Group 1 Automotive (GPI) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue reached a record $4.7 billion, up 3% year-over-year, with adjusted net income of $133.1 million and adjusted diluted EPS of $9.80; net income from continuing operations was $137.9 million.

• U.S. and U.K. operations both contributed to revenue growth, with U.S. new vehicle sales up 7% and U.K. new vehicle and parts/service revenues up 8.2% and 9%, respectively.

• Net income and gross profit declined year-over-year due to lower new vehicle margins and higher SG&A expenses.

• Navigated significant operational disruptions from the CDK cyberattack and extreme weather, with rapid recovery and minimal long-term financial impact expected.

• On track to close the Inchcape U.K. acquisition in Q3 2024, expected to add $2.7 billion in revenue and nearly double U.K. presence.

Financial highlights

• Q2 2024 adjusted net income: $133.1 million; net income: $137.9 million; adjusted diluted EPS: $9.80; diluted EPS: $10.15.

• Total revenues: $4.7 billion (record); new vehicle sales: $2.4 billion; F&I: $200 million (record).

• Gross profit for the quarter was $766.5 million, down 1.2% year-over-year; gross margin declined to 16.3% from 17.0%.

• SG&A expenses increased 3.6% to $497.2 million, representing 64.9% of gross profit.

• Floorplan interest expense rose 58% to $24.7 million.

Outlook and guidance

• Most financial impact from the CDK outage is behind, with no material impact expected in Q3; lost sales and F&I revenues are expected to be recovered.

• Inchcape U.K. acquisition expected to close in Q3 2024, adding $2.7 billion in annual revenues and expanding U.K. footprint.

• Service business expected to continue growth, supported by increased technician capacity.

• Management anticipates sufficient liquidity and compliance with debt covenants.

• Ongoing inflation, higher interest rates, and new EPA emissions standards may impact future vehicle mix and demand.