Record Q2 for Group 1 as net income soars

Group 1 Automotive Inc. reported Thursday that soaring new- and used-vehicle sales, higher per-vehicle gross profits and better service-and-parts and U.K. outcomes, along with leaner costs, led to record second-quarter results.

Net income for the nation’s fourth-largest new-vehicle retailer soared more than sixfold to $191 million compared with $30.2 million in the year-earlier quarter, in which results were severely hurt amid the early months of the coronavirus pandemic. Group 1’s total revenue jumped 74 percent to $3.7 billion, while U.S. revenue rose 60 percent to $2.92 billion.

When adjusted for one-time items, Group 1’s net income was slightly lower at $190.2 million. The 2021 after-tax adjustment totaled $800,000, consisting of dealership and real estate transaction gains and a tax benefit partially offset by a non-cash loss for interest rate swaps. That compared with adjusted net income of $69.6 million for the second quarter of 2020, a figure that was higher than net income for that period. The year-earlier after-tax adjustment totaled $39.4 million consisting of non-cash asset impairment, stock-based compensation expense, debt extinguishment and severance costs.

“Although the new-vehicle supply disruption continues to impact our vehicle sales volume in all three of our markets, our operating teams continue to navigate this challenge with great success,” Group 1 CEO Earl Hesterberg said in a statement on Thursday. “Our aftersales business is recovering extremely well, and our cost control has been outstanding.”
Sales through AcceleRide, Group 1’s omnichannel digital retailing platform in the U.S., more than doubled in the quarter to 5,612 new- and used-vehicle sales. Omnichannel refers to technology and processes aimed at providing a seamless buying experience for consumers whether they shop online, in-store or both.

In July, Group 1 said it had acquired businesses in the U.K. that represent nine dealership franchises expected to provide $300 million in annual revenue.

Group 1’s shares were trading at $168.52 at midday, up 2 percent.

Records: All-time quarterly record net income per diluted share.

Sales: New-vehicle retail sales across the group’s dealerships in the U.S., U.K. and Brazil surged 62 percent to 42,893. Used-vehicle retail sales jumped 47 percent to 45,002. In the U.S., new-vehicle sales soared 55 percent to 34,047, while retail sales of used vehicles increased 30 percent to 34,008.

Same-store sales: U.S. new-vehicle sales on a same-store basis rose 55 percent to 33,563. That tops the 49 percent increase in U.S. new light-vehicle sales across the industry during the second quarter, according to the Automotive News Research & Data Center. U.S. used-vehicle sales on a same-store basis increased 31 percent to 33,665.

Group 1 of Houston ranks No. 4 on Automotive News‘ list of the top 150 dealership groups based in the U.S., with retail sales of 140,221 new vehicles in 2020.


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