What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-11-04 compared with 2020-08-03 · 283 added, 269 removed, 857 unchanged (39% of the section changed)

15 unchanged sentences

and Brazil segments are led by the President, U.S.

and Brazilian Operations, and the U.K segment is led by a Managing Director, each reporting directly to our Chief Executive Officer.

and Brazilian Operations, and the U.K.

segment is led by an Operations Director, each reporting directly to our Chief Executive Officer.

The President, U.S.

and Brazilian Operations, and the U.K Managing Director are responsible for the overall performance of their respective regions, as well as for overseeing field level management.

and Brazilian Operations, and the U.K.

Operations Director are responsible for the overall performance of their respective regions, as well as for overseeing field level management.

segment includes the activities of our corporate office.

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

As of September 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 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.

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

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

1 unchanged sentence

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.

During the third quarter of 2020, AcceleRide® sales were up 73.1% from a year ago.

Used Vehicle Retail Growth

1 unchanged sentence

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 direct purchases from customers, purchases at auctions, including manufacturer-sponsored auctions available only to franchised dealers.

Our dealerships also purchase used vehicle inventory directly from customers and supplement their used vehicle inventory with 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.

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Parts and Service Growth

We remain focused on sustained growth in our higher margin parts and service operations which continue to hinge on the retention and hiring of service technicians and advisors.

Our four-day work week implemented in 2019 has allowed us to extend our hours of operations and increase service technicians and advisors retention, thereby expanding our service capacity without investing additional capital in facilities.

We remain focused on sustained growth in our higher margin parts and service operations which continue to hinge on the retention and hiring of skilled service technicians and advisors.

Our four-day work week implemented in 2019 has allowed us to extend our hours of operations and increase service technician and advisor retention, thereby expanding our service capacity without investing additional capital in facilities.

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.

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As our business evolves, we will manage our costs carefully and look for additional opportunities to improve our processes and disseminate best practices.

We believe that our management structure supports rapid decision making and facilitates an efficient and effective roll-out of new processes.

Additionally, see “COVID-19 Pandemic” section below for specific cost-cutting measures in response to the COVID-19 pandemic.

We believe that our management structure supports more rapid decision making and facilitates an efficient and effective roll-out of new processes.

Employee Training and Retention

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We believe that substantial opportunities for growth through acquisitions remain in our industry in the U.S., the U.K.

and Brazil upon an economic recovery from the impacts of the COVID-19 pandemic.

Further, we intend to continue to critically evaluate our return on invested capital in our current dealership portfolio for disposition opportunities.

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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.

Our new vehicle sales pace has improved during the third quarter, however the recovery of new vehicle unit sales was limited as a result of low inventory levels due to reduced OEM production rates.

Thus far, we have been able to offset the volume declines with higher gross margins in new and used vehicles and higher F&I per retail unit.

As a result, our margin improvement outweighed our volume declines.

Beginning in mid-April 2020, we saw continued improvement in our parts and service business as well and we are near prior year levels at the end of the third quarter.

Our online selling platform AcceleRide® and our online service scheduling platforms continue to show increased utilization rates as we remain in a restricted social distancing environment and such higher utilization rates are expected to continue after the pandemic.

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, 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.

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Operations in the U.K.

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

significantly improved in June 2020 and continued to improve throughout the third quarter.

As vehicle sales and service operations reopened, our revenues and margins in all departments increased versus prior year levels.

As a result, the U.K.

operations made a significant contribution to our quarterly financial results for the third quarter of 2020.

While new vehicle volumes have rebounded, our new vehicle inventory is still well below normal levels due to reduced OEM production rates.

On October 31, 2020, the U.K.

government announced a national lockdown of non-essential businesses, which includes our dealership vehicle showrooms, beginning November 5, 2020 through December 2, 2020, at which time the government will determine whether the lockdown restrictions will be extended.

Our dealership service operations will remain open, however this mandate will adversely impact our U.K.

vehicle sales in the fourth quarter.

See Part II, “Item 1A.

Risk Factors” of this Form 10-Q for further discussion of the potential risks if the lockdown is extended.

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

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.

Despite restrictions being lifted and businesses reopening in Brazil during the second quarter, the recovery has been limited as the impacts of COVID-19 are still impacting operations significantly.

Cost-Cutting Actions

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headcounts are approximately 75% 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.

Along with this, we modified our employee productivity targets in our U.S.

In addition, other measures were implemented significantly reducing 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.

By the end of the third quarter as market conditions improved, we restored many of these cost reductions and on October 6, 2020 announced a $200 million share repurchase program.

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 used vehicle and service operations in the third quarter to return to prior year levels.

The demand outlook remains uncertain and the long-term impact of the COVID-19 pandemic is difficult to predict, especially with the recently announced lockdown in the U.K.

and rising cases in some of our markets.

However, we expect our used vehicle and service operations in the fourth quarter to return to near 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.

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

However, we expect to continue the trend set in the third quarter of offsetting much or all of the decline in volume with improvements in gross margin.

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 were reinstated in the third quarter as market conditions improved, we expect to be more cost efficient going forward compared to pre-pandemic levels.

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

Critical Accounting Policies and Accounting Estimates

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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.

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

We evaluate our results of operations on both an as reported and a constant currency basis.

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GAAP financial measures to assess our business, including communication with our Board of Directors, investors and industry analysts concerning financial performance.

We disclose these non-GAAP measures, and the related reconciliations, because we believe investors use these metrics in evaluating longer-term period-over-period performance, and to allow investors to better understand and evaluate the information used by management to assess operating performance.

Certain disclosures are reported as zero balances, or may not compute, due to rounding.

We disclose these non-GAAP measures, and the related reconciliations, because we believe investors use these metrics in evaluating longer-term period-over-period performance.

These metrics also allow investors to better understand and evaluate the information used by management to assess operating performance.

Certain amounts in the financial statements may not compute due to rounding.

All computations have been calculated using unrounded amounts for all periods presented.

The following tables summarize our operating results on a reported basis and on a same store basis:

Reported Operating Data - Consolidated

(In millions, except unit and per unit amounts)

Three Months Ended June 30,

(In millions, except unit data)

Three Months Ended September 30,

Increase/ (Decrease)

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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.

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

Same Store Operating Data - Consolidated

(In millions, except unit and per unit amounts)

Three Months Ended June 30,

(In millions, except unit data)

Three Months Ended September 30,

Increase/ (Decrease)

31 unchanged sentences

Reported Operating Data - Consolidated

(In millions, except unit and per unit amounts)

Six Months Ended June 30,

(In millions, except unit data)

Nine Months Ended September 30,

Increase/ (Decrease)

34 unchanged sentences

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.

(1) Floorplan assistance is included within New vehicle retail sales Gross profit above and New vehicle retail sales 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,

(In millions, except unit data)

Nine Months Ended September 30,

Increase/ (Decrease)

31 unchanged sentences

Reported Operating Data - U.S.

(In millions, except unit and per unit amounts)

Three Months Ended June 30,

(In millions, except unit data)

Three Months Ended September 30,

Increase/(Decrease)

29 unchanged sentences

Same Store Operating Data - U.S.

(In millions, except unit and per unit amounts)

Three Months Ended June 30,

(In millions, except unit data)

Three Months Ended September 30,

Increase/(Decrease)

31 unchanged sentences

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.

During the third quarter of 2020, our U.S.

dealership operations have been steadily recovering from the impact on business caused by the COVID-19 pandemic.

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 .

during the three months ended September 30, 2020 decreased $178.2 million , or 7.4% , 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.

during the three months ended September 30, 2020 decreased $197.7 million , or 8.2% , as compared to the same period in 2019 , driven by declines in all of our revenue streams.

The declines of 9.9% in new vehicle retail same store sales, 8.9% in used vehicle retail same store sales and 2.3% in used vehicle wholesale same store sales were driven by decreases of 15.7% , 12.9% and 18.1% 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.

The declines in new vehicle retail, used vehicle retail and used vehicle wholesale unit sales were driven by inventory supply constraints, in part due to reduced OEM production rates, as our dealerships experienced increasing demand for new and used vehicles during the quarter.

Our online new and used vehicle sales platform, AcceleRide® was instrumental in allowing us to connect with and serve our customers throughout the restricted social distancing environment due to the COVID-19 pandemic.

During the third quarter of 2020, AcceleRide® sales were up 73.1% from a year ago.

Parts and service same store revenues, dampened by the impact of the COVID-19 pandemic, decreased 3.3% during the third quarter as compared to the same period last year, driven by a 23.4% decline in collision revenues and a 1.6% decline in both customer pay and warranty revenues which were partially offset by a 4.4% increase in wholesale parts revenues.

F&I same store revenues were relatively flat as a 14.3% decline in same store total retail unit sales was offset by improvements in income per contract, higher penetration rates, and a decline in our overall chargeback experience.

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 .

during the three months ended September 30, 2020 increased $28.8 million , or 7.4% , 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.

during the three months ended September 30, 2020 increased $24.6 million , or 6.4% , as compared to the same period in 2019 .

The increase in same store gross profit was driven by increases in new vehicle retail, used vehicle retail, and used vehicle wholesale, partially offset by a decline in parts and service gross profit compared to the same period last year.

New vehicle same store gross profit increased 34.3% driven by a 59.3% i ncrease in new vehicle same store gross profit per unit sold, which more than offset the 15.7% decline in new units sold.

The increase in new vehicle retail same store gross profit per unit sold reflects inventory supply constraints as many manufacturers put a hold on production due to the COVID-19 pandemic earlier in the year and have not returned to normal levels.

Used vehicle retail same store gross profit increased 19.1% reflecting an increase of 36.7% in used vehicle retail same store gross profit per unit sold partially offset by a 12.9% decrease in used vehicle retail same store unit sales over the same period in 2019.

The increase in used vehicle retail same store gross profit per unit sold reflects supply constraints combined with a strong demand leading to higher margins on used vehicle retail sales.

Used vehicle wholesale gross profit increased 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.

Parts and service same store gross profit declined 4.0% driven by the decrease in revenue discussed above.

F&I same store gross profit was relatively flat as discussed above.

Total same store gross margin increased 250 basis points driven by higher vehicle prices as a result of supply shortages of new and used vehicle inventory.

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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.

during the three months ended September 30, 2020 decreased $40.0 million , or 14.0% , as compared to the same period in 2019 .

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.

during the three months ended September 30, 2020 decreased $41.0 million , or 14.5% , as compared to the same period in 2019 driven by the implementation and continual execution of cost reduction strategies as a reaction to the COVID-19 pandemic.

As market conditions have improved, we have strived to retain our lower operating cost structure as a result of the pandemic and we continued to benefit from these cost cutting measures in the third quarter.

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.

in the third quarter of 2019 included $11.9 million in insurance deductible expense associated with Tropical Storm Imelda in Texas and $0.5 million in costs related to dealership and real estate transactions.

Total same store SG&A as a percent of gross profit decreased from 73.5% in the third quarter of 2019 to 59.1% for the same period of 2020 driven by the expense reductions 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,

(In millions, except unit data)

Nine Months Ended September 30,

Increase/(Decrease)

29 unchanged sentences

Same Store Operating Data - U.S.

(In millions, except unit and per unit amounts)

Six Months Ended June 30,

(In millions, except unit data)

Nine Months Ended September 30,

Increase/(Decrease)

31 unchanged sentences

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.

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

during the nine months ended September 30, 2020 decreased $681.0 million , or 10.1% , as compared to the same period in 2019 .

Total same store revenues in the U.S.

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

during the nine months ended September 30, 2020 decreased $742.9 million , or 11.1% , 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.

The declines of 13.4% in new vehicle retail same store sales, 9.7% in used vehicle retail same store sales and 7.5% in used vehicle wholesale same store sales were driven by declines of 17.6% , 11.2% and 14.1% 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 supply shortages.

Partially offsetting these declines, our online new and used vehicle sales platform, AcceleRide® was instrumental in allowing us to connect with and serve our customers throughout the restricted social distancing environment.

Parts and service same store revenues decreased 7.0% driven by an 18.1% decrease in collision revenues, 10.6% decrease in warranty revenues, 4.5% decrease in customer-pay revenues and a 1.8% decrease in wholesale parts revenues.

F&I same store revenues decreased 6.3% driven by a 14.4% decrease in same store retail unit sales as discussed above, which was partially offset by higher penetration rates and income per contract 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 six months ended June 30, 2020 decreased $58.2 million , or 8.0% , as compared to the same period in 2019 .

during the nine months ended September 30, 2020 decreased $29.4 million , or 2.6% , as compared to the same period in 2019 .

Total same store gross profit in the U.S.

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.

during the nine months ended September 30, 2020 decreased $42.1 million , or 3.8% , 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 new vehicle retail and used vehicle wholesale.

New vehicle retail same store gross profit increased 9.0% driven by a 32.4% increase in new vehicle retail same store gross profit per unit sold which was partially offset by a 17.6% decrease in new vehicle retail unit sales.

The increase in new vehicle retail same store gross profit per unit sold reflects supply constraints as many manufacturers had put a hold on production due to the COVID-19 pandemic earlier in the year and have not returned to normal production levels.

The 1.3% decrease in used vehicle retail same store gross profit was related to an 11.2% decline in used vehicle retail unit sales which was mostly offset by an 11.2% increase 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 inventory supply constraints and the reduced demand during the first half of the year caused by the COVID-19 pandemic.

Parts and service same store gross profit and F&I same store gross profit decreased 7.8% and 6.3% , 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.

Total same store gross margin increased 130 basis points primarily as a result of higher new vehicle and used vehicle retail and wholesale 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 six months ended June 30, 2020 decreased $63.5 million , or 12.1% , as compared to the same period in 2019 .

during the nine months ended September 30, 2020 decreased $103.5 million , or 12.8% , as compared to the same period in 2019 .

Total same store SG&A expenses in 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 .

during the nine months ended September 30, 2020 , decreased $112.4 million , or 14.0% , 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 and other SG&A expenses.

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

As market conditions have improved, we have strived to retain our lower operating cost structure as a result of the pandemic.

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

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.

for the first nine months of 2019 included $17.8 million in net costs associated with hailstorms and flooding from Tropical Storm Imelda in Texas;

$1.8 million in non-core legal expenses;

and $0.5 million in net gains on real estate and dealership transactions.

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.

during the first nine months 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 from 73.0% for the nine months ended 2019 to 65.3% for the same period of 2020 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 June 30,

(In millions, except unit data)

Three Months Ended September 30,

Increase/ (Decrease)

31 unchanged sentences

Same Store Operating Data - U.K.

(In millions, except unit and per unit amounts)

Three Months Ended June 30,

(In millions, except unit data)

Three Months Ended September 30,

Increase/ (Decrease)

33 unchanged sentences

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.

During the third quarter of 2020, our U.K.

dealership operations have been steadily recovering from the impact on business caused by the COVID-19 pandemic.

Total revenues in the U.K.

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

during the three months ended September 30, 2020 increased $156.2 million , or 26.7% , as compared to the same period in 2019 .

Total same store revenues in the U.K.

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.

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.

during the three months ended September 30, 2020 increased $130.5 million , or 22.6% , as compared to the same period in 2019 .

On a constant currency basis, total same store revenues increased 17.3% driven by improvements in all of our dealership operations.

In response to the COVID-19 pandemic, during March the government mandated the closure of all U.K.

dealerships in an effort to stop the spread of the virus with the exception of emergency vehicle repairs.

showrooms were allowed to reopen June 1, 2020.

Since reopening, dealership operations have continued to improve throughout the third quarter.

On a constant currency basis, new vehicle retail same store revenues grew 19.2% driven by a 10.6% increase in new vehicle retail same store unit sales, coupled with a 7.8% increase in average new vehicle retail same store sales price.

While industry sales declined slightly, our new vehicle retail same store unit sales were up reflecting 2019 inventory shortages experienced in our Audi and VW brands as a result of the stricter emissions standards imposed by the Worldwide Harmonised Light Vehicle Test Procedure.

Used vehicle retail same store revenues on a constant currency basis increased 20.9% as used vehicle retail same store unit sales improved 14.1%, coupled with a 5.9% increase in average used retail same store sales price reflecting higher demand.

Parts and service same store revenues increased 3.8% on a constant currency basis, driven by a 12.3% increase in customer-pay business, partially offset by declines in our other parts and service businesses.

F&I same store revenues on a constant currency basis increased 8.3% as an increase in retail unit sales volumes was partially offset by lower penetration rates.

Total gross profit in the U.K.

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

during the three months ended September 30, 2020 increased $22.5 million , or 34.6% , as compared to the same period in 2019 .

Total same store gross profit in the U.K.

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.

during the three months ended September 30, 2020 increased $19.9 million , or 31.6% , as compared to the same period in 2019 .

On a constant currency basis, total same store gross profit increased 25.7% , driven by increases in all of our operations.

New vehicle retail same store gross profit increased 26.1% on a constant currency basis, driven by a 10.6% growth in new vehicle retail same store unit sales, coupled with a 14.0% increase in new vehicle retail same store gross profit per unit.

The increase in new vehicle gross profit per unit primarily reflects increased demand coupled with our current supply constraints.

On a constant currency basis, used vehicle retail same store gross profit improved 78.9% , reflecting a 14.1% increase in used vehicle retail same store unit sales, coupled with a 56.8% 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.

Used vehicle wholesale same store gross profit increased 694.3% on a constant currency basis, driven by an increase in auction prices and improved processes.

Parts and service same store gross profit on a constant currency basis increased 9.5% driven by the 12.3% increase in our higher margin customer-pay business discussed above.

F&I same store revenues on a constant currency basis increased 8.3% as previously discussed.

SG&A Expenses

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Total SG&A expenses in the U.K.

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

during the three months ended September 30, 2020 decreased $3.9 million , or 6.8% , as compared to the same period in 2019 .

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

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.

during the three months ended September 30, 2020 , decreased $4.3 million , or 7.9% , as compared to the same period in 2019 .

On a constant currency basis, total same store SG&A expenses decreased 12.1% , driven by the implementation and continual execution of cost reduction strategies as a reaction to the COVID-19 pandemic.

Total same store SG&A expenses in 2019 included $0.2 million in losses on dealership and real estate transactions.

As a percentage of gross profit, total same store SG&A expenses decreased from 86.5% for the third quarter of 2019 to 60.6% for the same period of 2020.

Reported Operating Data - U.K.

(In millions, except unit and per unit amounts)

Six Months Ended June 30,

(In millions, except unit data)

Nine Months Ended September 30,

Increase/ (Decrease)

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Same Store Operating Data - U.K.

(In millions, except unit and per unit amounts)

Six Months Ended June 30,

(In millions, except unit data)

Nine Months Ended September 30,

Increase/ (Decrease)

33 unchanged sentences

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.

dealership operations have been impacted by the restrictions put in place by the national government in efforts to contain the spread of COVID-19.

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 .

during the nine months ended September 30, 2020 decreased $246.2 million , or 13.4% , 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 .

during the nine months ended September 30, 2020 decreased $297.1 million , or 16.6% , as compared to the same period in 2019 .

On a constant currency basis, total same store revenues decreased 16.8% , driven by decreases in all of our operations due to the COVID-19 pandemic.

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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.

Since June, business has recovered but not enough to offset the declines caused by the shutdown.

New vehicle retail same store revenues on a constant currency basis decreased 15.8% , as a 21.9% decrease in new vehicle retail same store unit sales was partially offset by a 7.8% increase in new vehicle retail same store average sales price per unit sold.

2 unchanged sentences

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.

F&I same store revenues on a constant currency basis decreased 22.8% driven by the decline in retail unit sales and lower penetration rates.

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 .

during the nine months ended September 30, 2020 decreased $19.3 million , or 9.6% , 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.

during the nine months ended September 30, 2020 decreased $24.7 million , or 12.8% , as compared to the same period in 2019 .

On a constant currency basis, total same store gross profit decreased 13.1% , driven by decreases in all of our operations, except for used vehicle, as result of the COVID-19 pandemic.

New vehicle retail same store gross profit on a constant currency basis decreased 16.0% , driven by a 21.9% decline in new vehicle retail same store unit sales, partially offset by a 7.6% 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 new vehicle retail same store gross profit per unit sold reflects supply constraints related to the COVID-19 pandemic as many manufacturers had put a hold on production earlier in the year and have not returned to normal production levels.

Used vehicle retail same store gross profit on a constant currency basis increased 16.9% on a 39.4% increase in used vehicle retail same store average gross profit per unit sold, partially offset by a 16.1% decrease in used vehicle retail same store unit sales.

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.

Used vehicle wholesale same store gross profit improved 192.5% on a constant currency basis driven by an increase in auction prices due to supply constraints and improved processes.

Parts and service same store gross profit on a constant currency basis decreased 20.6% as a result of a 21.1% decline in revenues discussed above.

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

F&I same store gross profit on a constant currency basis decreased 22.8% as discussed above.

SG&A Expenses

1 unchanged sentence

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 .

during the nine months ended September 30, 2020 decreased $34.0 million , or 19.3% , 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 .

during the nine months ended September 30, 2020 , decreased $38.7 million , or 23.3% , as compared to the same period in 2019 .

On a constant currency basis, total same store SG&A expenses decreased 23.6% .

1 unchanged sentence

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.

Total same store SG&A expenses in 2019 included $0.2 million in losses on dealership and real estate transactions.

As a percentage of gross profit, total same store SG&A expenses decreased from 86.0% for the nine months ended 2019 to 75.6% for the same period of 2020.

Reported Operating Data - Brazil

(In millions, except unit and per unit amounts)

Three Months Ended June 30,

(In millions, except unit data)

Three Months Ended September 30,

Increase/ (Decrease)

31 unchanged sentences

Same Store Operating Data - Brazil

(In millions, except unit and per unit amounts)

Three Months Ended June 30,

(In millions, except unit data)

Three Months Ended September 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 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.

Total revenues in Brazil during the three months ended September 30, 2020 decreased $56.6 million , or 51.1% , as compared to the same period in 2019 .

Total same store revenues in Brazil during the three months ended September 30, 2020 decreased $56.3 million , or 50.9% , as compared to the same period in 2019 .

On a constant currency basis, total same store revenues decreased 33.6% driven by declines in all business lines caused by the continued negative impacts of the COVID-19 pandemic.

New vehicle retail same store revenues on a constant currency basis decreased 38.3% , as a 46.9% decrease in new vehicle retail same store unit sales was partially offset by a 16.2% 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 34.7% , reflecting a 54.6% decrease in used vehicle same store unit sales partially offset by a 43.8% 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 .

Used vehicle wholesale same store revenues decreased 24.8% on a constant currency basis reflecting a 34.4% decline in wholesale used vehicle same store unit sales.

Reduced demand and a limited availability of inventory drove the reduction in new and used vehicle same store unit sales.

The increases in new and used vehicle retail same store average sales price per unit reflect the supply constraints and 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 8.4% primarily driven by declines in collision and customer-pay revenues.

F&I same store revenues on a constant currency basis decreased 20.3% primarily due to the decline in retail unit sales partially offset by an increase in the penetration rate and income per contract for our retail finance fees.

Total gross profit in Brazil during the three months ended September 30, 2020 decreased $5.0 million , or 36.6% , as compared to the same period in 2019 .

Total same store gross profit in Brazil during the three months ended September 30, 2020 decreased $5.0 million , or 36.7% , as compared to the same period in 2019 .

On a constant currency basis, total same store gross profit decreased 14.1% driven by declines in all business lines.

New vehicle retail same store gross profit on a constant currency basis decreased 20.7% driven by the 46.9% decline in new vehicle retail same store units sold partially offset by a 49.5% 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.

Used vehicle retail same store gross profit on a constant currency basis decreased 21.5% reflecting the 54.6% decline in used vehicle retail same store unit sales partially offset by a 72.9% increase in used vehicle retail same store average gross profit per unit sold.

Used vehicle wholesale same store gross profit on a constant currency basis decreased 14.7% driven by the 34.4% decline in wholesale used vehicles same store unit sales partially offset by a 30.0% increase in used vehicle wholesale same store average gross profit per unit sold.

The improvement in new and used same store gross profit PRU was a direct result of supply constraints and a mix shift towards our luxury brands.

Parts and service same store gross profit on a constant currency basis decreased 3.6% as a result of the 8.4% decrease in revenues described above.

2 unchanged sentences

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 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.

Total SG&A expenses in Brazil during the three months ended September 30, 2020 decreased $4.2 million , or 37.8% , as compared to the same period in 2019 .

Total same store SG&A expenses in Brazil during the three months ended September 30, 2020 decreased $4.4 million , or 38.9% , as compared to the same period in 2019 .

On a constant currency basis, total same store SG&A expenses decreased 17.0% while total same store gross profit decreased 14.1%, resulting in a 290 basis points decrease in total same store SG&A as a percentage of gross profit.

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

Reported Operating Data - Brazil

(In millions, except unit and per unit amounts)

Six Months Ended June 30,

(In millions, except unit data)

Nine Months Ended September 30,

Increase/ (Decrease)

31 unchanged sentences

Same Store Operating Data - Brazil

(In millions, except unit and per unit amounts)

Six Months Ended June 30,

(In millions, except unit data)

Nine Months Ended September 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 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 .

Total revenues in Brazil during the nine months ended September 30, 2020 decreased $143.5 million , or 43.9% , as compared to the same period in 2019 .

Total same store revenues in Brazil during the nine months ended September 30, 2020 decreased $135.0 million , or 42.4% , as compared to the same period in 2019 .

On a constant currency basis, total same store revenues decreased 27.7% 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.

New vehicle retail same store revenues on a constant currency basis decreased 33.6% , as a 43.7% decrease in new vehicle retail same store unit sales was partially offset by an 18.0% increase in new vehicle retail same store average sales price per unit sold.

Used vehicle retail same store revenues on a constant currency basis decreased 21.1% , as a 37.6% decrease in used vehicle retail same store unit sales more than offset a 26.5% 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 4.4% 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.

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 supply constraints and a shift in brand mix to higher priced luxury brands.

The decline in total units sold reflects the shutdowns and subsequent lower demand and inventory shortages caused by the COVID-19 pandemic.

Parts and service same store revenues on a constant currency basis decreased 15.2% driven by declines in customer-pay, warranty and collision revenues partially offset by an increase in wholesale revenues.

F&I same store revenues on a constant currency basis decreased 23.2% 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 .

Total gross profit in Brazil during the nine months ended September 30, 2020 decreased $15.4 million , or 38.9% , as compared to the same period in 2019 .

Total same store gross profit in Brazil during the nine months ended September 30, 2020 decreased $15.0 million , or 38.3% , as compared to the same period in 2019 .

On a constant currency basis total same store gross profit decreased 21.4% driven by declines in all business lines.

New vehicle retail same store gross profit on a constant currency basis decreased 24.6% , driven by a 43.7% decrease in new vehicle retail same store units sold partially offset by a 33.9% 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.

Used vehicle retail same store gross profit on a constant currency basis decreased 31.8%, reflecting a 37.6% decrease in used vehicle retail same store unit sales partially offset by a 9.3% increase in used vehicle retail same store average gross profit per unit sold.

The improvement in new and used 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 as many manufacturers had put a hold on production earlier in the year and have not returned to normal production levels.

Parts and service same store gross profit decreased 14.7% on a constant currency basis, driven by the 15.2% decrease in parts and service revenues described above.

2 unchanged sentences

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 SG&A expenses in Brazil during the nine months ended September 30, 2020 decreased $11.9 million , or 34.0% , as compared to the same period in 2019 .

Total same store SG&A expenses in Brazil during the nine months ended September 30, 2020 , decreased $11.4 million , or 33.1% , as compared to the same period in 2019 .

On a constant currency basis, total same store SG&A expenses decreased 14.7% while total same store gross profit decreased 21.4% , resulting in a 730 basis points increase in total same store SG&A as a percentage 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.

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.

1 unchanged sentence

Depreciation and Amortization Expense

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.

Our total depreciation and amortization expense increased from $18.2 million to $19.1 million and from $53.0 million to $56.5 million for the three and nine months ended September 30, 2020 , respectively, when compared to the same period in 2019 .

The slight increase is attributed to an increase in property and equipment in our U.S.

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.

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

During the three months ended September 30, 2019 we recorded franchise rights impairment charges of $5.6 million in the U.K.

segment and $3.0 million in the U.S.

See Part I, “Item 1.

1 unchanged sentence

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.

During the three 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.

During the three months ended September 30, 2019 we recognized a ROU asset impairment charge of $1.4 million in the U.K.

segment and asset impairment charges of $0.2 million in the U.S.

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

See Part I, “Item 1.

2 unchanged sentences

Floorplan Interest Expense

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.

Our floorplan interest expense fluctuates with changes in our borrowings outstanding and interest rates, which are based on LIBOR, Prime rate or a benchmark rate.

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 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.

For the three months ended September 30, 2020 , total floorplan interest expense decreased 47.1% as compared to the same period in 2019 .

For the nine months ended September 30, 2020 , total floorplan interest expense decreased 33.8% as compared to the same period in 2019 .

The decrease in both comparative periods is primarily due to lower inventory levels and lower weighted average interest rates mainly due to a decline in LIBOR, 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 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.

For the three months ended September 30, 2020 , other interest expense, net decreased from $18.9 million to $14.6 million as compared to the same period in 2019 .

For the nine months ended September 30, 2020 , other interest expense, net decreased from $55.8 million to $49.0 million as compared to the same period in 2019 .

The decrease in both comparable periods was primarily attributable to lower interest rates achieved through debt refinancings in the current year, including the redemption of $300.0 million in aggregate principal of our 5.25% Senior Notes on April 2, 2020, which was funded at lower interest rates through increased borrowings on our real estate related debt and Acquisition Line, and the redemption of $550.0 million aggregate principal of our 5.00% Senior Notes on September 2, 2020, which was funded through the issuance of $550.0 million aggregate principal amount of our 4.00% Senior Notes on August 17, 2020.

See “Sources and Uses of Liquidity from Financing Activities” within “Liquidity and Capital Resources” below for further discussion of our debt refinancings in the current year.

Loss on Extinguishment of Debt

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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 .

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

On September 2, 2020, we fully redeemed $550.0 million in aggregate principal amount of our outstanding 5.00% Senior Notes due June 2022, at par value.

We recognized a loss on extinguishment of $3.3 million which included write offs of an unamortized discount in the amount of $2.6 million and unamortized debt issuance costs in the amount of $0.7 million .

Provision for Income Taxes

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.

Our provision for income taxes increased $23.6 million to $34.6 million for the three months ended September 30, 2020 as compared to the same period in 2019.

For the nine months ended September 30, 2020 , our provision for income taxes increased $17.4 million to $55.8 million , as compared to the same period in 2019.

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

For the three months ended September 30, 2020 , our effective tax rate decreased to 21.5% from 22.3% as compared to the same period in 2019.

This decrease was primarily due to changes to valuation allowances provided for net operating losses in certain U.S.

states and in Brazil.

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.

For the nine months ended September 30, 2020 , our effective tax rate decreased to 23.1% from 23.4% as compared to the same period in 2019.

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

states and in Brazil that were higher in 2019.

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

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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 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 .

As of September 30, 2020 , our total cash on hand was $66.2 million .

The balance of cash on hand excludes $126.7 million of immediately available funds used to pay down our Floorplan Line and FMCC Facility as of September 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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In addition, for dealership acquisitions and dispositions that are negotiated as asset purchases, we do not assume transfer of liabilities for floorplan financing in the execution of the transactions.

Therefore, borrowings and repayments of all floorplan financing associated with dealership acquisition and disposition are characterized as either Cash Flow from Operating Activities or Cash Flow from Financing Activities in our Condensed Consolidated Statements of Cash Flows presented in conformity with U.S.

Therefore, borrowings and repayments of all floorplan financing associated with dealership acquisitions and dispositions are characterized as either Cash Flow from Operating Activities or Cash Flow from Financing Activities in our Condensed Consolidated Statements of Cash Flows presented in conformity with U.S.

GAAP, depending on the relationship described above.

However, the floorplan financing activity is so closely related to the inventory acquisition process that we believe the presentation of all acquisition and disposition related floorplan financing activities should be classified as investing activity to correspond with the associated inventory activity, which more closely reflects the cash flows associated with our acquisitions and disposition strategy and eliminates excess volatility in our operating cash flows prepared in accordance with U.S.

However, the floorplan financing activity is so closely related to the inventory acquisition process that we believe the presentation of all acquisition and disposition related floorplan financing activities should be classified as investing activity to correspond with the associated inventory activity, which more closely reflects the cash flows associated with our acquisition and disposition strategy and eliminates excess volatility in our operating cash flows prepared in accordance with U.S.

We have made such adjustments in our adjusted operating cash flow presentations.

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

Six Months Ended June 30,

Nine Months Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

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Net cash provided by (used in) investing activities:

Change in cash paid for acquisitions, associated with Floorplan notes payable

Change in proceeds from disposition of franchises, property and equipment, associated with Floorplan notes payable

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Sources and Uses of Liquidity 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 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.

For the nine months ended September 30, 2020 , we generated $712.7 million of net cash flows from operating activities.

On an adjusted basis for the same period, we generated $358.3 million in net cash flows from operating activities, primarily consisting of $186.4 million in net income, coupled with non-cash adjustments related to depreciation and amortization of $56.5 million , stock-based compensation of $27.0 million , asset impairments of $23.8 million , operating lease assets of $18.1 million and a loss on extinguishment of $13.7 million related to the 5.00% Senior Notes and 5.25% Senior Notes.

Adjusted net cash flows from operating activities also included a $31.1 million adjusted net change in operating assets and liabilities, including cash inflows of $499.6 million from decreases in inventory levels, $41.1 million from net decreases in prepaid expenses and other assets, $33.0 million from net decreases in contracts-in-transit and vehicle receivables and $25.2 million from net decreases in accounts and notes receivables.

These cash inflows were partially offset by cash outflows of $492.3 million from adjusted net floorplan repayments and $58.8 million from decreases in accounts payable and accrued expenses.

For the nine months ended September 30, 2019 , we generated $310.8 million of net cash flows from operating activities.

On an adjusted basis for the same period, we generated $242.0 million in net cash flows from operating activities, primarily consisting of $125.9 million in net income, coupled with non-cash adjustments related to depreciation and amortization of $53.0 million, operating lease assets of $21.2 million, stock-based compensation of $14.5 million, asset impairments of $10.8 million and deferred income taxes of $3.6 million, partially offset by a $5.9 million gain on the disposition of assets.

Adjusted net cash flows from operating activities also includes a $15.0 million adjusted net change in operating assets and liabilities, including cash inflows of $99.0 million from increases in accounts payable and accrued expenses and $41.7 million from decreases in inventory levels.

These cash inflows were partially offset by cash outflows of $70.0 million from adjusted net floorplan repayments, $31.7 million from net increases in accounts and notes receivables and $21.3 million from decreases in operating lease liabilities.

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.

At September 30, 2020 , we had a $104.6 million surplus of working capital.

This represents an increase of $10.5 million from December 31, 2019 , when we had a $94.0 million surplus of working capital.

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

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Sources and Uses of Liquidity from Investing Activities

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.

During the nine months ended September 30, 2020 , we used $78.8 million in net cash flows from investing activities on both an unadjusted and adjusted basis, which represented $78.8 million used for purchases of property and equipment and to construct new and improve existing facilities, $1.3 million used for acquisition activity, partially offset by cash inflows of $1.3 million related to the disposition of property and equipment.

Of the $78.8 million in property and equipment purchases, $55.4 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 $1.0 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.

During the nine months ended September 30, 2019 , we used $193.5 million in net cash flows from investing activities.

On an adjusted basis for the same period, we used $198.7 million in net cash flows from investing activities, representing $139.6 million used for purchases of property and equipment and to construct new and improve existing facilities and $82.7 million used for dealership acquisition activity, partially offset by cash inflows of $23.6 million related to the disposition of franchises and property and equipment.

Of the $139.6 million in property and equipment purchases, $70.8 million was used for non-real estate related capital expenditures, $65.1 million was used for the purchase of real estate associated with existing dealership operations and $3.6 million represented the net decrease in the accrual for capital expenditures from year-end.

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Sources and Uses of Liquidity from Financing Activities

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.

For the nine months ended September 30, 2020 , we used $590.4 million in net cash flows from financing activities.

On an adjusted basis for the same period, we used $236.0 million in net cash flows from financing activities, primarily related to cash outflows of $857.9 million related to the extinguishment of our 5.00% and 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 $550.0 million from the issuance of our 4.00% Senior Notes.

The $162.1 million net borrowings on other debt primarily reflected increased mortgage borrowings in the U.S.

to partially fund the redemption of the 5.25% Senior Notes.

For the nine months ended September 30, 2019 , we used $90.1 million in net cash flows from financing activities.

On an adjusted basis for the same period, we used $16.1 million in net cash flows from financing activities, primarily related to cash outflows of $35.8 million in net repayments on other debt and $14.9 million in dividend payments, partially offset by $19.1 million in net borrowings on our Acquisition Line and $15.8 million in net borrowings on our Floorplan Lines (representing the net cash activity in our floorplan offset accounts).

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 June 30, 2020 (in millions):

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

Floorplan line (1)

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credit facilities (4)

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

(1) The available balance at September 30, 2020 includes $108.2 million of immediately available funds.

The remaining available balance can be used for inventory financing.

(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.

(2) The outstanding balance of $75.9 million is related to outstanding letters of credit of $17.8 million and $ 58.1 million in borrowings as of September 30, 2020 .

The borrowings outstanding under the Acquisition Line included no U.S dollar borrowings and £ 45 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 June 30, 2020 includes $ 8.1 million of immediately available funds.

(3) The available balance at September 30, 2020 includes $ 18.5 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 4.00% Senior Notes, as well as real estate related and other long-term debt instruments.

4.00% Senior Notes Issuance

On August 17, 2020, we issued Senior Notes maturing on August 15, 2028 in aggregate principal amount of $550.0 million.

Interest on the notes is payable semi-annually on February 15 th and August 15 th at a coupon rate of 4.00%.

The notes were issued at par and carry an effective interest rate of 4.21% after consideration of associated debt issuance costs.

At our option, we may redeem some or all of the Senior Notes at varying redemption prices (expressed as percentages of principal amount of the notes) and redemption periods throughout the term.

Refer to Part I, “Item 1.

Financial Statements,” Note 9 “Debt” within our Notes to Condensed Consolidated Financial Statements for further information regarding our 4.00% Senior Notes.

5.00% Senior Notes Redemption and Debt Refinancing

On September 2, 2020, we fully redeemed $550.0 million in aggregate principal amount of our outstanding 5.00% Senior Notes due June 2022, at par value.

Additionally, we paid accrued interest of $6.9 million .

The redemption was funded with $550.0 million of our newly issued 4.00% Senior Notes due 2028.

See 4.00% Senior Notes Issuance .

These refinancings are expected to lower our annual interest expense by approximately $5.5 million.

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.

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

As of September 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 June 30, 2020

As of September 30, 2020

Total adjusted leverage ratio

Fixed charge coverage ratio

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.

As of September 30, 2020 , we had $66.2 million of cash on hand and an additional $126.7 million invested in our floorplan offset accounts, bringing total cash liquidity to $192.9 million.

In addition, we had $273.1 million of additional borrowing capacity on our Acquisition Line, bringing total immediate liquidity to $466.0 million as of September 30, 2020 .

Based on our position as of September 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 June 30, 2020 .

Stock Repurchases and Dividends

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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.

Supplemental Guarantor Financial Information

In 2014, Group 1 Automotive, Inc.

(the “Parent”) issued and registered $550.0 million aggregate principal 5.00% Senior Notes, due June 1, 2022 (the “5.00% Senior Notes”), with the SEC.

Obligations under the 5.00% Senior Notes are fully and unconditionally and jointly and severally guaranteed on a senior unsecured basis by our wholly owned domestic subsidiaries (“Guarantors”).

The guarantees rank equally in the right of payment to all of the Guarantors’ existing and future subordinated debt.

There are no significant restrictions on the ability of the Guarantors to make distributions to the Parent or on the ability of the Parent or the Guarantors to obtain funds from other Guarantors by dividend or loan.

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.

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):

June 30, 2020

December 31, 2019

Current assets (1)

Long-term assets

Current liabilities

Long-term liabilities

(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):

Six Months Ended June 30, 2020

Year Ended December 31, 2019

Income (loss) from operations

Net income (loss)

On October 5, 2020, our Board of Directors approved a new $200.0 million share repurchase program.

Future share repurchases 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.

Recent Regulatory Developments

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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