Group 1 Automotive, Inc. · NYSE:GPI
Group 1 Automotive — Q1 2024 Earnings Presentation
38 slides from Group 1 Automotive's earnings presentation, Apr 24, 2024
Slide 1: First Quarter 2024 Financial Results
First Quarter 2024 Financial Results Investor Presentation April 24, 2024
Slide 2: Forward looking statements
Forward looking statements This presentation contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, which are statements related to future, not past, events and are based on our current expectations and assumptions regarding our business, th
Slide 3: 1Q24 Summary
1Q24 Summary ($MM) Financial Highlights: Total Company Revenues Same Store Revenues + First quarter record total revenues of $4.5B increased 8% YoY + Quarterly record total parts & service revenues increased 5% YoY – U.S. same store customer pay revenues increased 7% YoY $576 4% $549 – U.S. same sto
Slide 4: Consistent Profitability & Strong Cash Flow Portfolio
Consistent Profitability Portfolio Parts & Service Employer of Choice Leading Customer & Strong Cash Flow Optimization Growth within the Auto Experience & Partner of Industry Choice + Continued strong EPS: + Balanced M&A, share + Outperformance of the peer + Our employees are the + Strive to be grea
Slide 5: Cash Flow Summary
Cash Flow Summary + $43 million in capital expenditures year-to- + $54 million in share buybacks year-to-date date representing ~1.5% of share count Adjusted Operating Cash Flow* $916 Adjusted Free Cash Flow* Rent Adjusted Total Liquidity $803 Leverage Ratio ($MM) $755 $720 $656 $581 $795 2.5x $726
Slide 6: Portfolio Optimization
Portfolio Optimization 2019-20 2021 2022 2023 2024 YTD Acquisitions: Acquisitions: Acquisitions: Acquisitions: Acquisitions: $430M $2.5B $940M $1.1B $1.0B (15 franchises) (58 franchises) (11 franchises) (9 franchises) (9 franchises) M&A Dispositions: Dispositions: Dispositions: Dispositions: Disposi
Slide 7: 1Q24 U.S. Acquisitions
1Q24 U.S. Acquisitions 9 dealerships with expected annual revenues of $1.0B + Portfolio Optimization: Following recent disposals of smaller, lower volume dealerships, these acquisitions include higher throughput. + Highly desirable brands: Acquisitions include 2 Lexus, 1 Mercedes-Benz, 1 Toyota, 3 H
Slide 8: U.K. Inchcape Acquisition Agreement
U.K. Inchcape Acquisition Agreement 54 dealerships with expected annual revenues of ~$2.7B + Purchase price of ~$439 million including $279 million of real estate. + Dealerships complement our footprint in the East and South East of England and enable us to expand in new markets in the Central and N
Slide 9: Business Diversification
Business Diversification Parts & Service business provides stability in economic cycles Revenue Gross Profit 4% Finance & Insurance Parts & Service is the heart of Group 1’s >40% 13% 25% Parts & Service Used Vehicles business model and generates of total gross profit New Vehicles 34% 1Q24 Fixed Abso
Slide 10: Diversified Geographic Footprint
Diversified Geographic Footprint Worldwide* 203 Dealerships 265 Franchises Maine (4) 43 Collision Centers United States New Hampshire (5) 35 Brands Boston Metro (19) 17 States 148 Dealerships NYC Metro (4) Philadelphia (1) 80% of New Vehicle Unit Sales* Atlantic City (2) Washington DC Metro (7) Sacr
Slide 11: 1Q24 Brand Diversification
1Q24 Brand Diversification Revenue Mix Unit Mix Brand diversity reduces risk from evolving 21% 19% consumer preferences 37% 21% 47% 34% 42% 12% Import Luxury Domestic Import Luxury Domestic 9% 7% 7% 7% 6% 6% 5% 5% 3% 3% 3% 3% 2% 1% <1% Other © Group 1 Automotive 2024. All Rights Reserved. 11
Slide 12: New Vehicle Overview
New Vehicle Overview GPI Outperforms the New Vehicle Industry 1Q24 GPI U.S. Same Store Retail Unit Sales: +8% YoY 1Q24 U.S. New Market Retail Unit Sales: +5% YoY Total New Vehicle U.S. New Market Revenues ($MM)* Size1 (MM) Annual New Vehicle Units +9% 2019-2023 17 18 17 17 17 CAGR 16 15 15 14 2023 8
Slide 13: Used Vehicle Overview
Used Vehicle Overview GPI Outperforms the Used Vehicle Industry 1Q24 GPI U.S. Same Store Retail Unit Sales: +8% YoY 1Q24 U.S. Used Market Retail Unit Sales: +3% YoY Total Used Vehicle U.S. Used Market Revenues ($MM)* Size1 (MM) 41 Annual Used Vehicle Units U.S. Market Share2 +13% 2019-2023 CAGR 40 4
Slide 14: Finance & Insurance Overview
1Q24 U.S. Same Store F&I GP PRU: Finance & Insurance Overview +3% YoY U.S. F&I Gross Profit Per Retail Unit (PRU) $2,428 $2,338 $2,340 Improved F&I Profitability $2,155 via focus on compliance & growth: $1,951 $1,782 + Consolidation of lender base $1,710 $1,647 $1,599 + Integration of compliance, tr
Slide 15: Parts & Service Overview
Parts & Service Overview Strong Financials + Stability of free cash flow through economic cycles + Above sector-average growth through strategic emphasis on customer service Competitive Advantage + Technology: Easy online booking, #1 ranked call center(1) and customer management software improve eff
Slide 16: Parts & Service Overview
Parts & Service Overview Service-to-Service Retention by Model Year* Consolidated P&S Revenue (1) ($MM) 79% 75% 72% 72% 70% 68% 66% 68% 65% 63% 61% 54% +10% 2019-2023 CAGR 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 10+ Yrs Average 2023 $2,222 *Represents vehicles having 2 service visits in 15
Slide 17: Battery EV Parts & Service Outlook
Battery EV Parts & Service Outlook Our dealerships are equipped to service all powertrain types + GPI is investing in the tooling & + We are adding EV lifts, battery technician training for all brands replace & repair tools, and charging stations where needed + We are equipping collision + Multiple
Slide 18: Battery EV Parts & Service Outlook
Battery EV Parts & Service Outlook According to Edmunds.com 5-year repair and maintenance cost of ownership 2023 Audi 2023 Audi e-tron (EV) vs. Q5 (ICE) $8,554 $8,478 © Group 1 Automotive 2024. All Rights Reserved. 18
Slide 19: Battery EV Parts & Service Outlook
Battery EV Parts & Service Outlook + BEVs still require repairs and maintenance, despite not needing some common low-margin maintenance services such as oil changes + Group 1’s analysis shows that we generate more revenue per repair order for vehicles with alternative powertrains + As vehicle comple
Slide 20: AcceleRide Digital Platform Summary
AcceleRide Digital Platform Summary + Seamless customer buying experience from online to AcceleRide drives customer in-store loyalty, retention, and + AcceleRide.com provides access to all GP1 stores and employee efficiencies inventory on a single site + During 1Q24, ~ 80% of customers engaged with
Slide 21: Structurally Lower SG&A % of GP
Structurally Lower SG&A % of GP We continue to fully leverage our scale and cost structure 2024 2019 1Q19 Salesperson Productivity Improvement compared to 2019 ~30% 1Q24 4.3% 6.5% Advertising 2.7% Rent & Facility 5.1% Other 16.5% Personnel 2023 SS Headcount 14.5% Reduction compared to 2019 (Excludes
Slide 22: U.K. Operational Update
U.K. Operational Update Targeted headcount reduction of 10% representing £8M-£10M annually + Completed 8% headcount reduction since October 2023 + Sequential improvements in used vehicle retail and wholesale gross profit per unit as market prices settle resulting in a 68% sequential improvement in t
Slide 23: Group Leadership Team
Group 1 Leadership Team Daryl Kenningham Joined GP1 July 2011 Mike Jones Joined GP1 April 2007 + 35+ Years Industry Experience + 40+ Years Industry Experience President, CEO and + Manufacturer and Automotive SVP, Aftersales + Automotive-related Experience Retailing Experience Director Daniel McHenry
Slide 24: Group 1's Core Values
Group 1’s Core Values Integrity Transparency Professionalism Teamwork Respect We conduct ourselves with the We promote open and honest We set our standards We put the interest of the group We treat everyone, customers highest level of ethics both communication between each high so that we can exceed
Slide 25: Sustainability
Sustainability First U.S. Greenhouse Gas Completed an ESG Materiality Installed over 2,000 solar Over 600 health and safety (GHG) inventory analysis Assessment that identified key panels in 2022; with a grand audits conducted by a third- of our Scope 1 and Scope 2 ESG topics, which will be a total of
Slide 26: Appendix
Appendix First Quarter 2024 Financial Results
Slide 27: Revenue, Adjusted EPS, Adjusted FCF
Revenue* ($MM) Adjusted EPS* Adjusted FCF* ($MM) $17,874 $45.85 $803 $44.24 $16,412 $656 $13,802 $35.02 $581 $12,044 $10,852 $426 $18.06 $237 $10.93 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 +10% +42% +25% CAGR CAGR CAGR *Based on consolidated results; includes Brazi
Slide 28: Income from Operations & Margin Trend
Income from Operations & Margin Trend Adjusted Operating Margin* 6.6% 6.5% 5.5% 5.9% 4.9% 5.0% $1,058 3.4% $991 $893 Adjusted Operating Income* ($MM) $526 395 $242 $219 2019 2020 2021 2022 2023 1Q23 1Q24 *See Appendix for Non-GAAP Reconciliations © Group 1 Automotive 2024. All Rights Reserved. 28
Slide 29: Debt & Interest Rate Exposure
Debt & Interest Rate Exposure Debt Maturities in millions, excludes floorplan + GPI’s total debt at March 31, 2024 including floorplan was $4.2B: ~$1,630 million of floorplan debt $881 ~$919 million of mortgage debt $751 ~$750 million of bond debt ~$547 million of acquisition line debt $487 ~$356 mi
Slide 30: Real Estate Strategy
Real Estate Strategy Dealership Property Breakdown by Region (as of March 31, 2024) GPI is shifting toward Dealerships owning more real estate: Region Owned Leased United States 113 34 + Control of dealership real estate is a strong strategic asset United Kingdom 26 29 Total 139 63 + Ownership means
Slide 31: Exposure to Strong Economic Growth
Exposure to Strong Economic Growth Group 1 will continue to benefit from Texas’ sustained economic growth + Texas continues to be the fastest growing state in the U.S. (1) + GPI is the #1 Auto Retailer + Texas is the leading destination for corporate relocation and expansion projects. (2) in Texas +
Slide 32: Non-GAAP Reconciliations
Non-GAAP Reconciliations First Quarter 2024 Financial Results
Slide 33: Non-GAAP Financial Measures, Same Store Data, and Other Data
Non-GAAP Financial Measures, Same Store Data, and Other Data In addition to evaluating the financial condition and results of our operations in accordance with U.S. GAAP, from time to time our management evaluates and analyzes results and any impact on the Company of strategic decisions and actions
Slide 34: Reconciliation: Adjusted Income from Operations (Non-GAAP)
Reconciliation: Adjusted Income from Operations (Non-GAAP) (Unaudited, $MM) 2019 2020 2021 2022 2023 1Q23 1Q24 As Reported Income from Operations $358 $496 $884 $1,091 $969 $242 $243 Asset impairments and accelerated depreciation 22 27 2 2 34 1 - (Gain) loss on real estate and dealership transaction
Slide 35: Reconciliation: Adjusted Cash Flow (Non-GAAP)
Reconciliation: Adjusted Cash Flow (Non-GAAP) (Unaudited, $MM) 2019 2020 2021 2022 2023 1Q23 1Q24 Operating Cash Flow (GAAP) $371 $805 $1,260 $586 $190 $143 $254 Change in Floorplan notes payable - credit facilities and other, excluding floorplan offset account and net (43) (314) (491) 320 505 45 (4
Slide 36: Reconciliation: Adjusted Total Earnings Per Share (Non-GAAP)
Reconciliation: Adjusted Total Earnings Per Share (Non-GAAP) (Unaudited) 2019 2020 2021 2022 2023 1Q24 As Reported EPS $9.34 $15.51 $30.11 $47.14 $42.73 $10.80 After Tax Adjustments: Asset impairments and accelerated depreciation 0.94 1.69 0.07 0.10 1.82 0.02 (Gain) loss on real estate and dealershi
Slide 37: Reconciliation: Adjusted SG&A (Non-GAAP)
Reconciliation: Adjusted SG&A (Non-GAAP) (Unaudited, $MM) 1Q19 1Q24 SG&A Expenses – GAAP $315.3 $476.1 (Gain) loss on real estate and dealership transactions 5.2 30.9 Catastrophic Events (2.0) (0.5) Legal items and other professional fees (1.8) (3.1) Severance Costs - (0.4) Acquisitions costs - (2.8
Slide 38: Thank you
Thank you www.group1auto.com