What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-08-05 compared with 2021-05-06 · 634 added, 181 removed, 554 unchanged (60% of the section changed)

19 unchanged sentences

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

As of March 31, 2021, our retail network consisted of 118 dealerships in the U.S., 49 dealerships in the U.K.

As of June 30, 2021, our retail network consisted of 117 dealerships in the U.S., 48 dealerships in the U.K.

and 16 dealerships in Brazil.

4 unchanged sentences

We constantly evaluate opportunities to improve the overall profitability of our dealerships.

We believe that as of March 31, 2021, we have sufficient financial resources to support additional acquisitions.

We believe that as of June 30, 2021 , we have sufficient financial resources to support additional acquisitions.

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

4 unchanged sentences

Acquisitions capitalize on economies of scale and cost savings opportunities in our existing markets in areas such as used vehicle sourcing, advertising, purchasing, data processing and personnel utilization, thereby increasing operating efficiency.

We seek to acquire large, profitable, well-established dealerships that represent growing brands in growth markets.

We seek to acquire dealerships where we have strategic opportunities that represent growing brands in growth markets.

We evaluate all brands and geographies to expand our brand, product and service offerings in our existing markets or expand into growing geographic areas we currently do not serve.

During the first quarter of 2021, we acquired two Toyota dealerships in the U.S.

In July, we announced the acquisition of seven dealerships in the U.K.

The expected aggregate annualized revenues, estimated at the time of acquisition, for both the U.S.

acquisitions, were $420.0 million.

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

2 unchanged sentences

Digital Initiatives to Enhance the Customer Experience

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

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

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

1 unchanged sentence

The customer also has the ability to apply for financing and review and select F&I products as part of the online process.

During the first quarter of 2021, U.S.

During the three months ended June 30, 2021, U.S.

total online retail unit sales increased 111.3% compared to the same period in 2020.

8 unchanged sentences

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

In 2019, our U.S.

service operations implemented a four-day work week for service technicians and advisors which allowed us to expand our hours of operations during the week.

service operations are reimplementing a four-day work week for service technicians and advisors which allows us to expand our hours of operations during the week.

This change has resulted in increased service technician and advisor retention, thereby expanding our service capacity without investing additional capital in facilities.

5 unchanged sentences

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

In October 2020, we introduced “Sell A Ride” to our AcceleRide® platform to increase our ability to purchase used vehicle inventory directly from customers with a cash offer within 30 minutes during business hours, home pickup and payment available within one hour.

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

13 unchanged sentences

Diversity, Equity and Inclusion (“DEI”)

We have a DEI council that is chaired by our President, U.S.

and Brazilian Operations.

We have a DEI council that is chaired by our Chief Diversity Officer.

The council’s mission is to foster a diverse and inclusive culture where employees of all backgrounds are respected, valued and developed.

We will enhance employee engagement in the areas of diversity, equity and inclusion by offering innovative training, recruitment and career path development where a sense of belonging is apparent throughout the organization.

We enhance employee engagement in the areas of diversity, equity and inclusion by offering innovative training, recruitment and career path development where a sense of belonging is apparent throughout the organization.

The council has four primary areas of focus:

2 unchanged sentences

Each area has an employee chairperson as well as an executive sponsor.

In 2020, we implemented an ongoing diversity and inclusion training program led by a well-known diversity expert which was developed specifically for us.

In addition, employees participate in on-going diversity and inclusion training programs which were developed for us.

COVID-19 Pandemic and New Vehicle Inventory Levels

The COVID-19 pandemic continues to impact our operations in all of our markets.

our dealership showrooms were closed for the entire first quarter of 2021 and in Brazil, our dealerships were closed for portions of the first quarter of 2021 due to government mandated closures related to the pandemic.

and Brazil in Results of Operations discussions for further information.

Our operations have recovered significantly from the COVID-19 pandemic.

In the U.K., our dealership showrooms reopened in the second quarter of 2021 and in Brazil, our dealerships were fully open in the second quarter of 2021 after both markets were closed for all or part of prior quarters due to government mandated closures related to the COVID-19 pandemic.

Our dealerships adhere to health and safety policies and practices to allow employees to return to work safely.

We cannot predict the future impact of COVID-19 pandemic on our business.

Additionally, our manufacturers’ production is currently at reduced levels as a result of global semiconductor chip shortages, which is impacting our new vehicle sales and inventory levels in all our markets.

The increased demand for new vehicles and reduced production levels have significantly reduced our new vehicle inventory levels.

Our new vehicle days’ supply of inventory was approximately 20 days for the quarter ended June 30, 2021, as compared to 52 days for the quarter ended December 31, 2020 and 61 days for the quarter ended June 30, 2020.

Refer to Item 1A.

Risk Factors of this Form 10-Q for additional discussion.

Risk Factors of this Form 10-Q for additional discussion regarding the impact of the decrease in inventory.

Critical Accounting Policies and Accounting Estimates

1 unchanged sentence

GAAP requires management to make certain estimates and assumptions.

For additional discussion of our critical accounting policies and accounting estimates, please see Management’s Discussion and Analysis of Financial Condition and Results of Operations in our most recent Annual Report on Form 10-K.

Results of Operations

20 unchanged sentences

(In millions, except unit data)

Three Months Ended March 31,

Three Months Ended June 30,

2021 2020 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change

9 unchanged sentences

Used vehicle retail sales 109.1 46.3 62.8 135.8 % 2.3 130.9 %

Used vehicle wholesale sales 3.9 1.0 2.9 293.5 % (0.1) 300.7 %

Used vehicle wholesale sales 9.1 2.0 7.1 NM 0.3 NM

Total used 118.2 48.3 69.9 144.7 % 2.5 139.5 %

8 unchanged sentences

Parts and service sales 55.3 % 53.2 % 2.1 %

F&I, net 100.0 % 100.0 % — %

Total gross margin 17.9 % 16.8 % 1.0 %

9 unchanged sentences

Used vehicle retail sales $ 2,425 $ 1,516 $ 909 59.9 % $ 50 56.6 %

Used vehicle wholesale sales $ 401 $ 83 $ 319 384.8 % $ (7) 393.5 %

Used vehicle wholesale sales $ 832 $ 278 $ 554 NM $ 24 NM

Total used $ 2,113 $ 1,277 $ 836 65.4 % $ 45 61.9 %

8 unchanged sentences

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

NM — Not Meaningful

Same Store Operating Data — Consolidated

(In millions, except unit data)

Three Months Ended March 31,

Three Months Ended June 30,

2021 2020 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change

9 unchanged sentences

Used vehicle retail sales 107.8 45.8 62.1 135.6 % 2.3 130.7 %

Used vehicle wholesale sales 4.0 1.0 3.0 295.2 % (0.1) 301.0 %

Used vehicle wholesale sales 8.9 2.0 6.9 NM 0.3 NM

Total used 116.8 47.8 69.0 144.4 % 2.5 139.1 %

8 unchanged sentences

Parts and service sales 55.2 % 53.2 % 2.1 %

Total gross margin 17.8 % 16.8 % 1.0 %

Retail new vehicles sold 42,409 26,116 16,293 62.4 %

Retail used vehicles sold 44,659 30,016 14,643 48.8 %

Wholesale used vehicles sold 10,846 7,217 3,629 50.3 %

Total used 55,505 37,233 18,272 49.1 %

Average sales price per unit sold:

New vehicle retail $ 43,329 $ 40,199 $ 3,131 7.8 % $ 792 5.8 %

Used vehicle retail $ 26,606 $ 21,072 $ 5,534 26.3 % $ 735 22.8 %

Gross profit per unit sold:

New vehicle retail sales $ 3,858 $ 2,415 $ 1,443 59.8 % $ 49 57.8 %

Used vehicle retail sales $ 2,415 $ 1,525 $ 890 58.4 % $ 51 55.0 %

Used vehicle wholesale sales $ 823 $ 277 $ 546 NM $ 25 NM

Total used $ 2,104 $ 1,283 $ 821 64.0 % $ 46 60.4 %

F&I PRU $ 1,837 $ 1,702 $ 135 7.9 % $ 20 6.8 %

SG&A expenses $ 372.3 $ 233.2 $ 139.1 59.7 % $ 6.2 57.0 %

SG&A as % gross profit 57.0 % 65.8 % (8.8) %

NM — Not Meaningful

Reported Operating Data - Consolidated

(In millions, except unit data)

Six Months Ended June 30,

2021 2020 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change

New vehicle retail sales $ 3,398.7 $ 2,404.8 $ 993.8 41.3 % $ 39.9 39.7 %

Used vehicle retail sales 2,094.4 1,420.3 674.1 47.5 % 38.4 44.8 %

Used vehicle wholesale sales 176.6 135.2 41.4 30.7 % 4.5 27.3 %

Total used 2,271.0 1,555.4 715.6 46.0 % 42.9 43.2 %

Parts and service sales 752.8 652.6 100.2 15.4 % 6.7 14.3 %

F&I, net 288.0 209.2 78.8 37.7 % 1.9 36.8 %

Total revenues $ 6,710.5 $ 4,822.0 $ 1,888.4 39.2 % $ 91.9 37.3 %

Gross profit:

New vehicle retail sales $ 264.3 $ 126.6 $ 137.7 108.8 % $ 2.0 107.2 %

Used vehicle retail sales 168.7 88.4 80.3 90.8 % 2.2 88.3 %

Used vehicle wholesale sales 13.1 3.0 10.0 NM 0.2 NM

Total used 181.8 91.5 90.3 98.7 % 2.4 96.1 %

Parts and service sales 417.8 348.0 69.8 20.0 % 4.4 18.8 %

F&I, net 288.0 209.2 78.8 37.7 % 1.9 36.8 %

Total gross profit $ 1,151.9 $ 775.3 $ 376.7 48.6 % $ 10.8 47.2 %

Gross margin:

New vehicle retail sales 7.8 % 5.3 % 2.5 %

Used vehicle retail sales 8.1 % 6.2 % 1.8 %

Used vehicle wholesale sales 7.4 % 2.2 % 5.2 %

Total used 8.0 % 5.9 % 2.1 %

Parts and service sales 55.5 % 53.3 % 2.2 %

Total gross margin 17.2 % 16.1 % 1.1 %

9 unchanged sentences

Used vehicle retail sales $ 2,031 $ 1,314 $ 718 54.6 % $ 27 52.6 %

Used vehicle wholesale sales $ 628 $ 156 $ 472 NM $ 8 NM

Total used $ 1,751 $ 1,055 $ 696 66.0 % $ 23 63.8 %

F&I PRU $ 1,769 $ 1,620 $ 149 9.2 % $ 12 8.5 %

SG&A expenses $ 695.2 $ 565.1 $ 130.0 23.0 % $ 7.3 21.7 %

SG&A as % gross profit 60.3 % 72.9 % (12.5) %

Floorplan expense:

Floorplan interest expense $ 16.4 $ 23.0 $ (6.6) (28.8) % $ 0.3 (30.0) %

floorplan assistance (1)

28.5 20.4 8.1 39.6 % — 39.6 %

Net floorplan expense $ (12.1) $ 2.6 $ (14.7) $ 0.3

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

NM — Not Meaningful

Same Store Operating Data - Consolidated

(In millions, except unit data)

Six Months Ended June 30,

2021 2020 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change

New vehicle retail sales $ 3,380.4 $ 2,381.9 $ 998.6 41.9 % $ 39.8 40.3 %

Used vehicle retail sales 2,086.4 1,403.0 683.4 48.7 % 38.3 46.0 %

Used vehicle wholesale sales 176.0 133.7 42.2 31.6 % 4.5 28.2 %

Total used 2,262.4 1,536.8 725.6 47.2 % 42.8 44.4 %

Parts and service sales 743.6 642.6 101.0 15.7 % 6.3 14.7 %

F&I, net 286.9 207.0 79.9 38.6 % 1.9 37.7 %

Total revenues $ 6,673.3 $ 4,768.3 $ 1,905.0 40.0 % $ 91.4 38.0 %

Gross profit:

New vehicle retail sales $ 262.7 $ 125.2 $ 137.5 109.8 % $ 2.0 108.2 %

Used vehicle retail sales 167.4 87.7 79.8 91.0 % 2.2 88.5 %

Used vehicle wholesale sales 12.9 3.0 9.9 NM 0.2 NM

Total used 180.4 90.7 89.7 98.9 % 2.4 96.3 %

Parts and service sales 412.9 342.8 70.1 20.5 % 4.2 19.2 %

F&I, net 286.9 207.0 79.9 38.6 % 1.9 37.7 %

Total gross profit $ 1,142.9 $ 765.7 $ 377.2 49.3 % $ 10.6 47.9 %

Gross margin:

New vehicle retail sales 7.8 % 5.3 % 2.5 %

Used vehicle retail sales 8.0 % 6.2 % 1.8 %

Used vehicle wholesale sales 7.3 % 2.3 % 5.1 %

Total used 8.0 % 5.9 % 2.1 %

Parts and service sales 55.5 % 53.3 % 2.2 %

Total gross margin 17.1 % 16.1 % 1.1 %

Retail new vehicles sold 79,260 61,198 18,062 29.5 %

Retail used vehicles sold 82,686 66,347 16,339 24.6 %

Wholesale used vehicles sold 20,645 19,138 1,507 7.9 %

Total used 103,331 85,485 17,846 20.9 %

Average sales price per unit sold:

New vehicle retail $ 42,650 $ 38,921 $ 3,729 9.6 % $ 503 8.3 %

Used vehicle retail $ 25,233 $ 21,147 $ 4,086 19.3 % $ 463 17.1 %

Gross profit per unit sold:

New vehicle retail sales $ 3,315 $ 2,046 $ 1,268 62.0 % $ 25 60.7 %

Used vehicle retail sales $ 2,025 $ 1,321 $ 704 53.3 % $ 27 51.2 %

Used vehicle wholesale sales $ 626 $ 157 $ 469 NM $ 8 NM

Total used $ 1,745 $ 1,061 $ 685 64.6 % $ 23 62.4 %

F&I PRU $ 1,772 $ 1,623 $ 149 9.2 % $ 12 8.4 %

1 unchanged sentence

SG&A as % gross profit 60.3 % 72.5 % (12.2) %

NM — Not Meaningful

Reported Operating Data — U.S.

(In millions, except unit data)

Three Months Ended March 31,

Three Months Ended June 30,

2021 2020 Increase/(Decrease) % Change

9 unchanged sentences

Used vehicle retail sales 87.3 41.0 46.4 113.2 %

Used vehicle wholesale sales 3.9 0.8 3.1 374.6 %

Used vehicle wholesale sales 6.4 1.6 4.8 NM

Total used 93.7 42.6 51.2 120.2 %

8 unchanged sentences

Parts and service sales 54.6 % 53.3 % 1.3 %

F&I, net 100.0 % 100.0 % — %

Total gross margin 19.2 % 17.7 % 1.5 %

9 unchanged sentences

Used vehicle retail sales $ 2,568 $ 1,568 $ 1,000 63.8 %

Used vehicle wholesale sales $ 610 $ 118 $ 492 417.9 %

Used vehicle wholesale sales $ 969 $ 311 $ 658 NM

Total used $ 2,308 $ 1,361 $ 947 69.6 %

2 unchanged sentences

SG&A as % gross profit 55.7 % 62.6 % (6.9) %

NM — Not Meaningful

Same Store Operating Data — U.S.

(In millions, except unit data)

Three Months Ended March 31,

Three Months Ended June 30,

2021 2020 Increase/(Decrease) % Change

9 unchanged sentences

Used vehicle retail sales 86.0 40.5 45.5 112.3 %

Used vehicle wholesale sales 3.9 0.8 3.1 367.2 %

Used vehicle wholesale sales 6.2 1.6 4.6 NM

Total used 92.2 42.1 50.2 119.1 %

8 unchanged sentences

Parts and service sales 54.6 % 53.3 % 1.3 %

Total gross margin 19.2 % 17.7 % 1.4 %

Retail new vehicles sold 33,563 21,631 11,932 55.2 %

Retail used vehicles sold 33,665 25,691 7,974 31.0 %

Wholesale used vehicles sold 6,487 5,084 1,403 27.6 %

Total used 40,152 30,775 9,377 30.5 %

Average sales price per unit sold:

New vehicle retail $ 44,292 $ 41,786 $ 2,506 6.0 %

Used vehicle retail $ 26,005 $ 20,756 $ 5,249 25.3 %

Gross profit per unit sold:

New vehicle retail sales $ 4,173 $ 2,583 $ 1,591 61.6 %

Used vehicle retail sales $ 2,556 $ 1,577 $ 978 62.0 %

Used vehicle wholesale sales $ 956 $ 309 $ 648 NM

Total used $ 2,297 $ 1,368 $ 930 68.0 %

F&I PRU $ 2,125 $ 1,874 $ 250 13.4 %

SG&A expenses $ 309.4 $ 200.2 $ 109.2 54.6 %

SG&A as % gross profit 55.8 % 62.5 % (6.7) %

NM — Not Meaningful

The following discussion of our U.S.

operating results is on actual and same store basis.

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

During 2020, our U.S.

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

Total revenues in the U.S.

during the three months ended June 30, 2021 increased $1,093.8 million, or 59.7%, as compared to the same period in 2020.

Total same store revenues in the U.S.

during the three months ended June 30, 2021 increased $1,087.7 million, or 60.2%, driven by increases in all of our revenue streams.

The increases were the result of a robust recovery during the second quarter of 2021, as consumer demand was extremely strong.

During the second quarter of 2020, the COVID-19 pandemic had dampened sales activity as a result of the social distancing restrictions.

Total gross profit in the U.S.

during the three months ended June 30, 2021 increased $236.6 million, or 72.9%, as compared to the same period in 2020.

Total same store gross profit in the U.S.

during the three months ended June 30, 2021 increased $234.3 million, or 73.1%, as compared to the same period in 2020, driven by increases in all of our operations.

New vehicle retail same store gross profit increased 150.7% reflecting a 61.6% increase in new vehicle same store gross profit per unit sold, coupled with a 55.2% increase in new vehicle retail same store unit sales.

The increase in new vehicle retail same store gross profit per unit sold reflects strong consumer demand coupled with inventory supply constraints as a result of the OEMs producing and delivering fewer vehicles to dealerships due to a global semiconductor chip shortage.

new vehicle inventory stood at a 16 days’ supply, which was 48 days lower than the same period last year and 32 days lower than December 31, 2020 days’ supply of 48.

Used vehicle retail same store gross profit increased 112.3% reflecting an increase of 62.0% in used vehicle retail same store gross profit per unit sold, coupled with a 31.0% increase in used vehicle retail same store unit sales over the same period in 2020.

The increase in used vehicle retail same store gross profit per unit sold reflects higher market prices stemming from tight inventory levels combined with a strong demand.

Used vehicle wholesale gross profit increased as industry supply shortages drove up auction prices as reflected in the Manheim Index, a generally accepted indicator of pricing trends in the used vehicle market.

Parts and service same store gross profit increased by 34.2% for the quarter ended June 30, 2021 as compared to the same period in 2020, driven primarily by a 32.4% increase in our customer-pay business.

F&I same store gross profit increased 61.0% driven by increases in same store retail unit sales volumes coupled with higher income per contract and penetration rates on most of our finance and insurance product offerings partially offset by an increase in our overall chargeback experience compared to the same period in 2020.

Total same store gross margin increased 140 basis points driven by higher vehicle and parts and service margins reflecting vehicle supply constraints, improvements in customer pay and increased internal work as a result of higher new and used sales volumes.

SG&A Expenses

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

Total SG&A expenses in the U.S.

during the three months ended June 30, 2021 increased $109.3 million, or 53.8%, as compared to the same period in 2020.

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

during the three months ended June 30, 2021 increased $109.2 million, or 54.6%, as compared to the same period in 2020 primarily driven by increased variable commission payments as a result of improvements in sales volume and margins and an increase in other variable expenses associated with the rise in business activity.

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

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

Total same store SG&A as a percent of gross profit decreased from 62.5% in the second quarter of 2020 to 55.8% for the same period of 2021, driven by productivity gains and higher vehicle margins.

Reported Operating Data - U.S.

(In millions, except unit data)

Six Months Ended June 30,

2021 2020 Increase/(Decrease) % Change

New vehicle retail sales $ 2,750.4 $ 1,904.1 $ 846.3 44.4 %

Used vehicle retail sales 1,579.4 1,111.2 468.2 42.1 %

Used vehicle wholesale sales 111.6 77.3 34.2 44.3 %

Total used 1,691.0 1,188.6 502.4 42.3 %

Parts and service sales 628.9 558.9 70.0 12.5 %

F&I, net 259.0 187.2 71.8 38.3 %

Total revenues $ 5,329.3 $ 3,838.7 $ 1,490.6 38.8 %

Gross profit:

New vehicle retail sales $ 222.6 $ 103.8 $ 118.8 114.5 %

Used vehicle retail sales 137.6 72.9 64.7 88.8 %

Used vehicle wholesale sales 10.3 2.4 7.9 NM

Total used 148.0 75.3 72.6 96.4 %

Parts and service sales 346.8 299.1 47.7 16.0 %

F&I, net 259.0 187.2 71.8 38.3 %

Total gross profit $ 976.3 $ 665.4 $ 310.9 46.7 %

Gross margin:

New vehicle retail sales 8.1 % 5.5 % 2.6 %

Used vehicle retail sales 8.7 % 6.6 % 2.2 %

Used vehicle wholesale sales 9.3 % 3.1 % 6.1 %

Total used 8.8 % 6.3 % 2.4 %

Parts and service sales 55.1 % 53.5 % 1.6 %

Total gross margin 18.3 % 17.3 % 1.0 %

9 unchanged sentences

Used vehicle retail sales $ 2,136 $ 1,355 $ 781 57.6 %

Used vehicle wholesale sales $ 792 $ 199 $ 592 NM

Total used $ 1,910 $ 1,142 $ 768 67.3 %

F&I PRU $ 2,029 $ 1,868 $ 161 8.6 %

SG&A expenses $ 574.3 $ 460.8 $ 113.5 24.6 %

SG&A as % gross profit 58.8 % 69.2 % (10.4) %

NM — Not Meaningful

Same Store Operating Data - U.S.

(In millions, except unit data)

Six Months Ended June 30,

2021 2020 Increase/(Decrease) % Change

New vehicle retail sales $ 2,732.3 $ 1,883.2 $ 849.1 45.1 %

Used vehicle retail sales 1,571.9 1,096.1 475.8 43.4 %

Used vehicle wholesale sales 111.0 76.0 35.0 46.0 %

Total used 1,682.9 1,172.1 510.8 43.6 %

Parts and service sales 624.8 553.1 71.7 13.0 %

F&I, net 257.9 185.2 72.6 39.2 %

Total revenues $ 5,297.9 $ 3,793.6 $ 1,504.3 39.7 %

Gross profit:

New vehicle retail sales $ 221.0 $ 102.5 $ 118.5 115.6 %

Used vehicle retail sales 136.4 72.3 64.1 88.7 %

Used vehicle wholesale sales 10.1 2.4 7.7 NM

Total used 146.5 74.7 71.8 96.2 %

Parts and service sales 344.3 295.6 48.7 16.5 %

F&I, net 257.9 185.2 72.6 39.2 %

Total gross profit $ 969.7 $ 658.1 $ 311.6 47.4 %

Gross margin:

New vehicle retail sales 8.1 % 5.4 % 2.6 %

Used vehicle retail sales 8.7 % 6.6 % 2.1 %

Used vehicle wholesale sales 9.1 % 3.2 % 6.0 %

Total used 8.7 % 6.4 % 2.3 %

Parts and service sales 55.1 % 53.5 % 1.7 %

Total gross margin 18.3 % 17.3 % 1.0 %

Retail new vehicles sold 62,711 45,902 16,809 36.6 %

Retail used vehicles sold 64,090 52,971 11,119 21.0 %

Wholesale used vehicles sold 12,927 11,981 946 7.9 %

Total used 77,017 64,952 12,065 18.6 %

Average sales price per unit sold:

New vehicle retail $ 43,570 $ 41,026 $ 2,544 6.2 %

Used vehicle retail $ 24,526 $ 20,692 $ 3,835 18.5 %

Gross profit per unit sold:

New vehicle retail sales $ 3,524 $ 2,234 $ 1,291 57.8 %

Used vehicle retail sales $ 2,128 $ 1,364 $ 764 56.0 %

Used vehicle wholesale sales $ 785 $ 201 $ 583 NM

Total used $ 1,903 $ 1,150 $ 753 65.5 %

F&I PRU $ 2,034 $ 1,874 $ 160 8.6 %

1 unchanged sentence

SG&A as % gross profit 58.9 % 69.0 % (10.1) %

NM — Not Meaningful

The following discussion of our U.S.

operating results is on a same store basis.

operating results is on actual and same store basis.

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

During 2020, our U.S.

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

Total revenues in the U.S.

during the three months ended March 31, 2021 increased $396.8 million, or 19.8%, as compared to the same period in 2020.

during the six months ended June 30, 2021 increased $1,490.6 million, or 38.8%, as compared to the same period in 2020.

Total same store revenues in the U.S.

during the three months ended March 31, 2021 increased $416.6 million, or 21.0%, as compared to the same period in 2020, driven by increases in all of our revenue streams, with the exception of parts and service sales.

The increase of 27.2% in new vehicle retail same store sales was driven by a 20.1% increase in same store new vehicle retail unit sales coupled with a 5.9% increase in same store new vehicle average sales price per retail unit reflecting increased demand at our dealerships and lower vehicle inventory supply as a result of the OEMs producing and delivering fewer vehicles to dealerships due to a global semiconductor chip shortage.

At March 31, 2021, our U.S.

new vehicle inventory stood at a 34 day’s supply, which was 87 days lower than the same period last year and 14 days lower than December 31, 2020 days’ supply of 48.

While we anticipate inventories remaining tight in the near term, we will continue to adjust our operations as necessary.

Used vehicle retail same store sales increased 23.7% driven by an 11.5% increase in used vehicle retail same store unit sales coupled with a 10.9% increase in used vehicle same store average price per retail unit reflecting increased demand and lower inventory levels.

Sell A Ride, a tool from our online digital platform, AcceleRide® which enables a customer to sell their vehicle from the comfort of their home, was instrumental in alleviating some of our used vehicle supply constraints.

Adding to the increase in our new and used vehicle retail same store sales were sales from AcceleRide®.

Several technological enhancements made during the first quarter of 2021 to our online platform helped bolster these results.

Used vehicle wholesale same store sales increased 9.8% driven by a 17.5% increase in used vehicle average same store price per wholesale unit which was partially offset by a 6.6% decrease in used vehicle same store wholesale units.

The increase in our same store average used vehicle wholesale price was the result of a 19.8% increase in average used vehicle market prices in 2021 as compared to the first quarter of 2020, as reflected in the Manheim Index.

Parts and service same store revenues decreased by 2.1% for the quarter ended March 31, 2021 as compared to the same period in 2020, driven by a 11.7% decline in warranty revenues and a 14.5% decline in collision revenues which were partially offset by a 5.2% increase in customer pay revenues while our wholesale revenues remained flat.

Our Texas and Oklahoma stores were adversely impacted by a record-setting winter storm in the middle of February, which essentially shut down most of our parts and service business for approximately a week and dampened our parts and service same store revenues.

F&I same store revenues increased 19.2% driven primarily by a 15.6% increase in same store total retail unit sales and higher income per contract on finance and many of our other insurance product offerings, which were partially offset by lower penetration rates and an increase in our overall chargeback experience.

during the six months ended June 30, 2021 increased $1,504.3 million, or 39.7%, as compared to the same period in 2020 driven by increases in all of our revenue streams.

The increases were the result of a robust recovery during the year as consumer demand was extremely strong.

During the same period in 2020, the COVID-19 pandemic had dampened sales activity as a result of the social distancing restrictions.

Total gross profit in the U.S.

during the three months ended March 31, 2021 increased $74.3 million, or 21.8%, as compared to the same period in 2020.

during the six months ended June 30, 2021 increased $310.9 million, or 46.7%, as compared to the same period in 2020.

Total same store gross profit in the U.S.

during the three months ended March 31, 2021 increased $77.4 million, or 22.9%, as compared to the same period in 2020, driven by increases in all of our operations.

New vehicle same store gross profit increased 73.4%, reflecting a 44.4% increase in new vehicle same store gross profit per unit sold, coupled with a 20.1% increase in same store new vehicle retail units sold.

The increase in new vehicle retail same store gross profit per unit sold reflects strong consumer demand along with inventory supply constraints.

Used vehicle retail same store gross profit increased 58.6%, reflecting an increase of 42.2% in used vehicle retail same store gross profit per unit sold coupled with an 11.5% increase in used vehicle retail same store unit sales over the same period in 2020.

The increase in used vehicle retail same store gross profit per unit sold reflects higher market prices stemming from tight inventory levels.

Used vehicle wholesale gross profit increased as industry supply shortages drove up auction prices as reflected in the Manheim Index.

Parts and service same store gross profit increased 1.8% primarily due to an increase in customer pay gross profit.

New F&I same store gross profit increased 19.2% driven by the increases in revenue discussed above.

Total same store gross margin increased 30 basis points driven by higher new and used vehicle margins because of vehicle supply constraints and higher parts and service margin due to improvements in customer pay.

during the six months ended June 30, 2021 increased $311.6 million, or 47.4%, as compared to the same period in 2020 driven by increases in all of our operations.

New vehicle retail same store gross profit increased 115.6% driven by a 57.8% increase in new vehicle retail same store gross profit per unit sold, coupled with a 36.6% increase in new vehicle retail unit sales.

The increase in new vehicle retail same store gross profit per unit sold reflects higher demand and inventory supply constraints as a result of the global semiconductor chip shortage.

Used vehicle retail same store gross profit increased 88.7% driven by a 56.0% increase in used vehicle retail same store gross profit per unit sold, coupled with a 21.0% increase in used vehicle retail unit sales.

The increase in used vehicle retail same store gross profit per unit sold reflects inventory constraints and the resulting increase in market prices.

Used vehicle wholesale same store gross profit increased as industry supply shortages drove up auction prices as reflected in the Manheim Index.

Parts and service same store gross profit increased 16.5% primarily driven by the increase in our customer-pay business reflecting increased business activity.

F&I same store gross profit increased 39.2% driven by increases in same store retail unit sales volumes, higher income per contract and improved penetration rates on most of our finance and insurance product offerings, partially offset by an increase in our overall chargeback experience.

Total same store gross margin increased 100 basis points driven by higher vehicle and parts and service margins reflecting vehicle supply constraints, improvements in customer pay and an increase in internal work associated with higher vehicle sales volumes.

SG&A Expenses

1 unchanged sentence

Total SG&A expenses in the U.S.

during the three months ended March 31, 2021 increased $4.2 million, or 1.6%, as compared to the same period in 2020.

during the six months ended June 30, 2021 increased $113.5 million, or 24.6%, as compared to the same period in 2020.

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

during the three months ended March 31, 2021 increased $8.1 million, or 3.2%, as compared to the same period in 2020 primarily driven by an increase in personnel costs due to growth in variable commission payments as a result of improvements in new and used vehicle retail sales volume and gross profit.

during the six months ended June 30, 2021, increased $117.3 million, or 25.8%, as compared to the same period in 2020, primarily driven by increased variable commission payments as a result of improvements in sales volume and margins and an increase in other variable expenses associated with the rise in business activity.

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

included $2.2 million in disaster pay and insurance deductible expense associated with the February winter storm in Texas and a $1.0 million gain related to a non-core legal settlement.

Total same store SG&A as a percent of gross profit decreased from 75.2% in the first quarter of 2020 to 63.1% for the same period of 2021, driven by higher vehicle margins and gains in our salesperson and technician productivity rates.

in the first six months of 2021 included $2.2 million in disaster pay and insurance deductible expense associated with the February winter storm in Texas and a $1.0 million gain related to a non-core legal settlement.

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

in the first six months of 2020 included $10.6 million in expense for an out of period adjustment related to stock compensation.

Total same store SG&A as a percent of gross profit decreased from 69.0% for the six months ended 2020 to 58.9% for the same period of 2021 driven by productivity gains and higher vehicle margins.

Reported Operating Data — U.K.

(In millions, except unit data)

Three Months Ended March 31,

Three Months Ended June 30,

2021 2020 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change

9 unchanged sentences

Used vehicle retail sales 20.8 4.9 15.9 326.2 % 2.3 280.1 %

Used vehicle wholesale sales (0.2) — (0.1) (412.9) % — (305.7) %

Used vehicle wholesale sales 2.5 0.4 2.2 NM 0.3 NM

Total used 23.3 5.2 18.1 345.7 % 2.5 297.7 %

8 unchanged sentences

Parts and service sales 61.5 % 54.7 % 6.8 %

F&I, net 100.0 % 100.0 % — %

Total gross margin 12.6 % 11.2 % 1.5 %

9 unchanged sentences

Used vehicle retail sales $ 1,984 $ 1,209 $ 775 64.1 % $ 215 46.3 %

Used vehicle wholesale sales $ (51) $ (7) $ (44) (649.3) % $ (11) (492.7) %

Used vehicle wholesale sales $ 611 $ 192 $ 419 NM $ 64 NM

Total used $ 1,597 $ 892 $ 705 79.0 % $ 172 59.7 %

2 unchanged sentences

SG&A as % gross profit 63.4 % 96.2 % (32.8) %

NM — Not Meaningful

Same Store Operating Data — U.K.

(In millions, except unit data)

Three Months Ended March 31,

Three Months Ended June 30,

2021 2020 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change

9 unchanged sentences

Used vehicle retail sales 20.8 4.8 16.0 331.9 % 2.3 285.1 %

Used vehicle wholesale sales (0.1) — (0.1) (208.2) % — (147.1) %

Used vehicle wholesale sales 2.5 0.3 2.2 NM 0.3 NM

Total used 23.3 5.2 18.2 351.5 % 2.5 302.9 %

8 unchanged sentences

Parts and service sales 62.2 % 54.8 % 7.4 %

Total gross margin 12.4 % 11.1 % 1.3 %

Retail new vehicles sold 7,395 3,791 3,604 95.1 %

Retail used vehicles sold 10,494 3,969 6,525 164.4 %

Wholesale used vehicles sold 4,124 1,809 2,315 128.0 %

Total used 14,618 5,778 8,840 153.0 %

Average sales price per unit sold:

New vehicle retail $ 40,727 $ 33,284 $ 7,443 22.4 % $ 4,455 9.0 %

Used vehicle retail $ 28,672 $ 23,131 $ 5,541 24.0 % $ 3,114 10.5 %

Gross profit per unit sold:

New vehicle retail sales $ 2,484 $ 1,533 $ 950 62.0 % $ 271 44.3 %

Used vehicle retail sales $ 1,984 $ 1,215 $ 770 63.3 % $ 215 45.7 %

Used vehicle wholesale sales $ 611 $ 192 $ 419 NM $ 64 NM

Total used $ 1,597 $ 895 $ 702 78.5 % $ 172 59.2 %

F&I PRU $ 879 $ 807 $ 72 8.9 % $ 95 (2.9) %

SG&A expenses $ 54.9 $ 27.3 $ 27.5 100.7 % $ 6.1 78.4 %

SG&A as % gross profit 63.3 % 94.4 % (31.1) %

NM — Not Meaningful

The following discussion of our U.K.

operating results is on actual and same store basis.

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

At the end of 2020, the U.K.

experienced a surge in COVID-19 cases, which led to a government-mandated closure of all non-essential businesses beginning January 4, 2021 through April 12, 2021.

In mid-April 2021, the COVID-19 restrictions affecting our U.K.

dealership showrooms were lifted, and our dealerships were able to reopen.

In the prior year, beginning March 21, 2020, the government mandated the closure of all U.K.

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

showrooms were allowed to reopen June 1, 2020.

Total revenues in the U.K.

during the three months ended June 30, 2021 increased $437.2 million, or 165.9%, as compared to the same period in 2020.

Total same store revenues in the U.K.

during the three months ended June 30, 2021 increased $436.5 million, or 167.3%, as compared to the same period in 2020.

On a constant currency basis, total same store revenues increased 138.2% driven by increases in all of our revenue streams.

These increases were largely the result of COVID-19 lockdown restrictions being lifted in mid-April, allowing our dealership showrooms to reopen and increased consumer demand, which was pent-up over the past several years due to both Brexit and the COVID-19 pandemic.

Total gross profit in the U.K.

during the three months ended June 30, 2021 increased $59.0 million, or 200.6%, as compared to the same period in 2020.

Total same store gross profit in the U.K.

during the three months ended June 30, 2021 increased $57.7 million, or 199.1%, as compared to the same period in 2020.

On a constant currency basis, total same store gross profit increased 166.6%, driven by improvements in all of our operations.

New vehicle retail same store gross profit increased 181.4% on a constant currency basis, driven by a 44.3% increase in new vehicle retail same store gross profit per unit, coupled with a 95.1% increase in new vehicle retail same store unit sales.

The increase in new vehicle gross profit per unit primarily reflects both higher demand and supply constraints as OEMs are producing fewer vehicles due to the global semiconductor chip shortage.

At June 30, 2021, our U.K.

new vehicle inventory stood at a 31 days’ supply, which was 18 days lower than the same period last year and 71 days lower than December 31, 2020 days’ supply of 102.

On a constant currency basis, used vehicle retail same store gross profit improved 285.1%, reflecting a 164.4% increase in used vehicle retail same store unit sales, coupled with a 45.7% increase in used vehicle retail same store gross profit per unit sold.

The increase in used vehicle retail same store gross profit per unit sold was driven by increased consumer demand and new vehicle inventory shortages.

Parts and service same store gross profit on a constant currency basis increased 122.2%, as all parts and service businesses increased with the easing of COVID-19 restrictions in mid-April.

F&I same store gross profit on a constant currency basis increased 123.9% as an increase in retail unit sales volumes coupled with higher penetration rates were partially offset by lower income per contract on VSC and other product offerings and a higher overall chargeback experience.

Total same store gross margin in the U.K.

increased 130 basis points driven by improved parts and service margins, reflecting higher internal work as a result of increased new and used sales volumes, and higher new and used vehicle margins because of higher demand and vehicle supply constraints.

SG&A Expenses

Total SG&A expenses in the U.K.

during the three months ended June 30, 2021 increased $27.7 million, or 98.0%, as compared to the same period in 2020.

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

during the three months ended June 30, 2021, increased $27.5 million, or 100.7%, as compared to the same period in 2020.

On a constant currency basis, total same store SG&A expenses increased 78.4%, driven by increased variable commission payments as a result of increased sales and margins during the second quarter of 2021 as compared to last year.

We have continued to focus on cost discipline throughout the second quarter of 2021.

As a percentage of gross profit, total same store SG&A expenses decreased from 94.4% for the second quarter of 2020 to 63.3% for the same period of 2021 driven by productivity gains and higher vehicle margins realized during the second quarter of 2021 as compared to last year.

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

Reported Operating Data - U.K.

(In millions, except unit data)

Six Months Ended June 30,

2021 2020 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change

New vehicle retail sales $ 564.3 $ 423.5 $ 140.8 33.3 % $ 52.3 20.9 %

Used vehicle retail sales 492.5 281.6 210.9 74.9 % 41.7 60.1 %

Used vehicle wholesale sales 60.4 51.1 9.3 18.1 % 5.0 8.3 %

Total used 552.8 332.7 220.1 66.2 % 46.7 52.1 %

Parts and service sales 106.8 78.3 28.5 36.5 % 8.8 25.2 %

F&I, net 26.3 19.7 6.6 33.6 % 2.4 21.5 %

Total revenues $ 1,250.3 $ 854.2 $ 396.1 46.4 % $ 110.7 33.4 %

Gross profit:

New vehicle retail sales $ 33.2 $ 17.9 $ 15.2 85.0 % $ 3.2 66.9 %

Used vehicle retail sales 29.0 14.0 15.0 106.5 % 2.6 88.3 %

Used vehicle wholesale sales 2.4 0.3 2.0 NM 0.2 NM

Total used 31.4 14.4 17.0 118.3 % 2.8 99.0 %

Parts and service sales 63.6 42.3 21.3 50.5 % 5.3 37.9 %

F&I, net 26.3 19.7 6.6 33.6 % 2.4 21.5 %

Total gross profit $ 154.4 $ 94.2 $ 60.2 63.8 % $ 13.7 49.3 %

Gross margin:

New vehicle retail sales 5.9 % 4.2 % 1.6 %

Used vehicle retail sales 5.9 % 5.0 % 0.9 %

Used vehicle wholesale sales 3.9 % 0.6 % 3.3 %

Total used 5.7 % 4.3 % 1.4 %

Parts and service sales 59.5 % 54.0 % 5.5 %

Total gross margin 12.3 % 11.0 % 1.3 %

9 unchanged sentences

Used vehicle retail sales $ 1,647 $ 1,164 $ 483 41.5 % $ 145 29.0 %

Used vehicle wholesale sales $ 325 $ 50 $ 275 NM $ 30 NM

Total used $ 1,261 $ 777 $ 483 62.2 % $ 111 47.9 %

F&I PRU $ 834 $ 794 $ 40 5.0 % $ 75 (4.5) %

SG&A expenses $ 105.7 $ 88.2 $ 17.5 19.9 % $ 9.2 9.5 %

SG&A as % gross profit 68.4 % 93.5 % (25.1) %

NM — Not Meaningful

Same Store Operating Data - U.K.

(In millions, except unit data)

Six Months Ended June 30,

2021 2020 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change

New vehicle retail sales $ 564.2 $ 421.4 $ 142.8 33.9 % $ 52.2 21.5 %

Used vehicle retail sales 492.0 279.6 212.4 76.0 % 41.7 61.1 %

Used vehicle wholesale sales 60.3 51.0 9.3 18.3 % 5.0 8.5 %

Total used 552.3 330.6 221.7 67.1 % 46.7 53.0 %

Parts and service sales 101.8 74.1 27.7 37.3 % 8.4 25.9 %

F&I, net 26.3 19.5 6.8 35.0 % 2.4 22.8 %

Total revenues $ 1,244.5 $ 845.5 $ 399.0 47.2 % $ 110.2 34.2 %

Gross profit:

New vehicle retail sales $ 33.1 $ 17.8 $ 15.3 86.1 % $ 3.2 67.9 %

Used vehicle retail sales 29.0 13.9 15.1 108.3 % 2.5 90.0 %

Used vehicle wholesale sales 2.4 0.3 2.1 NM 0.2 NM

Total used 31.4 14.2 17.2 120.7 % 2.8 101.2 %

Parts and service sales 61.2 40.5 20.7 51.2 % 5.1 38.6 %

F&I, net 26.3 19.5 6.8 35.0 % 2.4 22.8 %

Total gross profit $ 152.0 $ 92.0 $ 60.0 65.3 % $ 13.5 50.6 %

Gross margin:

New vehicle retail sales 5.9 % 4.2 % 1.6 %

Used vehicle retail sales 5.9 % 5.0 % 0.9 %

Used vehicle wholesale sales 4.0 % 0.6 % 3.4 %

Total used 5.7 % 4.3 % 1.4 %

Parts and service sales 60.2 % 54.6 % 5.5 %

Total gross margin 12.2 % 10.9 % 1.3 %

Retail new vehicles sold 13,927 12,631 1,296 10.3 %

Retail used vehicles sold 17,580 11,922 5,658 47.5 %

Wholesale used vehicles sold 7,249 6,358 891 14.0 %

Total used 24,829 18,280 6,549 35.8 %

Average sales price per unit sold:

New vehicle retail $ 40,509 $ 33,363 $ 7,146 21.4 % $ 3,750 10.2 %

Used vehicle retail $ 27,988 $ 23,452 $ 4,536 19.3 % $ 2,370 9.2 %

Gross profit per unit sold:

New vehicle retail sales $ 2,379 $ 1,409 $ 969 68.8 % $ 232 52.3 %

Used vehicle retail sales $ 1,648 $ 1,167 $ 481 41.3 % $ 145 28.8 %

Used vehicle wholesale sales $ 333 $ 49 $ 284 NM $ 31 NM

Total used $ 1,264 $ 778 $ 486 62.5 % $ 112 48.1 %

F&I PRU $ 834 $ 793 $ 41 5.2 % $ 75 (4.3) %

1 unchanged sentence

SG&A as % gross profit 67.8 % 92.6 % (24.8) %

NM — Not Meaningful

The following discussion of our U.K.

operating results is on a same store basis.

operating results is on actual and same store basis.

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

experienced a surge in COVID-19 cases at the end of 2020, which led to a government-mandated closure of all non-essential businesses beginning January 4, 2021 through April 12, 2021.

The national lockdown impacted our new and used vehicle sales as our showrooms were closed the entire first quarter of 2021, but had a lesser impact on our service operations as they remained open.

At the end of 2020, the U.K.

experienced a surge in COVID-19 cases, which led to a government-mandated closure of all non-essential businesses beginning January 4, 2021 through April 12, 2021.

The COVID-19 restrictions affecting our U.K.

dealership showrooms were lifted in mid-April, resulting in increased business activity during the second quarter of 2021.

In the prior year, beginning March 21, 2020, the government mandated the closure of all U.K.

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

showrooms were allowed to reopen June 1, 2020.

Total revenues in the U.K.

during the three months ended March 31, 2021 decreased $41.0 million, or 6.9%, as compared to the same period in 2020.

during the six months ended June 30, 2021 increased $396.1 million, or 46.4%, as compared to the same period in 2020.

Total same store revenues in the U.K.

during the three months ended March 31, 2021 decreased $37.5 million, or 6.4%, as compared to the same period in 2020.

On a constant currency basis, total same store revenues decreased 13.4% driven by declines in all of our revenue streams.

During the first quarter of 2021, our U.K.

operations relied heavily on online selling by rolling out AcceleRide®, our online new and used vehicle sales platform.

New vehicle retail same store revenues on a constant currency basis decreased 18.2% driven by a 26.1% decline in new vehicle retail same store unit sales, partially offset by a 10.7% increase in average new vehicle retail same store sales price.

On a constant currency basis, used vehicle retail same store revenues decreased 5.1% as used vehicle retail same store unit sales declined 10.9%, partially offset by a 6.5% increase in average used retail same store sales price.

The declines in new and used vehicle retail same store unit sales reflect limitations on selling vehicles without a showroom or the ability to conduct test drives as our showrooms were closed for the entire first quarter as discussed above.

The increases in average new and used vehicle retail same store sales prices reflect lower vehicle inventory supply as OEMs are producing and delivering fewer vehicles due to a global semiconductor chip shortage.

At March 31, 2021 our U.K.

new vehicle inventory stood at a 28 days’ supply, which was 8 days lower than the same period last year and 74 days lower than December 31, 2020 days’ supply of 102.

While we anticipate inventories remaining tight in the near term, we will continue to adjust our operations as necessary.

Parts and service same store revenues decreased 3.3% on a constant currency basis, as a 1.3% increase in customer-pay business was more than offset by declines in our other parts and service businesses.

F&I same store revenues on a constant currency basis decreased 26.3%, as a decline in retail unit sales volumes coupled with lower penetration rates were partially offset by a decrease in our overall chargeback experience.

during the six months ended June 30, 2021 increased $399.0 million, or 47.2%, as compared to the same period in 2020.

On a constant currency basis, total same store revenues increased 34.2%, driven by increases in all of our revenue streams.

Total gross profit in the U.K.

during the three months ended March 31, 2021 increased $1.2 million, or 1.8%, as compared to the same period in 2020.

during the six months ended June 30, 2021 increased $60.2 million, or 63.8%, as compared to the same period in 2020.

Total same store gross profit in the U.K.

during the three months ended March 31, 2021 increased $2.3 million, or 3.7%, as compared to the same period in 2020.

On a constant currency basis, total same store gross profit decreased 4.1%, driven by declines in our used vehicle retail and F&I operations.

New vehicle retail same store gross profit increased 12.3% on a constant currency basis, driven by a 51.9% increase in new vehicle retail same store gross profit per unit, partially offset by a 26.1% decrease in new vehicle retail same store unit sales.

The increase in new vehicle gross profit per unit primarily reflects supply constraints.

On a constant currency basis, used vehicle retail same store gross profit decreased 16.6%, reflecting a 10.9% decline in used vehicle retail same store unit sales, coupled with a 6.4% decrease in used vehicle retail same store gross profit per unit sold.

The decline in used vehicle retail same store gross profit per unit sold reflects our efforts to refresh inventory as we pushed to sell older units in stock.

Parts and service same store gross profit on a constant currency basis increased 3.4%, as most of the service repair work performed in the quarter was higher margin, as customers have deferred lower margin regular maintenance during the lockdown period.

F&I same store gross profit on a constant currency basis decreased 26.3% as previously discussed.

during the six months ended June 30, 2021 increased $60.0 million, or 65.3%, as compared to the same period in 2020.

On a constant currency basis, total same store gross profit increased 50.6%, driven by improvements in all of our operations.

New vehicle retail same store gross profit on a constant currency basis increased 67.9%, driven by a 52.3% increase in new vehicle retail same store average gross profit per unit sold, coupled with a 10.3% increase in new vehicle retail same store unit sales.

The increase in new vehicle retail same store gross profit per unit sold reflects both increased demand and supply constraints related to the COVID-19 pandemic as many manufacturers had put a hold on production due to the global semiconductor chip shortage.

Used vehicle retail same store gross profit on a constant currency basis increased 90.0% on a 28.8% increase in used vehicle retail same store average gross profit per unit sold, coupled with a 47.5% increase in used vehicle retail same store unit sales.

The increase in used vehicle retail same store average gross profit per unit sold reflects higher demand and new vehicle supply shortages.

Parts and service same store gross profit on a constant currency basis increased 38.6% as all parts and service businesses increased with the reduction of COVID-19 restrictions.

F&I same store gross profit on a constant currency basis increased 22.8% as an increase in retail unit sales volumes was partially offset with lower penetration rates, lower income per contract on VSC and other product offerings and an overall increase in our chargeback experience.

Total same store gross margin in the U.K.

SG&A Expenses

1 unchanged sentence

Total SG&A expenses in the U.K.

during the three months ended March 31, 2021 decreased $10.2 million, or 17.0%, as compared to the same period in 2020.

during the six months ended June 30, 2021 increased $17.5 million, or 19.9%, as compared to the same period in 2020.

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

during the three months ended March 31, 2021, decreased $9.6 million, or 16.6%, as compared to the same period in 2020.

On a constant currency basis, total same store SG&A expenses decreased 22.6%, driven by the continual execution of cost reduction strategies as a response to the COVID-19 pandemic coupled with a temporary suspension of city tax.

We have strived to retain our lower operating cost structure and have continued to benefit from these cost cutting measures in the first quarter of 2021.

As a percentage of gross profit, total same store SG&A expenses decreased from 91.8% for the first quarter of 2020 to 73.8% for the same period of 2021.

during the six months ended June 30, 2021, increased $17.9 million, or 21.0%, as compared to the same period in 2020.

On a constant currency basis, total same store SG&A expenses increased 10.5%, driven by the increase of business activity as COVID-19 restrictions were lifted early in the second quarter of 2021.

We have continued to focus on cost discipline throughout the year.

As a percentage of gross profit, total same store SG&A expenses decreased from 92.6% for the six months ended 2020 to 67.8% for the same period of 2021 driven by productivity gains and higher vehicle margins achieved during the six months ended June 30, 2021 as compared to the same period in 2020.

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

Reported Operating Data — Brazil

(In millions, except unit data)

Three Months Ended March 31,

Three Months Ended June 30,

2021 2020 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change

20 unchanged sentences

Parts and service sales 43.9 % 41.8 % 2.2 %

F&I, net 100.0 % 100.0 % — %

Total gross margin 15.7 % 13.5 % 2.3 %

9 unchanged sentences

Used vehicle retail sales $ 1,951 $ 1,213 $ 739 60.9 % $ 12 59.9 %

Used vehicle wholesale sales $ 725 $ 430 $ 295 68.6 % $ (161) 106.1 %

Used vehicle wholesale sales $ 850 $ 247 $ 603 NM $ 15 NM

Total used $ 1,599 $ 752 $ 847 112.6 % $ 13 110.8 %

2 unchanged sentences

SG&A as % gross profit 68.8 % 114.0 % (45.2) %

NM — Not Meaningful

Same Store Operating Data — Brazil

(In millions, except unit data)

Three Months Ended March 31,

Three Months Ended June 30,

2021 2020 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change

20 unchanged sentences

Parts and service sales 43.9 % 41.8 % 2.2 %

Total gross margin 15.8 % 13.5 % 2.3 %

Retail new vehicles sold 1,451 694 757 109.1 %

Retail used vehicles sold 500 356 144 40.4 %

Wholesale used vehicles sold 235 324 (89) (27.5) %

Total used 735 680 55 8.1 %

Average sales price per unit sold:

New vehicle retail $ 34,313 $ 28,495 $ 5,818 20.4 % $ 438 18.9 %

Used vehicle retail $ 23,671 $ 20,905 $ 2,766 13.2 % $ 273 11.9 %

Gross profit per unit sold:

New vehicle retail sales $ 3,578 $ 1,999 $ 1,579 79.0 % $ 38 77.1 %

Used vehicle retail sales $ 1,959 $ 1,204 $ 755 62.7 % $ 12 61.7 %

Used vehicle wholesale sales $ 850 $ 247 $ 603 NM $ 15 NM

Total used $ 1,605 $ 748 $ 856 114.5 % $ 13 112.8 %

F&I PRU $ 707 $ 550 $ 158 28.7 % $ 8 27.1 %

SG&A expenses $ 8.0 $ 5.6 $ 2.3 41.7 % $ 0.1 39.9 %

SG&A as % gross profit 67.6 % 114.0 % (46.4) %

NM — Not Meaningful

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

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

During the second quarter of 2021, as a result of the COVID-19 pandemic, our dealership showrooms in São Paulo were required to close from April 1, 2021 through April 18, 2021, however our parts and service operations remained open for essential services.

Our dealerships located outside of São Paulo were fully operational unlike the comparable period in 2020 where all of our showrooms in Brazil were closed the entire month of April and then only open limited hours for the remainder of the quarter .

Total revenues in Brazil during the three months ended June 30, 2021 increased $38.2 million, or 104.5%, as compared to the same period in 2020.

Total same store revenues in Brazil during the three months ended June 30, 2021 increased $38.3 million, or 104.6%, as compared to the same period in 2020.

On a constant currency basis, total same store revenues increased 101.8% driven by increases in all business lines except used vehicle wholesale sales.

This increase in revenue was the result of the lifting of COVID-19 restrictions and increased customer demand in 2021 as compared to last year.

Total gross profit in Brazil during the three months ended June 30, 2021 increased $6.8 million, or 138.6%, as compared to the same period in 2020.

Total same store gross profit during the three months ended June 30, 2021 increased $6.9 million, or 138.8%, as compared to the same period in 2020.

On a constant currency basis, total same store gross profit increased 135.7% driven by increases in all business lines.

New vehicle retail same store gross profit on a constant currency basis increased 270.4% driven by a 109.1% increase in new vehicle retail same store units sales and a 77.1% increase in new vehicle retail same store average gross profit per unit sold.

The increase in new vehicle same store gross profit per retail unit sold was the result of increased consumer demand and inventory constraints as OEM’s are producing and delivering fewer vehicles due to the global semiconductor chip shortage.

At June 30, 2021, our Brazil new vehicle inventory stood at a 32 days’ supply, which was 49 days lower than the same period last year and 5 days higher than December 31, 2020 days’ supply of 27.

Used vehicle retail same store gross profit on a constant currency basis increased 127.1%, reflecting the 61.7% increase in used vehicle retail same store average gross profit per unit sold coupled with a 40.4% increase in used vehicle retail same store unit sales.

The improvement in used same store retail gross profit per retail unit was driven by new vehicle inventory shortages, which drove customers to purchase used vehicles and an improved selling environment as compared to 2020.

Parts and service same store gross profit on a constant currency basis increased 61.5% driven by increases in our customer-pay, warranty and collision operations reflecting the increase in business activity over the prior year.

F &I same store gross profit on a constant currency basis increased 136.2%, driven by increases in same store retail unit sales and penetration rates partially offset by a decline in income per contract for our retail finance fees.

Total same store gross margin increased 230 basis points in the second quarter of 2021 compared to the same period of 2020 as a result of increases in all of our business lines resulting from the improved selling environment, consumer demand and supply constraints.

SG&A Expenses

Total SG&A expenses in Brazil during the three months ended June 30, 2021 increased $2.5 million, or 44.0%, as compared to the same period in 2020.

Total same store SG&A expenses in Brazil during the three months ended June 30, 2021 increased $2.3 million, or 41.7%, as compared to the same period in 2020.

On a constant currency basis, total same store SG&A expenses increased 39.9%, driven by increased variable commission payments as a result of increased sales and margins during the second quarter of 2021 as compared to last year.

SG&A as a percentage of gross profit decreased from 114.0% in 2020 to 67.6% in 2021 reflecting the 135.7% increase in total same store gross profit driven by productivity gains and higher vehicle margins realized during the second quarter of 2021.

We continued to focus on cost discipline throughout the second quarter of 2021.

Reported Operating Data - Brazil

(In millions, except unit data)

Six Months Ended June 30,

2021 2020 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change

New vehicle retail sales $ 83.9 $ 77.3 $ 6.7 8.6 % $ (12.4) 24.7 %

Used vehicle retail sales 22.5 27.4 (4.9) (17.9) % (3.4) (5.6) %

Used vehicle wholesale sales 4.6 6.7 (2.1) (30.8) % (0.5) (23.3) %

Total used 27.1 34.1 (7.0) (20.5) % (3.9) (9.1) %

Parts and service sales 17.1 15.5 1.6 10.4 % (2.1) 24.2 %

F&I, net 2.8 2.3 0.5 20.1 % (0.4) 38.8 %

Total revenues $ 130.9 $ 129.1 $ 1.8 1.4 % $ (18.8) 15.9 %

Gross profit:

New vehicle retail sales $ 8.6 $ 4.9 $ 3.7 75.1 % $ (1.2) 100.2 %

Used vehicle retail sales 2.1 1.5 0.6 40.6 % (0.3) 61.1 %

Used vehicle wholesale sales 0.4 0.3 0.1 30.0 % (0.1) 47.8 %

Total used 2.5 1.8 0.7 38.9 % (0.4) 59.0 %

Parts and service sales 7.4 6.7 0.7 10.8 % (0.9) 25.0 %

F&I, net 2.8 2.3 0.5 20.1 % (0.4) 38.8 %

Total gross profit $ 21.2 $ 15.6 $ 5.5 35.5 % $ (2.9) 54.3 %

Gross margin:

New vehicle retail sales 10.2 % 6.3 % 3.9 %

Used vehicle retail sales 9.3 % 5.4 % 3.9 %

Used vehicle wholesale sales 7.9 % 4.2 % 3.7 %

Total used 9.0 % 5.2 % 3.9 %

Parts and service sales 43.3 % 43.1 % 0.2 %

Total gross margin 16.2 % 12.1 % 4.1 %

9 unchanged sentences

Used vehicle retail sales $ 2,051 $ 1,019 $ 1,032 101.2 % $ (300) 130.6 %

Used vehicle wholesale sales $ 788 $ 356 $ 432 NM $ (108) NM

Total used $ 1,652 $ 784 $ 868 110.7 % $ (239) 141.2 %

F&I PRU $ 758 $ 557 $ 200 35.9 % $ (118) 57.2 %

SG&A expenses $ 15.2 $ 16.2 $ (1.0) (6.4) % $ (1.9) 5.5 %

SG&A as % gross profit 71.7 % 103.8 % (32.1) %

NM — Not Meaningful

Same Store Operating Data - Brazil

(In millions, except unit data)

Six Months Ended June 30,

2021 2020 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change

New vehicle retail sales $ 83.9 $ 77.3 $ 6.7 8.6 % $ (12.4) 24.7 %

Used vehicle retail sales 22.5 27.4 (4.9) (17.8) % (3.4) (5.4) %

Used vehicle wholesale sales 4.6 6.7 (2.1) (30.8) % (0.5) (23.3) %

Total used 27.1 34.1 (7.0) (20.4) % (3.9) (9.0) %

Parts and service sales 17.1 15.5 1.6 10.4 % (2.1) 24.2 %

F&I, net 2.8 2.3 0.5 20.1 % (0.4) 38.8 %

Total revenues $ 130.9 $ 129.1 $ 1.8 1.4 % $ (18.8) 16.0 %

Gross profit:

New vehicle retail sales $ 8.6 $ 4.9 $ 3.7 75.1 % $ (1.2) 100.2 %

Used vehicle retail sales 2.1 1.5 0.6 41.1 % (0.3) 61.8 %

Used vehicle wholesale sales 0.4 0.3 0.1 30.0 % (0.1) 47.8 %

Total used 2.5 1.8 0.7 39.3 % (0.4) 59.5 %

Parts and service sales 7.4 6.7 0.7 10.8 % (0.9) 25.0 %

F&I, net 2.8 2.3 0.5 20.1 % (0.4) 38.8 %

Total gross profit $ 21.2 $ 15.6 $ 5.6 35.5 % $ (2.9) 54.3 %

Gross margin:

New vehicle retail sales 10.2 % 6.3 % 3.9 %

Used vehicle retail sales 9.3 % 5.4 % 3.9 %

Used vehicle wholesale sales 7.9 % 4.2 % 3.7 %

Total used 9.1 % 5.2 % 3.9 %

Parts and service sales 43.3 % 43.1 % 0.1 %

Total gross margin 16.2 % 12.1 % 4.1 %

Retail new vehicles sold 2,622 2,665 (43) (1.6) %

Retail used vehicles sold 1,016 1,454 (438) (30.1) %

Wholesale used vehicles sold 469 799 (330) (41.3) %

Total used 1,485 2,253 (768) (34.1) %

Average sales price per unit sold:

New vehicle retail $ 32,011 $ 28,994 $ 3,017 10.4 % $ (4,728) 26.7 %

Used vehicle retail $ 22,143 $ 18,828 $ 3,315 17.6 % $ (3,334) 35.3 %

Gross profit per unit sold:

New vehicle retail sales $ 3,273 $ 1,839 $ 1,434 78.0 % $ (469) 103.5 %

Used vehicle retail sales $ 2,055 $ 1,018 $ 1,037 101.9 % $ (301) 131.5 %

Used vehicle wholesale sales $ 788 $ 356 $ 432 NM $ (108) NM

Total used $ 1,655 $ 783 $ 872 111.4 % $ (240) 142.0 %

F&I PRU $ 758 $ 557 $ 200 35.9 % $ (118) 57.2 %

1 unchanged sentence

SG&A as % gross profit 71.4 % 103.5 % (32.1) %

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

NM — Not Meaningful

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

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

During the first quarter of 2021, Brazil saw a rise in COVID-19 cases partially due to a new variant that is rapidly spreading through the country and overwhelming the healthcare system.

To contain the spread of the virus, the government canceled Carnival in 2021 and implemented various lockdowns for non-essential businesses.

As such, many of our showrooms were closed periodically throughout the quarter impacting our ability to sell new and used vehicles.

Total and same store revenues in Brazil during the three months ended March 31, 2021 decreased $36.5 million, or 39.4%, as compared to the same period in 2020.

On a constant currency basis, total same store revenues decreased 24.9% driven by declines in all business lines except parts and services, resulting from the continued negative impact of the COVID-19 pandemic.

New vehicle retail same store revenues on a constant currency basis decreased 26.5%, as a 40.6% decrease in new vehicle retail same store unit sales was partially offset by a 23.7% increase in new vehicle retail same store average sales price per unit sold.

Used vehicle retail same store revenues on a constant currency basis decreased 33.6%, reflecting a 53.0% decrease in used vehicle retail same store unit sales partially offset by a 41.4% increase in used vehicle retail same store average sales price per unit sold.

Used vehicle wholesale same store revenues decreased 34.6% on a constant currency b asis, reflecting a 50.7% decline in wholesale used vehicle same store unit sales.

Reduced demand, limited availability of inventory and closure of our dealerships during the COVID-19 lockdown drove the reduction in new and used vehicle same store unit sales.

The increases in new and used vehicle retail same store average sales price per unit is the result of higher transaction prices due to lower inventory supply in the market as OEMs are producing and delivering fewer vehicles due to a global semiconductor chip shortage.

Parts and service same store revenues on a constant currency basis increased 2.3%, driven by increases in customer-pay and warranty revenues, which were partially offset by declines in collision revenues.

F&I same store revenues on a constant currency basis remained relatively flat as an increase in finance income per contract was offset by the decline in retail unit sales.

Total and same store gross profit in Brazil during the three months ended March 31, 2021 decreased $1.3 million as compared to the same period in 2020.

On a constant currency basis, total same store gross profit increased 8.9% driven by increases in new vehicle, used vehicle retail and used vehicle wholesale, partially offset by declines in parts and services.

New vehicle retail same store gross profit on a constant currency basis increased 19.6% driven by a 101.3% increase in new vehicle retail same store average gross profit per unit sold, partially offset by a 40.6% decline in new vehicle retail same store unit sales.

Used vehicle retail same store gross profit on a constant currency basis increased 30.1%, reflecting the 176.9% increase in used vehicle retail same store average gross profit per unit sold partially offset by the 53.0% decline in used vehicle retail same store unit sales.

The improvement in new and used same store retail gross profit per retail unit was a direct result of supply constraints.

Parts and service same store gross profit on a constant currency basis decreased 1.1% driven by declines in our warranty and customer-pay margins.

F &I same store gross profit on a constant currency basis remained flat compared to the same period a year ago.

Brazil saw a rise in COVID-19 cases due to the Brazilian variant in the first quarter of 2021, which led the government to cancel Carnival in 2021 and implemented various lockdowns for non-essential businesses.

As such, many of our showrooms were closed periodically throughout the first and second quarters of 2021 impacting our ability to sell new and used vehicles.

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

Total and same store revenues in Brazil during the six months ended June 30, 2021 increased $1.8 million, or 1.4%, as compared to the same period in 2020.

On a constant currency basis, total same store revenues increased 16.0% driven by increases in new vehicle, parts and services and F&I sales which were partially offset by declines in used vehicle and used vehicle wholesale revenu es.

The increases in new vehicle, parts and service, and F&I revenues were driven by improved business conditions and increased business activity as the COVID-19 pandemic had a lesser impact in 2021 compared to a year ago.

Used vehicle retail same store revenues on a constant currency basis decreased 5.4%, as a 30.1% decrease in used vehicle retail same store unit sales more than offset a 35.3% increase in used vehicle retail same store average sales price per unit sold.

Used vehicle wholesale same store revenues decreased 23.3% on a constant currency basis reflecting the 41.3% decline in used vehicle wholesale units .

The decline in used retail and wholesale same store units sold reflects challenges with the availability of inventory.

The improvement in used vehicle retail same store average sales price per unit sold reflect higher demand in a supply constraint environment.

Total gross profit in Brazil during the six months ended June 30, 2021 increased $5.5 million, or 35.5%, as compared to the same period in 2020.

Total same store gross profit in Brazil during the six months ended June 30, 2021 increased $5.6 million, or 35.5%, as compared to the same period in 2020.

On a constant currency basis, total same store gross profit increased 54.3% driven by increases in all business lines.

New vehicle retail same store gross profit on a constant currency basis increased 100.2%, driven by a 103.5% increase in new vehicle retail same store average gross profit per unit sold partially offset by a 1.6% decrease in new vehicle retail same store units sold.

Used vehicle retail same store gross profit on a constant currency basis increased 61.8%, reflecting a 131.5% increase in used vehicle retail same store average gross profit per unit sold partially offset by a 30.1% decrease in used vehicle retail same store u nit sales.

The improvement in new and used vehicle retail same store gross profit and gross profit per unit reflects increased consumer demand and inventory constraints experienced during the COVID-19 pandemic as OEMs are producing and delivering fewer vehicles due to global semiconductor chip shortage and have not returned to normal production levels.

Parts and service same store gross profit increased 25.0% on a constant currency basis, driven by improvements in customer-pay and warranty reflecting the increase in business activity over the prior year .

F&I same store gross profit on a constant currency basis increased 38.8% driven by an increase in penetration rates partially offset by a decline in retail unit sales.

Total same store gross margin increased 410 basis points in the first six months of 2021 compared to the same period on 2020 as a result of increases in all of our business lines resulting from the improved selling environment, consumer demand and supply constraints.

SG&A Expenses

Total SG&A expenses in Brazil during the three months ended March 31, 2021 decreased $3.5 million, or 33.1%, as compared to the same period in 2020.

Total same store SG&A expenses in Brazil during the three months ended March 31, 2021 decreased $3.4 million, or 32.2%, as compared to the same period in 2020.

On a constant currency basis, total same store SG&A expenses decreased 16.8% while total same store gross profit increased 8.9%, resulting in a 2,250 basis points decrease in total same store SG&A as a percentage of gross profit.

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

Total SG&A expenses in Brazil during the six months ended June 30, 2021 decreased $1.0 million, or 6.4%, as compared to the same period in 2020.

Total same store SG&A expenses in Brazil during the six months ended June 30, 2021, decreased $1.0 million, or 6.5%, as compared to the same period in 2020.

On a constant currency basis, total same store SG&A expenses increased 5.3%, driven by increased variable commission payments as a result of increased sales and margins during the second quarter of 2021 as compared to last year.

Total same store SG&A as a percentage of gross profit decreased from 103.5% in 2020 to 71.4% in 2021 driven by productivity gains and higher vehicle margins realized during the second quarter of 2021.

We continued to focus on cost discipline throughout the first six months of 2021.

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

The following table (in millions) and discussion of our results of operations is on a consolidated basis, unless otherwise noted.

Three Months Ended March 31,

The following tables (in millions) and discussion of our results of operations are on a consolidated basis, unless otherwise noted.

Three Months Ended June 30,

2021 2020 Increase/ (Decrease) % Change

2 unchanged sentences

Other interest expense, net $ 13.7 $ 16.2 $ (2.5) (15.3) %

(Benefit) provision for income taxes $ 29.4 $ 9.1 $ 20.3 223.0 %

Provision for income taxes $ 52.3 $ 12.2 $ 40.1 329.9 %

Six Months Ended June 30,

2021 2020 Increase/ (Decrease) % Change

Depreciation and amortization expense $ 38.3 $ 37.4 $ 0.9 2.4 %

Total depreciation and amortization expense during the three months ended March 31, 2021 increased $0.9 million, or 4.7%, as compared to the same period in 2020.

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

Floorplan interest expense $ 16.4 $ 23.0 $ (6.6) (28.8) %

Total floorplan interest expense during the three months ended March 31, 2021 decreased $5.3 million, or 41.2%, as compared to the same period in 2020.

Other interest expense, net $ 27.5 $ 34.3 $ (6.8) (19.9) %

Provision for income taxes $ 81.7 $ 21.3 $ 60.4 284.1 %

Depreciation and Amortization Expense

Total depreciation and amortization expense during the three and six months ended June 30, 2021 as compared to the same periods in 2020 had no material changes.

Floorplan Interest Expense

Total floorplan interest expense during the three months ended June 30, 2021 decreased $1.3 million, or 13.2%, as compared to the same period in 2020.

For the six months ended June 30, 2021, floorplan interest expense decreased $6.6 million, or 28.8%, as compared to the same period in 2020.

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

To mitigate the impact of interest rate fluctuations, we employ an interest rate hedging strategy, whereby we swap variable interest rate exposure on a portion of our borrowings for a fixed interest rat e.

The decrease is primarily due to lower floorplan borrowings as a result of 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.

The decrease in both comparative periods is primarily due to lower floorplan borrowings as a result of lower inventory levels and lower weighted average interest rates mainly due to a decline in LIBOR, partially offset by higher realized expense on our interest rate swaps and unrealized loss on interest rate swaps of $2.3 million recognized during the three months ended June 30, 2021, primarily resulting from the impact of the de-designation of certain interest rate swaps due to lower inventory levels.

Refer to Note 6.

Financial Instruments and Fair Value Measurements within our Notes to Condensed Consolidated Financial Statements for additional details of the interest rate swaps.

Other Interest Expense, Net

Total other interest expense, net during the three months ended March 31, 2021 decreased $4.3 million, or 23.9%, as compared to the same period in 2020.

Total other interest expense, net during the three months ended June 30, 2021 decreased $2.5 million, or 15.3%, as compared to the same period in 2020.

For the six months ended June 30, 2021, other interest expense decreased $6.8 million, or 19.9%, as compared to the same period 2020.

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.

The decrease was primarily attributable to lower interest rates achieved through refinancing our debt in the previous 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.

The decrease in both comparative periods was primarily attributable to lower interest rates achieved through refinancing our debt in the previous 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 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.

Provision for Income Taxes

Provision for income taxes of $29.4 million during the three months ended March 31, 2021 increased by $20.3 million, or 223.0% , as compared to the same period in 2020.

The increase was primarily due to higher pretax book income.

For the three months ended March 31, 2021, our effective tax rate decreased to 22.4% from 23.4% as compared to the same period in 2020.

This decrease was primarily due to decreases in valuation allowances provided for net operating losses in Brazil as compared to the same period in 2020.

Provision for income taxes of $52.3 million during the three months ended June 30, 2021 increased by $40.1 million, or 329.9%, as compared to the same period in 2020.

For the six months ended June 30, 2021, our provision for income taxes of $81.7 million increased $60.4 million, or 284.1%, as compared to the same period in 2020.

These increases were primarily due to higher pre-tax book income.

For the three months ended June 30, 2021, our effective tax rate decreased to 21.5% from 28.7% as compared to the same period in 2020.

This decrease was primarily due to the increase of deferred tax assets based on a U.K.

tax rate increase enacted in June 2021 effective beginning April 1, 2023, and losses incurred in the U.K.

and Brazil during the three months ended June 30, 2020 that were benefited at a tax rate lower than the U.S.

statutory rate.

We expect our effective tax rate for the remainder of 2021 will be between 22.5 % and 23.5%.

7 unchanged sentences

Refer to Sources and Uses of Liquidity from Investing Activities below for further discussion of expectations regarding future capital expenditures.

As of March 31, 2021, our total cash on hand was $82.9 million.

As of June 30, 2021, our total cash on hand was $198.7 million.

The balance of cash on hand excludes $326.1 million of immediately available funds used to pay down our U.S.

Floorplan Line and FMCC Facility as of March 31, 2021.

Floorplan Line as of June 30, 2021.

We use the pay down of our U.S.

21 unchanged sentences

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

Three Months Ended March 31,

Six Months Ended June 30,

2021 2020 % Change

CASH FLOWS FROM OPERATING ACTIVITIES:

Net cash provided by (used in) operating activities:

Net cash provided by operating activities:

$ 752.1 $ 688.2 9.3 %

1 unchanged sentence

Change in Floorplan notes payable — manufacturer affiliates associated with net acquisitions and dispositions and floorplan offset activity (16.0) 0.2

Adjusted net cash provided by (used in) operating activities $ 156.6 $ 51.9 201.5 %

Adjusted net cash provided by operating activities $ 359.4 $ 237.6 51.3 %

CASH FLOWS FROM INVESTING ACTIVITIES:

Net cash provided by (used in) investing activities:

Net cash used in investing activities:

$ (93.8) $ (61.2) (53.3) %

1 unchanged sentence

Change in proceeds from disposition of franchises, property and equipment, associated with Floorplan notes payable (6.4) —

Adjusted net cash provided by (used in) investing activities $ (76.8) $ (31.1) (147.1) %

Adjusted net cash used in investing activities $ (94.9) $ (61.2) (55.1) %

CASH FLOWS FROM FINANCING ACTIVITIES:

Net cash provided by (used in) financing activities:

Net cash used in financing activities:

$ (547.1) $ (579.0) 5.5 %

Change in Floorplan notes payable, excluding floorplan offset 393.9 450.7

Adjusted net cash provided by (used in) financing activities $ (82.8) $ (26.4) (214.0) %

Adjusted net cash used in financing activities $ (153.3) $ (128.3) (19.4) %

Sources and Uses of Liquidity from Operating Activities

For the three months ended March 31, 2021, we generated $239.3 million of net cash flows from operating activities.

On an adjusted basis for the same period, we generated $156.6 million in net cash flows from operating activities, primarily consisting of $101.9 million in net income, coupled with non-cash adjustments related to depreciation and amortization of $19.5 million and stock-based compensation of $6.4 million.

Adjusted net cash flows from operating activities also included an $18.0 million adjusted net change in operating assets and liabilities, including cash inflows of $149.3 million from decreases in inventory levels and $18.3 million from increases in accounts payable and accrued expenses.

These cash inflows were partially offset by cash outflows of $83.2 million from adjusted net floorplan repayments and $43.5 million from net increases in contracts-in-transit and vehicle receivables.

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

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

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

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

For the six months ended June 30, 2021, we generated $752.1 million of net cash flows from operating activities.

On an adjusted basis for the same period, we generated $359.4 million in net cash flows from operating activities, primarily consisting of $292.9 million in net income, coupled with non-cash adjustments related to depreciation and amortization of $38.3 million, stock-based compensation of $13.2 million and operating lease assets of $11.8 million.

Adjusted net cash flows from operating activities also included a $3.1 million adjusted net change in operating assets and liabilities, primarily due to $449.4 million of adjusted net floorplan repayments, partially offset by $444.4 million from decreases in inventory levels as a result of global semiconductor chip shortages.

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

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

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

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

Working Capital

At March 31, 2021, we had a $198.6 million surplus of working capital.

At June 30, 2021, we had a $417.9 million surplus of working capital.

This represents an increase of $256.4 million from December 31, 2020, when we had a $161.5 million surplus of working capital.

5 unchanged sentences

Sources and Uses of Liquidity from Investing Activities

During the three months ended March 31, 2021, we used $76.7 million in net cash flow for investing activities.

On an adjusted basis for the same period, we used $76.8 million in net cash flows from investing activities, primarily consisting of $44.6 million used for acquisition activity and $37.3 million used for purchases of property and equipment and to construct new and improve existing facilities, partially offset by cash inflows of $5.0 million related to the disposition of franchises and property and equipment.

Of the $37.3 million in property and equipment purchases, $22.2 million was used for non-real estate related capital expenditures, $17.5 million was used for the purchase of real estate associated with existing dealership operations and $2.4 million represented the net increase in the accrual for capital expenditures from fiscal year-end.

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

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

During the six months ended June 30, 2021, we used $93.8 million in net cash flow from investing activities.

On an adjusted basis for the same period, we used $94.9 million in net cash flows from investing activities, primarily consisting of $63.8 million used for purchases of property and equipment and to construct new and improve existing facilities and $44.6 million used for acquisition activity, partially offset by cash inflows of $13.4 million related to the disposition of franchises and property and equipment.

Of the $63.8 million in property and equipment purchases, $47.7 million was used for non-real estate related capital expenditures, $17.5 million was used for the purchase of real estate associated with existing dealership operations, partially offset by the $1.4 million net increase in the accrual for capital expenditures from fiscal year-end.

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

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

Capital Expenditures

6 unchanged sentences

Sources and Uses of Liquidity from Financing Activities

For the three months ended March 31, 2021, we used $165.6 million in net cash flows from financing activities.

For the six months ended June 30, 2021, we used $547.1 million in net cash flows from financing activities.

On an adjusted basis for the same period, we used $153.3 million in net cash flows from financing activities, primarily related to cash outflows of $149.7 million in net repayments on our U.S.

Floorplan Line (representing the net cash activity in our floorplan offset account) and $5.6 million in dividend payments.

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

On an adjusted basis for the same period, we used $26.4 million in net cash flows from financing activities, primarily related to cash outflows of $48.9 million related to the repurchase of our common stock and $5.5 million in dividend payments, partially offset by $20.2 million in net borrowings on our U.S.

Floorplan Line (representing the net cash activity in our floorplan offset account) and $10.5 million in net borrowings on other debt.

Floorplan Line (representing the net cash activity in our floorplan offset account), $18.6 million related to the repurchase of our common stock and $11.7 million in dividend payments, partially offset by $28.2 million net borrowings on our Acquisition Line.

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

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

These cash outflows were partially offset by $160.1 million net borrowings on other debt, which primarily reflected increased mortgage borrowings in the U.S.

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

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.

The following table summarizes the commitment of our credit facilities as of March 31, 2021 (in millions):

The following table summarizes the commitment of our credit facilities as of June 30, 2021 (in millions):

Commitment Outstanding Available

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$ 2,045.0 $ 306.6 $ 1,738.4

(1) The available balance at March 31, 2021 includes $231.9 million of immediately available funds.

(1) The available balance at June 30, 2021 includes $326.1 million of immediately available funds.

The remaining available balance can be used for inventory financing.

(2) The outstanding balance of $65.8 million is related to outstanding letters of credit of $17.8 million and $48.0 million in borrowings as of March 31, 2021.

The borrowings outstanding under the Acquisition Line included no U.S dollar borrowings and £ 35 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.

(2) The outstanding balance of $94.3 million is related to outstanding letters of credit of $17.8 million and $76.5 million in borrowings as of June 30, 2021.

The borrowings outstanding under the Acquisition Line included no USD borrowings and £ 55 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 at March 31, 2021 includes $12.9 million of immediately available funds.

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

(3) The available balance at June 30, 2021 does not include any immediately available funds.

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

(4) The outstanding balance excludes $286.3 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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Certain of our mortgage agreements contain cross-default provisions that in the event of a default of certain mortgage agreements and of our Revolving Credit Facility, could trigger an uncured default.

As of March 31, 2021, we were in compliance with the requirements of the financial covenants under our debt agreements.

As of June 30, 2021, we were in compliance with the requirements of the financial covenants under our debt agreements.

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

As of March 31, 2021

As of June 30, 2021

Required Actual

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Fixed charge coverage ratio > 1.20 5.35

As of March 31, 2021, we had $82.9 million of cash on hand and an additional $244.8 million invested in our floorplan offset accounts, bringing total cash liquidity to $327.7 million.

In addition, we had $283.2 million of additional borrowing capacity on our Acquisition Line, bringing total immediate liquidity to $610.9 million as of March 31, 2021.

Based on our position as of March 31, 2021 and our outlook as discussed within Management's Discussion and Analysis of Financial Condition and Results of Operations, we have sufficient liquidity currently and do not anticipate any material liquidity constraints or issues with our ability to remain in compliance with our debt covenants.

As of June 30, 2021, we had $198.7 million of cash on hand and an additional $326.1 million invested in our floorplan offset accounts, bringing total cash liquidity to $524.8 million.

In addition, we had $254.7 million of additional borrowing capacity on our Acquisition Line, bringing total immediate liquidity to $779.5 million as of June 30, 2021.

Based on our position as of June 30, 2021 and our outlook as discussed within Item 2.

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.

Refer to Note 8.

Debt and Note 9.

Floorplan Notes Payable in our Notes to Condensed Consolidated Financial Statements for further discussion of our debt instruments, credit facilities and other financing arrangements existing as of March 31, 2021.

Share Repurchases and Dividends

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

During the first quarter of 2021, we had no repurchase of shares of our common stock.

As of March 31, 2021, we had $168.7 million available under our current share repurchase authorization.

For the first quarter of 2021, our Board of Directors approved a quarterly cash dividend of $0.31 per share on all shares of our common stock, which resulted in $5.4 million paid to common shareholders and $0.2 million to unvested RSA holders.

During the six months ended June 30, 2021, 125,069 shares were repurchased at an average price of $148.79 per share, for a total of $18.6 million.

As of June 30, 2021, we had $150.1 million available under our current share repurchase authorization.

During the three months ended June 30, 2021, our Board of Directors approved a quarterly cash dividend of $0.33 per share on all shares of our common stock, which resulted in $5.8 million paid to common shareholders and $0.2 million to unvested RSA holders.

During the six months ended June 30, 2021, we have declared cash dividends of $0.64 per share on all shares of our common stock, for a total of $11.3 million paid to common shareholders and $0.4 million to unvested RSA holders.

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.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis