financial returns of various suppliers, with some companies achieving significant returns on invested capital (ROIC) [54][56].

Financial Performance - Total revenues for Q1 2025 increased to $5,505.3 million, up 23.1% from $4,470.5 million in Q1 2024[22] - Gross profit for Q1 2025 was $891.9 million, representing a 20.1% increase compared to $742.6 million in Q1 2024[22] - Net income for Q1 2025 decreased to $128.1 million, down 13.4% from $147.9 million in Q1 2024[23] - Basic earnings per share for continuing operations in Q1 2025 was $9.66, a decrease of 10.6% from $10.81 in Q1 2024[22] - Comprehensive income for Q1 2025 was $141.9 million, slightly down from $150.0 million in Q1 2024[23] - Total revenues for the three months ended March 31, 2025, were $5,505.3 million, an increase from $4,470.5 million in the same period of 2024, representing a growth of approximately 23.2%[34] - Income before income taxes for the three months ended March 31, 2025, was $167.5 million, compared to $193.3 million for the same period in 2024, indicating a decrease of 13.3%[53] - Basic earnings per common share for the three months ended March 31, 2025, were $9.69, down from $10.84 in the same period of 2024, reflecting a decline of 10.6%[56] - Total revenues reached $5,505.3 million, reflecting a 23.1% increase from $4,470.5 million[99] Cash Flow and Investments - Cash flows from operating activities in Q1 2025 were $158.7 million, down from $253.9 million in Q1 2024[27] - The company reported a net cash used in investing activities of $41.0 million in Q1 2025, compared to $618.2 million in Q1 2024[27] - Total capital expenditures for the three months ended March 31, 2025, were $52.2 million, compared to $63.2 million in the same period of 2024, a decrease of 17.7%[53] - Net cash provided by operating activities decreased by $95.2 million compared to the Prior Year Quarter, with adjusted net cash provided decreasing by $33.3 million[150] - Net cash used in investing activities decreased by $577.2 million, primarily due to a $624.4 million decrease in acquisition activity[151] Acquisitions and Restructuring - The acquisition of Inchcape Retail was completed on August 1, 2024, for approximately $517.0 million, which included 54 dealership locations and three collision centers in the U.K.[36] - The Company recorded $11.1 million in restructuring charges during the three months ended March 31, 2025, as part of the U.K.-wide restructuring plan initiated in late 2024[50] - Goodwill associated with the Inchcape Acquisition totaled $121.7 million, while total identifiable net assets amounted to $395.3 million[38] - The Company expects to incur an additional $2.6 million in restructuring charges throughout 2025 as part of the integration activities of Inchcape Retail[49] - As of March 31, 2025, the Company had incurred $27.8 million in restructuring charges related to the ongoing Restructuring Plan since its commencement[51] Sales Performance - New vehicle retail sales in the U.S. reached $1,968.7 million for the three months ended March 31, 2025, compared to $1,799.8 million in 2024, reflecting an increase of 9.4%[34] - New vehicle retail sales increased to $2,680.0 million, a 22.8% increase compared to $2,182.6 million in the previous year[99] - Used vehicle retail sales grew by 23.9% to $1,755.4 million, up from $1,416.8 million[99] - Retail new vehicles sold increased by 26.6% to 56,099 units compared to 44,302 units last year[99] - Retail used vehicles sold in same stores increased by 2.0% to 49,180 units compared to 48,239 units[100] - Total revenues in the U.K. increased by $758.7 million, or 92.0%, compared to the prior year quarter, driven by store acquisitions, higher same store revenues, and foreign currency exchange rate changes[119] Expenses and Profitability - The total cost of sales for Q1 2025 was $4,613.3 million, an increase of 23.7% from $3,727.9 million in Q1 2024[22] - SG&A expenses rose to $617.3 million, a 29.6% increase from $476.1 million[99] - Floorplan interest expense increased by $6.4 million, or 31.0%, due to higher inventories from improved manufacturer production and acquisitions[139] - Other interest expense, net increased by $10.5 million, or 35.7%, primarily due to interest expense associated with the 6.375% Senior Notes issued in 2024[142] - The gross margin for total revenues improved to 13.7%, up from 12.5% in the prior year quarter[116] Debt and Financing - The total long-term debt decreased to $2,661.1 million as of March 31, 2025, down from $2,737.9 million as of December 31, 2024, reflecting a reduction of about 2.8%[70] - The Company had $2.5 billion in a revolving syndicated credit arrangement, with an option to increase availability to $3.0 billion[74] - The outstanding balance of the Acquisition Line was $51.8 million, with $40.0 million in USD borrowings and $11.8 million related to letters of credit[155] - The total adjusted leverage ratio was 2.70, well below the required maximum of 5.75, and the fixed charge coverage ratio was 3.43, exceeding the required minimum of 1.20[157] Corporate Governance and Compliance - Group 1 Automotive, Inc. reported significant updates in their corporate governance with the Third Amended and Restated Certificate of Incorporation effective May 18, 2023[3.1] - The company has made amendments to its bylaws, with the Fourth Amended and Restated Bylaws effective February 15, 2023[3.2] - The certifications of the Chief Executive Officer and Chief Financial Officer pursuant to the Sarbanes-Oxley Act of 2002 were filed, ensuring compliance and accountability[31.1][31.2] - The company remains in compliance with all financial covenants under its debt agreements as of March 31, 2025[157] - The company has no legal proceedings that are expected to materially affect its financial condition or results of operations[167]

Financial Data and Key Metrics Changes - Group 1 Automotive reported record gross profit of $892 million and adjusted net income of $134.7 million for Q1 2025, with adjusted diluted earnings per share of $10.17 [25][30] - Revenue growth occurred across all lines of business, with new vehicle revenues increasing by 9.4% on a reported basis and 7.4% on a same-store basis [26][30] - Same-store SG&A as a percentage of gross profit increased by 28 basis points sequentially to 66.9% [32] Business Line Data and Key Metrics Changes - In the UK, total revenues and gross profit increased by 92% and 9.6% year-over-year, respectively, with same-store retail gross vehicle units sold increasing nearly 6% [33][34] - Aftersales revenues in the US increased by 7.7% on a reported basis and 5.6% on a same-store basis, contributing to an 8.5% growth in gross profit [30][31] - F&I performance in the US improved, with a same-store increase of $98, and customer pay revenues rose over 6% [14][29] Market Data and Key Metrics Changes - The UK market overall was up 6.4%, with the retail market up 9.5% [9] - In the US, new vehicle units sold increased by 7.1% on a reported basis and 5.2% on a same-store basis [26] - The company ended Q1 2025 with approximately 20,000 units of inventory, the lowest in over a year [49] Company Strategy and Development Direction - The company is focusing on optimizing its UK business and aligning processes across its platform, including used car pricing and technician recruiting [10][12] - Group 1 continues to balance acquisitions and share repurchases, acquiring $100 million in revenues and repurchasing 2% of the company for $122.8 million in Q1 2025 [22][38] - The company plans to remain nimble in response to changing market conditions and has deferred some capital expenditure projects [21][58] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding future demand, anticipating that new and used vehicle GPUs could remain elevated due to tightening inventories [21] - The company is prepared for potential changes in the competitive environment and has developed contingency plans [60] - Management noted that the retail automotive business is local, emphasizing the importance of local market execution [19] Other Important Information - The company incurred $11.1 million in nonrecurring restructuring costs in Q1 2025 related to its UK restructuring plan [36] - As of March 31, the company had liquidity of $1 billion, including accessible cash and available borrowing [37] Q&A Session Summary Question: Can you estimate how much of the volume in late March was driven by pre-buy versus normal business? - Management estimated a 5% improvement in traffic counts during the last ten days of March, with some firming in grosses [45] Question: How is April shaping up so far? - Management noted that inventory was tight at the end of March, affecting gross patterns, and they are monitoring the situation closely [49] Question: Can you speak to the efficiencies seen with your cluster marketing initiative? - Management indicated it is early in the process, but they expect to leverage marketing and customer data management for local business management [55] Question: What is the current state of EVs in the business? - Management reported a reduction in GPU drag for EVs, with a $1,000 differential between EV and ICE vehicles [68] Question: Can you discuss the headcount reduction in the UK? - Management clarified that reductions were primarily in central office functions and not in sales positions [72][76] Question: How did weather impact your business in February? - Management acknowledged that weather had some impact, particularly in the Northeast, but overall efficiency remained strong [88] Question: What is the outlook for parts and service growth? - Management indicated that growth was driven by both traffic count and price, with significant retention opportunities [97]

Financial Data and Key Metrics Changes - Group 1 Automotive reported a quarterly record gross profit of $892 million and adjusted net income of $134.7 million, with adjusted diluted earnings per share of $10.17 [25][30] - Revenue growth occurred across all lines of business, with new vehicle revenues increasing by 9.4% on a reported basis and 7.4% on a same-store basis [26][30] - Same-store SG&A as a percentage of gross profit increased by 28 basis points sequentially to 66.9% [32] Business Line Data and Key Metrics Changes - In the UK, total revenues and gross profit increased by 92% and 9.6% year-over-year, respectively, with same-store retail gross vehicle units sold increasing nearly 6% [33][34] - Aftersales revenues in the US increased by 7.7% on a reported basis and 5.6% on a same-store basis, contributing to an 8.5% growth in gross profit [30][31] - Used vehicle GPUs declined by 3.1% on a reported basis and 3.8% on a same-store basis, while new vehicle GPUs decreased by 7.5% and 9.6%, respectively [27][28] Market Data and Key Metrics Changes - The UK market overall was up 6.4%, with the retail market up 9.5% [9] - In the US, new vehicle units sold increased by 7.1% on a reported basis and 5.2% on a same-store basis, reflecting strong demand [26] - The company ended the quarter with approximately 20,000 units of inventory, the lowest level in over a year [49] Company Strategy and Development Direction - The company is focused on optimizing its UK business and has undertaken strategic closures of less accretive franchise sites [13][21] - Group 1 continues to balance acquisitions and share repurchases, acquiring $100 million in revenues and repurchasing 2% of the company for $122.8 million in Q1 2025 [22][38] - The company plans to remain nimble in response to evolving market conditions and has deferred some capital expenditure projects [21][58] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding future demand, anticipating that new and used vehicle GPUs could remain elevated due to tightening inventories [21] - The company is prepared with contingency plans should there be significant changes in the competitive environment [60] - Management noted that the retail automotive business is fundamentally local, emphasizing the importance of local market execution [19] Other Important Information - The company incurred $11.1 million in nonrecurring restructuring costs related to its ongoing UK restructuring plan [36] - As of March 31, the company had liquidity of $1 billion, including accessible cash and available borrowing [37] Q&A Session Summary Question: Can you estimate how much of the volume in late March was driven by pre-buy versus normal business? - Management estimated a 5% improvement in traffic counts during the last ten days of March, with some firming in grosses [45] Question: How is April shaping up so far? - Management noted that inventory was tight at the end of March, affecting gross patterns, and they are monitoring the situation closely [49] Question: Can you speak to the efficiencies seen with your cluster marketing initiative? - Management indicated it is early in the process, but they expect to leverage marketing and customer data management for local business management [55] Question: What is the current state of EVs in the business? - Management reported a reduction in GPU drag for EVs, with a $1,000 differential between EV and ICE vehicles [68] Question: Can you discuss the headcount reduction in the UK? - Management clarified that reductions were primarily in central office functions and not in sales roles [72][76] Question: How did weather impact your business early in the quarter? - Management acknowledged some impact from weather-related store closures in February, making it difficult to catch up on service work [88] Question: What are OEMs signaling regarding their strategy going forward? - Management expects a moderation of incentives and modest price increases from OEMs [118]

First Quarter 2025 Financial Results Investor Presentation April 24, 2025 Group 1 Automotive 2025 Forward looking statements This presentation contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, which are statements related to future, not past, events and are based on our current expectations and assumptions regarding our business, the economy and other future conditions. In this context, the forward-looking statements often include statements re ...