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Group 1 Automotive(GPI) - 2021 Q2 - Quarterly Report

Dealership Operations - As of June 30, 2021, the company operated 117 dealerships in the U.S., 48 in the U.K., and 16 in Brazil[92]. - The company acquired two Toyota dealerships in the U.S. and seven dealerships in the U.K. in 2021, with expected aggregate annualized revenues of $420 million from these acquisitions[96]. - The company focuses on strategic acquisitions to enhance dealership performance and capitalize on economies of scale in the U.S., U.K., and Brazil[95]. Sales Performance - During Q2 2021, U.S. total online retail unit sales increased by 111.3% compared to the same period in 2020[98]. - New vehicle retail sales increased to $1,855.3 million, a 74.6% increase compared to $1,062.7 million in the same quarter of 2020[111]. - Used vehicle retail sales rose to $1,195.6 million, reflecting an 86.5% increase from $641.2 million year-over-year[111]. - Total revenues reached $3,700.4 million, marking a 73.6% increase from $2,131.2 million in the prior year[111]. - Retail new vehicles sold reached 42,893 units, a 62.0% increase from 26,472 units sold in the same quarter of 2020[111]. - Used vehicle wholesale sales grew by 31.6% to $176.0 million, indicating strong demand in the wholesale market[114]. Financial Performance - Total gross profit increased to $661.3 million, an 84.3% rise compared to $358.8 million in the previous year[111]. - Gross profit for new vehicle retail sales surged to $165.3 million, a 159.2% increase from $63.8 million in the same quarter last year[111]. - SG&A expenses increased to $376.7 million, up 58.8% from $237.2 million in the same quarter of 2020[111]. - The gross margin for total revenues improved to 17.9%, compared to 16.8% in the same quarter last year[111]. Inventory Management - New vehicle days' supply of inventory decreased to approximately 20 days, down from 52 days at the end of December 2020 and 61 days at the end of June 2020[106]. - The new vehicle inventory stood at a 16 days' supply, which was 48 days lower than the same period last year[119]. Cost Management and Efficiency - The company emphasizes cost management and productivity improvements across sales and service departments to enhance operational efficiency[102]. - The company implemented a four-day work week for service technicians and advisors, resulting in increased retention and expanded service capacity without additional capital investment[99]. - Total same store SG&A as a percentage of gross profit decreased from 62.5% in Q2 2020 to 55.8% in Q2 2021, indicating improved productivity and higher vehicle margins[120]. Digital Initiatives - The company is leveraging digital initiatives to improve customer experience and streamline operations, including the rollout of AcceleRide® to U.K. dealerships[98]. - The introduction of "Sell A Ride" on the AcceleRide® platform allows customers to receive cash offers for used vehicles within 30 minutes, enhancing inventory acquisition[100]. Diversity and Inclusion - The company is committed to diversity, equity, and inclusion through a dedicated council and ongoing training programs for employees[104]. Market Outlook - Future growth priorities include increasing sales penetration in the digital retailing platform AcceleRide® and expanding market share in the used vehicle business[94]. - The company cannot predict the future impact of the COVID-19 pandemic on its business, despite significant recovery in operations[105]. Cash Flow and Liquidity - Total cash on hand as of June 30, 2021, was $198.7 million, excluding $326.1 million used to pay down the U.S. Floorplan Line[163]. - Net cash provided by operating activities for the six months ended June 30, 2021, was $752.1 million, an increase of 9.3% from $688.2 million in the same period in 2020[167]. - As of June 30, 2021, total available liquidity was $779.5 million, consisting of $198.7 million in cash and $580.8 million in additional borrowing capacity[180]. Tax and Interest Expenses - Provision for income taxes increased significantly by $60.4 million, or 284.1%, reaching $81.7 million for the six months ended June 30, 2021[156]. - Floorplan interest expense decreased by $6.6 million, or 28.8%, for the six months ended June 30, 2021, compared to the same period in 2020[158].