Group 1 Automotive, Inc. · NYSE:GPI
Group 1 Automotive — Q2 2024 Earnings Presentation
39 slides from Group 1 Automotive's earnings presentation, Jul 24, 2024
Slide 1: Second Quarter 2024 Financial Results
Second Quarter 2024 Financial Results Investor Presentation July 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: 2Q24 Summary
2Q24 Summary ($MM) Total Company Revenues Same Store Revenues 2Q24 Financial Highlights: 574 + Second quarter record total revenues of $4.7B increased 3% YoY, 562 2% 538 -% 538 driven by consolidated new vehicle revenues of $2.4B, a quarterly high 5% 200 1% 190 181 184 + All-time record revenues - U
Slide 4: CDK Service Outage
CDK Service Outage GPI’s U.S. business applications and processes were disrupted beginning June 19, 2024. The core dealer management system was restored on June 26, 2024. “Our U.S. team persevered in the face of adversity this quarter. From extreme weather events in Texas and Oklahoma to the CDK out
Slide 5: CDK Service Outage Continued
CDK Service Outage Continued GPI’s operational impact from the outage: • Lost vehicle sales and F&I revenues are expected to be recovered during 3Q24 • Inventory days’ supply is expected to return to more normalized levels beginning in July 2024 U.S. Days' Jun 30, 2024 May 31, 2024 Apr 30, 2024 Mar
Slide 6: Consistent Profitability & Strong Cash Flow Portfolio
Consistent Profitability Portfolio Parts & Service Employer of Choice Leading Customer & Strong Cash Flow Optimization Growth within the Auto Experience & Partner of Industry Choice + Continued strong EPS: + Balanced M&A, share + Outperformance of the peer + Our employees are the + Strive to be grea
Slide 7: Cash Flow Summary
Cash Flow Summary + 79 million in capital expenditures year-to- + 100 million in share buybacks year-to-date date representing ~3% of share count Adjusted Operating Cash Flow* 916 Adjusted Free Cash Flow* Rent Adjusted Total Liquidity 803 Leverage Ratio ($MM) 755 720 656 581 795 2.5x 726 504 2.4x 2.
Slide 8: Portfolio Optimization
Portfolio Optimization 2019-20 2021 2022 2023 2024 YTD Acquisitions: Acquisitions: Acquisitions: Acquisitions: Acquisitions:(2) 430M 2.5B 940M 1.1B 1.1B (15 franchises) (58 franchises) (11 franchises) (9 franchises) (15 franchises) Contracted Revenues:(3) M&A 2.7B Dispositions: Dispositions: Disposi
Slide 9: 2024 U.S. Acquisitions
2024 U.S. Acquisitions Nine 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,
Slide 10: 2024 U.K. Acquisitions
2024 U.K. Acquisitions Four dealerships acquired from L&L Automotive on July 1, 2024 + Highly desirable brands: Acquisition includes 4 Mercedes-Benz and 2 Smart franchises` + Choice locations: Complementing our existing footprint north of London in the . country of Hertfordshire and contiguous with
Slide 11: U.K. Inchcape Acquisition Agreement
U.K. Inchcape Acquisition Agreement On track to close in 3Q24 with expected annual revenues of ~ 2.7B + Purchase price of ~$439 million including $279 million of real estate. + Dealerships complement our footprint in the East and South East of England and enable us to expand in new markets in the Ce
Slide 12: Business Diversification
Business Diversification Parts & Service business provides stability in economic cycles Revenue Gross Profit 4% Finance & Insurance Parts & Service is the heart of Group 1’s >40% 13% 26% Parts & Service Used Vehicles business model and generates of total gross profit New Vehicles 34% 2Q24 Fixed Abso
Slide 13: Diversified Geographic Footprint
Diversified Geographic Footprint Total U.S. & U.K.* 206 Dealerships 270 Franchises Maine (4) 42 Collision Centers United States New Hampshire (4) 35 Brands Boston Metro (19) 17 States 147 Dealerships NYC Metro (4) Philadelphia Metro (1) 81% of New Vehicle Unit Sales* Atlantic City (2) Washington DC
Slide 14: 2Q24 YTD Brand Diversification
2Q24 YTD Brand Diversification Revenue Mix Unit Mix Brand diversity reduces risk from evolving 22% 19% consumer preferences 37% 48% 20% 33% 41% Import Luxury Domestic Import Luxury Domestic 11% 9% 8% 7% 7% 6% 6% 6% 5% 3% 3% 3% 2% 2% 1% <1% Other © Group 1 Automotive 2024. All Rights Reserved. 14
Slide 15: New Vehicle Overview
New Vehicle Overview GPI Outperforms the New Vehicle Industry 2024 YTD GPI U.S. Same Store Retail Unit Sales: +3% YoY 2024 YTD U.S. New Market Retail Unit Sales: +2% YoY Total New Vehicle U.S. New Market Revenues ($MM)* Size1 (MM) Annual New Vehicle Units +9% 2019-2023 17 18 17 17 17 CAGR 16 15 15 1
Slide 16: Used Vehicle Overview
Used Vehicle Overview GPI Outperforms the Used Vehicle Industry 2024 YTD GPI U.S. Same Store Retail Unit Sales: +6% YoY 2024 YTD U.S. Used Market Retail Unit Sales: +3% YoY Total Used Vehicle U.S. Used Market Revenues ($MM)* Size1 (MM) 41 Annual Used Vehicle Units U.S. Market Share2 +13% 2019-2023 C
Slide 17: Finance & Insurance Overview
2Q24 YTD U.S. Same Store F&I GP PRU: Finance & Insurance Overview +1% YoY U.S. F&I Gross Profit Per Retail Unit (PRU) 2,428 2,338 2,351 Improved F&I Profitability 2,155 via focus on compliance & growth: 1,951 1,782 + Consolidation of lender base 1,710 1,647 1,599 + Integration of compliance, trainin
Slide 18: Parts & Service Overview
Parts & Service Overview Strong Financials + Stability of free cash flow through economic cycles + Above sector-average growth through strategic emphasis on customer service Competitive Advantage + Technology: Easy online booking, #1 ranked call center(1) and customer management software improve eff
Slide 19: Parts & Service Overview
Parts & Service Overview Service-to-Service Retention by Model Year* Consolidated P&S Revenue (1) ($MM) 79% 75% 72% 72% 66% 70% 68% 66% 68% 64% 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 20: 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 & + BEVs still require repairs and technician training for all brands maintenance, despite not needing 5-year repair and maintenance some common low-margin cost of owners
Slide 21: 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 + Allowed stores to structure a deal using the
Slide 22: Structurally Lower SG&A % of GP
Structurally Lower SG&A % of GP We continue to fully leverage our scale and cost structure 2024 2019 2Q19 Salesperson Productivity Improvement compared to 2019 ~ 30% 2Q24 4.3% Advertising 6.1% Rent & Facility 3.1% 5.2% Other 15.9% Personnel 2024 SS Headcount -11% 14.8% Reduction compared to 2019 (Ex
Slide 23: Group 1 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 Highlights
Sustainability Highlights* 1,035 100% 8,000+ 33,000+ EV charging stations of repair centers Solar panels Employee available at Group 1 equipped for hybrids & installed at Group 1 training hours locations EVs locations completed 44% 53% 16,011 80% / 76% of Group 1 Board of Employee Diversity Team Mem
Slide 26: Appendix
Appendix Second 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 Brazil discontinued
Slide 28: Income from Operations & Margin Trend
Income from Operations & Margin Trend Adjusted Operating Margin* 6.6% 6.5% 5.8% 5.5% 5.0% 4.9% 1,058 3.4% 991 893 Adjusted Operating Income* ($MM) 526 505 453 395 2019 2020 2021 2022 2023 2Q23 YTD 2Q24 YTD *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 June 30, 2024 including floorplan was 4.6B: ~$2,100 million of floorplan debt 892 ~$1,064 million of mortgage debt ~$750 million of bond debt 608 ~$294 million of acquisition line debt 506 ~$352 milli
Slide 30: Real Estate Strategy
Real Estate Strategy Dealership Property Breakdown by Region (as of June 30, 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 Second 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 2Q23 YTD 2Q24 YTD As Reported Income from Operations 358 496 884 1,091 969 512 484 Asset impairments and accelerated depreciation 22 27 2 2 34 4 4 (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 2Q23 YTD 2Q24 YTD Operating Cash Flow (GAAP) $371 $805 $1,260 $586 $190 $239 $130 Change in Floorplan notes payable - credit facilities and other, excluding floorplan offset account and net (43) (314) (491) 320 50
Slide 36: Reconciliation: Adjusted Continuing Ops Earnings Per Share (Non-GAAP)
Reconciliation: Adjusted Continuing Ops Earnings Per Share (Non-GAAP) (Unaudited) 2Q24 2Q23 As Reported EPS from Continuing Ops $10.15 $12.02 After Tax Adjustments: Asset impairments and accelerated depreciation 0.21 0.11 (Gain) loss on real estate and dealership transactions (1.17) (0.36) Catastrop
Slide 37: Reconciliation: Adjusted Total Earnings Per Share (Non-GAAP)
Reconciliation: Adjusted Total Earnings Per Share (Non-GAAP) Certain numbers may not compute due to rounding; includes Brazil discontinued operations © Group 1 Automotive 2024. All Rights Reserved. 37
Slide 38: Reconciliation: Adjusted SG&A (Non-GAAP)
Reconciliation: Adjusted SG&A (Non-GAAP) (Unaudited, MM) 2Q19 2Q24 SG&A Expenses – GAAP 327.1 497.2 Gain (loss) on real estate and dealership transactions - 21.5 Catastrophic Events (4.0) (8.6) Legal items and other professional fees - (0.2) Severance Costs - (0.1) Acquisitions costs - (1.7) SG&A Ex
Slide 39: Thank you
Thank you www.group1auto.com