1 unchanged sentence
The following discussion should be read in conjunction with Part I, including the matters set forth in Item 1A.
−Removed: Risk Factors,” and our Consolidated Financial Statements and notes thereto included elsewhere in this Annual Report on Form 10-K.
+Added: Risk Factors, and our Consolidated Financial Statements and notes thereto included elsewhere in this Form 10-K.
We are a leading operator in the automotive retail industry.
1 unchanged sentence
arrange related vehicle financing;
−Removed: sell service and other insurance contracts;
+Added: sell service and insurance contracts;
provide automotive maintenance and repair services;
1 unchanged sentence
Our operations are aligned into three regions, which comprise our reportable segments:
−Removed: (1) U.S., (2) U.K., and (3) Brazil.
+Added: the U.S., U.K.
and Brazil segments are led by the President, U.S.
−Removed: and Brazilian Operations, and the U.K segment is led by a Managing Director, each reporting directly to our Chief Executive Officer, who is the Chief Operating Decision Maker.
+Added: and Brazilian Operations, and the U.K.
+Added: segment is led by an Operations Director, each reporting directly to our Chief Executive Officer, who is the CODM.
The President, U.S.
−Removed: 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.
−Removed: segment includes the activities of our corporate office.
+Added: and Brazilian Operations, and the U.K.
+Added: Operations Director are responsible for the overall performance of their respective regions, as well as for overseeing field level management.
As of December 31, 2020, our retail network consisted of 117 dealerships in the U.S., 50 dealerships in the U.K.
and 17 dealerships in Brazil.
−Removed: Our operations are primarily located in major metropolitan areas in 15 states in the U.S., 33 towns in the U.K., and three states in Brazil.
−Removed: Our typical acquisition strategy is to acquire large, profitable, well-established and well-managed dealerships that are leaders in their respective market areas.
−Removed: From January 1, 2015 through December 31, 2019 , we acquired 53 dealerships representing 67 franchises with expected annual revenues estimated at the time of acquisition of $2.3 billion and opened eight dealerships representing 11 new franchises with expected annual revenues estimated at the time of acquisition of $260.0 million.
−Removed: During the year ended December 31, 2019 , we acquired eight dealerships representing 11 franchises with expected annual revenues estimated at the time of acquisition of $305.0 million.
−Removed: Aggregate consideration paid for these dealerships, which were accounted for as business combinations, totaled $143.2 million .
−Removed: We also opened three dealerships representing four new franchises with expected annual revenues estimated at the time of acquisition of $125.0 million.
−Removed: By segment, we acquired four dealerships representing six franchises in the U.S.
−Removed: and four dealerships representing five franchises in the U.K.
−Removed: We also opened one dealership representing one franchise in the U.S.
−Removed: and two dealerships representing three franchises in the U.K.
−Removed: We make disposition decisions based principally on the rate of return on our capital investment, the location of the dealership, our ability to leverage our cost structure, the brand, future capital investments required and existing real estate obligations.
−Removed: From January 1, 2015 through December 31, 2019 , we disposed of or terminated 36 franchises with annual revenues of approximately $825.0 million.
−Removed: During the year ended December 31, 2019 , we disposed of eight dealerships representing 14 franchises, with aggregate annual revenues at the time of disposition of $240.0 million.
−Removed: We recorded a net pre-tax gain totaling $5.0 million related to these dispositions.
−Removed: By segment, our dispositions included four dealerships representing seven franchises and two terminated franchises in the U.S., three dealerships representing four terminated franchises in the U.K.
−Removed: and one dealership representing one franchise in Brazil.
+Added: Our operations are primarily located in major metropolitan areas in 15 states in the U.S., 33 towns in the U.K.
+Added: and three states in Brazil.
Our operating results reflect the combined performance of each of our interrelated business activities, which include the sale of new vehicles, used vehicles, F&I products and parts, as well as maintenance and repair business.
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For example, during periods of sustained economic downturn or significant supply/demand imbalances, new vehicle sales may be negatively impacted as consumers tend to shift their purchases to used vehicles.
−Removed: Some consumers may even delay their purchasing decisions altogether, electing instead to continue to maintain and repair their existing vehicles.
−Removed: In such cases, however, we believe the new vehicle sales impact on our overall business is mitigated by our ability to offer other products and services, such as used vehicles and parts, as well as maintenance, repair and collision business.
+Added: Some consumers may delay their purchasing decisions altogether, electing instead to continue to maintain and repair their existing vehicles.
+Added: In such cases, however, we believe the new vehicle sales impact on our overall business is mitigated by our ability to offer other products and services, such as used vehicles and parts, as well as maintenance, repair and collision services.
In addition, our ability to expediently adjust our cost structure in response to changes in new vehicle sales volumes also tempers any negative impact of such sales volume changes.
+Added: In 2020, the industry sales in each of our regions was negatively impacted by economic restrictions as a result of the COVID-19 pandemic and the inventory shortages resulting from reduced manufacturer production and parts disruptions, including semiconductor chips.
According to U.S.
−Removed: industry experts, the annual new light vehicle unit sales for 2019 decreased 1.4%, to 17.0 million units as compared to the same period a year ago.
−Removed: which represents the fifth largest economy in the world, vehicle registrations decreased 2.4% to 2.3 million during 2019 as compared to the same period in 2018.
−Removed: industry's new vehicle sales have experienced more volatility than normal following the Brexit vote in 2016.
−Removed: The announcement of Brexit caused significant exchange rate fluctuations that resulted in the weakening of the GBP, in which we conduct business in the U.K., against the USD and other global currencies.
−Removed: The weakening of the GBP since the initial Brexit vote has and may continue to adversely affect our results of operations, as well as have a negative impact on the pricing and affordability of the vehicles in the U.K.
−Removed: Volatility in exchange rates is expected to continue in the short term, at least until there is a clear path forward in response to Brexit.
−Removed: In 2019, the Brazilian economy, which represents the ninth largest economy in the world, continued to recover from a recession.
−Removed: During 2019, new vehicle registrations in Brazil increased 7.6%, to 2.7 million units as compared to the same period in 2018.
−Removed: We expect macro-economic conditions to continue to improve in Brazil.
−Removed: Longer term, we expect sustained improvements in industry sales volumes and are utilizing a strategy of aligning with growing brands, in order to most effectively capitalize on that industry growth.
+Added: industry experts, the annual new light vehicle unit sales for 2020 decreased 14.8%, to 14.5 million units as compared to the same period in 2019.
+Added: During 2020, new vehicle registrations decreased 29.4%, to 1.6 million units in the U.K.
+Added: and decreased 26.6%, to 2.0 million units in Brazil as compared to the same period in 2019.
+Added: We expect sustained improvements in industry sales volumes in 2021 as all three markets recover from the pandemic.
+Added: We were able to partially offset the profit impact from a reduction in total revenues of 9.9% in 2020 as compared to 2019 by increasing gross margins from 15.1% in 2019 to 16.3% in 2020, resulting in a decline in total gross profit of only 2.6%.
+Added: The increase in gross margins was primarily a result of increased new and used vehicle gross margins due to the inventory shortages.
+Added: Our cost reduction actions in the spring and summer and an increase in our employee productivity resulted in a decrease in SG&A as a % of gross profit of 8.7% which more than offset the decrease in gross profit and drove record dilutive earnings per share of $15.51 in 2020, a 66.0% increase over 2019.
+Added: As of December 31, 2020, our total cash liquidity was $263.7 million, which included $87.3 million of cash on hand and $176.4 million of immediately available funds used to pay down our Floorplan Line and FMCC Facility.
+Added: We had additional liquidity available under our Acquisition Line.
+Added: As further 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.
Recent Accounting Pronouncements
−Removed: Refer to Note 1 “Business and Summary of Significant Accounting Polices” within our Notes to Consolidated Financial Statements for a discussion of those most recent pronouncements that impact us.
+Added: Refer to Note 1.
+Added: Business and Summary of Significant Accounting Policies within our Notes to Consolidated Financial Statements for further discussion of the most recent pronouncements that impact us.
Critical Accounting Policies and Accounting Estimates
6 unchanged sentences
We are organized into three geographic regions, the U.S.
−Removed: region, the U.K.
−Removed: region and the Brazil region.
+Added: region and Brazil region.
We have determined that each region represents a reporting unit for the purpose of assessing goodwill for impairment.
−Removed: Our only significant identifiable intangible assets, other than goodwill, are rights under franchise agreements with manufacturers, which are recorded at an individual dealership level.
−Removed: We evaluate goodwill and intangible franchise rights for impairment annually in the fourth quarter, or more frequently if events or circumstances indicate possible impairment has occurred.
+Added: Our only recognized identifiable intangible assets, other than goodwill, are rights under franchise agreements with manufacturers, which are recorded at an individual dealership level.
+Added: We evaluate goodwill and intangible franchise rights for impairment annually in the fourth quarter as of October 31, or more frequently if events or circumstances indicate possible impairment has occurred.
In evaluating goodwill and intangibles for impairment, an optional qualitative assessment may be initially performed to determine whether it is more-likely-than-not (i.e., a likelihood of greater than 50%) that an impairment exists.
If it is concluded that it is more-likely-than-not that an impairment exists, a quantitative test is required to measure the amount of impairment which, for goodwill, consists of comparing the fair value of the reporting unit to its carrying amount and, for intangibles, consists of comparing the fair value of the intangible asset to its carrying amount.
−Removed: When a quantitative impairment test is performed, we estimate fair value using a combination of the discounted cash flow, or income approach, and the market approach.
−Removed: Significant assumptions included in the model include changes in revenue growth rates, future gross margins, future SG&A expenses, and the WACC and terminal growth rates.
+Added: When a quantitative impairment test is performed, we estimate fair value of goodwill using a combination of the discounted cash flow, or income approach, and the market approach.
+Added: We weight the income approach and market approach 80% and 20%, respectively, in the fair value model.
+Added: For our intangible franchise rights, we estimate the fair value of the respective franchise right using a discounted cash flow, or income approach.
+Added: The income approach measures fair value by discounting expected future cash flows at a WACC that proportionately weights the cost of debt and equity.
+Added: Significant assumptions in the model include revenue growth rates, future gross margins, future SG&A expenses, the WACC and terminal growth rates.
+Added: We apply a five year projection period which aligns with our strategic plan.
+Added: Key considerations in the assumed growth rates include industry SAAR projections, macroeconomic conditions including consumer confidence levels, unemployment rates and gross domestic product growth, and internal measures such as historical financial performance, cost control and planned capital expenditures.
+Added: The revenue growth rates assume a significant increase in 2021 as the business recovers from the pandemic and limited increases in the next four years corresponding with the industry SAAR projections plus a return to more normal vehicle gross margins as inventories recover.
+Added: Beyond the five forecasted years, the terminal value is determined using a perpetuity growth rate based on long-term inflation projections for each reporting unit.
+Added: Significant inputs to the WACC include the risk free rate, an adjustment for stock market risk, an adjustment for company size risk and country risk adjustments for the U.K.
+Added: In 2020, the WACC applied in the impairment tests for the U.S., U.K.
+Added: and Brazil was 11%, 13% and 16%, respectively.
For the market approach, we utilize recent market multiples of guideline companies for both revenue and pre-tax net income weighted as appropriate by reporting unit.
−Removed: Each of these assumptions requires us to use its knowledge of (1) the industry, (2) recent transactions and (3) reasonable performance expectations for its operations.
−Removed: Our qualitative test includes a review of changes, since the last quantitative test was performed, in those assumptions having the most significant impact on the current year fair value, which are consistent with the significant assumptions identified in the quantitative test above.
−Removed: During the years ended December 31, 2019, 2018 and 2017 , we recorded $19.0 million , $38.7 million and $19.3 million , respectively, of impairments of intangible franchise rights.
−Removed: See Note 11 “Intangible Franchise Rights and Goodwill” within our Notes to Consolidated Financial Statements for details on our intangibles, including the results of our impairment testing.
−Removed: We may be charged back in the future for unearned financing, insurance contract or vehicle service contract fees in the event of early termination of the contracts by customers.
−Removed: A reserve for future amounts estimated to be charged back, representing variable consideration, is recorded as a reduction of Finance, Insurance and Other Revenue, Net in the Consolidated Statement of Operations.
−Removed: The reserve is estimated based on our historical charge back results and the termination provisions of the applicable contracts, and was $49.7 million and $46.4 million at December 31, 2019 and 2018 , respectively.
−Removed: See Note 1 “Business and Summary of Significant Accounting Policies” and Note 2 “Revenues” within our Notes to Consolidated Financial Statements, for further discussion of these accounting policies and estimates.
+Added: Developing these assumptions requires applying management’s knowledge of the industry, recent transactions and reasonable performance expectations for its operations.
+Added: The qualitative test includes a review of changes, since the last quantitative test was performed, in those assumptions having the most significant impact on the current year fair value, which are consistent with the significant assumptions identified in the quantitative test above.
+Added: During the year ended December 31, 2020, we recorded goodwill impairment charges of $10.7 million within the Brazil reporting unit, largely due to the impact of the COVID-19 pandemic on our Brazilian markets and our operations.
+Added: There was no remaining goodwill balance in the Brazil segment following the impairment charges recorded in 2020.
+Added: As of the last quantitative test performed for the U.S.
+Added: reporting units in the fourth quarter of 2018, the fair value of the reporting units each exceeded their respective carrying values by over 90%.
+Added: Based on the qualitative test performed for the U.S.
+Added: reporting units in the fourth quarter of 2020, no quantitative test was deemed necessary.
+Added: No goodwill impairments were recorded on any reporting units during the year ended December 31, 2019.
+Added: During the years ended December 31, 2020 and 2019, we recorded $20.8 million and $19.0 million, respectively, of impairments of intangible franchise rights.
+Added: As our intangible franchise rights are tested for impairment at the dealership level, any impairments are specific to the performance and outlook of the respective dealership.
+Added: The impact of the COVID-19 pandemic on the economy and unemployment in 2020 adversely impacted our long-term outlook projections, which resulted in the impairment charges on certain dealerships in the U.S., U.K.
+Added: Business for a discussion of the impact of COVID-19 pandemic on each of our regions and our response to date.
+Added: If the COVID-19 pandemic and any lockdowns or other restrictions to contain the pandemic continue and impact our long-term projections, we may be required to record additional impairment charges in the future.
+Added: Refer to Note 11.
+Added: Intangible Franchise Rights and Goodwill within our Notes to Consolidated Financial Statements for further discussion of our goodwill and intangibles, including the results of our impairment testing.
Results of Operations
−Removed: The “Same Store” amounts presented below include the results of dealerships for the identical months in each period presented in comparison, commencing with the first full month in which the dealership was owned by us and, in the case of dispositions, ending with the last full month it was owned by us.
−Removed: Same Store results also include the activities of our corporate headquarters.
−Removed: We evaluate our results of operations on both as reported and on a constant currency basis.
+Added: The “same store” amounts presented below include the results of dealerships and corporate headquarters for the identical months in each period presented in comparison, commencing with the first full month in which the dealership was owned by us and, in the case of dispositions, ending with the last full month it was owned by us.
+Added: For example, the results for a dealership acquired on August 15, 2020 will appear in our same store comparison beginning in 2021 for the period September 2021 through December 2021, when comparing to September 2020 through December 2020 results.
+Added: If we disposed of a store on August 15, 2020, the results from this store would be excluded from same store results beginning in August 2020 as July 2020 was the last full month the dealership was owned by us.
+Added: 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.
+Added: For these reasons, same store results allows management to manage and monitor the performance of the business and is also useful to investors.
+Added: We evaluate our results of operations on both an as reported and a constant currency basis.
The constant currency presentation, which is a non-GAAP measure, excludes the impact of fluctuations in foreign currency exchange rates.
4 unchanged sentences
GAAP measures.
−Removed: Our management uses constant currency and adjusted cash flows from operating, investing and financing activities in conjunction with U.S.
+Added: Our management also uses constant currency and adjusted cash flows from operating, investing and financing activities in conjunction with U.S.
GAAP financial measures to assess our business, including communication with our Board of Directors, investors and industry analysts concerning financial performance.
−Removed: 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.
−Removed: Certain disclosures are reported as zero balances, or may not compute, due to rounding.
−Removed: The following tables summarize our operating results on a reported basis and on a Same Store basis for the year ended December 31, 2019 as compared to 2018 and for the year ended December 31, 2018 , as compared to 2017 .
−Removed: Reported Operating Data - Consolidated
−Removed: (In millions, except unit and per unit amounts)
−Removed: For the Years Ended December 31,
−Removed: Increase/ (Decrease)
−Removed: Currency Impact on Current Period Results
−Removed: Constant Currency % Change
−Removed: New vehicle retail sales
−Removed: Used vehicle retail sales
−Removed: Used vehicle wholesale sales
−Removed: Parts and service sales
−Removed: Total revenues
−Removed: Gross profit:
−Removed: New vehicle retail sales
−Removed: Used vehicle retail sales
−Removed: Used vehicle wholesale sales
−Removed: Parts and service sales
−Removed: Total gross profit
−Removed: Gross margin:
−Removed: New vehicle retail sales
−Removed: Used vehicle retail sales
−Removed: Used vehicle wholesale sales
−Removed: Parts and service sales
−Removed: Total gross margin
−Removed: Retail new vehicles sold
−Removed: Retail used vehicles sold
−Removed: Wholesale used vehicles sold
−Removed: Average sales price per unit sold:
−Removed: New vehicle retail
−Removed: Used vehicle retail
−Removed: Gross profit per unit sold:
−Removed: New vehicle retail sales
−Removed: Used vehicle retail sales
−Removed: Used vehicle wholesale sales
−Removed: SG&A expenses
−Removed: SG&A as % gross profit
−Removed: Floorplan expense:
−Removed: Floorplan interest expense
−Removed: floorplan assistance (1)
−Removed: Net floorplan expense
−Removed: (1) Floorplan assistance is included within New vehicle retail Gross profit above and New vehicle retail Cost of sales in our Consolidated Statements of Operations.
+Added: 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.
+Added: These metrics also allow investors to better understand and evaluate the information used by management to assess operating performance.
+Added: Certain amounts in the financial statements may not compute due to rounding.
+Added: All computations have been calculated using unrounded amounts for all periods presented.
+Added: Additionally, refer to Item 7.
+Added: Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2019 Annual Report on Form 10-K for management’s discussion and analysis of financial condition and results of operations for the fiscal year 2019 compared to fiscal year 2018.
+Added: The following tables summarize our operating results on a reported basis and on a Same Store basis for the year ended December 31, 2020 as compared to 2019.
Reported Operating Data — Consolidated
−Removed: (In millions, except unit and per unit amounts)
+Added: (In millions, except unit data)
For the Years Ended December 31,
−Removed: Increase/ (Decrease)
−Removed: Currency Impact on Current Period Results
−Removed: Constant Currency % Change
+Added: 2020 2019 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change
New vehicle retail sales $ 5,580.8 $ 6,314.1 $ (733.3) (11.6) % $ (37.5) (11.0) %
1 unchanged sentence
Used vehicle wholesale sales 308.1 355.2 (47.1) (13.3) % (2.3) (12.6) %
+Added: Total used 3,413.7 3,721.8 (308.1) (8.3) % (8.1) (8.1) %
Parts and service sales 1,389.3 1,510.0 (120.7) (8.0) % (7.1) (7.5) %
+Added: F&I, net 467.9 497.9 (29.9) (6.0) % (1.1) (5.8) %
Total revenues $ 10,851.8 $ 12,043.8 $ (1,191.9) (9.9) % $ (53.8) (9.4) %
3 unchanged sentences
Used vehicle wholesale sales 11.0 1.0 10.0 991.6 % (0.3) 1017.5 %
+Added: Total used 219.7 202.3 17.4 8.6 % (0.9) 9.0 %
Parts and service sales 750.8 815.0 (64.1) (7.9) % (2.9) (7.5) %
+Added: F&I, net 467.9 497.9 (29.9) (6.0) % (1.1) (5.8) %
Total gross profit $ 1,769.0 $ 1,816.0 $ (47.0) (2.6) % $ (7.9) (2.2) %
3 unchanged sentences
Used vehicle wholesale sales 3.6 % 0.3 % 3.3 %
+Added: Total used 6.4 % 5.4 % 1.0 %
Parts and service sales 54.0 % 54.0 % 0.1 %
+Added: F&I, net 100.0 % 100.0 % — %
Total gross margin 16.3 % 15.1 % 1.2 %
2 unchanged sentences
Wholesale used vehicles sold 41,786 51,205 (9,419) (18.4) %
+Added: Total used 181,904 209,754 (27,850) (13.3) %
Average sales price per unit sold:
5 unchanged sentences
Used vehicle wholesale sales $ 263 $ 20 $ 244 1,237.7 % $ (6) 1,269.3 %
+Added: Total used $ 1208 $ 965 $ 243 25.2 % $ (5) 25.7 %
+Added: F&I PRU $ 1,669 $ 1,519 $ 150 9.9 % $ (4) 10.1 %
SG&A expenses $ 1,169.3 $ 1,358.4 $ (189.1) (13.9) % $ (7.3) (13.4) %
3 unchanged sentences
floorplan assistance (1)
+Added: 47.3 49.1 (1.8) (3.7) % — (3.7) %
Net floorplan expense $ (7.8) $ 12.4 $ (20.2) (162.6) % $ (0.1) (162.0) %
1 unchanged sentence
Same Store Operating Data — Consolidated
−Removed: (In millions, except unit and per unit amounts)
−Removed: For the Years Ended December 31,
−Removed: Increase/ (Decrease)
−Removed: Currency Impact on Current Period Results
−Removed: Constant Currency % Change
−Removed: New vehicle retail sales
−Removed: Used vehicle retail sales
−Removed: Used vehicle wholesale sales
−Removed: Parts and service sales
−Removed: Total revenues
−Removed: Gross profit:
−Removed: New vehicle retail sales
−Removed: Used vehicle retail sales
−Removed: Used vehicle wholesale sales
−Removed: Parts and service sales
−Removed: Total gross profit
−Removed: Gross margin:
−Removed: New vehicle retail sales
−Removed: Used vehicle retail sales
−Removed: Used vehicle wholesale sales
−Removed: Parts and service sales
−Removed: Total gross margin
−Removed: Retail new vehicles sold
−Removed: Retail used vehicles sold
−Removed: Wholesale used vehicles sold
−Removed: Average sales price per unit sold:
−Removed: New vehicle retail
−Removed: Used vehicle retail
−Removed: Gross profit per unit sold:
−Removed: New vehicle retail sales
−Removed: Used vehicle retail sales
−Removed: Used vehicle wholesale sales
−Removed: SG&A expenses
−Removed: SG&A as % gross profit
−Removed: Same Store Operating Data - Consolidated
−Removed: (In millions, except unit and per unit amounts)
+Added: (In millions, except unit data)
For the Years Ended December 31,
−Removed: Increase/ (Decrease)
−Removed: Currency Impact on Current Period Results
−Removed: Constant Currency % Change
+Added: 2020 2019 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change
New vehicle retail sales $ 5,463.0 $ 6,260.6 $ (797.7) (12.7) % $ (37.0) (12.2) %
1 unchanged sentence
Used vehicle wholesale sales 299.8 346.4 (46.6) (13.4) % (2.2) (12.8) %
+Added: Total used 3,323.4 3,674.6 (351.2) (9.6) % (7.9) (9.3) %
Parts and service sales 1,356.7 1,483.3 (126.6) (8.5) % (7.2) (8.0) %
+Added: F&I, net 461.9 494.3 (32.4) (6.6) % (1.1) (6.3) %
Total revenues $ 10,605.0 $ 11,912.9 $ (1,307.9) (11.0) % $ (53.1) (10.5) %
3 unchanged sentences
Used vehicle wholesale sales 10.9 1.3 9.7 757.1 % (0.3) 777.5 %
+Added: Total used 214.6 201.2 13.4 6.7 % (0.9) 7.1 %
Parts and service sales 732.3 802.1 (69.7) (8.7) % (2.9) (8.3) %
+Added: F&I, net 461.9 494.3 (32.4) (6.6) % (1.1) (6.3) %
Total gross profit $ 1,730.1 $ 1,796.3 $ (66.2) (3.7) % $ (7.9) (3.2) %
3 unchanged sentences
Used vehicle wholesale sales 3.6 % 0.4 % 3.3 %
+Added: Total used 6.5 % 5.5 % 1.0 %
Parts and service sales 54.0 % 54.1 % (0.1) %
+Added: F&I, net 100.0 % 100.0 % — %
Total gross margin 16.3 % 15.1 % 1.2 %
2 unchanged sentences
Wholesale used vehicles sold 40,767 50,282 (9,515) (18.9) %
+Added: Total used 177,632 206,821 (29,189) (14.1) %
Average sales price per unit sold:
5 unchanged sentences
Used vehicle wholesale sales $ 268 $ 25 $ 243 957.2 % $ (6) 982.3 %
+Added: Total used $ 1,208 $ 973 $ 235 24.2 % $ (5) 24.7 %
+Added: F&I PRU $ 1,685 $ 1,527 $ 158 10.3 % $ (4) 10.6 %
SG&A expenses $ 1,143.0 $ 1,338.9 $ (195.9) (14.6) % $ (7.2) (14.1) %
1 unchanged sentence
Reported Operating Data — U.S.
−Removed: (In millions, except unit and per unit amounts)
+Added: (In millions, except unit data)
For the Years Ended December 31,
−Removed: Increase/(Decrease)
+Added: 2020 2019 Increase/(Decrease) % Change
New vehicle retail sales $ 4,406.6 $ 4,832.2 $ (425.6) (8.8) %
1 unchanged sentence
Used vehicle wholesale sales 169.4 174.5 (5.0) (2.9) %
+Added: Total used 2,517.9 2,684.4 (166.5) (6.2) %
Parts and service sales 1,162.6 1,234.4 (71.8) (5.8) %
+Added: F&I, net 416.3 433.2 (16.9) (3.9) %
Total revenues $ 8,503.4 $ 9,184.2 $ (680.8) (7.4) %
3 unchanged sentences
Used vehicle wholesale sales 7.7 2.5 5.2 207.5 %
+Added: Total used 170.5 164.2 6.3 3.9 %
Parts and service sales 626.8 668.5 (41.8) (6.2) %
+Added: F&I, net 416.3 433.2 (16.9) (3.9) %
Total gross profit $ 1,486.0 $ 1,494.8 $ (8.8) (0.6) %
3 unchanged sentences
Used vehicle wholesale sales 4.6 % 1.4 % 3.1 %
+Added: Total used 6.8 % 6.1 % 0.7 %
Parts and service sales 53.9 % 54.2 % (0.2) %
+Added: F&I, net 100.0 % 100.0 % — %
Total gross margin 17.5 % 16.3 % 1.2 %
2 unchanged sentences
Wholesale used vehicles sold 24,679 28,577 (3,898) (13.6) %
+Added: Total used 133,090 149,593 (16,503) (11.0) %
Average sales price per unit sold:
5 unchanged sentences
Used vehicle wholesale sales $ 313 $ 88 $ 225 256.0 %
+Added: Total used $ 1,281 $ 1,098 $ 184 16.7 %
+Added: F&I PRU $ 1,951 $ 1,782 $ 169 9.5 %
SG&A expenses $ 947.0 $ 1,075.6 $ (128.5) (12.0) %
1 unchanged sentence
Same Store Operating Data — U.S.
−Removed: (In millions, except unit and per unit amounts)
+Added: (In millions, except unit data)
For the Years Ended December 31,
−Removed: Increase/(Decrease)
+Added: 2020 2019 Increase/(Decrease) % Change
New vehicle retail sales $ 4,343.5 $ 4,806.3 $ (462.8) (9.6) %
1 unchanged sentence
Used vehicle wholesale sales 167.1 171.5 (4.4) (2.6) %
+Added: Total used 2,466.5 2,660.7 (194.2) (7.3) %
Parts and service sales 1,145.6 1,225.2 (79.7) (6.5) %
+Added: F&I, net 412.8 430.8 (18.0) (4.2) %
Total revenues $ 8,368.4 $ 9,123.1 $ (754.6) (8.3) %
3 unchanged sentences
Used vehicle wholesale sales 7.7 2.5 5.2 204.5 %
+Added: Total used 167.2 163.2 4.0 2.5 %
Parts and service sales 616.6 663.7 (47.1) (7.1) %
+Added: F&I, net 412.8 430.8 (18.0) (4.2) %
Total gross profit $ 1,462.2 $ 1,485.3 $ (23.1) (1.6) %
3 unchanged sentences
Used vehicle wholesale sales 4.6 % 1.5 % 3.2 %
+Added: Total used 6.8 % 6.1 % 0.6 %
Parts and service sales 53.8 % 54.2 % (0.3) %
+Added: F&I, net 100.0 % 100.0 % — %
Total gross margin 17.5 % 16.3 % 1.2 %
2 unchanged sentences
Wholesale used vehicles sold 24,410 28,113 (3,703) (13.2) %
+Added: Total used 131,021 147,768 (16,747) (11.3) %
Average sales price per unit sold:
5 unchanged sentences
Used vehicle wholesale sales $ 317 $ 90 $ 227 250.7 %
+Added: Total used $ 1,276 $ 1,104 $ 172 15.6 %
+Added: F&I PRU $ 1,962 $ 1,788 $ 174 9.8 %
SG&A expenses $ 934.6 $ 1,068.9 $ (134.3) (12.6) %
4 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.
−Removed: Total revenue in the U.S.
−Removed: during the year ended December 31, 2019 increased $461.0 million , or 5.3% , as compared to the same period in 2018.
−Removed: Total same store revenue in the U.S.
−Removed: during the year ended December 31, 2019 increased $469.1 million , or 5.5% , as compared to the same period in 2018.
−Removed: The increase in U.S.
−Removed: same store revenue was driven by growth in all of our revenue streams with the exception of used vehicle wholesale sales.
−Removed: New vehicle retail same store revenue increased 3.3% as a 0.6% decrease in unit sales was more than offset by a 3.9% increase in average sales price per unit.
−Removed: The average sales price increase was driven by an increase in overall industry prices and the continued mix shift in sales from cars to trucks.
−Removed: Same store new vehicle truck sales represented 68.0% of total same store new vehicle retail unit sales, as compared to 65.2% in the prior year.
−Removed: Used vehicle retail same store revenue increased 8.6% primarily due to an 8.4% increase in units as our Val-U-Line® initiative enabled us to move older , higher mileage units from wholesale to retail sales and a strong focus on pricing.
−Removed: Parts and service same store revenue increased 8.7% driven by a 10.3% increase in customer-pay revenue, a 10.5% increase in warranty, a 5.2% increase in wholesale parts and a 6.9% increase in collision revenue.
−Removed: The implementation of our four-day work week service schedule improved hiring and retention of our service technicians and advisors and increased capacity and efficiency in our service departments.
−Removed: Our four-day work week has been rolled out at 75 U.S.
−Removed: dealerships as of December 31, 2019 and has driven an increase in our technician count of approximately 320 professionals in the last twelve months, a 13% increase.
−Removed: F&I same store revenue increased 7.9% as a result of an increase in our retail unit sales, improvements in income per contract on vehicle service and finance contracts, as well as higher penetration rates on finance and other insurance product offerings.
+Added: 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.
+Added: Total revenues in the U.S.
+Added: during the year ended December 31, 2020 decreased $680.8 million, or 7.4%, as compared to the same period in 2019.
+Added: Total same store revenues in the U.S.
+Added: during the year ended December 31, 2020 decreased $754.6 million, or 8.3%, as compared to the same period in 2019.
+Added: The decrease in U.S.
+Added: same store revenues was driven by declines in all of our revenues streams.
+Added: The declines of 9.6% in new vehicle retail same store sales, 7.6% in used vehicle retail same store sales and 2.6% in used vehicle wholesale same store sales were driven by decreases of 14.5%, 10.9% and 13.2% 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, in part due to reduced OEM production rates.
+Added: Our recent online new and used vehicle sales platform, AcceleRide®, was instrumental in allowing us to connect with and serve our customers throughout the social distancing requirements and served to help limit our declines.
+Added: Parts and service same store revenues decreased 6.5% driven by an 18.9% decrease in collision revenues, a 9.6% decrease in warranty revenues, a 3.9% decrease in customer-pay revenues and a 0.9% decrease in wholesale parts revenues.
+Added: F&I same store revenues decreased 4.2% as a result of a decrease of 12.7% in our 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.
−Removed: during the year ended December 31, 2019 increased $103.5 million , or 7.4% , as compared to the same period in 2018.
+Added: during the year ended December 31, 2020 decreased $8.8 million, or 0.6%, as compared to the same period in 2019.
Total same store gross profit in the U.S.
−Removed: during the year ended December 31, 2019 increased $104.6 million , or 7.7% , as compared to the same period in 2018.
−Removed: The increase in total same store gross profit was driven by increases in parts and service, F&I and used vehicle retail gross profit, partially offset by a decrease in new vehicle gross profit.
−Removed: New vehicle retail same store gross profit decreased 1.0% due to lower new vehicle unit sales as industry new vehicle sales have slowed.
−Removed: Used vehicle retail same store gross profit increased 14.3% as a result of an 8.4% increase in used vehicle retail unit sales and a 5.4% increase in used vehicle retail same store average gross profit PRU.
−Removed: The increased same store used vehicle retail PRU reflects our recently implemented big-data driven pricing strategies.
−Removed: Parts and service same store gross profit and F&I same store gross profit increased 9.5% and 7.9% , respectively, driven by the increase in revenue described above.
−Removed: Total same store gross margin increased 30 basis points as our higher margin businesses grew at a faster pace than our lower gross margin new vehicle business.
+Added: during the year ended December 31, 2020 decreased $23.1 million, or 1.6%, as compared to the same period in 2019.
+Added: The decrease in total gross profit was driven by decreases in all of our operations except for new vehicle retail and used vehicle wholesale.
+Added: New vehicle retail same store gross profit increased 16.7% driven by a 36.4% increase in new vehicle same store gross profit per unit sold, which was partially offset by a 14.5% decrease in new vehicle retail unit sales.
+Added: 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 the COVID-19 pandemic earlier in the year and have not yet returned to normal production levels.
+Added: Used vehicle retail same store gross profit remained relatively flat, as a 10.9% decrease in used vehicle unit sales was offset by an 11.4% increase in used vehicle retail same store average gross profit per unit.
+Added: Used vehicle retail same store gross profit was impacted by both inventory supply constraints and the reduced demand during the first half of the year caused by the COVID-19 pandemic.
+Added: Used vehicle wholesale same store gross profit was driven by an increase in used vehicle wholesale same store gross profit per unit sold, which was partially offset by a 13.2% decrease in used vehicle wholesale unit sales.
+Added: The increase in same store used vehicle wholesale profit per unit sold was driven by higher auction prices due to industry supply constraints.
+Added: Parts and service same store gross profit and F&I same store gross profit decreased 7.1% and 4.2%, respectively, driven by the decreases described above.
+Added: Total same store gross margin increased 120 basis points primarily as a result of higher new vehicle and used vehicle retail and wholesale margins related to inventory supply constraints.
SG&A Expenses
1 unchanged sentence
Total SG&A expenses in the U.S.
−Removed: during the year ended December 31, 2019 increased $93.5 million , or 9.5% , as compared to the same period in 2018.
+Added: during the year ended December 31, 2020 decreased $128.5 million, or 12.0%, as compared to the same period in 2019.
Total same store SG&A expenses in the U.S.
−Removed: during the year ended December 31, 2019, increased $80.8 million , or 8.3% , as compared to the same period in 2018.
−Removed: Same store SG&A expenses in 2019 includes $17.8 million of net costs associated with hail storms and flooding from Tropical Storm Imelda in Texas;
−Removed: $0.7 million in net gains on real estate and dealership transactions;
−Removed: and $1.1 million in non-core legal expenses.
−Removed: Same store SG&A expenses in 2018 includes $6.4 million for costs associated with catastrophic events;
−Removed: $4.7 million in net gains on real estate transactions;
−Removed: and $1.3 million in non-core legal expenses.
−Removed: Total same store SG&A expenses as a % of gross profit increased 40 basis points, primarily explained by a $11.4 million increase in insurance costs driven by $11.9 million in deductible expenses associated with the building and vehicle deductibles related to the flooding from Tropical Storm Imelda in Texas and a $4.0 million decrease in net gains in real estate and dealership transactions.
−Removed: Reported Operating Data - U.S.
−Removed: (In millions, except unit and per unit amounts)
−Removed: For the Years Ended December 31,
−Removed: Increase/(Decrease)
−Removed: New vehicle retail sales
−Removed: Used vehicle retail sales
−Removed: Used vehicle wholesale sales
−Removed: Parts and service sales
−Removed: Total revenues
−Removed: Gross profit:
−Removed: New vehicle retail sales
−Removed: Used vehicle retail sales
−Removed: Used vehicle wholesale sales
−Removed: Parts and service sales
−Removed: Total gross profit
−Removed: Gross margin:
−Removed: New vehicle retail sales
−Removed: Used vehicle retail sales
−Removed: Used vehicle wholesale sales
−Removed: Parts and service sales
−Removed: Total gross margin
−Removed: Retail new vehicles sold
−Removed: Retail used vehicles sold
−Removed: Wholesale used vehicles sold
−Removed: Average sales price per unit sold:
−Removed: New vehicle retail
−Removed: Used vehicle retail
−Removed: Gross profit per unit sold:
−Removed: New vehicle retail sales
−Removed: Used vehicle retail sales
−Removed: Used vehicle wholesale sales
−Removed: SG&A expenses
−Removed: SG&A as % gross profit
−Removed: Same Store Operating Data - U.S.
−Removed: (In millions, except unit and per unit amounts)
−Removed: For the Years Ended December 31,
−Removed: Increase/(Decrease)
−Removed: New vehicle retail sales
−Removed: Used vehicle retail sales
−Removed: Used vehicle wholesale sales
−Removed: Parts and service sales
−Removed: Total revenues
−Removed: Gross profit:
−Removed: New vehicle retail sales
−Removed: Used vehicle retail sales
−Removed: Used vehicle wholesale sales
−Removed: Parts and service sales
−Removed: Total gross profit
−Removed: Gross margin:
−Removed: New vehicle retail sales
−Removed: Used vehicle retail sales
−Removed: Used vehicle wholesale sales
−Removed: Parts and service sales
−Removed: Total gross margin
−Removed: Retail new vehicles sold
−Removed: Retail used vehicles sold
−Removed: Wholesale used vehicles sold
−Removed: Average sales price per unit sold:
−Removed: New vehicle retail
−Removed: Used vehicle retail
−Removed: Gross profit per unit sold:
−Removed: New vehicle retail sales
−Removed: Used vehicle retail sales
−Removed: Used vehicle wholesale sales
−Removed: SG&A expenses
−Removed: SG&A as % gross profit
−Removed: Year Ended December 31, 2018 compared to 2017
−Removed: The following discussion of our U.S.
−Removed: operating results is on a same store basis.
−Removed: The difference between reported amounts and same store amounts is related to acquisition and disposition activity, as well as new add-point openings.
−Removed: Total revenue in the U.S.
−Removed: during the year ended December 31, 2018 increased $42.7 million, or 0.5%, as compared to the same period in 2017.
−Removed: Total same store revenue in the U.S.
−Removed: during the year ended December 31, 2018 declined $60.4 million, or 0.7%, as compared to the same period in 2017.
−Removed: The decline in U.S.
−Removed: same store revenue was driven by declines in new vehicle retail and used vehicle wholesale revenues which were partially offset by increases in all other revenue streams.
−Removed: New vehicle retail same store revenue declined 3.1%, driven by a 4.8% decline in same store new vehicle retail unit sales.
−Removed: The decline in new vehicle unit sales was primarily driven by difficult prior year comparisons in our Houston and Beaumont markets, reflecting strong replacement demand during the tail end of 2017 following Hurricane Harvey.
−Removed: Further contributing to the decrease in same store U.S.
−Removed: new vehicle unit sales was an overall decline in new vehicle retail demand in the industry compared to 2017.
−Removed: Used vehicle retail same store revenue increased 5.3% driven by 8.8% increase in retail units, as a result of the launch of Val-U-Line® during the first quarter of 2018.
−Removed: The Val-U-Line® initiative enabled us to move older model, higher mileage units from wholesale to retail sales which resulted in a 29.8% decrease in same store used vehicle wholesale revenue.
−Removed: same store parts and service revenues increased 2.2% reflecting a 4.5% increase in customer-pay parts and service revenues and a 5.0% increase in wholesale parts revenues, partially offset by a 3.7% decline in warranty parts and service revenues, when compared to the same period in 2017.
−Removed: The growth in our customer-pay parts and service revenue in the U.S.
−Removed: was supported by continued implementation of numerous aftersales initiatives, including the roll out of a four-day work week service schedule that has increased capacity in a significant number of our service departments by allowing us to improve our recruiting and retention efforts with our service technicians and service advisor professionals.
−Removed: F&I same store revenue in the U.S.
−Removed: increased 5.3% as compared to the same period in 2017.
−Removed: In the fourth quarter of 2018, we reversed the remaining $1.1 million of the $6.6 million reserve that was estimated and recognized in the third quarter of 2017, in association with expected F&I product cancellations on vehicles sold by us and damaged by flooding from Hurricane Harvey.
−Removed: After adjusting for the impact of this reserve activity related to Hurricane Harvey in both periods, our U.S.
−Removed: total same store F&I revenue grew 3.2% primarily driven by an increase in same store retail unit sales and higher income per contract in our vehicle service contracts and retail finance fees.
−Removed: Total gross profit in the U.S.
−Removed: during the year ended December 31, 2018 increased $26.0 million, or 1.9%, as compared to the same period in 2017.
−Removed: Total same store gross profit in the U.S.
−Removed: during the year ended December 31, 2018 increased $12.5 million, or 0.9%, as compared to the same period in 2017.
−Removed: The increase in U.S.
−Removed: same store total gross profit was primarily driven by increases in F&I, parts and service and used vehicle wholesale gross profit, partially offset by decreases in new vehicle and used vehicle retail gross profit.
−Removed: New vehicle retail same store gross profit decreased 7.5%, as the 4.8% decline in unit sales was compounded by a 2.8% decrease in gross profit PRU.
−Removed: The decrease in gross profit PRU was primarily driven by the impact on 2017 of temporarily inflated new vehicle gross profit PRU due to replacement demand in the aftermath of Hurricane Harvey at the end of that year.
−Removed: In the U.S., same store used vehicle retail gross profit decreased by 3.3%, driven by a decline in same store used vehicle gross profit PRU of 11.1% partially offset by an increase in same store used vehicle retail unit sales of 8.8%.
−Removed: The decline in our U.S same store used vehicle gross profit PRU was primarily the result of the growth in our Val-U-Line® brand that focuses on moving more of our lower valued used vehicles to retail customers versus selling at auction.
−Removed: The improved wholesale profitability more than offset the deterioration in used vehicle retail gross profit.
−Removed: Parts and service and F&I same store gross profit increased 1.5% and 5.3%, respectively, driven by the increase in revenue described above.
−Removed: SG&A Expenses
−Removed: 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.
−Removed: Total SG&A expenses in the U.S.
during the year ended December 31, 2020, decreased $134.3 million, or 12.6%, as compared to the same period in 2019.
+Added: As market conditions have improved in the second half of 2020, we have strived to retain the lower operating cost structure put in place as a result of the pandemic.
Total same store SG&A expenses in the U.S.
−Removed: during the year ended December 31, 2018, increased $6.1 million, or 0.6%, as compared to the same period in 2017.
−Removed: Same store SG&A expenses in 2018 includes charges of $6.4 million primarily associated with hail storms and $1.3 million in legal costs that were partially offset by gains of $2.4 million related to real estate and dealership transactions.
−Removed: Items included in U.S.
−Removed: Same Store SG&A expenses for the comparable period of 2017 included $8.8 million in costs associated primarily with damages resulting from Hurricane Harvey and $0.8 million in losses on real estate and dealership transactions that was partially offset by a $1.1 million gain related to legal settlements.
−Removed: same store SG&A expenses as a percentage of gross profit for the year ended December 31, 2018, as compared to 2017, improved 20 basis points as a result of increases in F&I, parts and service and used vehicle wholesale gross profit as mentioned above.
+Added: for the year ended 2019 included $17.8 million in net costs associated with hailstorms and flooding from Tropical Storm Imelda in Texas;
+Added: $1.1 million in non-core legal expenses;
+Added: and $0.5 million in net gains on real estate and dealership transactions.
+Added: Total same store SG&A expenses in the U.S.
+Added: for the year ended 2020 included $10.6 million in expense for an out-of-period adjustment related to stock-based compensation and a $2.7 million gain related to a favorable legal settlement.
+Added: Total same store SG&A as a percent of gross profit decreased from 72.0% for the twelve months ended 2019 to 63.9% for the same period of 2020, driven by cost cutting measures taken to mitigate the impact of the COVID-19 pandemic.
Reported Operating Data — U.K.
−Removed: (In millions, except unit and per unit amounts)
+Added: (In millions, except unit data)
For the Years Ended December 31,
−Removed: Increase/ (Decrease)
−Removed: Currency Impact on Current Period Results
−Removed: Constant Currency % Change
+Added: 2020 2019 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change
New vehicle retail sales $ 1,021.8 $ 1,195.1 $ (173.2) (14.5) % $ 3.7 (14.8) %
1 unchanged sentence
Used vehicle wholesale sales 126.4 162.3 (36.0) (22.2) % 1.2 (22.9) %
+Added: Total used 833.5 933.7 (100.1) (10.7) % 8.5 (11.6) %
Parts and service sales 194.8 227.9 (33.1) (14.5) % 2.2 (15.5) %
+Added: F&I, net 46.6 57.0 (10.4) (18.2) % 0.3 (18.7) %
Total revenues $ 2,096.8 $ 2,413.7 $ (316.8) (13.1) % $ 14.7 (13.7) %
3 unchanged sentences
Used vehicle wholesale sales 2.5 (2.7) 5.2 190.8 % — 191.2 %
+Added: Total used 44.6 31.0 13.6 43.8 % 0.5 42.1 %
Parts and service sales 109.9 125.4 (15.5) (12.4) % 1.3 (13.4) %
+Added: F&I, net 46.6 57.0 (10.4) (18.2) % 0.3 (18.7) %
Total gross profit $ 248.1 $ 267.7 $ (19.6) (7.3) % $ 2.1 (8.1) %
3 unchanged sentences
Used vehicle wholesale sales 1.9 % (1.7) % 3.6 %
+Added: Total used 5.3 % 3.3 % 2.0 %
Parts and service sales 56.4 % 55.0 % 1.4 %
+Added: F&I, net 100.0 % 100.0 % — %
Total gross margin 11.8 % 11.1 % 0.7 %
2 unchanged sentences
Wholesale used vehicles sold 15,651 20,694 (5,043) (24.4) %
+Added: Total used 44,742 53,815 (9,073) (16.9) %
Average sales price per unit sold:
5 unchanged sentences
Used vehicle wholesale sales $ 157 $ (131) $ 288 220.1 % $ (1) 220.6 %
+Added: Total used $ 997 $ 576 $ 420 72.9 % $ 11 71.0 %
+Added: F&I PRU $ 793 $ 806 $ (13) (1.6) % $ 5 (2.3) %
SG&A expenses $ 191.2 $ 236.9 $ (45.6) (19.3) % $ 1.6 (19.9) %
1 unchanged sentence
Same Store Operating Data — U.K.
−Removed: (In millions, except unit and per unit amounts)
+Added: (In millions, except unit data)
For the Years Ended December 31,
−Removed: Increase/ (Decrease)
−Removed: Currency Impact on Current Period Results
−Removed: Constant Currency % Change
+Added: 2020 2019 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change
New vehicle retail sales $ 967.0 $ 1,170.3 $ (203.2) (17.4) % $ 4.2 (17.7) %
1 unchanged sentence
Used vehicle wholesale sales 120.4 158.7 (38.2) (24.1) % 1.2 (24.9) %
+Added: Total used 794.7 915.1 (120.5) (13.2) % 8.7 (14.1) %
Parts and service sales 179.3 211.2 (31.9) (15.1) % 2.1 (16.1) %
+Added: F&I, net 44.1 55.9 (11.9) (21.2) % 0.3 (21.8) %
Total revenues $ 1,985.0 $ 2,352.6 $ (367.5) (15.6) % $ 15.3 (16.3) %
3 unchanged sentences
Used vehicle wholesale sales 2.4 (2.5) 4.8 196.2 % — 196.6 %
+Added: Total used 42.8 30.9 11.9 38.4 % 0.5 36.8 %
Parts and service sales 101.5 117.6 (16.1) (13.7) % 1.2 (14.7) %
+Added: F&I, net 44.1 55.9 (11.9) (21.2) % 0.3 (21.8) %
Total gross profit $ 233.1 $ 257.8 $ (24.8) (9.6) % $ 2.1 (10.4) %
3 unchanged sentences
Used vehicle wholesale sales 2.0 % (1.6) % 3.5 %
+Added: Total used 5.4 % 3.4 % 2.0 %
Parts and service sales 56.6 % 55.7 % 0.9 %
+Added: F&I, net 100.0 % 100.0 % — %
Total gross margin 11.7 % 11.0 % 0.8 %
2 unchanged sentences
Wholesale used vehicles sold 14,901 20,302 (5,401) (26.6) %
+Added: Total used 42,539 52,852 (10,313) (19.5) %
Average sales price per unit sold:
5 unchanged sentences
Used vehicle wholesale sales $ 159 $ (121) $ 280 231.0 % $ (1) 231.6 %
+Added: Total used $ 1,006 $ 585 $ 421 71.9 % $ 12 69.9 %
+Added: F&I PRU $ 792 $ 810 $ (18) (2.2) % $ 6 (2.9) %
SG&A expenses $ 177.2 $ 224.7 $ (47.5) (21.1) % $ 1.7 (21.9) %
4 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.
−Removed: Total revenue in the U.K.
+Added: dealership operations have been impacted by the restrictions put in place by the national government in efforts to contain the COVID-19 pandemic.
+Added: Total revenues in the U.K.
during the year ended December 31, 2020 decreased $316.8 million, or 13.1%, as compared to the same period in 2019.
−Removed: Total same store revenue in the U.K.
+Added: Total same store revenues in the U.K.
during the year ended December 31, 2020 decreased $367.5 million, or 15.6%, as compared to the same period in 2019.
−Removed: On a constant currency basis, total same store revenue increased 0.5% driven by a 5.6% increase in parts and service revenues.
−Removed: The market conditions in the U.K.
−Removed: remain challenging due to continued uncertainty related to Brexit and supply constraints surrounding the real-driving emissions (“RDE”) legislation enacted across the EU in September 2019.
−Removed: New vehicle retail same store revenue on a constant currency basis increased 0.4% , as a 3.6% decrease in new vehicle retail same store unit sales was fully offset by a 4.2% increase in new vehicle retail same store average sales price per unit sold.
−Removed: Used vehicle retail same store revenue on a constant currency basis remained relatively flat, as a 1.4% increase in used vehicle retail same store average sales price per unit sold was mostly offset by a 1.0% decrease in used vehicle retail same store unit sales.
−Removed: Parts and service same store revenue increased 5.6% on a constant currency basis driven by increases of 9.3% in customer-pay, 5.0% in warranty and 4.9% in wholesale parts, partially offset by a decrease of 16.3% in collision revenue.
−Removed: The increases in customer-pay and warranty revenue are a result of our efforts to increase our technician headcount through improved hiring methods and improved pay plans.
−Removed: F&I same store revenue on a constant currency basis increased 0.4% driven by increased penetration rates on finance fees and other insurance product offerings, as well as increased income per contract on vehicle service contracts.
+Added: On a constant currency basis, total same store revenues decreased 16.3% driven by decreases in all of our operations due to the COVID-19 pandemic.
+Added: Beginning March 21, 2020, the government mandated the closure of all U.K.
+Added: dealerships in efforts to stop the spread of the virus.
+Added: The government shutdown remained in effect through May 18, 2020 for service, with the exception of emergency vehicle repairs.
+Added: showrooms were allowed to reopen on June 1, 2020.
+Added: However, cases of COVID-19 started to rise again causing another government-ordered lockdown beginning November 5, 2020, continuing at different levels through December.
+Added: Business recovered between June and November but not enough to offset the declines caused by the shutdowns.
+Added: New vehicle retail same store revenues on a constant currency basis decreased 17.7%, as a 23.3% decrease in new vehicle retail same store unit sales was partially offset by a 7.2% increase in new vehicle retail same store average sales price per unit sold.
+Added: On a constant currency basis, used vehicle retail same store revenues decreased 11.9%, as a 15.1% decline in used vehicle retail same store unit sales was partially offset by a 3.8% increase in used vehicle retail same store average sales price per unit sold.
+Added: Parts and service same store revenues decreased 16.1% on a constant currency basis driven by declines of 9.4% in customer-pay, 24.8 % i n warranty, 29.9% in collision and 23.0 % in wholesale parts revenues.
+Added: The decreases in all parts and service businesses are a result of the limitations put in place due to the COVID-19 pandemic.
+Added: F&I same store revenues on a constant currency basis decreased 21.8% driven by the decline in retail unit sales and lower penetration rates.
Total gross profit in the U.K.
2 unchanged sentences
during the year ended December 31, 2020 decreased $24.8 million, or 9.6%, as compared to the same period in 2019.
−Removed: On a constant currency basis, total same store gross profit decreased 4.3% as a result of a decline in new and used gross profit, partially offset by an increase in parts and service and F&I gross profit.
−Removed: New vehicle retail same store gross profit on a constant currency basis decreased 13.9% driven by a 10.7% decrease in new vehicle retail same store average gross profit per unit sold, coupled with the decline in retail units discussed above.
−Removed: Used vehicle retail same store gross profit on a constant currency basis decreased 14.5% on a 1.0% decrease in used vehicle retail same store unit sales and a 13.7% decrease in used vehicle retail same store average gross profit per unit sold.
−Removed: The gross profit pressures on new and used vehicles are a result of continued economic pressure due to uncertainty around Brexit.
−Removed: In addition, used vehicle retail gross profit in 2018 was impacted by above average used vehicle values caused by the WLTP related new vehicle shortages.
−Removed: Parts and service same store gross profit on a constant currency basis increased 2.2% as a result of a 5.6% increase in revenue discussed above, partially offset by an increase in technician costs as a result of hiring initiatives discussed above.
−Removed: F&I same store gross profit on a constant currency basis increased 0.4% as discussed above.
+Added: On a constant currency basis, total same store gross profit decreased 10.4% driven by decreases in all of our operations, except for used vehicle, as a result of the COVID-19 pandemic.
+Added: New vehicle retail same store gross profit on a constant currency basis decreased 16.4% driven by the decline in retail units discussed above, partially offset by a 9.0% increase in new vehicle retail same store average gross profit per unit sold.
+Added: 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.
+Added: Used vehicle retail same store gross profit on a constant currency basis increased 19.6%, as a 15.1% decrease in used vehicle retail same store unit sales was more than offset by a 40.8% increase in used vehicle retail same store average gross profit per unit sold.
+Added: The increase in used vehicle retail same store average gross profit per unit sold reflects supply constraints similar to new vehicles.
+Added: Used vehicle wholesale same store gross profit improved 196.6% on a constant currency basis driven by an increase in auction prices due to supply constraints and improved processes.
+Added: Parts and service same store gross profit on a constant currency basis decreased 14.7% as a result of a 16.1% decline in revenues discussed above.
+Added: F&I same store gross profit on a constant currency basis decreased 21.8% as discussed above.
SG&A Expenses
4 unchanged sentences
during the year ended December 31, 2020, decreased $47.5 million, or 21.1%, as compared to the same period in 2019.
−Removed: On a constant currency basis, total same store SG&A expenses decreased 1.4% driven by reductions in personnel and advertising costs resulting from the implementation and execution of cost reduction plans which enabled us to partially offset the decline in gross profit.
−Removed: The decline in personnel and advertising costs were partially offset by increased rent and facility costs.
−Removed: Reported Operating Data - U.K.
−Removed: (In millions, except unit and per unit amounts)
−Removed: For the Years Ended December 31,
−Removed: Increase/ (Decrease)
−Removed: Currency Impact on Current Period Results
−Removed: Constant Currency % Change
−Removed: New vehicle retail sales
−Removed: Used vehicle retail sales
−Removed: Used vehicle wholesale sales
−Removed: Parts and service sales
−Removed: Total revenues
−Removed: Gross profit:
−Removed: New vehicle retail sales
−Removed: Used vehicle retail sales
−Removed: Used vehicle wholesale sales
−Removed: Parts and service sales
−Removed: Total gross profit
−Removed: Gross margin:
−Removed: New vehicle retail sales
−Removed: Used vehicle retail sales
−Removed: Used vehicle wholesale sales
−Removed: Parts and service sales
−Removed: Total gross margin
−Removed: Retail new vehicles sold
−Removed: Retail used vehicles sold
−Removed: Wholesale used vehicles sold
−Removed: Average sales price per unit sold:
−Removed: New vehicle retail
−Removed: Used vehicle retail
−Removed: Gross profit per unit sold:
−Removed: New vehicle retail sales
−Removed: Used vehicle retail sales
−Removed: Used vehicle wholesale sales
−Removed: SG&A expenses
−Removed: SG&A as % gross profit
−Removed: Same Store Operating Data - U.K.
−Removed: (In millions, except unit and per unit amounts)
−Removed: For the Years Ended December 31,
−Removed: Increase/ (Decrease)
−Removed: Currency Impact on Current Period Results
−Removed: Constant Currency % Change
−Removed: New vehicle retail sales
−Removed: Used vehicle retail sales
−Removed: Used vehicle wholesale sales
−Removed: Parts and service sales
−Removed: Total revenues
−Removed: Gross profit:
−Removed: New vehicle retail sales
−Removed: Used vehicle retail sales
−Removed: Used vehicle wholesale sales
−Removed: Parts and service sales
−Removed: Total gross profit
−Removed: Gross margin:
−Removed: New vehicle retail sales
−Removed: Used vehicle retail sales
−Removed: Used vehicle wholesale sales
−Removed: Parts and service sales
−Removed: Total gross margin
−Removed: Retail new vehicles sold
−Removed: Retail used vehicles sold
−Removed: Wholesale used vehicles sold
−Removed: Average sales price per unit sold:
−Removed: New vehicle retail
−Removed: Used vehicle retail
−Removed: Gross profit per unit sold:
−Removed: New vehicle retail sales
−Removed: Used vehicle retail sales
−Removed: Used vehicle wholesale sales
−Removed: SG&A expenses
−Removed: SG&A as % gross profit
−Removed: Year Ended December 31, 2018 compared to 2017
−Removed: The following discussion of our U.K.
−Removed: operating results is on a same store basis.
−Removed: The difference between reported amounts and same store amounts is related to acquisition and disposition activity, as well as new add-point openings.
−Removed: Total revenue in the U.K.
−Removed: for the year ended December 31, 2018 increased $451.4 million, or 22.7%, as compared to the same period in 2017.
−Removed: Total same store revenue in the U.K.
−Removed: for the year ended December 31, 2018 increased $13.9 million, or 0.7%, as compared to the same period in 2017.
−Removed: On a constant currency basis, total same store revenue decreased 2.6% as a result of a decline in new vehicle revenue, partially offset by increases in used vehicle, parts and service and F&I revenues.
−Removed: The market conditions in the U.K.
−Removed: were challenging, primarily due to supply constraints and lingering uncertainties surrounding Brexit.
−Removed: New vehicle retail same store revenue on a constant currency basis decreased 11.9%, primarily explained by an 11.1% decline in new vehicle retail same store unit sales coupled with a 0.9% decrease in new vehicle retail same store average sales price per unit sold.
−Removed: The decline in units was driven by uncertainty around Brexit and supply constraints stemming from delays by various OEM partners in passing the new WLTP emissions standards that became effective on September 1, 2018.
−Removed: Used vehicle retail same store revenue on a constant currency basis increased 11.4%, driven by a 6.3% increase in used vehicle retail same store average sales price per unit sold coupled with a 4.8% increase in used vehicle retail same store unit sales, reflecting strong performance by our operating team that focused on growing the used vehicle portion of our business as an offset to the decline in new vehicle unit sales.
−Removed: Parts and service same store revenue increased 6.1% on a constant currency basis driven by increases of 6.0% in customer-pay, 10.0% in warranty and 10.5% in wholesale parts, partially offset by a decrease of 7.0% in collision revenue.
−Removed: The increases in customer-pay and warranty revenue are a result of our efforts to expand capacity in several of our service departments.
−Removed: The improvement in warranty was also driven by an increase in several recall campaigns.
−Removed: The increase in wholesale parts revenue was primarily the result of initiatives executed to enhance our sales processes and increase productivity.
−Removed: F&I same store revenue on a constant currency basis increased 2.2%, reflecting improvements in our income per contract and penetration rates for most of our U.K.
−Removed: product offerings.
−Removed: Total gross profit in the U.K.
−Removed: for the year ended December 31, 2018 increased $54.6 million, or 24.3%, as compared to the same period in 2017.
−Removed: Total same store gross profit in the U.K.
−Removed: for the year ended December 31, 2018 increased $7.0 million, or 3.2%, as compared to the same period in 2017.
−Removed: On a constant currency basis, total same store gross profit was flat as increases in used vehicle, parts and service and F&I gross profit were offset by a decline in new vehicle gross profit.
−Removed: New vehicle retail same store gross profit on a constant currency basis decreased 11.4% driven by the decline in retail units discussed above, coupled with a 0.3% decrease in new vehicle retail same store average gross profit per unit sold.
−Removed: Used vehicle retail same store gross profit on a constant currency basis increased 12.6% on a 7.5% increase in used vehicle retail same store average gross profit per unit sold and a 4.8% increase in used vehicle retail same store unit sales.
−Removed: The increase in used vehicle retail same store unit sales was the result of heightened used vehicle demand reflecting supply constraints on many new vehicle models as a result of the WLTP legislation, as well as a strong performance by our operating team.
−Removed: Parts and service same store gross profit on a constant currency basis increased 3.7% as a result of a 6.1% increase in revenue discussed above.
−Removed: F&I same store gross profit on a constant currency basis increased 2.2% as discussed above.
−Removed: SG&A Expenses
−Removed: 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.
−Removed: Total SG&A expenses in the U.K.
−Removed: for the year ended December 31, 2018 increased $48.8 million, or 25.5%, as compared to the same period in 2017.
−Removed: Total same store SG&A expenses in the U.K.
−Removed: for the year ended December 31, 2018, increased $10.7 million, or 5.8%, as compared to the same period in 2017.
−Removed: On a constant currency basis, total same store SG&A expenses increased 2.6%.
−Removed: This increase was driven by higher rent and facility costs primarily related to septennial property rate adjustments that occurred in 2017, as well as additional rental costs associated with new and/or improved dealership facilities.
+Added: On a constant currency basis, total same store SG&A expenses decreased 21.9% driven by the implementation and execution of cost reduction strategies as a reaction to the COVID-19 pandemic coupled with a temporary suspension of the city tax.
+Added: These cost savings enabled us to more than offset the decline in gross profit.
+Added: Total same store SG&A expenses in 2020 included $1.2 million in severance costs for redundancy due to the COVID-19 pandemic.
+Added: Total same store SG&A expenses in 2019 included $0.2 million in losses on dealership and real estate transactions.
+Added: As a percentage of gross profit, total same store SG&A expenses improved from 87.2% for the year ended 2019 to 76.0% for the same period in 2020.
Reported Operating Data — Brazil
−Removed: (In millions, except unit and per unit amounts)
+Added: (In millions, except unit data)
For the Years Ended December 31,
−Removed: Increase/ (Decrease)
−Removed: Currency Impact on Current Period Results
−Removed: Constant Currency % Change
+Added: 2020 2019 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change
New vehicle retail sales $ 152.4 $ 286.8 $ (134.4) (46.9) % $ (41.2) (32.5) %
1 unchanged sentence
Used vehicle wholesale sales 12.3 18.3 (6.1) (33.1) % (3.5) (14.2) %
+Added: Total used 62.3 103.7 (41.5) (40.0) % (16.7) (23.9) %
Parts and service sales 31.9 47.6 (15.7) (33.0) % (9.3) (13.5) %
+Added: F&I, net 5.0 7.6 (2.7) (34.9) % (1.4) (16.6) %
Total revenues $ 251.6 $ 445.9 $ (194.3) (43.6) % $ (68.6) (28.2) %
3 unchanged sentences
Used vehicle wholesale sales 0.8 1.2 (0.4) (32.7) % (0.3) (11.9) %
+Added: Total used 4.6 7.1 (2.5) (35.6) % (1.4) (16.4) %
Parts and service sales 14.2 21.0 (6.8) (32.5) % (4.1) (12.8) %
+Added: F&I, net 5.0 7.6 (2.7) (34.9) % (1.4) (16.6) %
Total gross profit $ 34.8 $ 53.5 $ (18.7) (34.9) % $ (10.0) (16.2) %
3 unchanged sentences
Used vehicle wholesale sales 6.6 % 6.6 % — %
+Added: Total used 7.3 % 6.8 % 0.5 %
Parts and service sales 44.5 % 44.2 % 0.3 %
+Added: F&I, net 100.0 % 100.0 % — %
Total gross margin 13.9 % 12.0 % 1.8 %
2 unchanged sentences
Wholesale used vehicles sold 1,456 1,934 (478) (24.7) %
+Added: Total used 4,072 6,346 (2,274) (35.8) %
Average sales price per unit sold:
5 unchanged sentences
Used vehicle wholesale sales $ 559 $ 625 $ (66) (10.6) % $ (172) 17.0 %
+Added: Total used $ 1,124 $ 1,120 $ 4 0.4 % $ (335) 30.3 %
+Added: F&I PRU $ 612 $ 551 $ 61 11.1 % $ (172) 42.4 %
SG&A expenses $ 31.1 $ 46.0 $ (14.9) (32.4) % $ (8.9) (13.0) %
1 unchanged sentence
Same Store Operating Data — Brazil
−Removed: (In millions, except unit and per unit amounts)
+Added: (In millions, except unit data)
For the Years Ended December 31,
−Removed: Increase/ (Decrease)
−Removed: Currency Impact on Current Period Results
−Removed: Constant Currency % Change
+Added: 2020 2019 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change
New vehicle retail sales $ 152.4 $ 284.0 $ (131.6) (46.3) % $ (41.2) (31.8) %
1 unchanged sentence
Used vehicle wholesale sales 12.3 16.2 (4.0) (24.4) % (3.4) (3.2) %
+Added: Total used 62.3 98.8 (36.5) (37.0) % (16.6) (20.2) %
Parts and service sales 31.9 46.9 (15.0) (32.0) % (9.3) (12.1) %
+Added: F&I, net 5.0 7.6 (2.6) (34.3) % (1.4) (15.8) %
Total revenues $ 251.6 $ 437.3 $ (185.7) (42.5) % $ (68.4) (26.8) %
3 unchanged sentences
Used vehicle wholesale sales 0.8 1.2 (0.4) (31.7) % (0.3) (10.7) %
+Added: Total used 4.6 7.1 (2.5) (35.4) % (1.4) (16.1) %
Parts and service sales 14.2 20.7 (6.5) (31.5) % (4.1) (11.6) %
+Added: F&I, net 5.0 7.6 (2.6) (34.3) % (1.4) (15.8) %
Total gross profit $ 34.8 $ 53.1 $ (18.3) (34.4) % $ (10.0) (15.6) %
3 unchanged sentences
Used vehicle wholesale sales 6.6 % 7.3 % (0.7) %
+Added: Total used 7.3 % 7.2 % 0.2 %
Parts and service sales 44.5 % 44.2 % 0.3 %
+Added: F&I, net 100.0 % 100.0 % — %
Total gross margin 13.9 % 12.2 % 1.7 %
2 unchanged sentences
Wholesale used vehicles sold 1,456 1,867 (411) (22.0) %
+Added: Total used 4,072 6,201 (2,129) (34.3) %
Average sales price per unit sold:
5 unchanged sentences
Used vehicle wholesale sales $ 559 $ 638 $ (79) (12.4) % $ (172) 14.5 %
+Added: Total used $ 1,123 $ 1,142 $ (19) (1.6) % $ (336) 27.8 %
+Added: F&I PRU $ 612 $ 550 $ 62 11.2 % $ (172) 42.5 %
SG&A expenses $ 31.1 $ 45.3 $ (14.2) (31.3) % $ (8.9) (11.7) %
3 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.
−Removed: Total revenue in Brazil during the year ended December 31, 2019 increased $5.2 million , or 1.2% , as compared to the same period in 2018.
−Removed: Total same store revenue in Brazil during the year ended December 31, 2019 decreased $4.1 million , or 1.0% , as compared to the same period in 2018.
−Removed: On a constant currency basis, total same store revenue increased 7.6% with increases in all but F&I revenue lines.
−Removed: New vehicle retail same store revenue on a constant currency basis increased 5.9% , as a 6.2% increase in new vehicle retail same store average sales price per unit sold more than offset a 0.3% decrease in new vehicle retail same store unit sales.
−Removed: The increase in average sales price was driven by a change in brand mix as our higher priced luxury brands outpaced the growth in our lower priced import brands.
−Removed: Used vehicle retail same store revenue on a constant currency basis increased 10.0% , driven by a 8.3% increase in used vehicle retail same store average sales price per unit sold and a 1.6% increase in used vehicle retail same store unit sales.
−Removed: The increase was driven by a recently implemented centralized used vehicle purchasing and pricing model which has improved our acquisition of used vehicle inventory and increased the profitability of our used vehicle business.
−Removed: Parts and service same store revenue on a constant currency basis increased 9.4% as a 12.8% increase in customer-pay business was partially offset by a 6.8% decrease in warranty business.
−Removed: The increase in customer-pay reflects management initiatives to enhance the effectiveness of our service sales process and improve efficiency of our parts and service operations.
−Removed: F&I same store revenue on a constant currency basis decreased 15.5% primarily as a result of a decline in fleet business.
+Added: 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.
+Added: Total revenues in Brazil during the year ended December 31, 2020 decreased $194.3 million, or 43.6%, as compared to the same period in 2019.
+Added: Total same store revenues in Brazil during the year ended December 31, 2020 decreased $185.7 million, or 42.5%, as compared to the same period in 2019 .
+Added: On a constant currency basis, total same store revenues decreased 26.8% with declines in all business line s.
+Added: 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.
+Added: New vehicle retail same store revenues on a constant currency basis decreased 31.8%, as a 41.5% decrease in new vehicle retail same store unit sales was partially offset by a 16.6% increase in new vehicle retail same store average sales price per unit sold.
+Added: Used vehicle retail same store revenues on a constant currency basis decreased 23.5%, reflecting a 39.6% decrease in used vehicle retail same store unit sales partially offset by a 26.7% increase in used vehicle retail same store average sales price per unit sold.
+Added: Used vehicle wholesale same store revenues declined 3.2%.
+Added: Reduced demand, limited availability of inventory and the closure of our dealerships during the COVID-19 pandemic drove the reduction in new and used vehicle same store unit sales.
+Added: 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.
+Added: Parts and service same store revenues on a constant currency basis decreased 12.1% driven by declines in customer-pay, warranty and collision business.
+Added: F&I same store revenues on a constant currency basis decreased 15.8% 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 year ended December 31, 2020 decreased $18.7 million, or 34.9%, as compared to the same period in 2019.
Total same store gross profit in Brazil during the year ended December 31, 2020 decreased $18.3 million, or 34.4%, as compared to the same period in 2019.
−Removed: On a constant currency basis total same store gross profit increased 3.8% as growth in new vehicles, used vehicles and parts and service was partially offset by a decrease in F&I.
−Removed: New vehicle retail same store gross profit on a constant currency basis increased 0.6% , as a 0.9% increase in new vehicle retail same store average gross profit per unit sold was partially offset by a 0.3% decrease in new vehicle retail same store units sold.
−Removed: Used vehicle retail same store gross profit on a constant currency basis increased 17.0% on a 15.2% increase in used vehicle retail same store average gross profit per unit sold and a 1.6% increase in used vehicle retail same store unit sales.
−Removed: This increase was driven by a recently implemented centralized used vehicle purchasing and pricing model which has improved our acquisition of used vehicle inventory and increased the profitability of our used vehicle business.
−Removed: Parts and service same store gross profit increased 8.2% on a constant currency basis, driven by the 9.4% increase in parts and service revenue as discussed above.
−Removed: F&I same store gross profit on a constant currency basis decreased 15.5% driven by the decrease in revenue described above.
+Added: On a constant currency basis, total same store gross profit decreased 15.6% driven by declines in all business lines.
+Added: New vehicle retail same store gross profit on a constant currency basis decreased 19.9%, as a 41.5% decline in new vehicle retail same store units sold was partially offset by a 37.0% increase in new vehicle retail same store average gross profit per unit sold.
+Added: Used vehicle retail same store gross profit on a constant currency basis decreased 17.2% driven by the 39.6% decline in used vehicle retail same store unit sales, partially offset by 37.2% increase in used vehicle retail same store average gross profit per unit sold.
+Added: Used vehicle wholesale same store gross profit on a constant currency basis decreased 10.7% reflecting the 22.0% decline in wholesale used vehicles same store unit sales partially offset by a 14.5% increase in used vehicle wholesale same store average gross profit per unit sold.
+Added: The improvement in new and used same store gross profit PRU reflects the shift towards our higher priced luxury brands and the supply constraints experienced during the COVID-19 pandemic as many manufacturers put a hold on production earlier in the year and have not yet returned to normal production levels.
+Added: Parts and service same store gross profit decreased 11.6% on a constant currency basis, driven by the 12.1% decrease in parts and service revenues as discussed above.
+Added: F&I same store gross profit on a constant currency basis decreased 15.8% as discussed above.
SG&A Expenses
2 unchanged sentences
Total same store SG&A expenses in Brazil during the year ended December 31, 2020, decreased $14.2 million, or 31.3%, as compared to the same period in 2019.
−Removed: On a constant currency basis, total same store SG&A expenses decreased 2.4% while total gross profit increased 3.8% , resulting in a 480 basis points decrease in total SG&A expenses as a % of gross profit.
−Removed: The decrease in SG&A expenses was a result of cost control initiatives implemented by the management team and lower legal expenses.
−Removed: SG&A expenses in 2018 included $2.9 million related to accruals for certain legal items not recurring in 2019.
−Removed: Reported Operating Data - Brazil
−Removed: (In millions, except unit and per unit amounts)
−Removed: For the Years Ended December 31,
−Removed: Increase/ (Decrease)
−Removed: Currency Impact on Current Period Results
−Removed: Constant Currency % Change
−Removed: New vehicle retail sales
−Removed: Used vehicle retail sales
−Removed: Used vehicle wholesale sales
−Removed: Parts and service sales
−Removed: Total revenues
−Removed: Gross profit:
−Removed: New vehicle retail sales
−Removed: Used vehicle retail sales
−Removed: Used vehicle wholesale sales
−Removed: Parts and service sales
−Removed: Total gross profit
−Removed: Gross margin:
−Removed: New vehicle retail sales
−Removed: Used vehicle retail sales
−Removed: Used vehicle wholesale sales
−Removed: Parts and service sales
−Removed: Total gross margin
−Removed: Retail new vehicles sold
−Removed: Retail used vehicles sold
−Removed: Wholesale used vehicles sold
−Removed: Average sales price per unit sold:
−Removed: New vehicle retail
−Removed: Used vehicle retail
−Removed: Gross profit per unit sold:
−Removed: New vehicle retail sales
−Removed: Used vehicle retail sales
−Removed: Used vehicle wholesale sales
−Removed: SG&A expenses
−Removed: SG&A as % gross profit
−Removed: Same Store Operating Data - Brazil
−Removed: (In millions, except unit and per unit amounts)
+Added: On a constant currency basis, total same store SG&A expenses decreased 11.7% while total gross profit decreased 15.6%, resulting in a 400 basis points increase in total SG&A expenses as a percentage of gross profit.
+Added: The decrease in same store SG&A expenses was a result of cost control initiatives implemented by the management team centered around reducing personnel expense.
+Added: Total same store SG&A expenses in 2020 included $0.9 million of severance costs associated with the te rmination of employees as a result of the COVID-19 pandemic.
+Added: The following table (in millions) and discussion of our results of operations is on a consolidated basis, unless otherwise noted.
For the Years Ended December 31,
−Removed: Increase/ (Decrease)
−Removed: Currency Impact on Current Period Results
−Removed: Constant Currency % Change
−Removed: New vehicle retail sales
−Removed: Used vehicle retail sales
−Removed: Used vehicle wholesale sales
−Removed: Parts and service sales
−Removed: Total revenues
−Removed: Gross profit:
−Removed: New vehicle retail sales
−Removed: Used vehicle retail sales
−Removed: Used vehicle wholesale sales
−Removed: Parts and service sales
−Removed: Total gross profit
−Removed: Gross margin:
−Removed: New vehicle retail sales
−Removed: Used vehicle retail sales
−Removed: Used vehicle wholesale sales
−Removed: Parts and service sales
−Removed: Total gross margin
−Removed: Retail new vehicles sold
−Removed: Retail used vehicles sold
−Removed: Wholesale used vehicles sold
−Removed: Average sales price per unit sold:
−Removed: New vehicle retail
−Removed: Used vehicle retail
−Removed: Gross profit per unit sold:
−Removed: New vehicle retail sales
−Removed: Used vehicle retail sales
−Removed: Used vehicle wholesale sales
−Removed: SG&A expenses
−Removed: SG&A as % gross profit
−Removed: Year Ended December 31, 2018 compared to 2017
−Removed: The following discussion of our Brazil operating results is on a same store basis.
−Removed: The difference between reported amounts and same store amounts is related to acquisition and disposition activity, as well as new add-point openings.
−Removed: Total revenue in Brazil for the year ended December 31, 2018 decreased $16.4 million, or 3.6%, as compared to the same period in 2017.
−Removed: Total same store revenue in Brazil for the year ended December 31, 2018 decreased $30.3 million, or 6.7%, as compared to the same period in 2017.
−Removed: On a constant currency basis, total same store revenue increased 6.2% with increases in all revenue lines.
−Removed: New vehicle retail same store revenue on a constant currency basis increased 3.6%, as a 3.8% increase in new vehicle retail same store average sales price per unit sold more than offset a 0.3% decrease in new vehicle retail same store unit sales.
−Removed: Used vehicle retail same store revenue on a constant currency basis increased 6.9%, driven by a 6.8% increase in used vehicle retail same store average sales price per unit sold and a 0.1% increase in used vehicle retail same store unit sales.
−Removed: These increases reflect improved market conditions, inventory management initiatives, and ongoing process improvements.
−Removed: Parts and service same store revenue on a constant currency basis increased 7.5% as a 9.8% increase in customer-pay business and a 12.5% increase in warranty business was partially offset by an 7.5% decrease in collision business.
−Removed: F&I same store revenue on a constant currency basis increased 19.7% primarily as a result of an increase in commissions on fleet sales for our BMW, Honda, and Toyota brands and improvements in our income per contract and penetration rates on our retail finance fees.
−Removed: Total gross profit in Brazil for the year ended December 31, 2018 decreased $1.1 million, or 1.9%, as compared to the same period in 2017.
−Removed: Total same store gross profit in Brazil for the year ended December 31, 2018 decreased $2.6 million, or 4.8%, as compared to the same period in 2017.
−Removed: On a constant currency basis total same store gross profit increased 8.9% as growth in new vehicles, parts and service and F&I was partially offset by a decrease in used vehicles.
−Removed: New vehicle retail same store gross profit and gross profit per unit sold on a constant currency basis increased 18.0% and 18.3%, respectively, as compared to the same period in 2017, driven by our efforts to prioritize margins over volume growth.
−Removed: Used vehicle retail same store gross profit on a constant currency basis decreased 11.1%, which resulted from an 11.2% decrease in used vehicle retail same store average gross profit per unit sold, as we strategically sacrificed margin to manage inventory levels.
−Removed: Parts and service same store gross profit increased 4.6% on a constant currency basis, primarily reflecting the implementation of new and enhanced processes.
−Removed: F&I same store revenue on a constant currency basis increased 19.7% driven by an increase in revenue described above.
−Removed: SG&A Expenses
−Removed: 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.
−Removed: Total SG&A expenses in Brazil for the year ended December 31, 2018 decreased $0.1 million, or 0.1%, as compared to the same period in 2017.
−Removed: Total same store SG&A expenses in Brazil for the year ended December 31, 2018, decreased $1.5 million, or 3.1%, as compared to the same period in 2017.
−Removed: On a constant currency basis, total same store SG&A expenses increased 11.3% while total gross profit increased 8.9%, resulting in a 160 basis points increase in total same store SG&A expenses as a % of gross profit to 92.6% .
−Removed: The increase in SG&A expenses was primarily driven by a non-core charge of $2.9 million related to legal settlements in 2018 that did not occur in 2017 and an increase in advertising expense driven by initiatives designed to grow our used vehicle and parts and service businesses.
−Removed: The following discussion of our results of operations is on a consolidated basis, unless otherwise noted.
+Added: 2020 2019 Increase/ (Decrease) % Change
Depreciation and amortization expense $ 75.8 $ 71.6 $ 4.2 5.8 %
−Removed: Our total depreciation and amortization expense was $71.6 million , $67.1 million, and $57.9 million for the years ended December 31, 2019 , 2018, and 2017, respectively.
−Removed: The year over year increases are substantially explained by the increase in our U.S.
+Added: Asset impairments $ 37.7 $ 22.2 $ 15.5 69.6 %
+Added: Floorplan interest expense $ 39.5 $ 61.6 $ (22.1) (35.8) %
+Added: Other interest expense, net $ 62.6 $ 74.9 $ (12.3) (16.5) %
+Added: (Gain) loss on extinguishment of debt $ 13.7 $ — $ 13.7 — %
+Added: (Benefit) provision for income taxes $ 83.8 $ 53.3 $ 30.6 57.4 %
+Added: Depreciation and Amortization Expense
+Added: Total depreciation and amortization expense during the year ended December 31, 2020 increased $4.2 million, or 5.8%, as compared to the same period in 2019.
+Added: The year over year increase is substantially explained by the increase in our U.S.
segment, as we continue to strategically add dealership-related real estate to our investment portfolio and make improvements to our existing facilities intended to enhance the profitability of our dealerships and the overall customer experience.
Impairment of Assets
−Removed: We evaluate franchise rights for impairment annually in the fourth quarter, based on the respective carrying values as of October 31, or more frequently if events or circumstances indicate possible impairment has occurred.
−Removed: We review long-lived assets, including our property and equipment and ROU assets, that are held-for-use for impairment at the lowest level of identifiable cash flows whenever there is evidence that the carrying value of these assets may not be recoverable (i.e., triggering events).
−Removed: During the years ended December 31, 2019, 2018 and 2017 , we recorded $19.0 million , $38.7 million and $19.3 million , respectively, of impairments of intangible franchise rights.
−Removed: Also during the years ended December 31, 2019, 2018 and 2017 , we recorded $1.8 million , $5.1 million and $0.2 million of impairments of property and equipment, respectively, and additionally recognized an ROU asset impairment charge of $1.4 million during the year ended December 31, 2019 .
−Removed: See Note 11 “Intangible Franchise Rights and Goodwill,” Note 9 “Property and Equipment, Net” and Note 10 “Leases” within our Notes to Consolidated Financial Statements for further discussion of our impairments.
+Added: We evaluate goodwill and intangible franchise rights for impairment annually in the fourth quarter as of October 31, or more frequently if events or circumstances indicate possible impairment has occurred.
+Added: During the year ended December 31, 2020, we recorded goodwill impairment charges of $10.7 million within the Brazil reporting unit.
+Added: No goodwill impairments were recorded during the year ended December 31, 2019.
+Added: During the year ended December 31, 2020, we recorded franchise rights impairment charges of $11.1 million in the U.K.
+Added: segment, $9.7 million in the U.S.
+Added: segment and $0.1 million in the Brazil segment.
+Added: During the year ended December 31, 2019, we recorded franchise rights impairment charges of $13.4 million in the U.S.
+Added: segment and $5.6 million in the U.K.
+Added: We review long-lived assets including property and equipment and ROU assets for impairment at the lowest level of identifiable cash flows whenever there is evidence that the carrying value of these assets may not be recoverable (i.e., triggering events).
+Added: During the year ended December 31, 2020, we recorded property and equipment impairment charges of $4.2 million in the U.S.
+Added: segment, and ROU asset impairment charges of $1.8 million in the U.K.
+Added: segment and $0.2 million in the Brazil segment.
+Added: During the year ended December 31, 2019, we recorded property and equipment impairment charges of $1.3 million in the U.S.
+Added: segment and $0.5 million in the Brazil segment, and ROU asset impairment charges of $1.4 million in the U.K.
+Added: Intangible Franchise Rights and Goodwill, Note 9.
+Added: Property and Equipment, Net and Note 10.
+Added: Leases within our Notes to Consolidated Financial Statements for further discussion of our impairments.
Floorplan Interest Expense
−Removed: Our floorplan interest expense fluctuates with changes in our borrowings outstanding and interest rates, which are based on the one-month LIBOR (or Prime rate in some cases), plus a spread in the U.S.
−Removed: and U.K., and a benchmark rate plus a spread in Brazil.
−Removed: 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 debt.
−Removed: For the year ended December 31, 2019, our total floorplan interest expense increased 2.8% as compared to the same period in 2018, primarily due to higher inventory levels in the U.S.
−Removed: For the year ended December 31, 2018, our total floorplan interest expense increased 14.3% as compared to the same period in 2017, primarily explained by the increase in LIBOR in the U.S.
+Added: Total floorplan interest expense during the year ended December 31, 2020 decreased $22.1 million, or 35.8%, as compared to the same period in 2019.
+Added: 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.
+Added: To mitigate the impact of interest rate fluctuations, we employ an interest rate hedging strategy, whereby we swap variable interest rate exposure on a portion of our borrowings for a fixed interest rate.
+Added: The year over year decrease was 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
−Removed: 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.
−Removed: For the year ended December 31, 2019, other interest expense, net decreased from $75.8 million to $74.9 million as compared to the same period in 2018.
−Removed: The decrease was primarily attributable to a decrease in the weighted average borrowings on our real estate related debt.
−Removed: For the year ended December 31, 2018, other interest expense, net increased from $70.5 million to $75.8 million as compared to the same period in 2017.
−Removed: The increase was primarily attributable to the impact of rising interest rates in the U.S.
−Removed: on our variable-rate borrowings.
+Added: Total other interest expense, net during the year ended December 31, 2020 decreased $12.3 million, or 16.5%, as compared to the same period in 2019.
+Added: Other interest expense, net consists of interest charges primarily on our Senior Notes, real estate related debt and other debt, partially offset by interest income.
+Added: The year over year decrease was primarily attributable to lower interest rates achieved through debt refinancing 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.
+Added: Loss on Extinguishment of Debt
+Added: On April 2, 2020, we fully redeemed $ 300.0 million in aggregate principal amount of our outstanding 5.25 % Senior Notes due June 2023, at a premium of 102.625 %.
+Added: The total redemption price, consisting of the principal amount of the notes redeemed plus associated premium, amounted to $ 307.9 million.
+Added: 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.
+Added: 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.
+Added: We recognized a loss on extinguishmen t of $ 3.3 million whi ch 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
+Added: Provision for income taxes during the year ended December 31, 2020 increased $30.6 million, or 57.4%, as compared to the same period in 2019.
For the year ended December 31, 2020, we recorded a tax provision of $83.8 million.
−Removed: The 2019 effective tax rate of 23.4% was slightly higher than the 2018 effective tax rate of 23.2%, primarily as a result of increased valuation allowances with respect to net operating losses in certain U.S.
−Removed: states, partially offset by reduced net operating losses in Brazil.
−Removed: On December 22, 2017, the U.S.
−Removed: government enacted comprehensive tax legislation commonly referred to as the Tax Act.
−Removed: Generally effective January 1, 2018, the Tax Act made broad and complex changes to the U.S.
−Removed: tax code, including, but not limited to, reducing the U.S.
−Removed: federal corporate tax rate from 35 percent to 21 percent and creating a territorial tax system that generally eliminates U.S.
−Removed: federal income taxes on dividends from foreign subsidiaries.
+Added: The 2020 effective tax rate of 22.6% was lower than the 2019 effective tax rate of 23.4%, primarily as a result of a lower overall effective state tax rate based on the m ix of income among the states we operate in and the relevant apportionment factors, decreased valuation allowances with respect to net operating losses in certain U.S.
+Added: states and higher excess tax deductions for stock compensation, partially offset by increased valuation allowances for Brazil goodwill.
For the year ended December 31, 2019, we recorded a tax provision of $53.3 million.
−Removed: The 2018 effective tax rate of 23.2% increased from the 2017 effective tax rate of 2.5%, primarily resulting from the impact that was recorded in 2017 of the remeasurement of deferred taxes recorded in 2017 due to the Tax Act that reduced the U.S.
−Removed: corporate tax rate from 35.0% to 21.0%, as well as the valuation allowances provided for net operating losses and other deferred tax assets in certain U.S.
−Removed: states and in Brazil, partially offset by the employment tax credits and the enactment date adjustments from the Tax Act.
+Added: The 2019 effective tax rate of 23.4% was slightly higher than the 2018 effective tax rate of 23.2%, primarily as a result of increased valuation allowances with respect to net operating losses in certain U.S.
+Added: states, partially offset by reduced valuation allowances for net operating losses in Brazil.
We believe that it is more-likely-than-not that our deferred tax assets, net of valuation allowances provided, will be realized, based primarily on the assumption of future taxable income.
−Removed: We expect our effective tax rate in 2020 will be approximately between 23.0% and 23.5%.
−Removed: For further discussion, please see Note 14 “Income Taxes” within our Notes to Consolidated Financial Statements.
+Added: We expect our effective tax rate in 2021 will be between approximately 23.0% and 23.5%.
+Added: For further discussion, please see Note 14.
+Added: Income Taxes within our Notes to Consolidated Financial Statements.
Liquidity and Capital Resources
−Removed: Our liquidity and capital resources are primarily derived from cash on hand, cash temporarily invested as a pay down of our Floorplan Line and FMCC Facility levels (see Note 12 “Floorplan Notes Payable” within our Notes to Consolidated Financial Statements for additional information), cash from operations, borrowings under our credit facilities, which provide vehicle floorplan financing, working capital, dealership and real estate acquisition financing and proceeds from debt and equity offerings.
+Added: Our liquidity and capital resources are primarily derived from cash on hand, cash temporarily invested as a pay down of our Floorplan Line and FMCC Facility levels (see Note 12.
+Added: Floorplan Notes Payable in our Notes to Consolidated Financial Statements for additional information), cash from operations, borrowings under our credit facilities, which provide vehicle floorplan financing, working capital, dealership and real estate acquisition financing and proceeds from debt and equity offerings.
Based on current facts and circumstances, we believe we will have adequate cash flow, coupled with available borrowing capacity, to fund our current operations, capital expenditures and acquisitions for 2021.
If economic and business conditions deteriorate or if our capital expenditures or acquisition plans for 2021 change, we may need to access the private or public capital markets to obtain additional funding.
−Removed: See “Sources and Uses of Liquidity from Investing Activities” below for further discussion of expectations regarding future capital expenditures.
+Added: See Sources and Uses of Liquidity from Investing Activities section for further discussion of expectations regarding future capital expenditures.
As of December 31, 2020, our total cash on hand was $87.3 million.
−Removed: The balance of cash on hand excludes $110.9 million of immediately available funds used to pay down our Floorplan Line and FMCC Facility and $4.3 million of restricted cash as of December 31, 2019 .
+Added: The balance of cash on hand excludes $176.4 million of immediately available funds used to pay down our Floorplan Line and FMCC Facility as of December 31, 2020.
We use the pay down of our Floorplan Line and FMCC Facility as a channel for the short-term investment of excess cash.
We utilize various credit facilities to finance the purchase of our new and used vehicle inventory.
−Removed: With respect to all new vehicle floorplan borrowings in the normal course of business, the manufacturers of the vehicles draft our credit facilities directly with no cash flow to or from us.
−Removed: With respect to borrowings for used vehicle financing, we finance up to 85% of the value of our used vehicle inventory in the U.S., and the funds flow directly to us from the lender.
−Removed: We categorize the cash flows associated with borrowings and repayment on these various credit facilities as Cash Flows from Operating Activities or Cash Flows from Financing Activities in our Consolidated Statements of Cash Flow.
−Removed: All borrowings from, and repayments to, lenders affiliated with our vehicle manufacturers (excluding the cash flows from or to manufacturer-affiliated lenders participating in our syndicated lending group) are presented within Cash Flows from Operating Activities in our Consolidated Statements of Cash Flows in conformity with U.S.
−Removed: All borrowings from, and repayments to, the Revolving Credit Facility (see Note 12 “Floorplan Notes Payable” within our Notes to Consolidated Financial Statements for additional information) (including the cash flows from or to manufacturer-affiliated lenders participating in the facility) and other credit facilities in the U.K.
+Added: With respect to all new vehicle floorplan borrowings in the normal course of business, the manufacturers of the vehicles draft our credit facilities directly with no cash flows to or from us.
+Added: With respect to borrowings for used vehicle financing, we finance up to 85% of the value of our used vehicle inventory in the U.S.
+Added: and the funds flow directly between us and the lender.
+Added: We categorize the cash flows associated with borrowings and repayments on these various credit facilities as Cash Flows from Operating Activities or Cash Flows from Financing Activities in our Consolidated Statements of Cash Flows.
+Added: All borrowings from, and repayments to, lenders affiliated with our vehicle manufacturers (excluding the cash flows from or to manufacturer-affiliated lenders participating in our syndicated lending group) are presented within Cash Flows from Operating Activities in the Consolidated Statements of Cash Flows in conformity with U.S.
+Added: All borrowings from, and repayments to, the Revolving Credit Facility (see Note 12.
+Added: Floorplan Notes Payable in the Notes to Consolidated Financial Statements for additional information) (including the cash flows from or to manufacturer-affiliated lenders participating in the facility) and other credit facilities in the U.K.
and Brazil unaffiliated with our manufacturer partners (collectively, “Non-OEM Floorplan Credit Facilities”), are presented within Cash Flows from Financing Activities in conformity with U.S.
2 unchanged sentences
Therefore, we believe that all floorplan financing of inventory purchases in the normal course of business should correspond with the related inventory activity and be classified as an operating activity.
−Removed: As a result, we use the non-GAAP measure “Adjusted net cash provided by/used in operating activities” and “Adjusted net cash provided by/used in financing activities” to evaluate our cash flows.
+Added: As a result, we use the non-GAAP measure “Adjusted net cash provided by/used in operating activities” and “Adjusted net cash provided by/used in financing activities” to further evaluate our cash flows.
We believe that this classification eliminates excess volatility in our operating cash flows prepared in accordance with U.S.
1 unchanged sentence
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.
−Removed: Therefore, borrowings and repayments of all floorplan financing associated with dealership acquisition and disposition are characterized as either operating or financing activities in our statement of cash flows presented in conformity with U.S.
+Added: 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 the Consolidated Statements of Cash Flows presented in conformity with U.S.
GAAP, depending on the relationship described above.
1 unchanged sentence
We have made such adjustments in our adjusted operating cash flow presentations.
−Removed: The following table reconciles cash flow provided by (used in) operating, investing and financing activities on a GAAP basis to the corresponding adjusted amounts (in millions):
+Added: The following table reconciles cash flow provided by (used in) operating, investing and financing activities on a U.S.
+Added: GAAP basis to the corresponding adjusted amounts (in millions):
Years Ended December 31,
14 unchanged sentences
Sources and Uses of Liquidity from Operating Activities
−Removed: For the year ended December 31, 2019 , we generated $370.9 million of net cash flow from operating activities.
−Removed: On an adjusted basis for the same period, we generated $332.1 million in net cash flow from operating activities, primarily consisting of $174.0 million in net income, as well as non-cash adjustments related to depreciation and amortization of $71.6 million , amortization of operating lease ROU assets of $28.2 million , asset impairments of $22.2 million related to our intangible franchise rights, property and equipment and ROU assets (see Note 11 “Intangible Franchise Rights and Goodwill,” Note 9 “Property and Equipment, Net” and Note 10 “Leases” within our Notes to Consolidated Financial Statements for additional discussion), stock-based compensation of $18.8 million and deferred income taxes of $16.2 million , partially offset by a $5.9 million gain on the disposition of assets.
−Removed: Adjusted net cash flows from operating activities also includes $1.8 million adjusted net change in operating assets and liabilities, including cash inflows of $123.1 million from increases in accounts payable and accrued expenses and $12.7 million from net decrease in contracts-in-transit and vehicle receivables.
−Removed: These cash inflows were partially offset by cash outflows of $44.0 million from net increases in prepaid expenses and other current assets, $32.5 million from net increases of accounts and notes receivable, $28.8 million from an increase in inventory level and $28.3 million from the decrease in operating lease liabilities.
−Removed: For the year ended December 31, 2018 , we generated $270.0 million of net cash flow from operating activities.
−Removed: On an adjusted basis for the same period, we generated $309.8 million in net cash flow from operating activities, primarily consisting of $157.8 million in net income, as well as non-cash adjustments related to depreciation and amortization of $67.1 million, stock-based compensation of $18.7 million, deferred income taxes of $3.5 million and asset impairments of $43.9 million, partially offset by a $26.8 million gain on disposition of assets.
−Removed: Also included in adjusted net cash flow from operating activities was a $41.4 million net change in operating assets and liabilities, consisting of cash inflows of $78.2 million from a net increase in floorplan borrowings, $2.9 million from the net decrease in accounts and notes receivable, $39.5 million from decreases in vehicle receivables and contracts-in-transit, and $18.4 million from increases in accounts payable and accrued expenses.
−Removed: These cash inflows were partially offset by cash outflows of $80.6 million from the increase in inventory levels and $16.3 million from the net increase in prepaid expenses and other assets.
+Added: F or the year ended December 31, 2020, we generated $805.4 million of net cash flow from operating activities.
+Added: On an adjusted basis for the same period, we generated $503.7 million in net cash flow from operating activities, primarily consisting of $286.5 million in net income, coupled with non-cash adjustments related to depreciation and amortization of $75.8 million, asset impairments of $37.7 million, stock-based compensation of $32.3 million, operating lease assets of $24.0 million, loss on extinguishment of $13.7 million related to the 5.00% Senior Notes and 5.25% Senior Notes, partially offset by a $5.8 million gain on the disposition of assets.
+Added: Adjusted net cash flo ws from operating activities also includes a $35.0 million adjusted net change in operating assets and liabilities, including cash inflows of $416.1 million from decreases in inventory levels, $56.9 million from net decreases in prepaid expenses and other assets, and $43.5 million from net decreases in contracts-in-transit and vehicle receivables.
+Added: These cash inflows were partially offset by cash outflows of $433.9 million from adjusted net floorplan repayments and $45.9 million from decreases in accounts payable and accrued expenses.
For the year ended December 31, 2019, we generated $370.9 million of net cash flow from operating activities.
−Removed: On an adjusted basis for the same period, we generated $282.3 million in net cash flow from operating activities, primarily consisting of $213.4 million in net income, as well as non-cash adjustments related to depreciation and amortization of $57.9 million, stock-based compensation of $18.9 million and asset impairments of $19.5 million, partially offset by a $46.1 million non-cash adjustment related to deferred income taxes, which includes the provisional deferred tax benefit of $73.0 million recognized as a result of the Tax Act.
−Removed: Also included in adjusted net cash flow from operating activities was a $16.1 million net change in operating assets and liabilities, consisting of cash inflows of $77.4 million from a net increase in floorplan borrowings and $35.6 million from increases in accounts payable and accrued expenses.
−Removed: These cash inflows were partially offset by cash outflows of $10.7 million from the net increase in accounts and notes receivable, $44.0 million from the increase in inventory levels, $33.5 million from increases in vehicle receivables and contracts-in-transit, and $9.3 million from the net increase in prepaid expenses and other assets.
+Added: On an adjusted basis for the same period, we generated $332.1 million in net cash flow from operating activities, primarily consisting of $174.0 million in net income, as well as non-cash adjustments related to depreciation and amortization of $71.6 million, operating lease assets of $28.2 million, asset impairments of $22.2 million, stock-based compensation of $18.8 million and deferred income taxes of $16.2 million, partially offset by a $5.9 million gain on the disposition of assets.
+Added: Adjusted net cash flo ws from operating activities also includes a $1.8 million adjusted net change in operating assets and liabilities, including cash inflows of $123.1 million from increases in accounts payable and accrued expenses, and $12.7 million from net decreases in contracts-in-transit and vehicle receivables.
+Added: These cash inflows were partially offset by cash outflows of $44.0 million from net increases in prepaid expenses and other assets, $32.5 million from net increases of accounts and notes receivable, $28.8 million from an increase in inventory levels and $28.3 million from the decrease in operating lease liabilities.
Working Capital
−Removed: At December 31, 2019 , we had $94.0 million of working capital.
−Removed: This represents an increase of $78.2 million from December 31, 2018 , when we had $15.8 million of working capital.
−Removed: Changes in our working capital are explained primarily by changes in floorplan notes payable outstanding.
+Added: At December 31, 2020, we had a $161.5 million surplus of working capital.
+Added: This represents an increase of $67.4 million from December 31, 2019, when we had a $94.0 million surplus of working capital.
+Added: Changes in our working capital are typically explained by changes in floorplan notes payable outstanding.
Borrowings on our new vehicle floorplan notes payable, subject to agreed-upon pay-off terms, are equal to 100% of the factory invoice of the vehicles.
4 unchanged sentences
For the year ended December 31, 2020, we used $74.7 million in net cash flow for investing activities.
−Removed: On an adjusted basis for the same period, we used $285.9 million in net cash flow for investing activities, primarily consisting of $191.8 million used for purchases of property and equipment and to construct new and improve existing facilities and $118.0 million used for dealership acquisition activity, partially offset by cash inflow of $23.9 million related to the disposition of franchises and property and equipment.
−Removed: Of the $191.8 million in property and equipment purchases, $95.2 million was used for non-real estate related capital expenditures, $92.5 million was used for the purchase of real estate associated with existing dealership operations and $4.1 million represents the net year over year decrease in the accrual for capital expenditures.
−Removed: For the year ended December 31, 2018 , we used $168.0 million in net cash flow for investing activities.
−Removed: On an adjusted basis for the same period, we used $176.0 million in net cash flow for investing activities, primarily consisting of $141.0 million for purchases of property and equipment and to construct new and improve existing facilities and $119.0 million used for dealership acquisition activity, partially offset by cash inflows of $83.6 million related to dispositions of franchises and property and equipment.
−Removed: Of the $141.0 million in property and equipment purchases, $110.1 million was used for non-real estate related capital expenditures and $31.4 million was used for the purchase of real estate associated with existing dealership operations and $0.5 million represents the net year over year increase in the accrual for capital expenditures.
+Added: On an adjusted basis for the same period, we used $83.3 million in net cash flow for investing activities, primarily consisting of $103.2 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 inflow of $21.2 million related to the disposition of franchises and property and equipment.
+Added: Of the $103.2 million in property and equipment purchases, $77.4 million was used for non-real estate related capital expenditures, $24.1 million was used for the purchase of real estate associated with existing dealership operations and $1.7 million represented the net decrease in the accrual for capital expenditures from year-end.
For the year ended December 31, 2019, we used $291.6 million in net cash flow for investing activities.
−Removed: On an adjusted basis for the same period, we used $297.9 million in net cash flow for investing activities, primarily consisting of $215.8 million for purchases of property and equipment and to construct new and improve existing facilities and $94.3 million used for dealership acquisition activity, partially offset by cash inflows of $10.7 million related to dispositions of franchises and property and equipment.
−Removed: Of the $215.8 million in property and equipment purchases, $110.4 million was used for the purchase of real estate associated with existing dealership operations, $98.3 million was used for non-real estate related capital expenditures and $7.1 million represents the net year over year decrease in the accrual for capital expenditures.
+Added: On an adjusted basis for the same period, we used $285.9 million in net cash flow for investing activities, primarily consisting of $191.8 million for purchases of property and equipment and to construct new and improve existing facilities and $118.0 million used for acquisition activity, partially offset by cash inflows of $23.9 million related to the dispositions of franchises and property and equipment.
+Added: Of the $191.8 million in property and equipment purchases, $95.2 million was used for non-real estate related capital expenditures, $92.5 million was used for the purchase of real estate associated with existing dealership operations and $4.1 million represented the net decrease in the accrual for capital expenditures from year-end.
Capital Expenditures
2 unchanged sentences
We critically evaluate all planned future capital spending, working closely with our manufacturer partners to maximize the return on our investments.
−Removed: We forecast our capital expenditures for 2020 to be approximately $125.0 million excluding expenditures related to future acquisitions, which could generally be funded from excess cash.
+Added: We forecast our capital expenditures for 2021 will be approximately $95.0 million excluding expenditures related to real estate purchases and future acquisitions, which could generally be funded from excess cash.
We evaluate the expected return on investment in our consideration of potential business purchases.
2 unchanged sentences
For the year ended December 31, 2020, we used $668.1 million in net cash flow from financing activities.
−Removed: On an adjusted basis for the same period, we used $33.9 million in net cash flow from financing activities, primarily related to cash outflows of $82.9 million in net repayment on our Floorplan lines (representing the net cash activity in our floorplan offset account), $20.3 million in dividend payments, partially offset by $37.6 million in net borrowings on our Acquisition Line and $26.2 million in net borrowings on debt related to real estate.
+Added: On an adjusted basis for the same period, we used $357.8 million in net cash flow 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, $80.2 million related to the repurchase of our common stock, $65.5 million in net repayments on our Floorplan lines (representing the net cash activity in our floorplan offset account) and $11.0 million in dividend payments.
+Added: These cash outflows were partially offset by $550.0 million from the issuance of our 4.00% Senior Notes and $137.9 million net borrowings on other debt, which primarily reflected increased mortgage borrowings in the U.S.
+Added: to partially fund the redemption of the 5.25% Senior Notes.
For the year ended December 31, 2019, we used $67.0 million in net cash flow from financing activities.
−Removed: On an adjusted basis for the same period, we used $141.4 million in net cash flow from financing activities, primarily related to cash outflows of $183.9 million related to the repurchase of our common stock, $36.8 million of net payments on our real estate debt, and $20.9 million for dividend payments.
−Removed: These outflows were partially offset by cash inflows of $75.3 million in net borrowings on our Floorplan lines (representing the net cash activity in our floorplan offset accounts), $6.9 million of net borrowings on our Acquisition Line and $14.3 million of net borrowings of other debt.
−Removed: For the year ended December 31, 2017 , we generated $121.5 million in net cash flow from financing activities.
−Removed: On an adjusted basis for the same period, we generated $21.0 million in net cash flow from financing activities, primarily related to cash inflows of $25.8 million of net borrowings on our Acquisition Line, $45.9 million of net borrowings of real estate debt, and $29.2 million of net borrowings of other debt.
−Removed: These inflows were partially offset by cash outflows of $40.1 million related to the repurchase of our common stock, $23.9 million in net payments on our Floorplan lines (representing the net cash activity in our floorplan offset accounts), and $20.5 million for dividend payments.
+Added: On an adjusted basis for the same period, we used $33.9 million in net cash flow from financing activities, primarily related to cash outflows of $82.9 million in net repayment on our Floorplan lines (representing the net cash activity in our floorplan offset account), $20.3 million in dividend payments, partially offset by $37.6 million in net borrowings on our Acquisition Line and $34.4 million in net borrowings on other debt.
Credit Facilities, Debt Instruments and Other Financing Arrangements
Our various credit facilities, debt instruments and other financing arrangements are used to finance the purchase of inventory and real estate, provide acquisition funding and provide working capital for general corporate purposes.
−Removed: The following table summarizes the position of our U.S.
−Removed: credit facilities as of December 31, 2019 (in millions):
+Added: The following table summarizes the commitment of our credit facilities as of December 31, 2020 (in millions):
As of December 31, 2020
+Added: Commitment Outstanding Available
Floorplan Line (1)
+Added: $ 1,396.0 $ 741.2 $ 654.8
Acquisition Line (2)
+Added: 349.0 64.8 284.2
Total revolving credit facility 1,745.0 806.0 939.0
FMCC facility (3)
+Added: 300.0 95.2 204.8
credit facilities (4)
−Removed: The available balance as of December 31, 2019 includes $106.8 million of immediately available funds.
+Added: $ 2,045.0 $ 901.2 $ 1,143.8
+Added: (1) The available balance at December 31, 2020 includes $160.4 million of immediately available funds.
+Added: The remaining available balance can be used for inventory financing.
(2) The outstanding balance of $64.8 million is related to outstanding letters of credit of $17.8 million and $47.0 million in borrowings as of December 31, 2020.
−Removed: The borrowings outstanding under the Acquisition Line represent 55.0 million GBP translated at the spot rate on the day borrowed, solely for the purpose of calculating the Outstanding and Available borrowings under the Acquisition Line.
+Added: The borrowings outstanding under the Acquisition Line included no U.S dollar borrowings and £35.0 million of GBP 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 as of December 31, 2020 includes $16.0 million of immediately available funds.
+Added: The remaining available balance can be used for Ford new vehicle inventory financing.
(4) The outstanding balance excludes $258.6 million of borrowings with manufacturer-affiliates and third-party financial institutions for foreign and rental vehicle financing not associated with any of our U.S.
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and Brazil with third-party financial institutions, most of which are affiliated with the automobile manufacturers that provide financing for portions of our new, used and rental vehicle inventories.
−Removed: In addition, we have outstanding debt instruments, including our 5.00% and 5.25% senior notes, as well as real estate related and other long-term debt instruments.
+Added: In addition, we have outstanding debt instruments, including our 4.00% Senior Notes, as well as real estate related and other debt instruments.
+Added: Refer to Note 13.
+Added: Debt in our Notes to Consolidated Financial Statements for further information.
+Added: 4.00% Senior Notes Issuance
+Added: On August 17, 2020, we issued Senior Notes maturing on August 15, 2028 in aggregate principal amount of $550.0 million.
+Added: Interest on the notes is payable semi-annually on February 15th and August 15th at a coupon rate of 4.00%.
+Added: The notes were issued at par and carry an effective interest rate of 4.21% after consideration of associated debt issuance costs.
+Added: 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.
+Added: Refer to Note 13.
+Added: Debt within our Notes to Consolidated Financial Statements for further information regarding our 4.00% Senior Notes.
+Added: 5.00% Senior Notes Redemption and Debt Refinancing
+Added: 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.
+Added: 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.
+Added: Additionally, we paid accrued interest of $6.9 million.
+Added: The redemption was funded with $550.0 million of our newly issued 4.00% Senior Notes due 2028.
+Added: See 4.00% Senior Notes Issuance.
+Added: These refinancings are expected to lower our annual interest expense by approximately $5.5 million.
+Added: 5.25% Senior Notes Redemption and Debt Refinancing
+Added: On April 2, 2020, we fully redeemed $300.0 million in aggregate principal amount of our outstanding 5.25% Senior Notes due June 2023, at a premium of 102.625%.
+Added: The total redemption price, consisting of the principal amount of the notes redeemed plus associated premium, amounted to $307.9 million.
+Added: 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.
+Added: Additionally, we paid $4.6 million of accrued interest up to the date of redemption.
+Added: The redemption was funded through a combination of Acquisition Line borrowings, mortgage borrowings and excess cash.
+Added: Additional mortgage debt was funded during the second quarter of 2020 to provide supplemental liquidity.
+Added: These refinancings are expected to lower our annual interest expense by approximately $10.8 million.
Our revolving credit facility, indentures governing our senior notes and certain mortgage term loans contain customary financial and operating covenants that place restrictions on us, including our ability to incur additional indebtedness, create liens or to sell or otherwise dispose of assets, and to merge or consolidate with other entities.
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As of December 31, 2020
+Added: Required Actual
Total adjusted leverage ratio < 5.50 2.29
Fixed charge coverage ratio > 1.20 4.11
−Removed: See Note 12 “Floorplan Notes Payable” and Note 13 “Debt” within our Notes to Consolidated Financial Statements for further discussion of our credit facilities, debt instruments and other financing arrangements existing as of December 31, 2019 .
−Removed: Stock Repurchases
+Added: Based on our position as of December 31, 2020 and our outlook as discussed within “Management's Discussion and Analysis of Financial Condition and Results of Operations,” we have sufficient liquidity currently and do not anticipate any material liquidity constraints or issues with our ability to remain in compliance with our debt covenants.
+Added: Refer to Note 12.
+Added: Floorplan Notes Payable and Note 13.
+Added: Debt in our Notes to Consolidated Financial Statements for further discussion of our debt instruments, credit facilities and other financing arrangements existing as of as of December 31, 2020.
+Added: Stock Repurchases and Dividends
Our Board of Directors from time to time, authorizes the repurchase of shares of our common stock up to a certain monetary limit.
−Removed: During the year ended December 31, 2019, 14,200 shares were repurchased at an average price of $99.98 per share, for a total of $1.4 million, leaving $73.6 million available under our stock repurchase limit of $75.0 million most recently authorized by our Board of Directors.
−Removed: Our stock repurchase program does not have an expiration date.
−Removed: Future repurchases are subject to the discretion of our Board of Directors after considering our results of operations, financial condition, cash flows, capital requirements, existing debt covenants, outlook for our business, general business conditions and other factors.
−Removed: In December 2019, we entered into a Rule 10b5-1 repurchase plan that was effective from January 2, 2020 to February 3, 2020.
−Removed: Under the plan, we have purchased 149,284 shares subsequent to December 31, 2019, at an average price of $98.12 per share for an aggregate cost of $14.7 million, leaving $58.9 million available under our stock repurchase program.
−Removed: Our Board of Directors approved four quarterly cash dividends on all outstanding shares of our common stock totaling $1.09 per share during 2019.
+Added: On October 5, 2020, our Board of Directors approved a $200.0 million share repurchase authorization.
+Added: During 2020, we repurchased 863,572 shares of our common stock for a total of $80.2 million.
+Added: As of December 31, 2020, we had $168.7 million available under our current stock repurchase authorization.
+Added: During 2020, our Board of Directors approved a first quarter and fourth quarter cash dividend on all outstanding shares of our common stock totaling $0.60 per share during 2020.
For the year ended December 31, 2020, we paid dividends of $10.6 million to common stock shareholders and $0.4 million to unvested RSA holders.
−Removed: The payment of any future dividend is 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, share repurchases, current economic environment and other factors considered relevant.
−Removed: There is no guarantee that additional dividends will be declared and paid at any time in the future.
+Added: 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.
Off-Balance Sheet Arrangements
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Payments Due by Period
+Added: Total 1 Year 2-3 Years 4-5 Years Thereafter
Floorplan notes payable (1)
+Added: $ 1,095.0 $ 1,095.0 $ — $ — $ —
Debt obligations (2)
+Added: 1,362.4 57.3 165.0 238.0 902.2
Estimated interest payments on fixed-rate long-term debt obligations 224.4 31.1 59.6 56.0 77.8
Estimated interest payments on variable-rate long-term debt obligations (3)
−Removed: Operating lease obligations (4)
−Removed: Estimated interest on operating lease obligations (4)
−Removed: Estimated interest payments on interest rate risk management obligations (5)
+Added: 54.4 11.6 19.7 13.9 9.2
+Added: Operating lease payments (4)
+Added: 330.3 33.4 64.3 50.6 182.0
+Added: Deferred compensation plan (5)
+Added: 78.4 5.3 8.4 6.3 58.4
Purchase commitments (6)
−Removed: See Note 12 “Floorplan Notes Payable” within our Notes to Consolidated Financial Statements for additional details.
−Removed: See Note 13 “Debt” within our Notes to Consolidated Financial Statements for additional details.
+Added: 62.2 22.1 28.9 11.2 —
+Added: Total $ 3,207.2 $ 1,255.9 $ 345.9 $ 376.0 $ 1,229.5
+Added: (1) Refer to Note 12.
+Added: Floorplan Notes Payable within our Notes to Consolidated Financial Statements for additional details.
+Added: (2) Refer to Note 13.
+Added: Debt within our Notes to Consolidated Financial Statements for additional details.
+Added: Balances exclude unamortized debt issuance costs.
(3) Estimated future interest payments on our variable-rate long-term debt were projected using variable interest rates in effect as of December 31, 2020.
−Removed: See Note 10 “Leases” within our Notes to Consolidated Financial Statements for additional details.
−Removed: Represents estimated future net settlement of obligations related to our interest rate swaps.
−Removed: See Note 6 “Financial Instruments and Fair Value Measurements” within our Notes to Consolidated Financial Statements for additional details.
+Added: (4) Includes future minimum undiscounted lease payments under operating lease obligations.
+Added: Refer to Note 10.
+Added: Leases within our Notes to Consolidated Financial Statements for additional details.
+Added: (5) Refer to Note 15.
+Added: Employee Savings Plans within our Notes to Consolidated Financial Statements for additional details.
(6) Represents fixed purchase commitments, mainly related to information technology.
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.