What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-08-03 compared with 2020-05-08 · 611 added, 173 removed, 515 unchanged (60% of the section changed)

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may differ materially from those discussed in the forward-looking statements because of various factors.

See “Cautionary Statement about Forward - Looking Statements.” Unless the context requires otherwise, references to “we,” “us,” “our,” “the Company” are intended to mean the business and operations of Group 1 Automotive, Inc.

See “Cautionary Statement about Forward - Looking Statements.” Unless the context requires otherwise, references to “we,” “us” and “our” are intended to mean the business and operations of Group 1 Automotive, Inc.

and its subsidiaries.

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segment includes the activities of our corporate office.

As of March 31, 2020 , our retail network consisted of 119 dealerships in the U.S., 50 dealerships in the U.K.

As of June 30, 2020 , our retail network consisted of 119 dealerships in the U.S., 50 dealerships in the U.K.

and 17 dealerships in Brazil.

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Our long-term strategic areas of emphasis include:

Digital Initiatives to Enhance the Customer Experience

Our digital initiatives focus on ensuring that we can do business with our customers where and when they want to do business.

Our online new and used vehicle retail platform, AcceleRide®, which was deployed to all of our U.S.

dealerships in 2019, allows a customer to complete a vehicle transaction entirely online or start the sales process online and complete the transaction at our dealerships.

In addition, our parts and service digital efforts focus on our online customer scheduling appointment system.

We have seen continued growth in the percentage of appointments scheduled online over the past few years as we have continued to enhance this tool.

These digital platforms were instrumental in allowing us to connect with and service our customers during the restricted social distancing environment as a result of the COVID-19 pandemic.

During the second quarter of 2020, AcceleRide® sales were up 190% from a year ago.

Used Vehicle Retail Growth

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Our new vehicle operations generally provide our used vehicle operations with a large supply of high-quality trade-ins and off-lease vehicles, which are our best source of used vehicle inventory.

Our dealerships supplement their used vehicle inventory with purchases at auctions, including manufacturer-sponsored auctions available only to franchised dealers.

Our dealerships supplement their used vehicle inventory with direct purchases from customers, purchases at auctions, including manufacturer-sponsored auctions available only to franchised dealers.

Our data-driven pricing strategies ensure that our used vehicles are priced at market to generate more traffic to our websites.

We review our market pricing on a regular basis and work to limit discounting from our advertised prices.

We will continue efforts to expand our “Val-U-Line®” sales program, a strategic used vehicle initiative that targets a growing customer niche and enables us to retail lower cost, higher mileage units that would otherwise have been sent to the auction.

The Val-U-Line® initiative is expected to increase used retail volume by leveraging our scale, internal on-line buying center, internal auction capability and transportation infrastructure.

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We seek to increase the retention of our customers through more convenient service hours, training of our service advisors, selling service contracts with vehicles sales and customer relationship management software that allows us to provide target marketing to our customers.

The increasing complexity of vehicles, especially in the area of electronics and technological advancements, is making it difficult for independent repairs shops to retain the expertise and technology to work on these vehicles and provides us the opportunity to increase our market share.

Digital Initiatives to Enhance the Customer Experience

Our digital initiatives focus on ensuring that we can do business with our customers where and when they want to do business.

Our online new and used vehicle retail platform, AcceleRide®, which was deployed to all of our U.S.

dealerships in 2019, allows a customer to complete a vehicle transaction entirely online or start the sales process online and complete the transaction at our dealerships.

In addition, our parts and service digital efforts focus on our online customer scheduling appointment system.

We have seen continued growth in the percentage of appointments scheduled online over the past few years as we have continued to enhance this tool.

The increasing complexity of vehicles, especially in the area of electronics and technological advancements, is making it difficult for independent repair shops to retain the expertise and technology to work on these vehicles and provides us the opportunity to increase our market share.

Cost Management

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and Brazil, significantly impacting our operating results starting in March 2020.

On March 11, 2020, the WHO declared COVID-19 a pandemic, and subsequently, various countries including the U.S., U.K.

and Brazil declared the COVID-19 pandemic a national emergency.

Along with these declarations, there have been extraordinary and wide-ranging actions taken by international, federal, state and local public health and governmental authorities to contain and combat the outbreak and spread of COVID-19 across the world, including mandates for many individuals to substantially restrict daily activities and for many businesses to curtail or cease normal operations.

Beginning in mid-March, these measures have either completely shut down or significantly reduced operating capacity of all of our dealerships in the U.S., the U.K.

The length of the stay-at-home orders, travel restrictions, other restrictions on operating businesses and resulting economic impacts are uncertain.

To date, these measures have significantly reduced our new and used vehicle sales volumes, parts and service revenues and F&I revenues, as well as impacted our vehicle and parts supply chain.

There have been extraordinary and wide-ranging actions taken by international, federal, state and local public health and governmental authorities to contain and combat the outbreak and spread of COVID-19 across the world, including mandates for many individuals to substantially restrict daily activities and for many businesses to curtail or cease normal operations.

Beginning in mid-March 2020, these measures significantly reduced operating capacity of all of our dealerships in the U.S., the U.K.

The primary COVID-19 impacts on our global business and our response to date include:

Virtually all of our U.S.

dealerships are located in markets operating in some form of shelter-in-place or restricted travel environments in accordance with applicable state and local orders.

Dealership service facilities remain open to provide essential services to customers.

Overall, service activity levels have decreased due to the reduced number of vehicles on the road caused by government restrictions and our customers’ concerns related to the virus.

While dealership sales departments have closed in some jurisdictions, they are in most cases permitted to continue to operate, with a dramatically reduced staffing level.

Our online selling platform Acceleride® continues to show increased utilization rates which are likely to continue in a restricted social distancing environment.

sales were well above prior year levels through February.

dealerships are located in markets that operated in some form of restricted social distancing environments in accordance with applicable state and local orders during most of March 2020 and April 2020.

As the market shutdowns began, March 2020 U.S.

sales dropped sharply from February, with new and used retail unit sales dropping approximately 50% and service repair orders also declining by approximately 50% for the last two weeks of March 2020 compared to the last two weeks of March 2019.

This pace continued into early April, but recently we have begun to see signs of improvement as shelter-in-place policies are beginning to be partially lifted.

For the last week of April, total U.S.

retail unit sales were down approximately 25% and service repair orders were down approximately 30% as compared to the same week a year ago.

In addition, the Texas and Oklahoma economies are significantly affected by oil and natural gas prices, which were severely impacted by reduced demand related to the COVID-19 pandemic and the increased production from certain large international crude oil producers, including Saudi Arabia and Russia.

We cannot predict whether or when oil production and economic activities will return to normalized levels.

However, oil and natural gas prices remaining at current depressed levels could have a significant impact on economic activity in Texas and Oklahoma, which could negatively impact our vehicle sales, financial condition and results of operations in those markets.

New vehicle unit sales in Texas and Oklahoma represented approximately 43% of our total new vehicle unit sales for the year ended December 31, 2019 and approximately 42% for the three months ended March 31, 2020.

Used vehicle retail unit sales in Texas and Oklahoma represented approximately 49% of our total used vehicle retail unit sales for the year ended December 31, 2019 and approximately 49% for the three months ended March 31, 2020.

sales dropped sharply from February 2020, with new and used retail unit sales dropping approximately 50% and service repair orders also declining by approximately 50% for the last two weeks of March 2020 compared to the last two weeks of March 2019 and the first two weeks of April 2020 compared to the first two weeks of April 2019.

In early May 2020, as restricted social distancing environment policies began to be partially lifted, our used vehicle business returned to near normal levels and our new vehicle sales pace started improving.

Near the end of the quarter, our new vehicle sales pace started improving, however the recovery of new vehicle sales was limited as a result of low inventory levels due to reduced OEM production rates.

Beginning in mid-April 2020, we saw continued improvement in our parts and service business as well.

Our online selling platform AcceleRide® and our online service scheduling platforms continue to show increased utilization rates which are likely to continue in a restricted social distancing environment.

vehicle sales levels were well above prior year levels in most of our brands through February 2020.

March, which is a plate change month, is one of the largest selling months of the year with many vehicles delivered from orders placed in January 2020 and February 2020.

Due to the closure of our facilities and various business restrictions put in place as a result of a shut-down order from the government, effective through May 10 th , we were not able to deliver approximately 35% of our vehicles we had contracted to sell prior to the shut-down restrictions.

We have closed all of our U.K.

dealerships except for emergency services as required by the mandate and will maintain a skeleton service staff to provide the emergency only service.

Due to the closure of our facilities and various business restrictions put in place as a result of a shut-down order from the government, we were not able to deliver approximately 35% of our vehicles at the end of March 2020 that we had contracted to sell prior to the shut-down restrictions, and most were delivered at the end of June 2020.

We closed all of our U.K.

dealerships from late March 2020 through May 18, 2020 for service, with the exception of emergency vehicle repairs.

Our vehicle showrooms were closed for more than two months and did not reopen until June 1, 2020.

Operations in the U.K.

are not expected to resume until mid-to-late May, subject to any further governmental actions.

significantly improved in June 2020 as vehicle sales and service operations reopened.

Effective March 20, 2020, all of our dealerships were required to close.

Historically, March represents approximately 40% of first quarter new vehicle unit sales in the Brazilian market.

In April, our stores were allowed to re-open for service operations only, and we anticipate in-person sales to resume shortly, subject to any further government actions.

While our service centers reopened and operated throughout the second quarter, our showrooms did not reopen until May 2020 and operated at reduced hours.

Despite operations resuming in Brazil, the recovery has been limited as the impacts of COVID-19 are still impacting operations significantly.

Cost-Cutting Actions

In all regions we have taken aggressive actions to reduce costs and preserve liquidity, with about 4,800 employees (over 40% of the workforce) furloughed or terminated in the U.S., 2,800 employees (over 90% of the workforce) furloughed in the U.K., and over 450 employees (over 45% of the workforce) furloughed or terminated in Brazil.

In addition, other measures have been implemented and have significantly reduced costs in all three regions including reductions of as much as 50% in management compensation, 100% of Board of Directors’ compensation, over 75% reduction in advertising expense and cuts across all other cost categories.

In all regions we have taken aggressive actions to reduce costs and preserve liquidity, with approximately 8,000 employees furloughed or terminated in early April 2020.

As sales have improved in the U.S.

and U.K., we have been able to return some of the furloughed employees to a point where our U.S.

headcounts are approximately 70% of our pre-COVID levels.

In addition, other measures have been implemented and have significantly reduced costs in all three regions including reductions of as much as 50% in management compensation, 100% of Board of Directors’ cash compensation, over 75% reduction in advertising expense and cuts across all other cost categories.

Additionally, as announced in April 2020, we suspended our dividend and canceled our share repurchase program, as well as implemented capital expenditure deferrals.

As discussed in “Liquidity and Capital Resources,” we have sufficient liquidity currently and do not anticipate any material liquidity constraints or issues with our ability to remain in compliance with debt covenants.

While the potential long-term impact of the COVID-19 pandemic is difficult to predict, we expect our second quarter results to be significantly lower than the prior year.

Moving forward, we anticipate service will recover quicker than vehicle sales, with both beginning to recover in the late spring and summer months as shelter-in-place policies continue to be lifted and consumers transition to more normal habits, at which time we will re-evaluate our cost cutting measures.

While the potential long-term impact of the COVID-19 pandemic is difficult to predict, we expect our used vehicle and service operations in the third quarter to return to prior year levels.

Reduced new vehicle inventory levels in the U.S.

will likely persist until the fourth quarter and will limit the recovery in new vehicle unit sales in the third quarter.

The demand outlook remains uncertain and difficult to predict given the recent increases in cases in the U.S.

and Brazil, however we will remain vigilant and are prepared to adjust our cost structure to adapt to the market conditions.

While some of the cost reductions taken in the first and second quarters will be reinstated if market conditions continue to improve, we expect to be more cost efficient going forward.

Any potential impact will depend on future developments and new information that may emerge regarding the severity and duration of the COVID-19 pandemic and the actions taken by authorities to contain it or treat its impact, all of which are beyond our control.

Critical Accounting Policies and Accounting Estimates

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If we disposed of a store on August 15, 2020, the results from this store would be excluded from same store results beginning in August 2020 as July 2020 was the last full month the dealership was owned by us.

Same store results provide a measurement of our ability to grow revenue and profitability of our existing stores and also provide a metric for peer group comparisons.

Same store results provide a measurement of our ability to grow revenues and profitability of our existing stores and also provide a metric for peer group comparisons.

For these reasons, same store results allow management to manage and monitor the performance of the business and is also useful to investors.

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(In millions, except unit and per unit amounts)

Three Months Ended March 31,

Three Months Ended June 30,

Increase/ (Decrease)

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(In millions, except unit and per unit amounts)

Three Months Ended March 31,

Three Months Ended June 30,

Increase/ (Decrease)

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SG&A as % gross profit

Reported Operating Data - Consolidated

(In millions, except unit and per unit amounts)

Six Months Ended June 30,

Increase/ (Decrease)

Currency Impact on Current Period Results

Constant Currency % Change

New vehicle retail sales

Used vehicle retail sales

Used vehicle wholesale sales

Parts and service sales

Total revenues

Gross profit:

New vehicle retail sales

Used vehicle retail sales

Used vehicle wholesale sales

Parts and service sales

Total gross profit

Gross margin:

New vehicle retail sales

Used vehicle retail sales

Used vehicle wholesale sales

Parts and service sales

Total gross margin

Retail new vehicles sold

Retail used vehicles sold

Wholesale used vehicles sold

Average sales price per unit sold:

New vehicle retail

Used vehicle retail

Gross profit per unit sold:

New vehicle retail sales

Used vehicle retail sales

Used vehicle wholesale sales

SG&A expenses

SG&A as % gross profit

Floorplan expense:

Floorplan interest expense

floorplan assistance (1)

Net floorplan expense

(1) Floorplan assistance is included within New vehicle retail Gross Profit above and New vehicle retail Cost of sales in our Condensed Consolidated Statements of Operations.

Same Store Operating Data - Consolidated

(In millions, except unit and per unit amounts)

Six Months Ended June 30,

Increase/ (Decrease)

Currency Impact on Current Period Results

Constant Currency % Change

New vehicle retail sales

Used vehicle retail sales

Used vehicle wholesale sales

Parts and service sales

Total revenues

Gross profit:

New vehicle retail sales

Used vehicle retail sales

Used vehicle wholesale sales

Parts and service sales

Total gross profit

Gross margin:

New vehicle retail sales

Used vehicle retail sales

Used vehicle wholesale sales

Parts and service sales

Total gross margin

Retail new vehicles sold

Retail used vehicles sold

Wholesale used vehicles sold

Average sales price per unit sold:

New vehicle retail

Used vehicle retail

Gross profit per unit sold:

New vehicle retail sales

Used vehicle retail sales

Used vehicle wholesale sales

SG&A expenses

SG&A as % gross profit

Reported Operating Data - U.S.

(In millions, except unit and per unit amounts)

Three Months Ended March 31,

Three Months Ended June 30,

Increase/(Decrease)

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(In millions, except unit and per unit amounts)

Three Months Ended March 31,

Three Months Ended June 30,

Increase/(Decrease)

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The difference between reported amounts and same store amounts is related to acquisition and disposition activity, as well as new add-point openings.

dealership operations have been impacted by the reduced demand caused by the COVID-19 pandemic and the restrictions put in place by local governments to contain the virus.

Total revenues in the U.S.

during the three months ended June 30, 2020 decreased $447.6 million , or 19.6% , as compared to the same period in 2019 .

Total same store revenues in the U.S.

during the three months ended June 30, 2020 decreased $472.4 million , or 20.8% , as compared to the same period in 2019 , driven by declines in all of our revenue streams.

The declines of 24.2% in new vehicle retail same store sales, 14.9% in used vehicle retail same store sales and 31.2% in used vehicle wholesale same store sales were driven by decreases of 28.5% , 14.8% and 24.3% in new vehicle, used vehicle retail and used vehicle wholesale unit sales, respectively.

The declines in new and used vehicle retail and used vehicle wholesale unit sales were related to reduced demand at our dealerships caused by the COVID-19 pandemic and ensuing inventory shortages later in the quarter as OEMs struggled to restart factories closed because of the pandemic.

Despite the challenges faced during the quarter, our recent online new and used vehicle sales initiative, AcceleRide® was instrumental in allowing us to connect with and serve our customers throughout the restricted social distancing environment impacting all of our markets at varying times throughout the second quarter.

During the second quarter of 2020, AcceleRide® sales were up 190% from a year ago.

Parts and service same store revenues decreased 19.0% driven by a 14.1% decline in customer pay revenues, a 35.2% decline in collision revenues, a 23.2% decline in warranty revenues and a 14.9% decline in wholesale parts revenues.

Parts and service same store revenues declined compared to the same period last year due to the impacts of the COVID-19 pandemic during the quarter.

F&I same store revenues decreased 19.1% , driven by a 21.6% decline in same store total retail unit sales coupled with a decline in income per contract on finance and vehicle services contracts which were partially offset by a decline in our overall chargeback experience and higher penetration rates on many of our finance and insurance product offerings.

Total gross profit in the U.S.

during the three months ended June 30, 2020 decreased $52.2 million , or 13.9% , as compared to the same period in 2019 .

Total same store gross profit in the U.S.

during the three months ended June 30, 2020 decreased $56.6 million , or 15.1% , as compared to the same period in 2019 .

The decrease in same store gross profit was driven by declines in parts and service, F&I and used vehicle retail gross profit partially offset by increases in new vehicle retail and used vehicle wholesale gross profit compared to the same period last year.

New vehicle same store gross profit increased 0.2% driven by a 40.1% i ncrease in new vehicle gross profit per unit sold which more than offset a 28.5% decrease in same store new vehicle retail unit sales.

The increase in same store new vehicle gross profit per unit sold reflects increased incentives provided by the manufacturers and supply constraints as many manufacturers put a hold on production due to the COVID-19 pandemic.

Used vehicle retail same store gross profit decreased 7.1% reflecting a 14.8% decrease in used vehicle retail same store unit sales partially offset by an increase of 9.0% in used vehicle retail same store gross profit per unit sold over the same period in 2019.

The increase in used vehicle retail same store gross profit per unit sold reflects supply constraints as the COVID-19 pandemic has negatively impacted our ability to obtain used vehicle inventory.

Used vehicle wholesale gross profit increased 73.9% as industry supply constraints drove up auction prices.

Parts and service same store gross profit and F&I same store gross profit declined by 20.0% and 19.1% , respectively, driven by the decreases discussed above.

Total same store gross margin increased 120 basis points driven by higher vehicle prices as a result of supply shortages of new and used vehicle inventory.

SG&A Expenses

Our SG&A expenses consist primarily of personnel costs, including salaries, commissions and incentive-based compensation, as well as rent and facility costs, advertising and other expenses, which include legal, professional fees and general corporate expenses.

Total SG&A expenses in the U.S.

during the three months ended June 30, 2020 decreased $64.8 million , or 24.2% , as compared to the same period in 2019 .

Total same store SG&A expenses in the U.S.

during the three months ended June 30, 2020 decreased $67.1 million , or 25.2% , as compared to the same period in 2019 .

dealership operations were directly impacted by reduced demand caused by the COVID-19 pandemic.

In an effort to reduce costs, we furloughed and terminated employees and significantly reduced advertising, outside services and other SG&A expenses.

Total same store SG&A expenses in the U.S.

in the second quarter of 2019 included $4.0 million in net costs associated with a hailstorm in Texas.

Total same store SG&A expenses in the U.S.

in second quarter of 2020 included a $10.6 million expense for an out-of-period adjustment related to stock-based compensation.

Total same store SG&A as a percent of gross profit decreased 850 basis points compared to the same period in 2019 to 62.6% driven by the cost cutting measures taken to offset the negative impact of the COVID-19 pandemic.

Reported Operating Data - U.S.

(In millions, except unit and per unit amounts)

Six Months Ended June 30,

Increase/(Decrease)

New vehicle retail sales

Used vehicle retail sales

Used vehicle wholesale sales

Parts and service sales

Total revenues

Gross profit:

New vehicle retail sales

Used vehicle retail sales

Used vehicle wholesale sales

Parts and service sales

Total gross profit

Gross margin:

New vehicle retail sales

Used vehicle retail sales

Used vehicle wholesale sales

Parts and service sales

Total gross margin

Retail new vehicles sold

Retail used vehicles sold

Wholesale used vehicles sold

Average sales price per unit sold:

New vehicle retail

Used vehicle retail

Gross profit per unit sold:

New vehicle retail sales

Used vehicle retail sales

Used vehicle wholesale sales

SG&A expenses

SG&A as % gross profit

Same Store Operating Data - U.S.

(In millions, except unit and per unit amounts)

Six Months Ended June 30,

Increase/(Decrease)

New vehicle retail sales

Used vehicle retail sales

Used vehicle wholesale sales

Parts and service sales

Total revenues

Gross profit:

New vehicle retail sales

Used vehicle retail sales

Used vehicle wholesale sales

Parts and service sales

Total gross profit

Gross margin:

New vehicle retail sales

Used vehicle retail sales

Used vehicle wholesale sales

Parts and service sales

Total gross margin

Retail new vehicles sold

Retail used vehicles sold

Wholesale used vehicles sold

Average sales price per unit sold:

New vehicle retail

Used vehicle retail

Gross profit per unit sold:

New vehicle retail sales

Used vehicle retail sales

Used vehicle wholesale sales

SG&A expenses

SG&A as % gross profit

The following discussion of our U.S.

operating results is on a same store basis.

The difference between reported amounts and same store amounts is related to acquisition and disposition activity, as well as new add-point openings.

dealership operations have been significantly impacted by the reduced demand caused by the COVID-19 pandemic and the restrictions put in place by local governments to contain the virus.

Total revenues in the U.S.

during the three months ended March 31, 2020 decreased $55.2 million , or 2.7% , as compared to the same period in 2019 .

during the six months ended June 30, 2020 decreased $502.8 million , or 11.6% , as compared to the same period in 2019 .

Total same store revenues in the U.S.

during the three months ended March 31, 2020 decreased $72.8 million , or 3.6% , as compared to the same period in 2019 , driven by declines in new vehicle and used vehicle retail sales which were partially offset by increases in used vehicle wholesale, parts and service and F&I sales.

The declines of 5.2% in same store new vehicle retail sales and 5.1% in same store used vehicle retail sales were driven by a 7.6% and a 5.7% decrease in new vehicle and used vehicle retail unit sales, respectively.

The declines in new and used vehicle unit sales were due to reduced demand at our dealerships caused by the COVID-19 pandemic.

Total same store used vehicle wholesale revenues increased 11.5% over the same period last year due to a higher mix of luxury cars wholesaled during the first two months of the quarter.

Parts and service same store revenues increased 1.6% with growth driven by a 5.4% increase in wholesale parts revenues, a 2.8% increase in customer pay and a 5.0% increase in collision revenues which was partially offset by a 6.9% decline in warranty revenues.

Parts and service same store revenues increased through February 2020 compared to the same period last year but were dampened by the impacts of the COVID-19 pandemic during March 2020.

F&I same store revenues increased 1.1% , driven by improvements in income per contract on finance and vehicle services contracts, as well as higher penetration rates on all of our finance and insurance product offerings, which were partially offset by a 6.6% decrease in total same store retail units as discussed above.

during the six months ended June 30, 2020 decreased $545.2 million , or 12.7% , as compared to the same period in 2019 .

The decrease in U.S.

same store revenues was driven by declines in all of our revenue streams.

The declines of 15.4% in new vehicle retail same store sales, 10.1% in used vehicle retail same store sales and 10.3% in used vehicle wholesale same store sales were driven by declines of 18.8% , 10.3% and 12.0% in new vehicle, used vehicle retail and used vehicle wholesale unit sales, respectively, reflecting reduced demand at our dealerships caused by the COVID-19 pandemic and inventory shortages.

Partially offsetting these declines, our recent online new and used vehicle sales initiative, AcceleRide® was instrumental in allowing us to connect with and serve our customers throughout the restricted social distancing environment impacting all of our markets at varying times.

Parts and service same store revenues decreased 9.0% driven by a 15.1% decrease in warranty revenues, a 6.0% decrease in customer-pay revenues, a 15.4% decrease in collision revenues, and a 4.9% decrease in wholesale parts revenues.

Parts and service same store revenues were up 8.4% at the end of February 2020 compared to the same period last year but were dampened by the impacts of COVID-19 for the remaining months through June 30, 2020.

F&I same store revenues decreased 9.7% driven by a 14.5% decrease in same store retail unit sales as discussed above, which was partially offset by higher penetration rates on many of our finance and insurance product offerings and a decline in our overall chargeback experience.

Total gross profit in the U.S.

during the three months ended March 31, 2020 decreased $6.0 million , or 1.7% , as compared to the same period in 2019 .

during the six months ended June 30, 2020 decreased $58.2 million , or 8.0% , as compared to the same period in 2019 .

Total same store gross profit in the U.S.

during the three months ended March 31, 2020 decreased $10.2 million , or 3.0% , as compared to the same period in 2019 .

The decrease in same store gross profit was driven by new and used vehicle retail gross profit which was partially offset by an increase in parts and service and F&I gross profit.

New vehicle retail same store gross profit decreased 10.6% driven by a 7.6% decline in new vehicle retail unit sales coupled with a 3.3% decline in new vehicle gross profit PRU over the first quarter of 2019.

Used vehicle retail same store gross profit decreased 18.1% as used vehicle retail same store unit sales decreased by 5.7% and used vehicle retail same store gross profit PRU decreased 13.1% over the same period in 2019.

The decline in new vehicle and used vehicle retail same store gross profit was related to the reduced demand caused by the COVID-19 pandemic.

Parts and service same store gross profit and F&I same store gross profit increased by 0.9% and 1.1% , respectively, driven by the increases discussed above.

Total same store gross margin increased 10 basis points primarily due to the change in mix of sales towards higher margin parts and service and F&I businesses.

during the six months ended June 30, 2020 decreased $66.7 million , or 9.3% , as compared to the same period in 2019 .The decrease in total gross profit was driven by decreases in all of our operations except for used vehicle wholesale.

New vehicle retail same store gross profit decreased 5.0% driven by an 18.8% decrease in new vehicle unit sales partially offset by a 17.0% increase in same store new vehicle gross profit per unit sold.

The increase in same store new vehicle gross profit per unit sold was related to supply constraints of new vehicle inventory as many manufacturers put a hold on production due to COVID-19.

The 12.3% decrease in same store used vehicle retail gross profit was related to a 10.3% decline in used vehicle retail unit sales coupled with a 2.2% decrease in used vehicle retail same store average gross profit per unit sold.

The decline in used vehicle retail same store gross profit was related to the reduced demand caused by the COVID-19 pandemic.

Parts and service same store gross profit and F&I same store gross profit decreased 9.8% and 9.7% , respectively, driven by decreases described above.

Total same store gross margin increased 60 basis points primarily as a result of higher new vehicle margins related to the supply constraints of inventory in the industry.

SG&A Expenses

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Total SG&A expenses in the U.S.

during the three months ended March 31, 2020 increased $1.4 million , or 0.5% , as compared to the same period in 2019 .

during the six months ended June 30, 2020 decreased $63.5 million , or 12.1% , as compared to the same period in 2019 .

Total same store SG&A expenses in the U.S.

during the three months ended March 31, 2020 decreased $4.2 million , or 1.6% , as compared to the same period in 2019 .

As mentioned above, in March 2020, the U.S.

during the six months ended June 30, 2020 , decreased $71.3 million , or 13.7% , as compared to the same period in 2019 .

dealership operations were directly impacted by reduced demand caused by the COVID-19 pandemic.

In an effort to reduce costs, we furloughed and terminated employees in late March and significantly reduced advertising and other outside services.

In an effort to reduce costs, we furloughed and terminated employees and significantly reduced advertising and other SG&A expenses.

Total same store SG&A expenses in the U.S.

in the first quarter of 2019 included $2.0 million in net costs associated with a hailstorm in Texas;

for the first six months of 2019 included $6.0 million in net costs associated with hailstorms in Texas and Oklahoma;

$1.1 million in net gains on real estate and dealership transactions;

and $1.8 million in non-core legal expenses.

Total same store SG&A as a percent of gross profit increased 100 basis points over the same period in 2019 driven by the decline in gross profit due to the impact of the COVID-19 pandemic.

Total same store SG&A expenses in the U.S.

during the second quarter of 2020 included $10.6 million in expense for an out-of-period adjustment related to stock-based compensation.

Total same store SG&A as a percent of gross profit decreased 350 basis points over the same period in 2019 driven by cost cutting measures taken due to the impact of the COVID-19 pandemic.

Reported Operating Data - U.K.

(In millions, except unit and per unit amounts)

Three Months Ended March 31,

Three Months Ended June 30,

Increase/ (Decrease)

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(In millions, except unit and per unit amounts)

Three Months Ended March 31,

Three Months Ended June 30,

Increase/ (Decrease)

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Total revenues in the U.K.

during the three months ended March 31, 2020 decreased $51.5 million , or 8.0% , as compared to the same period in 2019 .

during the three months ended June 30, 2020 decreased $350.9 million , or 57.1% , as compared to the same period in 2019 .

Total same store revenues in the U.K.

during the three months ended March 31, 2020 decreased $76.5 million , or 12.4% , as compared to the same period in 2019 .

during the three months ended June 30, 2020 decreased $351.1 million , or 59.2% , as compared to the same period in 2019 .

On a constant currency basis, total same store revenues decreased 57.9% , driven by decreases in all of our operations due to the COVID-19 pandemic.

March is one of the largest new vehicle selling months of the year with many pre-orders taken weeks in advance.

On March 21, 2020, the government mandated the closure of all U.K.

dealerships due to the COVID-19 pandemic.

Because of these closures and various travel restrictions, many new vehicles were not delivered.

This drove a 9.0% decline in new vehicle retail same store revenues on a constant currency basis, driven by a 16.7% decrease in new vehicle retail same store unit sales.

However, we believe most of these delayed new vehicle pre-orders will be delivered during the second quarter of 2020 after the lockdown in the U.K.

Used vehicle retail same store revenues on a constant currency basis decreased 9.9% as used vehicle retail same store unit sales declined 9.3% and average used retail same store sales price decreased by 0.6%.

Parts and service same store revenues decreased 8.5% on a constant currency basis as a 4.3% increase in customer-pay business was more than offset by declines of 28.3% in warranty, 27.5% in collision and 9.3% in wholesale parts revenues, due to the negative impacts of COVID-19.

F&I same store revenues on a constant currency basis decreased 15.9% , driven by the decline in retail unit sales, an increase in our overall chargeback experience and lower penetration rates on finance fees.

Beginning March 21, 2020, the government mandated the closure of all U.K.

dealerships in efforts to stop the spread of the virus and the government shutdown remained in effect through May 18, 2020 for service, with the exception of emergency vehicle repairs.

showrooms were allowed to reopen June 1, 2020 and performed well for the month.

On a constant currency basis, new vehicle retail same store revenues declined 58.9% driven by a 61.1% decrease in new vehicle retail same store unit sales, partially offset by a 5.8% increase in average new vehicle retail same store sales price.

Used vehicle retail same store revenues on a constant currency basis decreased 53.3% as used vehicle retail same store unit sales declined 54.7%, partially offset by a 3.2% increase in average used retail same store sales price.

Parts and service same store revenues decreased 60.2% on a constant currency basis as all of our parts and service businesses were negatively impacted by COVID-19, with declines of 57.1% in customer-pay, 66.2% in warranty, 67.7% in collision and 60.2% in wholesale parts revenues.

F&I same store revenues on a constant currency basis decreased 58.2% , driven by lower penetration rates coupled with the decline in retail unit sales volumes.

Total gross profit in the U.K.

during the three months ended March 31, 2020 decreased $7.2 million , or 9.9% , as compared to the same period in 2019 .

during the three months ended June 30, 2020 decreased $34.7 million , or 54.1% , as compared to the same period in 2019 .

Total same store gross profit in the U.K.

during the three months ended March 31, 2020 decreased $10.1 million , or 14.7% , as compared to the same period in 2019 .

On a constant currency basis, total same store gross profit decreased 12.7% , driven by decreases in new vehicle retail, parts and service and F&I gross profit, partially offset by an increase in used vehicle retail gross profit.

New vehicle retail same store gross profit decreased 28.8% , driven by a 16.7% decrease in new vehicle retail same store unit sales and a 14.5% decrease in new vehicle gross profit per unit on a constant currency basis.

The decline in new vehicle gross profit was directly related to the COVID-19 pandemic.

Used vehicle retail same store gross profit increased 8.3% , reflecting a 19.4% increase in used vehicle retail same store gross profit per unit sold on a constant currency basis partially offset by a 9.3% decrease in used vehicle retail same store unit sales.

The increase in used vehicle retail same store gross profit reflects gross profit PRUs returning to a more normalized level.

In 2019, there was a severe decline in used vehicle values after the new vehicle inventory supply shortage, due to the WLTP legislation, concluded in the second half of 2018.

Parts and service same store gross profit on a constant currency basis decreased 10.6% due to an 8.5% decrease in revenues, as discussed above.

during the three months ended June 30, 2020 decreased $34.6 million , or 56.1% , as compared to the same period in 2019 .

On a constant currency basis, total same store gross profit decreased 54.7% , driven by decreases in all of our operations, except used vehicle wholesale, due to COVID-19.

New vehicle retail same store gross profit decreased 47.5% on a constant currency basis, driven by a 61.1% decrease in new vehicle retail same store unit sales, partially offset by a 35.1% increase in new vehicle retail same store gross profit per unit.

The increase in new vehicle gross profit per unit is primarily due to current supply constraints.

On a constant currency basis, used vehicle retail same store gross profit decreased 43.5% , reflecting a 54.7% decline in used vehicle retail same store unit sales, partially offset by a 24.7% increase in used vehicle retail same store gross profit per unit sold.

The increase in used vehicle retail same store gross profit per unit sold reflects supply constraints similar to new vehicles.

The overall decline in new vehicle and used vehicle retail same store gross profits was directly related to the closures caused by the COVID-19 pandemic.

Used vehicle wholesale same store gross profit improved 128.5% on a constant currency basis due to the increase in auction prices due to supply constraints.

Parts and service same store gross profit on a constant currency basis decreased 61.9% due to a 60.2% decrease in revenues, as discussed above.

F&I same store revenues on a constant currency basis decreased 58.2% as previously discussed.

2 unchanged sentences

Total SG&A expenses in the U.K.

during the three months ended March 31, 2020 increased $0.7 million , or 1.1% , as compared to the same period in 2019 .

during the three months ended June 30, 2020 decreased $30.7 million , or 52.1% , as compared to the same period in 2019 .

Total same store SG&A expenses in the U.K.

during the three months ended March 31, 2020 , decreased $3.3 million , or 6.0% , as compared to the same period in 2019 .

On a constant currency basis, total same store SG&A expenses decreased 4.4% , driven by the implementation and execution of cost reduction strategies as a reaction to the COVID-19 pandemic, which enabled us to partially offset the adverse effect in gross profit.

during the three months ended June 30, 2020 , decreased $31.1 million , or 55.7% , as compared to the same period in 2019 .

On a constant currency basis, total same store SG&A expenses decreased 54.1% , driven by the implementation and execution of cost reduction strategies as a reaction to the COVID-19 pandemic, which enabled us to partially offset the adverse effect of significantly lower gross profit.

Total same store SG&A expenses in the second quarter of 2020 included $1.2 million in severance costs for redundancy driven by the COVID-19 pandemic.

As a percentage of gross profit, total same store SG&A expenses increased 90 basis points over the same period in 2019 to 91.5%, reflecting the decline in gross profit discussed above.

Reported Operating Data - U.K.

(In millions, except unit and per unit amounts)

Six Months Ended June 30,

Increase/ (Decrease)

Currency Impact on Current Period Results

Constant Currency % Change

New vehicle retail sales

Used vehicle retail sales

Used vehicle wholesale sales

Parts and service sales

Total revenues

Gross profit:

New vehicle retail sales

Used vehicle retail sales

Used vehicle wholesale sales

Parts and service sales

Total gross profit

Gross margin:

New vehicle retail sales

Used vehicle retail sales

Used vehicle wholesale sales

Parts and service sales

Total gross margin

Retail new vehicles sold

Retail used vehicles sold

Wholesale used vehicles sold

Average sales price per unit sold:

New vehicle retail

Used vehicle retail

Gross profit per unit sold:

New vehicle retail sales

Used vehicle retail sales

Used vehicle wholesale sales

SG&A expenses

SG&A as % gross profit

Same Store Operating Data - U.K.

(In millions, except unit and per unit amounts)

Six Months Ended June 30,

Increase/ (Decrease)

Currency Impact on Current Period Results

Constant Currency % Change

New vehicle retail sales

Used vehicle retail sales

Used vehicle wholesale sales

Parts and service sales

Total revenues

Gross profit:

New vehicle retail sales

Used vehicle retail sales

Used vehicle wholesale sales

Parts and service sales

Total gross profit

Gross margin:

New vehicle retail sales

Used vehicle retail sales

Used vehicle wholesale sales

Parts and service sales

Total gross margin

Retail new vehicles sold

Retail used vehicles sold

Wholesale used vehicles sold

Average sales price per unit sold:

New vehicle retail

Used vehicle retail

Gross profit per unit sold:

New vehicle retail sales

Used vehicle retail sales

Used vehicle wholesale sales

SG&A expenses

SG&A as % gross profit

The following discussion of our U.K.

operating results is on a same store basis.

The difference between reported amounts and same store amounts is related to acquisition and disposition activity, as well as new add-point openings.

dealership operations have been significantly impacted by the reduced demand caused by the COVID-19 pandemic and the restrictions put in place by the national government to contain the virus.

Total revenues in the U.K.

during the six months ended June 30, 2020 decreased $402.4 million , or 32.0% , as compared to the same period in 2019 .

Total same store revenues in the U.K.

during the six months ended June 30, 2020 decreased $427.6 million , or 35.3% , as compared to the same period in 2019 .

On a constant currency basis, total same store revenues decreased 33.9% , driven by decreases in all of our operations due to the COVID-19 pandemic.

Beginning March 21, 2020, the government mandated the closure of all U.K.

dealerships in efforts to stop the spread of the virus.

The government shutdown remained in effect through May 18, 2020 for service, with the exception of emergency vehicle repairs, and June 1, 2020 for showrooms.

New vehicle retail same store revenues on a constant currency basis decreased 33.6% , as a 38.1% decrease in new vehicle retail same store unit sales was partially offset by a 7.3% increase in new vehicle retail same store average sales price per unit sold.

On a constant currency basis, used vehicle retail same store revenues decreased 31.3% , as a 32.0% decrease in used vehicle retail same store unit sales was partially offset by a 1.0% increase in used vehicle retail same store average sales price per unit sold.

Parts and service same store revenues decreased 33.8% on a constant currency basis driven by declines of 27.1% in customer-pay, 45.5% in warranty, 45.6% in collision, and 34.0% in wholesale parts revenues.

The decreases in all parts and service businesses are a result of the limitations on the business due to COVID-19.

F&I same store revenues on a constant currency basis decreased 37.1% driven by the decline in retail unit sales and lower penetration rates, partially offset by an increase in income per contract on finance fees.

Total gross profit in the U.K.

during the six months ended June 30, 2020 decreased $41.8 million , or 30.7% , as compared to the same period in 2019 .

Total same store gross profit in the U.K.

during the six months ended June 30, 2020 decreased $44.6 million , or 34.3% , as compared to the same period in 2019 .

On a constant currency basis, total same store gross profit decreased 32.8% , driven by decreases in all of our operations, except for used vehicle wholesale, due to COVID-19.

New vehicle retail same store gross profit on a constant currency basis decreased 36.2% , driven by a 38.1% decline in new vehicle retail same store unit sales, partially offset by a 3.0% increase in new vehicle retail same store average gross profit per unit sold.

The increase in new vehicle retail same store gross profit per unit sold reflects supply constraints that occurred during the second quarter of 2020 related to the COVID-19 pandemic.

Used vehicle retail same store gross profit on a constant currency basis decreased 18.3% on a 32.0% decrease in used vehicle retail same store unit sales, partially offset by a 20.1% increase in used vehicle retail same store average gross profit per unit sold.

The increase in used vehicle retail same store average gross profit per unit sold reflects supply constraints similar to new vehicles.

The overall gross profit declines on new and used vehicles are a result of the COVID-19 pandemic.

Used vehicle wholesale same store gross profit improved 114.5% on a constant currency basis due to increases in auction prices.

Parts and service same store gross profit on a constant currency basis decreased 36.0% as a result of a 33.8% decline in revenues discussed above.

F&I same store on a constant currency basis decreased 37.1% as discussed above.

SG&A Expenses

Total SG&A expenses in the U.K.

during the six months ended June 30, 2020 decreased $30.1 million , or 25.4% , as compared to the same period in 2019 .

Total same store SG&A expenses in the U.K.

during the six months ended June 30, 2020 , decreased $34.4 million , or 30.9% , as compared to the same period in 2019 .

On a constant currency basis, total same store SG&A expenses decreased 29.5% .

This decline was driven by the implementation and execution of cost reduction strategies as a reaction to the COVID-19 pandemic, which enabled us to partially offset the negative impact of lower gross profit.

Total same store SG&A expenses in 2020 included $1.2 million in severance costs for redundancy due to the COVID-19 pandemic.

As a percentage of gross profit, total same store SG&A expenses increased 440 basis points over the same period in 2019 to 90.1%, reflecting the decline in gross profit discussed above.

Reported Operating Data - Brazil

(In millions, except unit and per unit amounts)

Three Months Ended March 31,

Three Months Ended June 30,

Increase/ (Decrease)

32 unchanged sentences

(In millions, except unit and per unit amounts)

Three Months Ended March 31,

Three Months Ended June 30,

Increase/ (Decrease)

33 unchanged sentences

Our Brazil dealership operations have been significantly impacted by the reduced demand caused by the COVID-19 pandemic and the restrictions put in place by local governments to contain the virus.

Total revenues in Brazil during the three months ended March 31, 2020 decreased $10.9 million , or 10.5% , as compared to the same period in 2019 .

Total same store revenues in Brazil during the three months ended March 31, 2020 decreased $7.4 million , or 7.4% , as compared to the same period in 2019 .

On a constant currency basis, total same store revenues increased 8.7% driven by increases in all business lines except parts and service.

New vehicle retail same store revenues on a constant currency basis increased 7.1% as a 15.5% increase in new vehicle retail same store average sales price per unit sold more than offset a 7.3% decrease in new vehicle retail same store unit sales.

The increase in average sales price was driven by a change in brand mix, which has shifted towards our higher priced luxury brands.

The decline in new vehicle same store unit sales was a result of the reduced demand at our dealerships caused by the COVID-19 pandemic.

Used vehicle retail same store revenues on a constant currency basis increased 18.9% reflecting a 14.6% increase in used vehicle retail same store average sales price per unit sold and a 3.8% increase in used vehicle retail same store unit sales.

The increase in used vehicle retail same store average sales price reflects higher luxury sales in 2020 compared with the prior year.

The increase in used vehicle retail same store unit sales was driven by an increased focus by management on used sales volume growth.

Parts and service same store revenues on a constant currency basis decreased 4.8% driven by a decline in warranty revenues, partially offset by increases in customer-pay, collision and wholesale revenues.

F&I same store revenues on a constant currency basis increased 3.5% primarily reflecting improvement in income per contract on retail finance fees.

Total gross profit in Brazil during the three months ended March 31, 2020 decreased $1.9 million , or 15.2% , as compared to the same period in 2019 .

Total same store gross profit in Brazil during the three months ended March 31, 2020 decreased $1.9 million , or 14.9% , as compared to the same period in 2019 .

On a constant currency basis, total same store gross profit decreased 0.2% as declines in used vehicle and parts and service were almost fully offset by increases in new vehicle and F&I gross profit.

New vehicle retail same store gross profit on a constant currency basis increased 7.7% driven by an increase of 16.2% in new vehicle retail same store average gross profit per unit sold, partially offset by a 7.3% decline in new vehicle retail same store units sold.

The improvement in new vehicle retail same store gross profit reflects an increase in manufacturer incentives.

Used vehicle retail same store gross profit on a constant currency basis decreased 11.6% reflecting a 14.8% decrease in used vehicle retail same store average gross profit PRU that was partially offset by a 3.8% increase in used vehicle retail same store unit sales.

The decline in used vehicle same store gross profit PRU was a result of the COVID-19 pandemic as we sacrificed profit over volume to reduce inventory levels.

Total revenues in Brazil during the three months ended June 30, 2020 decreased $76.0 million , or 67.5% , as compared to the same period in 2019 .

Total same store revenues in Brazil during the three months ended June 30, 2020 decreased $71.3 million , or 66.1% , as compared to the same period in 2019 .

On a constant currency basis, total same store revenues decreased 53.9% driven by declines in all business lines except for used vehicle wholesale caused by the COVID-19 pandemic.

Beginning March 20, 2020, all our dealerships were required to close in efforts to stop the spread of the virus and while our service centers reopened and operated throughout the second quarter, our showrooms did not reopen until May 2020 with reduced hours.

New vehicle retail same store revenues on a constant currency basis decreased 63.0% as a 72.0% decrease in new vehicle retail same store unit sales was partially offset by a 32.2% increase in new vehicle retail same store average sales price per unit sold.

The decline in new vehicle same store unit sales was a result of the reduced demand and closure of our dealerships caused by the COVID-19 pandemic.

Used vehicle retail same store revenues on a constant currency basis decreased 45.2% reflecting a 62.2% decrease in used vehicle same store unit sales partially offset by a 45.1% increase in used vehicle retail same store average sales price per unit sold.

The decrease in used vehicle retail same store unit sales was driven by the COVID-19 pandemic.

Used vehicle wholesale same store revenues increased 19.5% on a constant currency basis.

The improvement in used vehicle wholesale same store revenues and the increases in new and used vehicle retail same store average sales price per unit sold were driven by a change in brand mix, which has shifted towards our higher priced luxury brands.

Parts and service same store revenues on a constant currency basis decreased 32.0% driven by declines in warranty, customer-pay and collision revenues, partially offset by an increase in wholesale revenues.

F&I same store revenues on a constant currency basis decreased 55.0% primarily due to the decline in retail unit sales partially offset by an increase in income per contract for our retail finance fees.

Total gross profit in Brazil during the three months ended June 30, 2020 decreased $8.5 million , or 63.3% , as compared to the same period in 2019 .

Total same store gross profit in Brazil during the three months ended June 30, 2020 decreased $8.2 million , or 62.3% , as compared to the same period in 2019 .

On a constant currency basis, total same store gross profit decreased 48.7% driven by declines in all business lines.

New vehicle retail same store gross profit on a constant currency basis decreased 56.4% driven by the 72.0% decline in new vehicle retail same store units sold partially offset by a 55.8% increase in new vehicle retail same store average gross profit per unit sold.

The improvement in new vehicle retail same store gross profit reflects the mix shift towards our higher priced luxury brands and supply constraints experienced during the COVID-19 pandemic.

Used vehicle retail same store gross profit on a constant currency basis decreased 61.9% reflecting the 62.2% decline in used vehicle retail same store unit sales.

Parts and service same store gross profit on a constant currency basis decreased 35.9% as a result of the 32.0% decrease in revenues described above.

F&I same store gross profit on a constant currency basis increased 3.5% as discussed above.

F&I same store gross profit on a constant currency basis decreased 55.0% as discussed above.

SG&A Expenses

Total SG&A expenses in Brazil during the three months ended March 31, 2020 decreased $1.8 million , or 14.3% , as compared to the same period in 2019 .

Total same store SG&A expenses in Brazil during the three months ended March 31, 2020 decreased $0.9 million , or 7.7% , as compared to the same period in 2019 .

On a constant currency basis, total same store SG&A expenses increased 9.4% , resulting in a 780 basis points increase in total same store SG&A as a % of gross profit.

The increase in same store SG&A can be more than explained by $0.9 million of severance costs associated with the termination of employees as a result of the COVID-19 pandemic.

Total SG&A expenses in Brazil during the three months ended June 30, 2020 decreased $6.0 million , or 51.5% , as compared to the same period in 2019 .

Total same store SG&A expenses in Brazil during the three months ended June 30, 2020 decreased $6.2 million , or 52.3% , as compared to the same period in 2019 .

On a constant currency basis, total same store SG&A expenses decreased 34.8% .

The decrease in same store SG&A can be more than explained by expense control measures taken by management due to COVID-19, primarily driven by a decrease in personnel expense.

Despite the reduction in same store SG&A expenses, total same store SG&A as a % of gross profit increased to 114.0% driven by the decline in same store gross profit discussed above.

Reported Operating Data - Brazil

(In millions, except unit and per unit amounts)

Six Months Ended June 30,

Increase/ (Decrease)

Currency Impact on Current Period Results

Constant Currency % Change

New vehicle retail sales

Used vehicle retail sales

Used vehicle wholesale sales

Parts and service sales

Total revenues

Gross profit:

New vehicle retail sales

Used vehicle retail sales

Used vehicle wholesale sales

Parts and service sales

Total gross profit

Gross margin:

New vehicle retail sales

Used vehicle retail sales

Used vehicle wholesale sales

Parts and service sales

Total gross margin

Retail new vehicles sold

Retail used vehicles sold

Wholesale used vehicles sold

Average sales price per unit sold:

New vehicle retail

Used vehicle retail

Gross profit per unit sold:

New vehicle retail sales

Used vehicle retail sales

Used vehicle wholesale sales

SG&A expenses

SG&A as % gross profit

Same Store Operating Data - Brazil

(In millions, except unit and per unit amounts)

Six Months Ended June 30,

Increase/ (Decrease)

Currency Impact on Current Period Results

Constant Currency % Change

New vehicle retail sales

Used vehicle retail sales

Used vehicle wholesale sales

Parts and service sales

Total revenues

Gross profit:

New vehicle retail sales

Used vehicle retail sales

Used vehicle wholesale sales

Parts and service sales

Total gross profit

Gross margin:

New vehicle retail sales

Used vehicle retail sales

Used vehicle wholesale sales

Parts and service sales

Total gross margin

Retail new vehicles sold

Retail used vehicles sold

Wholesale used vehicles sold

Average sales price per unit sold:

New vehicle retail

Used vehicle retail

Gross profit per unit sold:

New vehicle retail sales

Used vehicle retail sales

Used vehicle wholesale sales

SG&A expenses

SG&A as % gross profit

The following discussion of our Brazil operating results is on a same store basis.

The difference between reported amounts and same store amounts is related to acquisition and disposition activity, as well as new add-point openings.

Our Brazil dealership operations have been significantly impacted by the reduced demand caused by the COVID-19 pandemic and the restrictions put in place by local governments to contain the virus.

Total revenues in Brazil during the six months ended June 30, 2020 decreased $86.9 million , or 40.2% , as compared to the same period in 2019 .

Total same store revenues in Brazil during the six months ended June 30, 2020 decreased $78.7 million , or 37.9% , as compared to the same period in 2019 .

On a constant currency basis, total same store revenues decreased 24.4% with declines in all revenue lines except for used vehicle wholesale.

New vehicle retail same store revenues on a constant currency basis decreased 31.1% , as a 42.1% decrease in new vehicle retail same store unit sales was partially offset by a 19.1% increase in new vehicle retail same store average sales price per unit sold.

The decline in new vehicle same store unit sales was a result of the reduced demand and closure of our dealerships caused by the COVID-19 pandemic.

Used vehicle retail same store revenues on a constant currency basis decreased 12.7% , as a 27.3% decrease in used vehicle retail same store unit sales more than offset a 20.1% increase in used vehicle retail same store average sales price per unit sold.

The decrease in used vehicle retail same store unit sales was driven by the COVID-19 pandemic.

Used vehicle wholesale same store revenues increased 24.0% on a constant currency basis.

The improvement in used vehicle wholesale same store revenues and the increases in new and used vehicle retail same store average sales price per unit sold reflect a shift in brand mix to higher priced luxury brands.

Parts and service same store revenues on a constant currency basis decreased 18.8% driven by declines in warranty, customer-pay and collision revenues partially offset by an increase in wholesale revenues.

F&I same store revenues on a constant currency basis decreased 24.7% primarily as a result of a decline in our retail unit sales partially offset by an improvement in income per contract on our retail finance fees.

Total gross profit in Brazil during the six months ended June 30, 2020 decreased $10.4 million , or 40.1% , as compared to the same period in 2019 .

Total same store gross profit in Brazil during the six months ended June 30, 2020 decreased $10.0 million , or 39.1% , as compared to the same period in 2019 .

On a constant currency basis total same store gross profit decreased 25.4% driven by declines in all business lines.

New vehicle retail same store gross profit on a constant currency basis decreased 26.8% , driven by a 42.1% decrease in new vehicle retail same store units sold partially offset by a 26.4% increase in new vehicle retail same store average gross profit per unit sold.

The improvement in new vehicle retail same store gross profit per unit reflects the shift towards our higher priced luxury brands and supply constraints experienced during the COVID-19 pandemic.

Used vehicle retail same store gross profit on a constant currency basis decreased 38.2%, reflecting a 27.3% decrease in used vehicle retail same store unit sales and a 15.0% decrease in used vehicle retail same store average gross profit per unit sold.

The declines were attributable to the negative impacts of COVID-19.

Parts and service same store gross profit decreased 20.4% on a constant currency basis, driven by the 18.8% decrease in parts and service revenues described above.

F&I same store gross profit on a constant currency basis decreased 24.7% as discussed above.

SG&A Expenses

Total SG&A expenses in Brazil during the six months ended June 30, 2020 decreased $7.7 million , or 32.3% , as compared to the same period in 2019 .

Total same store SG&A expenses in Brazil during the six months ended June 30, 2020 , decreased $7.0 million , or 30.3% , as compared to the same period in 2019 .

On a constant currency basis, total same store SG&A expenses decreased 13.5% while total same store gross profit decreased 25.4% , resulting in a 1,300 basis points increase in total same store SG&A as a % of gross profit.

The decrease in SG&A expenses was a result of cost control initiatives implemented by the management team centered around reducing personnel expense and lower legal expenses.

Total same store SG&A expenses in 2020 included $0.9 million of severance costs associated with the termination of employees as a result of the COVID-19 pandemic.

The following discussion of our results of operations is on a consolidated basis, unless otherwise noted.

Depreciation and Amortization Expense

Our total depreciation and amortization expense increased from $ 17.0 million to $18.6 million for the three months ended March 31, 2020 when compared to the same period in 2019 .

Our total depreciation and amortization expense increased from $17.9 million to $18.8 million and from $34.9 million to $37.4 million for the three and six months ended June 30, 2020 , respectively, when compared to the same period in 2019 .

This increase is substantially explained by the increase in our U.S.

segment, as we continue to strategically add dealership-related real estate to our investment portfolio and make improvements to our existing facilities intended to enhance the profitability of our dealerships and the overall customer experience.

Impairment of Assets

We evaluate intangible assets, consisting entirely of indefinite-lived franchise rights and goodwill, for impairment annually, or more frequently if events or circumstances indicate possible impairment.

During the three and six months ended June 30, 2020, we recorded goodwill impairment charges of $10.7 million within the Brazil reporting unit.

During the three and six months ended June 30, 2020, we recorded franchise rights impairment charges of $11.1 million within the U.K.

segment and $0.1 million within the Brazil segment.

During the three and six months ended June 30, 2019, there was no impairment to indefinite-lived franchise rights or goodwill.

See Part I, “Item 1.

Financial Statements,” Note 8 “Intangibles” for additional discussion of our interim impairment assessment.

We also review long-lived assets that are held-for-use, including our property and equipment and ROU assets, for impairment at the lowest level of identifiable cash flows whenever there are indicators that the carrying value of these assets may not be recoverable.

During the three and six months ended June 30, 2020, we recognized ROU asset impairment charges of $1.7 million relating to seven dealerships within the U.K.

segment and $0.2 million relating to one dealership within the Brazil segment.

During the three and six months ended June 30, 2019, we recognized asset impairment charges of $0.5 million within the Brazil segment.

See Part I, “Item 1.

Financial Statements,” Note 1 “Interim Financial Information” for additional discussion of our interim impairment assessment.

The impairment charges were recognized within Asset impairments in our Condensed Consolidated Statements of Operations.

Floorplan Interest Expense

Our floorplan interest expense fluctuates with changes in our borrowings outstanding and interest rates, which are based on the one-month LIBOR (or Prime rate in some cases), plus a spread in the U.S.

Our floorplan interest expense fluctuates with changes in our borrowings outstanding and interest rates, which are based on LIBOR (or Prime rate in some cases), plus a spread in the U.S.

and U.K., and a benchmark rate plus a spread in Brazil.

To mitigate the impact of interest rate fluctuations, we employ an interest rate hedging strategy, whereby we swap variable interest rate exposure for a fixed interest rate over the term of the variable interest rate borrowing.

For the three months ended March 31, 2020 , our total floorplan interest expense decreased 18.1% as compared to the same period in 2019 , primarily due to lower weighted average interest rates as a result of a decline in LIBOR and lower inventory levels in the U.S.

For the three months ended June 30, 2020 , total floorplan interest expense decreased 36.4% as compared to the same period in 2019 .

For the six months ended June 30, 2020 , total floorplan interest expense decreased 27.3% as compared to the same period in 2019 .

The decrease in both comparative periods is primarily due to lower weighted average interest rates as a result of a decline in LIBOR and lower inventory levels, partially offset by higher expense on our interest rate swaps.

Other Interest Expense, Net

Other interest expense, net consists of interest charges primarily on our real estate related debt, working capital lines of credit and other long-term debt, partially offset by interest income.

For the three months ended March 31, 2020 , other interest expense, net decreased from $18.9 million to $18.1 million as compared to the same period in 2019 .

The decrease was mainly attributed to a decrease in the weighted average interest rate as a result of a decline in LIBOR, partially offset by an increase primarily attributed to higher weighted average borrowings on our real estate related debt.

For the three months ended June 30, 2020 , other interest expense, net decreased from $18.0 million to $16.2 million as compared to the same period in 2019 .

For the six months ended June 30, 2020 , other interest expense, net decreased from $36.9 million to $34.3 million as compared to the same period in 2019 .

The decrease in both comparative periods was primary attributable to the redemption of our 5.25% Senior Notes on April 2, 2020 and lower interest rates on our Acquisition Line and real estate related debt, partially offset by increased borrowings on said debt.

Loss on Extinguishment of Debt

On April 2, 2020, we fully redeemed $300.0 million in aggregate principal amount of our outstanding 5.25% Senior Notes due June 2023, at a premium of 102.625% .

The total redemption price, consisting of the principal amount of the notes redeemed plus associated premium, amounted to $307.9 million .

We recognized a loss on extinguishment of $10.4 million which included write offs of unamortized discount in the amount of $1.9 million and unamortized premium in the amount of $0.6 million .

Provision for Income Taxes

Our provision for income taxes decreased $4.4 million to $9.1 million for the three months ended March 31, 2020 as compared to the same period in 2019 , primarily due to a decrease in pre-tax book income.

For the three months ended March 31, 2020 , our effective tax rate decreased to 23.4% from 25.9% as compared to the same period in 2019 .

This decrease was primarily due to higher tax deductions in excess of book expense with respect to RSAs that vested in 2020, offset by changes to valuation allowances provided for net operating losses in certain U.S.

Our provision for income taxes decreased $1.8 million to $12.2 million for the three months ended June 30, 2020 as compared to the same period in 2019.

For the six months ended June 30, 2020 , our provision for income taxes decreased $6.3 million to $21.3 million , as compared to the same period in 2019.

The decreases were primarily due to decreases in pretax book income.

For the three months ended June 30, 2020 , our effective tax rate increased to 28.7% from 22.2% as compared to the same period in 2019.

This increase was primarily due to an increase in excess compensation from an out-of-period adjustment to accelerate stock-based compensation, and the decrease in tax deductions in excess of book expense with respect to RSAs that vested in 2020, offset by changes to valuation allowances provided for net operating losses in certain U.S.

states and in Brazil.

We expect our effective tax rate for the full-year of 2020 will be between 23.0% and 24.0% .

For the six months ended June 30, 2020, our effective tax rate increased to 26.2% from 23.9% as compared to the same period in 2019.

This increase was primarily due to the increase in excess compensation expense as a result of the out-of-period adjustment to accelerate stock-based compensation, offset by changes to valuation allowances provided for net operating losses in certain U.S.

states and in Brazil, and the increase of tax deductions in excess of book expense with respect to RSAs that vested in 2020.

We expect our effective tax rate for the remainder of 2020 will be between 23.0% and 24.0%.

We believe that it is more-likely-than-not that our deferred tax assets, net of valuation allowances provided, will be realized, based primarily on assumptions of our future taxable income, considering future reversals of existing taxable temporary differences.

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See “Sources and Uses of Liquidity from Investing Activities” below for further discussion of expectations regarding future capital expenditures.

As of March 31, 2020 , our total cash on hand was $19.2 million .

The balance of cash on hand excludes $82.8 million of immediately available funds used to pay down our Floorplan Line and FMCC Facility as of March 31, 2020 .

As of June 30, 2020 , our total cash on hand was $72.7 million .

The balance of cash on hand excludes $107.8 million of immediately available funds used to pay down our Floorplan Line and FMCC Facility as of June 30, 2020 .

We use the pay down of our Floorplan Line and FMCC Facility as a channel for the short-term investment of excess cash.

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GAAP basis to the corresponding adjusted amounts (in millions):

Three Months Ended March 31,

Six Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

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Sources and Uses of Liquidity from Operating Activities

For the three months ended March 31, 2020 , we generated $44.1 million of net cash flows from operating activities.

On an adjusted basis for the same period, we generated $51.9 million in net cash flows from operating activities, primarily consisting of $29.8 million in net income, coupled with non-cash adjustments related to depreciation and amortization of $18.6 million , operating lease assets of $6.4 million and stock-based compensation of $5.1 million .

Adjusted net cash flows from operating activities also includes an $8.9 million adjusted net change in operating assets and liabilities, including cash outflows of $125.7 million from an increase in inventory levels, $98.1 million from decreases in accounts payable and accrued expenses and $7.3 million from the decrease in operating lease liabilities.

These cash outflows were partially offset by cash inflows of $135.2 million from net decreases in contracts-in-transit and vehicle receivables, $43.8 million from an adjusted net increase of floorplan borrowings and $41.6 million from decreases in accounts and notes receivable

For the three months ended March 31, 2019 , we generated $127.9 million of net cash flows from operating activities.

For the six months ended June 30, 2020 , we generated $688.2 million of net cash flows from operating activities.

On an adjusted basis for the same period, we generated $237.6 million in net cash flows from operating activities, primarily consisting of $60.0 million in net income, coupled with non-cash adjustments related to depreciation and amortization of $37.4 million , asset impairments of $23.8 million , stock-based compensation of $21.7 million , operating lease assets of $12.9 million and a loss on extinguishment of $10.4 million related to the 5.25% Senior Notes.

Adjusted net cash flows from operating activities also included a $70.9 million adjusted net change in operating assets and liabilities, including cash inflows of $536.7 million from decreases in inventory levels, $77.2 million from net decreases in contracts-in-transit and vehicle receivables and $64.8 million from decreases in accounts and notes receivables.

These cash inflows were partially offset by cash outflows of $540.9 million from an adjusted net decrease of floorplan borrowings and $48.0 million from decreases in accounts payable and accrued expenses.

For the six months ended June 30, 2019 , we generated $252.9 million of net cash flows from operating activities.

On an adjusted basis for the same period, we generated $184.3 million in net cash flows from operating activities, primarily consisting of $87.9 million in net income, coupled with non-cash adjustments related to depreciation and amortization of $34.9 million, operating lease assets of $14.4 million, stock-based compensation of $10.0 million and deferred income taxes of $5.1 million, partially offset by a $6.0 million gain on the disposition of assets.

Adjusted net cash flows from operating activities also includes a $63.1 million adjusted net change in operating assets and liabilities, including cash inflows of $101.6 million from increases in accounts payable and accrued expenses, $9.2 million from the net decrease in accounts and notes receivable, $5.1 million from the net decrease in contracts-in-transit and vehicle receivables and $1.5 million from the adjusted net increase in floorplan borrowings.

These cash inflows were partially offset by cash outflows of $28.1 million from an increase in inventory, $17.7 million from the net increase in prepaid expenses and other assets and $8.4 million from the decrease in operating lease liabilities.

Adjusted net cash flows from operating activities also included a $34.9 million adjusted net change in operating assets and liabilities, including cash inflows of $77.3 million from increases in accounts payable and accrued expenses and $31.7 million from decreases in inventory levels.

These cash inflows were partially offset by cash outflows of $59.8 million from the adjusted net decrease in floorplan borrowings and $14.5 million from the decrease in operating lease liabilities.

Working Capital

At March 31, 2020 , we had a $241.0 million deficit of working capital.

At June 30, 2020 , we had a $59.5 million surplus of working capital.

This represents a decrease of $34.5 million from December 31, 2019 , when we had a $94.0 million surplus of working capital.

The decrease is primarily related to the reclassification of $297.5 million of our 5.25% Senior Notes from Long-term debt to Current maturities of long-term debt .

Changes in our working capital are also typically explained by changes in floorplan notes payable outstanding.

Changes in our working capital are typically explained by changes in floorplan notes payable outstanding.

Borrowings on our new vehicle floorplan notes payable, subject to agreed-upon pay-off terms, are equal to 100% of the factory invoice of the vehicles.

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Sources and Uses of Liquidity from Investing Activities

During the three months ended March 31, 2020 , we used $31.1 million in net cash flows from investing activities on both unadjusted and adjusted basis, which represents $31.6 million used for purchases of property and equipment partially offset by cash inflows of $0.5 million related to the disposition of franchises and property and equipment.

Of the $31.6 million in property and equipment purchases, $21.2 million was used for non-real estate related capital expenditures, $11.2 million was used for the purchase of real estate associated with existing dealership operations and $0.7 million represents the net increase in the accrual for capital expenditures from year-end.

During the three months ended March 31, 2019 , we used $6.8 million in net cash flows from investing activities.

On an adjusted basis for the same period, we used $22.5 million in net cash flows from investing activities, representing $41.7 million used for purchases of property and equipment, partially offset by cash inflows of $19.4 million related to the disposition of franchises and property and equipment.

Of the $41.7 million in property and equipment purchases, $23.4 million was used for non-real estate related capital expenditures, $14.1 million was used for the purchase of real estate associated with existing dealership operations and $4.1 million represents the net decrease in the accrual for capital expenditures from year-end.

During the six months ended June 30, 2020 , we used $61.2 million in net cash flows from investing activities on both unadjusted and adjusted basis, which represented $60.5 million used for purchases of property and equipment and to construct new and improve existing facilities and $1.3 million used for acquisition activity, partially offset by cash inflows of $0.6 million related to the disposition of property and equipment.

Of the $60.5 million in property and equipment purchases, $35.3 million was used for non-real estate related capital expenditures, $22.4 million was used for the purchase of real estate associated with existing dealership operations and $2.7 million represented the net decrease in the accrual for capital expenditures from year-end.

During the six months ended June 30, 2019 , we used $71.6 million in net cash flows from investing activities.

On an adjusted basis for the same period, we used $87.3 million in net cash flows from investing activities, representing $109.2 million used for purchases of property and equipment and to construct new and improve existing facilities, partially offset by cash inflows of $22.3 million related to the disposition of franchises and property and equipment.

Of the $109.2 million in property and equipment purchases, $46.5 million was used for non-real estate related capital expenditures, $59.2 million was used for the purchase of real estate associated with existing dealership operations and $3.5 million represented the net decrease in the accrual for capital expenditures from year-end.

Capital Expenditures

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We critically evaluate all planned future capital spending, working closely with our manufacturer partners to maximize the return on our investments.

We forecast our capital expenditures for the full year of 2020 will be less than $70 million , which represents a reduction from our previous $125 million forecast, following the onset of the COVID-19 pandemic.

We forecast our capital expenditures for the full year of 2020 will be approximately $70 million excluding expenditures related to real estate purchases and future acquisitions, which could generally be funded from excess cash.

We evaluate the expected return on investment in our consideration of potential business purchases.

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Sources and Uses of Liquidity from Financing Activities

For the three months ended March 31, 2020 , we used $18.5 million in net cash flows from financing activities.

On an adjusted basis for the same period, we used $26.4 million in net cash flows from financing activities, primarily related to cash outflows of $48.9 million related to the repurchase of our common stock and $5.5 million in dividend payments, partially offset by $20.2 million in net borrowings on our Floorplan Lines (representing the net cash activity in our floorplan offset accounts) and $11.2 million in net borrowings on debt related to real estate.

For the three months ended March 31, 2019 , we used $102.5 million in net cash flows from financing activities.

On an adjusted basis for the same period, we used $90.8 million in net cash flows from financing activities, primarily related to cash outflows of $20.9 million of net payments on real estate debt, $4.8 million for dividend payments, $3.7 million of net repayments on our Acquisition line and $65.0 million in net repayments on our Floorplan lines (representing the net cash activity in our floorplan offset accounts).

These outflows were partially offset by cash inflows of $4.4 million of net borrowings of other debt.

For the six months ended June 30, 2020 , we used $579.0 million in net cash flows from financing activities.

On an adjusted basis for the same period, we used $128.3 million in net cash flows from financing activities, primarily related to cash outflows of $307.9 million related to the extinguishment of our 5.25% Senior Notes, $48.9 million related to the repurchase of our common stock and $5.5 million in dividend payments.

These cash outflows were partially offset by $173.9 million net borrowings on debt related to real estate, which reflected increased mortgage borrowings in the U.S.

to partially fund the redemption of the 5.25% Senior Notes, as well as $68.8 million net borrowings on our Acquisition Line.

For the six months ended June 30, 2019 , we used $157.8 million in net cash flows from financing activities.

On an adjusted basis for the same period, we used $73.4 million in net cash flows from financing activities, primarily related to cash outflows of $44.8 million in net repayments on our Floorplan lines (representing the net cash activity in our floorplan offset accounts), $20.1 million in net payments on debt related to real estate, and $9.7 million in dividend payments.

Credit Facilities, Debt Instruments and Other Financing Arrangements

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The following table summarizes the position of our U.S.

credit facilities as of March 31, 2020 (in millions):

credit facilities as of June 30, 2020 (in millions):

Floorplan line (1)

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credit facilities (4)

(1) The available balance at March 31, 2020 includes $82.6 million of immediately available funds.

(1) The available balance at June 30, 2020 includes $99.7 million of immediately available funds.

The remaining available balance can be used for inventory financing.

(2) The outstanding balance of $91.2 million is related to outstanding letters of credit of $20.6 million and $ 70.7 million in borrowings as of March 31, 2020 .

The borrowings outstanding under the Acquisition Line represent 55 million GBP loans translated at the spot rate on the day borrowed, solely for the purpose of calculating the outstanding and available borrowings under the Acquisition Line.

(2) The outstanding balance of $155.7 million is related to outstanding letters of credit of $18.6 million and $ 137.1 million in borrowings as of June 30, 2020 .

The borrowings outstanding under the Acquisition Line include $75 million of U.S dollar borrowings and £ 50 million of British pound sterling borrowings translated at the spot rate on the day borrowed, solely for the purpose of calculating the outstanding and available borrowings under the Acquisition Line.

The available borrowings may be limited from time to time, based on certain debt covenants.

(3) The available balance at March 31, 2020 includes $ 0.2 million of immediately available funds.

(3) The available balance at June 30, 2020 includes $ 8.1 million of immediately available funds.

The remaining available balance can be used for Ford new vehicle inventory financing.

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In addition, we have outstanding debt instruments, including our 5.00% Senior Notes, as well as real estate related and other long-term debt instruments.

Our 5.25% Senior Notes were paid in full on April 2, 2020 as discussed further below, and therefore included in current maturities of long-term debt, as of March 31, 2020.

Subsequent 5.25% Senior Notes Redemption and Debt Refinancing

5.25% Senior Notes Redemption and Debt Refinancing

On April 2, 2020, we fully redeemed $300.0 million in aggregate principal amount of our outstanding 5.25% Senior Notes due 2023, at a premium of 102.625%.

The total redemption price, consisting of the principal amount of the notes redeemed plus associated premium, amounted to $307.9 million.

We recognized a loss on extinguishment of $10.4 million which included write offs of unamortized discount in the amount of $1.9 million and unamortized premium in the amount of $0.6 million .

Additionally, we paid $4.6 million of accrued interest up to the date of redemption.

The redemption was funded through a combination of Acquisition Line borrowings, mortgage borrowings, and excess cash.

Additional mortgage debt will be funded during the second quarter of 2020 to provide supplemental liquidity.

Additional mortgage debt was funded during the second quarter of 2020 to provide supplemental liquidity.

These refinancings are expected to lower our annual interest expense by approximately $8.5 million.

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Certain of our mortgage agreements contain cross-default provisions that in the event of a default of certain mortgage agreements and of our Revolving Credit Facility, could trigger an uncured default.

As of March 31, 2020 , we were in compliance with the requirements of the financial covenants under our debt agreements.

As of June 30, 2020 , we were in compliance with the requirements of the financial covenants under our debt agreements.

We are required to maintain the ratios detailed in the following table:

As of March 31, 2020

As of June 30, 2020

Total adjusted leverage ratio

Fixed charge coverage ratio

As of March 31, 2020, we had $19.2 million of cash on hand and an additional $82.6 million invested in our floorplan offset account, bringing total cash liquidity to $101.8 million.

In addition, we had $257.8 million of additional borrowing capacity on our Acquisition Line, bringing total immediate liquidity to $359.6 million as of March 31, 2020.

Based on our position as of March 31, 2020 and our outlook as discussed within “Management's Discussion and Analysis of Financial Condition and Results of Operations,” we have sufficient liquidity currently and do not anticipate any material liquidity constraints or issues with our ability to remain in compliance with our debt covenants.

As of June 30, 2020 , we had $72.7 million of cash on hand and an additional $107.8 million invested in our floorplan offset accounts, bringing total cash liquidity to $180.5 million.

In addition, we had $193.3 million of additional borrowing capacity on our Acquisition Line, bringing total immediate liquidity to $373.8 million as of June 30, 2020 .

Based on our position as of June 30, 2020 and our outlook as discussed within “Management's Discussion and Analysis of Financial Condition and Results of Operations,” we have sufficient liquidity currently and do not anticipate any material liquidity constraints or issues with our ability to remain in compliance with our debt covenants.

See Part I, “Item 1.

Financial Statements,” Note 9 “Debt” and Note 10 “Floorplan Notes Payable” in our Notes to Condensed Consolidated Financial Statements for further discussion of our debt instruments, credit facilities, and other financing arrangements existing as of March 31, 2020 .

Stock Repurchases and Dividends

Our Board of Directors from time to time, authorizes the repurchase of shares of our common stock up to a certain monetary limit.

During the three months ended March 31, 2020 , 597,764 shares were repurchased at an average price of $81.83 per share, for a total of $48.9 million , leaving $77.0 million available under our stock repurchase limit of $100.0 million most recently authorized by our Board of Directors in February 2020.

For the three months ended March 31, 2020 , our Board of Directors approved a quarterly cash dividend of $0.30 per share on all shares of our common stock, which resulted in $5.3 million paid to common shareholders and $0.2 million to unvested RSA holders.

On April 7, 2020, we canceled our most recently authorized share repurchase program in light of the COVID-19 pandemic.

During the first quarter 2020 and through the cancellation date, 597,764 shares were repurchased at an average price of $81.83 per share, for a total of $48.9 million.

During the first quarter of 2020, our Board of Directors approved a quarterly cash dividend of $0.30 per share on all shares of our common stock, which resulted in $5.3 million paid to common shareholders and $0.2 million to unvested RSA holders.

On April 7, 2020, we temporarily suspended quarterly dividends in light of the COVID-19 pandemic.

Future stock repurchase programs and the payment of any future dividends are subject to the business judgment of our Board of Directors, taking into consideration our historical and projected results of operations, financial condition, cash flows, capital requirements, covenant compliance, current economic environment and other factors considered relevant.

On April 7, 2020, due to the adverse impacts of COVID-19 on our business activities, as discussed in Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the existing share repurchase program was canceled and the quarterly dividend was suspended by the Board of Directors.

Supplemental Guarantor Financial Information

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The Guarantors will be released and discharged of their obligations upon customary events, including the sale, transfer or other disposition of all or substantially all of the assets or Capital Stock of that Guarantor (including by way of merger or consolidation) or the designation of a guarantor as an “Unrestricted Subsidiary” under the indenture.

The other subsidiaries of the Company do not guarantee the 5.00% Senior Notes (such subsidiaries are referred to as the “Non-Guarantors”).

Our other subsidiaries do not guarantee the 5.00% Senior Notes (such subsidiaries are referred to as the “Non-Guarantors”).

The following summarized financial information presents the Parent and Guarantors on a combined basis after 1) the elimination of intercompany transactions between the Parent and Guarantors and 2) the elimination of equity in earnings from and investment in subsidiaries of Non-Guarantors.

Summarized balance sheets information is as follows (in millions):

March 31, 2020

June 30, 2020

December 31, 2019

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Long-term liabilities

(1) Includes receivables due from Non-Guarantors of $95.5 million and $99.0 million as of March 31, 2020 and December 31, 2019, respectively.

(1) Includes receivables due from Non-Guarantors of $93.2 million and $99.0 million as of June 30, 2020 and December 31, 2019, respectively.

Summarized statements of operations information is as follows (in millions):

Three Months Ended March 31, 2020

Six Months Ended June 30, 2020

Year Ended December 31, 2019

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Net income (loss)

Recent Regulatory Developments

In Brazil, Law No.

13,709/2018, the General Data Protection Act (Lei Geral de Proteção de Dados, or “GDPA”) will come into force in May 2021 and will change personal data protection in Brazil.

The GDPA establishes a new legal framework covering personal data processing, including client, supplier and employee data.

The GDPA establishes, among others, personal data owners’ rights, the legal basis for personal data protection, requirements for obtaining consent from personal data owners, obligations and requirements related to security incidents, data leaks and data transfers, as well as the creation of a National Data Protection Authority.

We have begun initial preparations to comply with the GDPA ahead of its May 2021 effective date;

however, we may have difficulty adapting our systems and processes to the new legislation due to the legislation’s complexity.

In the event of non-compliance with the GDPA, we may be subject to penalties, beginning in August 2021, including making certain disclosures to authorities, the required deletion of personal data and fines, per infraction, of up to 2% (subject to an upper limit of R$50,000,000) of our revenues in Brazil during our last fiscal year, excluding taxes.

See the risk factor titled “We are subject to substantial governmental laws and regulations, which if we are found to be in violation of, or subject to liabilities under, may adversely affect our business and results of operations” in Part I, “Item 1A.

Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2019.

On March 31, 2020, the U.S.

Environmental Protection Agency and National Highway Traffic Safety Administration under the Trump Administration issued a final rule re-setting corporate average fuel economy (“CAFE”) and greenhouse gas (“GHG”) emissions standards for model years 2021-2026 passenger cars and light trucks.

The March 31, 2020 final rule will increase stringency of CAFE and GHG emissions standards by 1.5% each year through model year 2026, as compared with the standards issued in 2012, which would have required annual increases of about 5%.

Legal challenges to the March 31, 2020 final rule are expected.

See the risk factor titled “Our operations are subject to environmental laws and regulations that may expose us to significant costs and liabilities” in Part I, “Item 1A.

Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2019.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis