Group 1 Automotive(GPI) - 2024 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements Presents unaudited Condensed Consolidated Financial Statements for Q1 2024, including Balance Sheets, Statements of Operations, and Cash Flows | Financial Metric | March 31, 2024 (in millions) | December 31, 2023 (in millions) | | :--- | :--- | :--- | | Assets | | | | Total Current Assets | $2,834.8 | $2,791.3 | | Total Assets | $8,509.9 | $7,774.1 | | Liabilities & Equity | | | | Total Current Liabilities | $2,722.0 | $2,505.7 | | Total Liabilities | $5,737.7 | $5,099.7 | | Total Stockholders' Equity | $2,772.4 | $2,674.4 | | Income Statement Item | Three Months Ended March 31, 2024 (in millions) | Three Months Ended March 31, 2023 (in millions) | | :--- | :--- | :--- | | Total Revenues | $4,470.5 | $4,130.0 | | Gross Profit | $742.6 | $727.9 | | Income from Operations | $242.6 | $241.5 | | Net Income | $147.9 | $158.4 | | Diluted EPS | $10.80 | $11.10 | | Cash Flow Activity | Three Months Ended March 31, 2024 (in millions) | Three Months Ended March 31, 2023 (in millions) | | :--- | :--- | :--- | | Net cash provided by operating activities | $253.9 | $143.4 | | Net cash used in investing activities | $(618.2) | $(104.6) | | Net cash provided by (used in) financing activities | $349.4 | $(67.0) | | Net decrease in cash and cash equivalents | $(15.3) | $(26.6) | - During Q1 2024, the company acquired nine U.S. dealerships for aggregate consideration of $690.4 million and disposed of six U.S. dealerships, recording a net pre-tax gain of $30.9 million[35][39] - In April 2024, the company announced a definitive agreement to acquire 54 dealerships in the U.K. from Inchcape plc for approximately $439 million, with the transaction expected to close in Q3 2024[37] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2024 performance, highlighting revenue growth, segment results, margin pressures, increased interest expenses, and liquidity Overview and Recent Events Overview of business and recent events, including new EPA emissions standards, increased inventory, Port of Baltimore impact, and macroeconomic pressures - The EPA finalized new, stricter emissions standards for light and medium-duty vehicles for model years 2027-2032, which may significantly impact the future mix and demand for vehicles[83] - New vehicle inventory days' supply increased to approximately 37 days in Q1 2024, compared to 25 days in Q1 2023, due to improved manufacturer production[84] - The indefinite closure of the Port of Baltimore following a bridge collapse could cause shipping delays for some manufacturers, though the full impact is uncertain[85] Results of Operations Detailed analysis of Q1 2024 operating results, showing 8.2% consolidated revenue growth, segment performance for U.S. and U.K., and gross profit trends | Consolidated Performance | Q1 2024 | Q1 2023 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $4,470.5M | $4,130.0M | 8.2% | | Total Gross Profit | $742.6M | $727.9M | 2.0% | | New Vehicle Retail GP/Unit | $3,601 | $4,710 | (23.5)% | | Retail New Vehicles Sold | 44,302 | 39,649 | 11.7% | - U.S. same-store revenues increased 4.5%, driven by higher unit sales in new and used vehicles and growth in parts & service, while total same-store gross profit was nearly flat, decreasing 0.1% due to significant margin compression in new vehicles[98][101][106] - U.K. same-store gross profit fell 10.3% on a constant currency basis, driven by margin declines across all business lines, particularly new and used vehicles[115][122] - Consolidated floorplan interest expense increased 62.6% to $20.5 million, and other interest expense rose 48.9% to $29.3 million, primarily due to higher inventory levels and increased borrowings for acquisitions[129][132][135] Liquidity and Capital Resources Details financial position, reporting $463.2 million total available liquidity, reconciled cash flows, and debt covenant compliance | Liquidity Source | Amount (in millions) | | :--- | :--- | | Cash and cash equivalents | $41.9 | | Floorplan offset accounts | $180.4 | | Available capacity under Acquisition Line | $240.8 | | Total liquidity | $463.2 | - Adjusted net cash provided by operating activities decreased 10.4% to $170.9 million in Q1 2024 from $190.8 million in Q1 2023[143][144] - Adjusted net cash used in investing activities increased significantly to $590.6 million, primarily due to a $571.9 million increase in acquisition activity compared to the prior year quarter[143][145] - The company was in compliance with its debt covenants, with a total adjusted leverage ratio of 2.45 against a requirement of less than 5.75[151] Share Repurchases and Dividends Details Q1 2024 capital return program, including share repurchases for $53.8 million and a $0.47 per share quarterly cash dividend - In Q1 2024, the company repurchased 203,350 shares of common stock at an average price of $264.41 per share, for a total of $53.8 million[153] - A quarterly cash dividend of $0.47 per share was approved and paid during the quarter[154] - As of March 31, 2024, $89.6 million was available for future repurchases under the existing share repurchase authorization[153] Quantitative and Qualitative Disclosures about Market Risk States that the company's exposure to market risk has not materially changed since December 31, 2023, referring to the 2023 Form 10-K - The company's exposure to market risk has not changed materially since December 31, 2023[156] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2024, with no material changes to internal controls during Q1 2024 - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2024[157] - No changes were made to the internal control over financial reporting during Q1 2024 that have materially affected or are likely to materially affect the controls[159] PART II. OTHER INFORMATION Legal Proceedings The company is not party to any legal proceedings expected to have a material adverse effect on its operations, financial condition, or cash flows - The company is not currently involved in any legal proceedings expected to have a material adverse effect on its financial results[162] Risk Factors Confirms no changes to Risk Factors previously disclosed in the 2023 Annual Report on Form 10-K - There were no changes to the Risk Factors disclosed in the 2023 Form 10-K during the first quarter of 2024[163] Unregistered Sales of Equity Securities and Use of Proceeds Reports no unregistered sales of equity securities and details common stock repurchases totaling $53.8 million during the quarter | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Jan 2024 | — | $— | | Feb 2024 | 174,964 | $264.88 | | Mar 2024 | 28,386 | $261.52 | | Total | 203,350 | N/A | - As of March 31, 2024, $89.6 million was available for future repurchases under the current share repurchase authorization[166] Other Information Reports no director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during Q1 - No director or officer of the company adopted or terminated a Rule 10b5-1 trading plan during the first quarter of 2024[167] Exhibits Provides an index of exhibits filed with the Form 10-Q, including corporate governance documents, credit agreements, and CEO/CFO certifications - The report includes a list of all exhibits filed, such as amendments to credit agreements and CEO/CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act[170]