Group 1 Automotive(US:GPI)2025-07-24 20:32PART I. FINANCIAL INFORMATION Item 1. Financial Statements 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 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 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 dealerships4144 - 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 charges45 - 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 million4849 - 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 million53 Note 4. Restructuring 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 202557 Note 5. Segment Information 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 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 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 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, 2025106 - 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 vehicles107 - 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 prices109110111 Results of Operations 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 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 - 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 authorization206 Quantitative and Qualitative Disclosures About Market Risk 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, 2024209 Controls and Procedures 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, 2025210 - 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 controls212 PART II. OTHER INFORMATION Legal Proceedings 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 business215 Risk Factors 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 business217 - 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 demand218219220 Unregistered Sales of Equity Securities and Use of Proceeds 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 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 quarter225 Exhibits 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 certifications227228