Core Viewpoint - Group 1 Automotive, Inc. is set to release its financial results for the second quarter of 2025 on July 24, 2025, before market opening, with a conference call scheduled for later that morning to discuss the results [1]. Group 1 Automotive Overview - Group 1 operates 259 automotive dealerships and 330 franchises across the U.S. and U.K., offering 36 brands of automobiles [3]. - The company provides a range of services including the sale of new and used cars, vehicle financing, service and insurance contracts, automotive maintenance and repair, and vehicle parts [3]. Conference Call Details - The conference call will be available via live simulcast on the internet and will have a replay available for 30 days [2]. - Participants can join the call by dialing in 10 minutes prior to the start, with specific numbers provided for domestic and international callers [2]. - A telephonic replay will be accessible until July 31, 2025, with designated numbers for domestic and international access [2].

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]