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Item 2. Management’s Discussion and Analysis

2021-11-04 compared with 2021-08-05 · 396 added, 269 removed, 919 unchanged (42% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties.

Actual results of Group 1 Automotive, Inc.

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

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

Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, should be read in conjunction with the accompanying unaudited Condensed Consolidated Financial Statements and the notes thereto, as well as our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 24, 2021 (the “2020 Form 10-K”).

Unless the context requires otherwise, references to “we,” “us” and “our” are intended to mean the business and operations of Group 1 Automotive, Inc.

and its subsidiaries.

Forward-Looking Statements

This Quarterly Report on Form 10-Q (this “Form 10-Q”) includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (“Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”).

Forward-looking statements may appear throughout this report.

This information includes statements regarding our strategy, plans, projections, goals or current expectations with respect to, among other things:

• our future operating performance;

• our ability to maintain or improve our margins;

• our ability to accomplish and sustain SG&A expense decreases;

• operating cash flows and availability of capital;

• the completion of future acquisitions and divestitures;

• the future revenues of acquired dealerships;

• future stock repurchases, refinancing of debt and dividends;

• future capital expenditures;

• changes in sales volumes and availability of credit for customer financing in new and used vehicles and sales volumes in the parts and service markets;

• business trends in the retail automotive industry, including the level of manufacturer incentives, new and used vehicle retail sales volume, pricing and margins, online vehicle purchases, acceptance of electric and autonomous vehicles, customer demand, interest rates and changes in industry-wide or manufacturer specific inventory levels;

• manufacturer quality issues, including the recall of vehicles and any related negative impact on vehicle sales and brand reputation;

• availability of financing for inventory, working capital, real estate and capital expenditures;

• changes in regulatory practices, tariffs and taxes, including Brexit;

• the impacts of any potential global recession;

• our ability to meet our financial covenants in our debt obligations and to maintain sufficient liquidity to operate;

• the impacts of the COVID-19 pandemic on our business.

Although we believe that the expectations reflected in these forward-looking statements are reasonable when and as made, we cannot assure you that these expectations will prove to be correct.

When used in this Form 10-Q, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may” and similar expressions are intended to identify forward-looking statements.

These forward-looking statements are based on our expectations and beliefs as of the date of this Form 10-Q concerning future developments and their potential effect on us.

While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate.

All comments concerning our expectations for future revenues and operating results are based on our forecasts for our existing operations and do not include the potential impact of any future acquisitions.

Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections.

Known material factors that could cause actual results to differ from those in the forward-looking statements include:

• adverse developments in the global economy as well as the public health crisis related to the COVID-19 pandemic and the resulting impact on the demand for and supply of new and used vehicles and related parts and services;

• uncertainty regarding the length of time it will take for the U.S.

and the rest of the world to slow the spread of the COVID-19 virus, the actions to be taken by governments to contain and combat the pandemic and the timing, pace and extent of an economic recovery in the U.S.

and elsewhere, which in turn will likely affect demand and availability for our vehicles, parts and services;

• future deterioration in the economic environment, including consumer confidence, consumer preferences, interest rates, inflation, the prices of oil and gasoline, the level of manufacturer incentives, the implementation of international and domestic trade tariffs and the availability of consumer credit may affect the demand and availability for new and used vehicles, replacement parts, maintenance and repair services and F&I products;

• adverse domestic and international developments such as war, terrorism, political conflicts, social protests or other hostilities may adversely affect the demand and availability for our products and services;

• uncertainty of the potential impact of Brexit on the overall U.K.

economy and, more specifically, the potential adverse effect on retail automotive industry sales could have a material adverse effect on our revenues and business operations;

• the existing and future regulatory environment, climate control legislation, changes to U.S.

federal, U.S.

or Brazil tax laws, rates and regulations and unexpected litigation or adverse legislation, including changes in U.S.

state franchise laws, may impose additional costs on us or otherwise adversely affect us;

• a concentration of risk associated with our principal automobile manufacturers, especially Toyota, Nissan, Honda, BMW, Ford, Daimler, General Motors, Chrysler, Hyundai, Volkswagen and Jaguar-Land Rover, because of financial distress, bankruptcy, natural disasters or pandemics, such as the COVID-19 pandemic, that disrupt production, or other reasons, may not continue to produce or make available to us vehicles that are in high demand by our customers or provide financing, insurance, advertising or other assistance to us;

• restructuring by one or more of our principal manufacturers, up to and including bankruptcy, may cause us to suffer financial loss in the form of uncollectible receivables, devalued inventory or loss of franchises;

• requirements imposed on us by our manufacturers may require dispositions, limit our acquisitions or require increases in the level of capital expenditures related to our dealership facilities;

• our existing and/or new dealership operations may not perform at our or manufacturer expected levels or achieve expected improvements;

• our ability to realize attractive margins or volumes for our vehicle sales or services;

• our failure to achieve expected future cost savings or future costs may be higher than we expect;

• manufacturer quality issues, including the recall of vehicles, may negatively impact vehicle sales and brand reputation;

• available capital resources, increases in cost of financing (such as higher interest rates) and our various debt agreements may limit our ability to complete acquisitions, complete construction of new or expanded facilities, repurchase shares, or pay dividends;

• our ability to refinance or obtain financing in the future may be limited and the cost of financing could increase significantly;

• our ability to facilitate credit for consumers;

• foreign currency exchange controls and currency fluctuations;

• new accounting standards could materially impact our reported EPS;

• our ability to acquire new dealerships and successfully integrate those dealerships into our business;

• the impairment of our goodwill, our indefinite-lived intangibles and our other long-lived assets;

• natural disasters, adverse weather events and other catastrophic events;

• a cybersecurity event of our systems or a third party partners’ systems, including a breach of personally identifiable information about our customers or employees or a shutdown of our operating systems;

• our foreign operations and sales in the U.K.

and Brazil, which pose additional risks;

• the inability to adjust our cost structure and inventory levels to offset any reduction in the demand for our products and services;

• availability of trained workforce;

• our losses may not be fully covered by insurance or may only be fully covered with a significant increase to our insurance costs;

• our inability to obtain inventory of new and used vehicles and parts, including imported inventory, at the cost, or in the volume, we expect;

• failure to consummate proposed transactions in a timely manner;

• failure of the closing conditions in the Purchase Agreement, as defined therein, to be satisfied in a timely manner;

• advancements in vehicle technology and changes in vehicle ownership models/consumer preferences.

For additional information regarding known material factors that could cause our actual results to differ from our projected results, refer to Item 1A.

Risk Factors in our 2020 Form 10-K and this Form 10-Q, as well as Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures About Market Risk of the Form 10-Q.

Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof.

We undertake no responsibility and expressly disclaim any duty, to update any such statements, whether as a result of new information, new developments or otherwise, or to publicly release the result of any revision of our forward-looking statements after the date they are made, except to the extent required by law.

We are a leading operator in the automotive retail industry.

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Our operations are aligned into three regions, which comprise our reportable segments:

the U.S., U.K.

the U.S., the U.K.

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

and Brazilian Operations, and the U.K.

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

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

The President, U.S.

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

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

As of September 30, 2021, our retail network consisted of 117 dealerships in the U.S., 55 dealerships in the U.K.

and 16 dealerships in Brazil.

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

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

We believe that as of September 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.

For 2021, our priorities are growing our company through acquisitions, improving and growing sales penetration in our digital retailing platform, AcceleRide®, continuing to grow our parts and service gross profit through numerous initiatives, increasing our market share in the highly fragmented used vehicle business, continuing to leverage our SG&A as a percentage of gross profit and focusing on the retention and training of our talented dealership employees.

For 2021, our priorities include:

• growing our company through acquisitions;

• improving and growing sales penetration in our digital retailing platform, AcceleRide®;

• continuing to grow our parts and service gross profit through numerous initiatives;

• increasing our market share in the highly fragmented used vehicle business;

• continuing to leverage our SG&A as a percentage of gross profit;

• focusing on the retention and training of our talented dealership employees;

• securing additional vehicle inventory.

Strategic Acquisitions and Dispositions

We will continue to focus on opportunities to enhance our current dealership portfolio through strategic acquisitions and improving or disposing of underperforming dealerships.

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

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 dealerships where we have strategic opportunities that represent growing brands in growth markets.

We believe that substantial opportunities for growth through acquisitions remain in our industry.

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

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.

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

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.

In July 2021, we acquired 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.

On September 13, 2021, we entered into a Purchase Agreement (the “Purchase Agreement”) to purchase substantially all the assets, including real estate, of Prime Automotive Group (the “Seller”), headquartered in Westwood, Massachusetts (the “Prime Acquisition”).

We expect to pay a purchase price of approximately $880 million, excluding repayment of sellers’ floorplan notes payable, subject to customary adjustments described in the Purchase Agreement (the “Purchase Price”) and appropriate reduction for any exercise of customary manufacturer rights of first refusal.

The Purchase Price is expected to be financed through a combination of cash, available lines of credit and debt financing.

The operating assets expected to be acquired include 30 dealerships representing 43 additional franchises and three collision centers in the Northeastern U.S.

In 2020, the corresponding Prime dealerships generated $1.8 billion in annual revenues.

At the closing of the Prime Acquisition, $45.0 million of the Purchase Price will be deposited into escrow as a contingent reserve to be used, if necessary, to compensate us for any post-closing indemnifiable losses pursuant to the terms of the Purchase Agreement, with 50% of the escrowed amount to be released to the Prime Sellers 12 months after the closing of the Prime Acquisition and the remainder to be released to the Prime Sellers 24 months after the closing of the Prime Acquisition, subject to pending and realized claims, if any.

The Prime Acquisition is expected to close in November 2021(such day, the “Closing Date”), provided that the closing conditions are satisfied or waived.

During such time, we will pay the entire Purchase Price;

however, any dealerships and assets related to dealerships with respect to which manufacturer approvals have not been obtained (collectively, the “Delayed Dealerships”) will not be transferred to us until such time as such approvals have been received from the relevant manufacturers and such Delayed Dealerships will be operated for the benefit of us by the Seller Parties during the interim period.

From the 105th day after the Closing Date (such day, the “Exclusion Date”) until up to (i) 180 days following the Exclusion Date or (ii) 24 months following the Closing Date, if Group 1 has requested that the relevant Selling Party take action against a manufacturer to obtain approval, such Selling Party will cooperate in the sale of any Delayed Dealerships to third parties.

Any net proceeds from any such sale would be for the benefit of us.

The relevant Selling Party will be under no obligation to refund us for any difference between the purchase price paid by us and such net proceeds, and we will not be required to turn over any gain realized as a result of such third party sale.

Any Delayed Dealerships not sold to a third party are conveyed to us and, to the extent any assets cannot be acquired by us without manufacturer approval, such assets will be sold by us at our sole expense.

In October 2021, we acquired three dealerships in the U.S, which we expect to generate approximately $235.0 million in annualized revenues.

Refer to Note 3.

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

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

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

total online retail unit sales increased 67.8% c ompared to the same period in 2020.

We also completed the roll out of AcceleRide® to our U.K.

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We are capitalizing on technology advances in robotic process automation and artificial intelligence to improve our marketing, call center and back office efficiency.

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

Parts and Service Growth

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

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.

service operations utilize 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.

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Diversity, Equity and Inclusion (“DEI”)

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

In 2021, we established 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.

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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.

Our new vehicle days’ supply of inventory was approximately 14 days for the quarter ended September 30, 2021, as compared to 52 days for the quarter ended December 31, 2020, and 41 days for the quarter ended September 30, 2020.

Refer to Item 1A.

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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 2020 Form 10-K.

For additional discussion of our critical accounting policies and accounting estimates, please see Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2020 Form 10-K.

Results of Operations

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(In millions, except unit data)

Three Months Ended June 30,

Three Months Ended September 30,

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

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Used vehicle retail sales 98.6 71.1 27.5 38.6 % 1.5 36.5 %

Used vehicle wholesale sales 9.1 2.0 7.1 NM 0.3 NM

Used vehicle wholesale sales 7.6 5.9 1.7 28.1 % 0.3 23.4 %

Total used 106.2 77.0 29.1 37.8 % 1.8 35.5 %

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Used vehicle retail sales $ 2,279 $ 1,854 $ 425 23.0 % $ 36 21.0 %

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

Used vehicle wholesale sales $ 676 $ 513 $ 163 31.7 % $ 25 26.9 %

Total used $ 1,948 $ 1,543 $ 405 26.3 % $ 33 24.1 %

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(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 June 30,

Three Months Ended September 30,

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

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Used vehicle retail sales 94.6 70.5 24.1 34.2 % 1.4 32.2 %

Used vehicle wholesale sales 8.9 2.0 6.9 NM 0.3 NM

Used vehicle wholesale sales 7.3 5.9 1.4 23.3 % 0.3 18.8 %

Total used 101.8 76.4 25.5 33.3 % 1.7 31.2 %

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Used vehicle retail sales $ 2,294 $ 1,863 $ 431 23.1 % $ 34 21.3 %

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

Used vehicle wholesale sales $ 687 $ 516 $ 171 33.1 % $ 25 28.1 %

Total used $ 1,966 $ 1,551 $ 415 26.7 % $ 32 24.7 %

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SG&A as % gross profit 58.5 % 59.5 % (1.0) %

NM — Not Meaningful

Reported Operating Data — Consolidated

(In millions, except unit data)

Six Months Ended June 30,

Nine Months Ended September 30,

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

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Used vehicle retail sales 267.3 159.5 107.8 67.6 % 3.7 65.2 %

Used vehicle wholesale sales 13.1 3.0 10.0 NM 0.2 NM

Used vehicle wholesale sales 20.7 9.0 11.7 130.3 % 0.4 125.4 %

Total used 287.9 168.5 119.5 70.9 % 4.2 68.4 %

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Used vehicle retail sales $ 2,116 $ 1,510 $ 607 40.2 % $ 29 38.2 %

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

Used vehicle wholesale sales $ 645 $ 290 $ 355 122.6 % $ 14 117.9 %

Total used $ 1,819 $ 1,233 $ 585 47.5 % $ 26 45.3 %

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(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,

Nine Months Ended September 30,

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

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Used vehicle retail sales 262.0 158.1 103.9 65.7 % 3.6 63.4 %

Used vehicle wholesale sales 12.9 3.0 9.9 NM 0.2 NM

Used vehicle wholesale sales 20.2 8.9 11.3 126.8 % 0.4 122.0 %

Total used 282.2 167.0 115.2 68.9 % 4.0 66.6 %

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Used vehicle retail sales $ 2,115 $ 1,518 $ 596 39.3 % $ 29 37.4 %

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

Used vehicle wholesale sales $ 647 $ 291 $ 355 121.9 % $ 14 117.2 %

Total used $ 1,819 $ 1,240 $ 579 46.7 % $ 26 44.6 %

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SG&A as % gross profit 59.7 % 67.4 % (7.7) %

NM — Not Meaningful

Reported Operating Data — U.S.

(In millions, except unit data)

Three Months Ended June 30,

Three Months Ended September 30,

2021 2020 Increase/(Decrease) % Change

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Used vehicle retail sales 73.1 52.8 20.2 38.3 %

Used vehicle wholesale sales 6.4 1.6 4.8 NM

Used vehicle wholesale sales 3.2 3.7 (0.5) (13.6) %

Total used 76.3 56.6 19.7 34.9 %

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Used vehicle retail sales $ 2,305 $ 1,908 $ 397 20.8 %

Used vehicle wholesale sales $ 969 $ 311 $ 658 NM

Used vehicle wholesale sales $ 478 $ 603 $ (125) (20.8) %

Total used $ 1,984 $ 1,669 $ 315 18.9 %

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SG&A as % gross profit 57.7 % 59.0 % (1.3) %

NM — Not Meaningful

Same Store Operating Data — U.S.

(In millions, except unit data)

Three Months Ended June 30,

Three Months Ended September 30,

2021 2020 Increase/(Decrease) % Change

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Used vehicle retail sales 71.5 52.4 19.2 36.6 %

Used vehicle wholesale sales 6.2 1.6 4.6 NM

Used vehicle wholesale sales 3.0 3.7 (0.7) (18.8) %

Total used 74.5 56.1 18.5 33.0 %

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Used vehicle retail sales $ 2,280 $ 1,918 $ 362 18.9 %

Used vehicle wholesale sales $ 956 $ 309 $ 648 NM

Used vehicle wholesale sales $ 454 $ 608 $ (154) (25.4) %

Total used $ 1,962 $ 1,679 $ 283 16.8 %

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SG&A as % gross profit 57.7 % 58.8 % (1.1) %

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.

operating results is on an as reported and same store basis.

The difference between as 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.

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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.

during the three months ended September 30, 2021, increased $417.8 million, or 18.6%, 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.

during the three months ended September 30, 2021, increased $413.5 million, or 18.6%, driven by increases in all of our revenue streams.

The increase of 2.8% in new vehicle retail same store sales was driven by an 11.3% increase in the average new vehicle retail same store sales price, partially offset by a 7.6% decrease in new vehicle retail same store unit sales 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 September 30, 2021, our U.S.

new vehicle inventory supply was 11 days’ which was 41 days lower than the same period in 2020 and 37 days lower than December 31, 2020 days’ supply of 48.

Used vehicle retail same store sales increased 48.9%, driven by a 29.6% increase in average used vehicle same store sales price, coupled with a 14.9% increase in used vehicle retail same store unit sales.

The increase reflects strong consumer demand coupled with our ability to hold used vehicle days’ supply relatively constant by sourcing more inventory through direct purchases from vehicle owners rather than through public auctions.

New and used vehicle retail same store revenues also benefited from a 67.8% increase in sales from our online digital platform, AcceleRide®, during the three months ended September 30, 2021 as compared to the same period in 2020.

Used vehicle wholesale same store sales increased 53.7%, driven by a 41.2% increase in average used vehicle wholesale same store sales price, coupled with an 8.8% increase in used vehicle wholesale same store units.

The increase in our same store average used vehicle wholesale sales price was the result of a 23.1% increase in average used vehicle market prices in 2021, as compared to the same period in 2020, as reflected in the Manheim Index.

Parts and service same store revenues increased 15.5%, for the quarter ended September 30, 2021, as compared to the same period in 2020, driven by a 19.4% increase in customer pay revenues, a 25.7% increase in wholesale revenues and a 30.4% increase in collision revenues;

partially offset by a 12.9% decline in warranty revenues.

F&I same store revenues increased 15.5% driven primarily by improved penetration rates on VSCs and many of our other insurance product offerings, higher income per contract on our retail finance fees and an increase in our total retail same store unit sales.

These increases were partially offset by an increase in our overall chargeback experience.

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.

during the three months ended September 30, 2021, increased $119.3 million, or 28.7%, 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.

during the three months ended September 30, 2021, increased $116.7 million, or 28.4%, as compared to the same period in 2020, driven by increases in all of our operations with the exception of used vehicle wholesale same store gross profit.

New vehicle retail same store gross profit increased 74.8%, reflecting an 89.2% increase in new vehicle retail same store gross profit per unit sold, partially offset by a 7.6% decrease 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.

Used vehicle retail same store gross profit increased 36.6%, driven by an increase of 18.9% in used vehicle retail same store gross profit per unit sold, coupled with a 14.9% 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 a combination of higher market prices and strong demand.

Our used vehicle wholesale same store gross profit decreased 18.8%, driven by a 25.4% decrease in used vehicle wholesale same store gross profit per unit sold, partially offset by an increase in used vehicle same store wholesale units.

The decrease in our used vehicle wholesale same store gross profit per unit sold stems from fluctuations in wholesale prices from month to month, as reflected in the Manheim Index, and the timing of when we acquire inventory and sell the vehicles at auction.

Parts and service same store gross profit increased 13.4% for the quarter ended September 30, 2021, as compared to the same period in 2020, driven primarily by a 19.3% increase in our customer-pay gross profit.

F&I same store gross profit increased 15.5%, driven by increases in revenue discussed above.

Total same store gross margin increased 150 basis points, driven by higher new vehicle margins due to supply constraints.

SG&A Expenses

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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.

during the three months ended September 30, 2021, increased $63.5 million, or 25.9%, 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.

during the three months ended September 30, 2021, increased $62.9 million, or 26.0%, as compared to the same period in 2020, primarily driven by increased variable commission payments as a result of improvements in used vehicle sales volume and new vehicle 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.

for the three months ended September 30, 2021, included $3.8 million in acquisition costs and $0.6 million of net costs associated with Hurricane Ida, partially offset by $3.7 million in gains related to favorable legal settlements.

Total same store SG&A as a percent of gross profit decreased from 58.8% in the third quarter of 2020, to 57.7% for the same period of 2021, driven by productivity gains and higher new vehicle margins.

Reported Operating Data — U.S.

(In millions, except unit data)

Six Months Ended June 30,

Nine Months Ended September 30,

2021 2020 Increase/(Decrease) % Change

9 unchanged sentences

Used vehicle retail sales 210.7 125.7 85.0 67.6 %

Used vehicle wholesale sales 10.3 2.4 7.9 NM

Used vehicle wholesale sales 13.6 6.2 7.4 119.9 %

Total used 224.3 131.9 92.4 70.0 %

19 unchanged sentences

Used vehicle retail sales $ 2,192 $ 1,543 $ 649 42.1 %

Used vehicle wholesale sales $ 792 $ 199 $ 592 NM

Used vehicle wholesale sales $ 685 $ 336 $ 349 104.0 %

Total used $ 1,934 $ 1,321 $ 614 46.5 %

2 unchanged sentences

SG&A as % gross profit 58.4 % 65.3 % (6.9) %

NM — Not Meaningful

Same Store Operating Data — U.S.

(In millions, except unit data)

Six Months Ended June 30,

Nine Months Ended September 30,

2021 2020 Increase/(Decrease) % Change

9 unchanged sentences

Used vehicle retail sales 207.9 124.6 83.3 66.8 %

Used vehicle wholesale sales 10.1 2.4 7.7 NM

Used vehicle wholesale sales 13.1 6.1 7.0 115.2 %

Total used 221.1 130.7 90.3 69.1 %

19 unchanged sentences

Used vehicle retail sales $ 2,178 $ 1,553 $ 625 40.3 %

Used vehicle wholesale sales $ 785 $ 201 $ 583 NM

Used vehicle wholesale sales $ 673 $ 338 $ 334 98.9 %

Total used $ 1,922 $ 1,330 $ 593 44.6 %

2 unchanged sentences

SG&A as % gross profit 58.5 % 65.1 % (6.6) %

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.

operating results is on an as reported and same store basis.

The difference between as 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.

1 unchanged sentence

Total revenues in the U.S.

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

during the nine months ended September 30, 2021, increased $1,908.4 million, or 31.4%, as compared to the same period in 2020.

Total same store revenues in the U.S.

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.

during the nine months ended September 30, 2021, increased $1,917.7 million, or 31.9%, as compared to the same period in 2020, driven by increases in all of our revenue streams.

The 29.0% increase in new vehicle retail same store sales was driven by a 20.0% increase in new vehicle retail same store unit sales, coupled with a 7.5% increase in average new vehicle retail same store sales price 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.

Used vehicle retail same store sales increased 45.4%, driven by a 22.2% increase in average used vehicle retail same store sales price coupled with an 18.9% increase in used vehicle retail same store unit sales, reflecting increased demand and our ability to maintain used vehicle inventory levels through sourcing more inventory from direct purchases from vehicle owners.

New and used vehicle retail same store revenues also benefited from a 96.5% increase in sales from our online digital platform, AcceleRide®, during the nine months ended September 30, 2021 as compared to the same period in 2020.

Used vehicle wholesale same store sales increased 48.8%, driven by a 35.7% increase in average used vehicle same store sales price coupled with an 8.2% increase in used vehicle wholesale same store units.

The increase in our average used vehicle wholesale same store sales price was the result of a 28.4% increase in the average used vehicle market prices for the nine months ended September 30, 2021, as compared to the same period last year, as reflected in the Manheim Index.

Parts and service same store revenues increased 13.8% for the nine months ended September 30, 2021, as compared to the same period in 2020, driven by a 17.2% increase in our customer pay revenues, a 21.1% increase in our wholesale revenue and an 18.6% increase in our collision revenues;

partially offset by a 5.2% decline in our warranty revenues.

F&I same store revenues increased 30.3% driven primarily by a 19.4% increase in same store total retail unit sales, coupled with higher income per contract on finance and many of our other insurance product offerings and higher penetration rates.

These increases were partially offset by an increase in our overall chargeback experience.

Total gross profit in the U.S.

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

during the nine months ended September 30, 2021, increased $430.3 million, or 39.8%, as compared to the same period in 2020.

Total same store gross profit in the U.S.

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.

during the nine months ended September 30, 2021, increased $428.4 million, or 40.1%, as compared to the same period in 2020, driven by increases in all of our operations.

New vehicle retail same store gross profit increased 97.8%, driven by a 64.9% increase in new vehicle retail same store gross profit per unit sold, coupled with a 20.0% increase in new vehicle retail same store 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 retail same store gross profit increased 66.8%, driven by a 40.3% increase in used vehicle retail same store gross profit per unit sold, coupled with an 18.9% increase in used vehicle retail same store unit sales.

The increase in used vehicle retail same store gross profit per unit sold reflects a combination of higher market prices and strong demand.

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 15.4%, 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.

F&I same store gross profit increased 30.3%, driven by increases in revenue discussed above.

Total same store gross margin increased 110 basis points, driven by higher new and used vehicle margins, reflecting vehicle supply constraints and higher parts and service margins, reflecting improvements in customer pay and an increase in internal work associated with higher vehicle 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 six months ended June 30, 2021 increased $113.5 million, or 24.6%, as compared to the same period in 2020.

during the nine months ended September 30, 2021, increased $177.0 million, or 25.1%, as compared to the same period in 2020.

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

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.

during the nine months ended September 30, 2021, increased $180.2 million, or 25.9%, 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.

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.

for the nine months ended September 30, 2021, included $2.8 million in disaster pay and insurance deductible expense associated with the February winter storm in Texas and Hurricane Ida, coupled with $3.8 million in acquisition costs, partially offset by $4.7 million in gains related to favorable legal settlements.

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.

in the nine months ended September 30, 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 65.1% for the nine months ended September 30, 2020, to 58.5% 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 June 30,

Three Months Ended September 30,

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

9 unchanged sentences

Used vehicle retail sales 23.9 17.2 6.7 39.0 % 1.5 30.3 %

Used vehicle wholesale sales 2.5 0.4 2.2 NM 0.3 NM

Used vehicle wholesale sales 4.1 2.0 2.1 106.1 % 0.3 92.7 %

Total used 28.1 19.2 8.9 46.0 % 1.8 36.8 %

19 unchanged sentences

Used vehicle retail sales $ 2,215 $ 1,706 $ 509 29.9 % $ 139 21.7 %

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

Used vehicle wholesale sales $ 987 $ 394 $ 593 NM $ 64 134.0 %

Total used $ 1,872 $ 1,266 $ 606 47.9 % $ 118 38.6 %

5 unchanged sentences

(In millions, except unit data)

Three Months Ended June 30,

Three Months Ended September 30,

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

9 unchanged sentences

Used vehicle retail sales 21.5 17.1 4.4 25.9 % 1.3 18.0 %

Used vehicle wholesale sales 2.5 0.3 2.2 NM 0.3 NM

Used vehicle wholesale sales 4.0 2.0 2.0 101.1 % 0.3 88.0 %

Total used 25.6 19.1 6.5 33.8 % 1.6 25.4 %

26 unchanged sentences

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.

operating results is on an as reported and same store basis.

The difference between as 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.

2 unchanged sentences

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.

In the prior year, the government-mandated closure of non-essential businesses remained in effect through May 18, 2020, for service and June 1, 2020, for our showrooms.

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

dealership operations steadily recovered from the COVID-19 closures.

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.

during the three months ended September 30, 2021, increased $9.6 million, or 1.3%, 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.

during the three months ended September 30, 2021, decreased $64.4 million, or 8.8%, as compared to the same period in 2020.

On a constant currency basis, total same store revenues decreased 14.6%, driven by decreases in most of our revenue streams, partially offset by an improvement in used vehicle retail same store revenues.

New vehicle retail same store revenues decreased 31.0%, on a constant currency basis, driven by a 38.6% decrease in new vehicle retail same store unit sales, partially offset by a 12.4% increase in the average new vehicle retail same store sales price.

The decrease in new vehicle retail same store revenues primarily reflects supply constraints as OEMs struggled to produce new vehicles due to parts shortages, including the global semiconductor chip shortage.

At September 30, 2021, our U.K.

new vehicle inventory supply was 19 days, which was 1 day lower than the same period in 2020 and 83 days lower than December 31, 2020 days’ supply of 102.

The increase in the average new vehicle retail same store sales price was driven by both supply shortages and strong vehicle demand, which was pent-up over past years due to Brexit and the COVID-19 pandemic.

On a constant currency basis, used vehicle retail same store revenues increased 9.5%, as an 8.4% decline in used vehicle retail same store unit sales was more than offset by a 19.6% increase in average used vehicle retail same store sales price.

The increase in used vehicle retail same store revenues was due to higher consumer demand and new vehicle shortages.

Parts and service same store revenues decreased 9.8%, on a constant currency basis, as a 16.3% increase in wholesale revenues was more than offset by decreases in our other parts and service businesses, reflecting higher pent-up demand in the third quarter of 2020 due to prior COVID-19 related closures.

F&I same store revenues, on a constant currency basis, decreased 11.8%, driven by a decrease in retail unit sales volumes, partially offset by higher income per contract on retail finance fees and other product offerings and improved penetration rates.

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.

during the three months ended September 30, 2021, increased $16.0 million, or 18.3%, 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.

during the three months ended September 30, 2021, increased $8.0 million, or 9.3%, as compared to the same period in 2020.

On a constant currency basis, total same store gross profit increased 2.4%, driven by improvements in new and used retail same store gross profit, partially offset by decreases in parts and service and F&I same store gross profit.

New vehicle retail same store gross profit increased 9.4%, on a constant currency basis, driven by a 78.2% increase in new vehicle retail same store gross profit per unit, partially offset with a 38.6% decrease in new vehicle retail same store unit sales.

The increase in new vehicle gross profit per unit primarily reflects both higher demand and the supply constraints previously discussed.

On a constant currency basis, used vehicle retail same store gross profit improved 18.0%, reflecting a 28.9% increase in used vehicle retail same store gross profit per unit sold, partially offset by an 8.4% decrease in used vehicle retail same store unit sales.

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

Parts and service same store gross profit, on a constant currency basis declined 7.5%, driven by the decreases in our businesses discussed above.

F&I same store gross profit on a constant currency basis, decreased 11.8% as previously discussed.

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.

increased 230 basis points, driven by higher new and used vehicle margins due to higher demand, vehicle supply constraints and improved customer-pay margins.

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.

during the three months ended September 30, 2021, increased $13.9 million, or 25.9%, 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.

during the three months ended September 30, 2021, increased $6.8 million, or 12.9%, as compared to the same period in 2020.

On a constant currency basis, total same store SG&A expenses increased 5.8%, reflecting the temporary suspension of city tax in 2020 that expired at the end of the second quarter of 2021.

As a percentage of gross profit, total same store SG&A expenses increased from 60.9% for the third quarter of 2020 to 62.9% for the same period of 2021.

Total same store SG&A expenses in the third quarter of 2021 included $0.6 million in acquisition costs.

Reported Operating Data — U.K.

(In millions, except unit data)

Six Months Ended June 30,

Nine Months Ended September 30,

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

39 unchanged sentences

(In millions, except unit data)

Six Months Ended June 30,

Nine Months Ended September 30,

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

38 unchanged sentences

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.

operating results is on an as reported and same store basis.

The difference between as 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.

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.

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, the government-mandated closure of non-essential businesses remained in effect through May 18, 2020, for service and June 1, 2020, for our showrooms.

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

dealership operations steadily recovered from the COVID-19 closures.

Total revenues in the U.K.

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

during the nine months ended September 30, 2021, increased $405.7 million, or 25.4%, as compared to the same period in 2020.

Total same store revenues in the U.K.

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.

during the nine months ended September 30, 2021, increased $334.6 million, or 21.2%, as compared to the same period in 2020.

On a constant currency basis, total same store revenues increased 11.7%, driven by increases in used vehicle retail, F&I, and parts and service, partially offset by a decline in new vehicle retail and used vehicle wholesale same store revenues.

New vehicle retail same store revenues decreased 2.9% on a constant currency basis, driven by a 12.0% decrease in new vehicle retail same store unit sales, partially offset by a 10.4% increase in average new vehicle retail same store sales price.

The increase in the average new vehicle retail same store sales price was driven by both supply shortages and high vehicle demand, which was pent-up over past years due to Brexit and the COVID-19 pandemic.

On a constant currency basis, used vehicle retail same store revenues increased 37.1%, driven by a 22.0% growth in used vehicle retail same store unit sales, coupled with a 12.4% increase in average used vehicle retail same store sales price.

The increase in used vehicle retail same store revenues was due to strong consumer demand and new vehicle inventory shortages.

Parts and service same store revenues increased 10.3%, on a constant currency basis, driven by increases in customer-pay, warranty and wholesale businesses reflecting increased business activity with the reduction of COVID-19 restrictions in 2021.

F&I same store revenues, on a constant currency basis, increased 7.7%, driven by higher income per contract on retail finance fees and other product offerings and an increase in used vehicle same store unit sales.

Total gross profit in the U.K.

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

during the nine months ended September 30, 2021, increased $76.2 million, or 41.9%, as compared to the same period in 2020.

Total same store gross profit in the U.K.

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

during the nine months ended September 30, 2021, increased $68.0 million, or 38.3%, as compared to the same period in 2020.

On a constant currency basis, total same store gross profit increased 27.6%, 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.

New vehicle retail same store gross profit on a constant currency basis increased 40.0%, driven by a 59.1% increase in new vehicle retail same store average gross profit per unit sold, partially offset by a 12.0% decline 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 and the global semiconductor chip shortage.

Used vehicle retail same store gross profit, on a constant currency basis, increased 50.6% on a 23.4% increase in used vehicle retail same store average gross profit per unit sold, coupled with a 22.0% 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.

Parts and service same store gross profit, on a constant currency basis, increased 17.5%, driven by the increases in our businesses discussed above.

F&I same store gross profit, on a constant currency basis, increased 7.7%, as previously discussed.

Total same store gross margin in the U.K.

increased 160 basis points, driven by higher new and used vehicle margins due to increased demand and supply constraints and increased parts and service margins, reflecting improved customer-pay margins and higher internal work as a result of increased used vehicle sales volumes.

SG&A Expenses

Total SG&A expenses in the U.K.

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

during the nine months ended September 30, 2021, increased $31.4 million, or 22.2%, as compared to the same period in 2020.

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

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.

during the nine months ended September 30, 2021, increased $24.7 million, or 18.0%, as compared to the same period in 2020.

On a constant currency basis, total same store SG&A expenses increased 8.8%, driven by increased 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.

As a percentage of gross profit, total same store SG&A expenses decreased from 77.3% for the nine months ended September 30, 2020 to 65.9% for the same period of 2021, driven by productivity gains and higher vehicle margins.

Total same store SG&A expenses in 2021 included $0.6 million in acquisition costs.

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

1 unchanged sentence

(In millions, except unit data)

Three Months Ended June 30,

Three Months Ended September 30,

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

31 unchanged sentences

Used vehicle retail sales $ 2,090 $ 1,840 $ 250 13.6 % $ 58 10.4 %

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

Used vehicle wholesale sales $ 792 $ 696 $ 96 13.8 % $ 22 10.7 %

Total used $ 1,709 $ 1,453 $ 256 17.6 % $ 47 14.4 %

2 unchanged sentences

SG&A as % gross profit 60.9 % 79.9 % (19.0) %

NM — Not Meaningful

Same Store Operating Data — Brazil

(In millions, except unit data)

Three Months Ended June 30,

Three Months Ended September 30,

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

31 unchanged sentences

Used vehicle retail sales $ 2,090 $ 1,840 $ 250 13.6 % $ 58 10.4 %

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

Used vehicle wholesale sales $ 792 $ 696 $ 96 13.8 % $ 22 10.7 %

Total used $ 1,709 $ 1,453 $ 256 17.6 % $ 47 14.4 %

2 unchanged sentences

SG&A as % gross profit 60.4 % 79.8 % (19.4) %

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.

The following discussion of our Brazil operating results is on an as reported and same store basis.

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

During the third quarter of 2021, all of our dealerships were fully operational unlike the comparable period where the operations had been significantly impacted by the reduced demand caused by the COVID-19 pandemic and the restrictions put in place by local governments.

Total and same store revenues in Brazil during the three months ended September 30, 2021, increased $42.2 million, or 77.7%, as compared to the same period in 2020.

On a constant currency basis, total same store revenues increased 73.1%, driven by increases in all revenue streams.

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.

New vehicle retail same store revenues, on a constant currency basis, increased 90.5%, driven by a 46.8% increase in new vehicle retail same store unit sales and a 29.8% increase in new vehicle retail same store average sales price per unit sold.

Used vehicle retail same store revenues, on a constant currency basis, increased 60.3%, reflecting a 31.5% increase in used vehicle retail same store unit sales, coupled with a 21.9% increase in used vehicle retail same store average sales price per unit sold.

Used vehicle wholesale same store revenues increased 33.2%, on a constant currency b asis, reflecting a 6.7% increase in wholesale used vehicle same store unit sales and a 24.8% increase in used vehicle wholesale same store sales price.

The increases in new and used vehicle same store revenues was the result of higher consumer demand, improved selling conditions and new vehicle inventory constraints as OEM’s were producing and delivering fewer vehicles due to parts shortages, including the global semiconductor chip shortage.

At September 30, 2021, our Brazil new vehicle inventory supply was 23 days, which was 18 days lower than the same period in 2020 and 4 days lower than December 31, 2020 days’ supply of 27.

Parts and service same store revenues on a constant currency basis increased 36.2%, driven by improvements in customer-pay and collision revenues, which were partially offset by a decline in warranty revenues.

F&I same store revenues on a constant currency basis increased 50.1%, driven by increases in income per contract for our retail finance fees and higher retail sales volumes partially offset by lower penetration rates.

Total and same store gross profit in Brazil during the three months ended September 30, 2021, increased $5.9 million, or 68.7%, as compared to the same period in 2020.

On a constant currency basis, total same store gross profit increased 64.1%, driven by increases in all business lines.

New vehicle retail same store gross profit, on a constant currency basis, increased 128.6%, driven by a 46.8% increase in new vehicle retail same store units sales and a 55.7% 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.

The increase in new vehicle same store gross profit per retail unit sold was the result of increased consumer demand and inventory constraints as discussed above.

Used vehicle retail same store gross profit, on a constant currency basis, increased 45.2%, reflecting a 31.5% increase in used vehicle retail same store unit sales, coupled with a 10.4% increase in used vehicle retail same store average gross profit per unit, driven by new vehicle inventory shortages, which drove customers to purchase used vehicles and an improved selling environment compared to 2020.

Parts and service same store gross profit, on a constant currency basis, increased 29.7%, driven by increases in our customer-pay and collision operations, reflecting the increase in business activity over the prior year, partially offset by a slight decline in our warranty business.

F &I same store gross profit, on a constant currency basis, increased 50.1% as discussed above.

Total same store gross margin declined 80 basis points during the three months ended September 30, 2021, as compared to the same period in 2020, primarily driven by decreases in customer-pay and warranty margins partially offset by increases in new vehicle margins resulting from the improved selling environment, higher 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.

Total SG&A expenses in Brazil during the three months ended September 30, 2021, increased $2.0 million, or 28.5%, as compared to the same period in 2020.

Total same store SG&A expenses in Brazil during the three months ended September 30, 2021, increased $1.9 million, or 27.7%, as compared to the same period in 2020.

On a constant currency basis, total same store SG&A expenses increased 24.2% , driven by increased variable commission payments as a result of increased sales and higher new vehicle margins during the third quarter of 2021, as compared to last year.

SG&A as a percentage of gross profit decreased from 79.8% in 2020 to 60.4% in 2021, on a constant currency basis, driven by productivity gains and higher new vehicle margins realized during the third quarter of 2021.

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

Reported Operating Data — Brazil

(In millions, except unit data)

Six Months Ended June 30,

Nine Months Ended September 30,

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

31 unchanged sentences

Used vehicle retail sales $ 2,067 $ 1,245 $ 822 66.0 % $ (143) 77.5 %

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

Used vehicle wholesale sales $ 789 $ 444 $ 345 77.6 % $ (51) 89.1 %

Total used $ 1,676 $ 965 $ 711 73.7 % $ (115) 85.6 %

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SG&A as % gross profit 67.3 % 95.3 % (28.0) %

NM — Not Meaningful

Same Store Operating Data — Brazil

(In millions, except unit data)

Six Months Ended June 30,

Nine Months Ended September 30,

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

31 unchanged sentences

Used vehicle retail sales $ 2,070 $ 1,244 $ 826 66.4 % $ (143) 77.9 %

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

Used vehicle wholesale sales $ 789 $ 444 $ 345 77.6 % $ (51) 89.1 %

Total used $ 1,677 $ 964 $ 713 74.0 % $ (115) 85.9 %

2 unchanged sentences

SG&A as % gross profit 66.9 % 95.1 % (28.1) %

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.

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.

The following discussion of our Brazil operating results is on an as reported and same store basis.

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

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 implement various lockdowns for non-essential businesses in the first and second quarters of 2021 impacting our ability to sell new and used vehicles.

Conditions in the third quarter improved significantly as all of our dealerships were fully operational increasing our ability to operate more efficiently.

In the prior year, beginning March 20, 2020, our dealership operations were significantly impacted by the reduced demand caused by the COVID-19 pandemic and the restrictions put in place by local governments.

Total revenues in Brazil during the nine months ended September 30, 2021, increased $43.9 million, or 23.9%, as compared to the same period in 2020.

Total same store revenues in Brazil during the nine months ended September 30, 2021, increased $44.0 million, or 24.0%, as compared to the same period in 2020.

On a constant currency basis, total same store revenues increased 34.5%, driven by increases in new vehicle, used vehicle retail, parts and services and F&I sales, partially offset by declines in used vehicle wholesal e revenues.

New vehicle retail same store revenues, on a constant currency basis, increased 45.9%, reflecting a 28.6% increase in new vehicle retail same store average sales price per unit sold, coupled with a 13.4% increase in new vehicle retail same store unit sales.

The increase in new vehicle retail same store units was driven by improved business conditions as the COVID-19 pandemic had a lesser impact in 2021 than in 2020.

The increase in new vehicle retail same store average sales price was driven by inventory constraints as OEMs were producing and delivering fewer vehicles due to parts shortages, including the global semiconductor chip shortage.

Used vehicle retail same store revenues, on a constant currency basis, increased 15.2%, as a 32.7% increase in used vehicle retail same store average sales price per unit sold was partially offset by a 13.2% decrease in used vehicle retail same store unit sales, reflecting higher demand in a supply constraint environment.

Used vehicle wholesale same store revenues decreased 7.0%, on a constant currency basis, driven by a 28.8% decline in used vehicle wholesale units.

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

Parts and service same store revenues, on a constant currency basis, increased 28.6%, driven by increases in customer-pay, warranty and collision revenues.

F&I same store revenues, on a constant currency basis, increased 42.8% , driven by improved income per contract on our retail finance fees and higher new vehicle retail unit sales, partially offset by a decline in penetration.

Total and same store gross profit in Brazil during the nine months ended September 30, 2021, increased $11.5 million, or 47.3%, as compared to the same period in 2020.

On a constant currency basis, total same store gross profit increased 58.1%, driven by increases in all revenue streams.

New vehicle retail same store gross profit, on a constant currency basis, increased 111.0%, driven by a 86.1% increase in new vehicle retail same store average gross profit per unit sold, coupled with a 13.4% increase in new vehicle retail same store units sold.

Used vehicle retail same store gross profit, on a constant currency basis, increased 54.5%, reflecting a 77.9% increase in used vehicle retail same store average gross profit per unit sold, partially offset by a 13.2% decrease in used vehicle retail same store unit sales.

The improvement in new and used vehicle retail same store gross profit and gross profit per unit reflects increased consumer demand and supply constraints.

Parts and service same store gross profit increased 26.8%, on a constant currency basis, driven by improvements in customer-pay, warranty and collision, reflecting the increase in business activity over the prior year.

F&I same store gross profit, on a constant currency basis, increased 42.8% as discussed above.

Total same store gross margin increased 250 basis points during the nine months ended September 30, 2021, as compared to the same period in 2020, as a result of increases in new and used vehicle margins resulting from the improved selling environment, higher consumer demand and supply constraints.

SG&A Expenses

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 SG&A expenses in Brazil during the nine months ended September 30, 2021, increased $0.9 million, or 4.0%, as compared to the same period in 2020.

Total same store SG&A expenses in Brazil during the nine months ended September 30, 2021, increased $0.9 million, or 3.7%, as compared to the same period in 2020.

On a constant currency basis, total same store SG&A expenses increased 11.4%, driven by increased variable commission payments as a result of increased sales and vehicle margins in 2021 as compared to last year.

Total same store SG&A as a percentage of gross profit decreased from 95.1% in 2020 to 66.9% in 2021, reflecting a 58.1% increase in total same store gross profit, on a constant currency basis, driven by productivity gains and higher vehicle margins realized in 2021.

We continued our focus on cost discipline throughout the nine months ended September 30, 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 tables (in millions) and discussion of our results of operations are on a consolidated basis, unless otherwise noted.

Three Months Ended June 30,

Three Months Ended September 30,

2021 2020 Increase/ (Decrease) % Change

Depreciation and amortization expense $ 19.6 $ 19.1 $ 0.5 2.5 %

Asset impairments $ 1.7 $ — $ 1.7 — %

Floorplan interest expense $ 4.8 $ 8.1 $ (3.3) (40.9) %

Other interest expense, net $ 13.2 $ 14.6 $ (1.5) (10.1) %

Loss on extinguishment of debt $ 3.8 $ 3.3 $ 0.5 15.2 %

Provision for income taxes $ 52.9 $ 34.6 $ 18.3 53.1 %

Six Months Ended June 30,

Nine Months Ended September 30,

2021 2020 Increase/ (Decrease) % Change

Depreciation and amortization expense $ 57.9 $ 56.5 $ 1.4 2.4 %

Asset impairments $ 1.7 $ 23.8 $ (22.1) (92.8) %

Floorplan interest expense $ 21.2 $ 31.1 $ (9.9) (32.0) %

Other interest expense, net $ 40.7 $ 49.0 $ (8.3) (17.0) %

Loss on extinguishment of debt $ 3.8 $ 13.7 $ (9.9) (72.0) %

Provision for income taxes $ 134.6 $ 55.8 $ 78.8 141.1 %

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.

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

Impairment of Assets

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

During the three months ended September 30, 2021, we recognized fixed asset impairment charges of $1.7 million relating to one dealership and one collision center within the U.S.

During the three months ended June 30, 2020, we recorded goodwill impairment charges of $10.7 million within the Brazil reporting unit and franchise rights impairment charges of $11.1 million within the U.K.

segment and $0.1 million within the Brazil segment.

During the three months ended June 30, 2020, we also recognized right-of-use asset impairment charges of $1.7 million relating to seven dealerships within the U.K.

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

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

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.

Total floorplan interest expense during the three months ended September 30, 2021, decreased $3.3 million, or 40.9%, as compared to the same period in 2020.

For the nine months ended September 30, 2021, floorplan interest expense decreased $9.9 million, or 32.0%, 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 rate.

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.

The decrease during the three months ended September 30, 2021, is primarily due to lower floorplan borrowings as a result of lower inventory levels, lower weighted average interest rates mainly due to a decline in LIBOR, lower realized expense on our interest rate swaps and unrealized gains on interest rate swaps of $0.9 million, primarily related to mark-to-market gains associated with de-designated interest rate swaps.

The decrease during the nine months ended September 30, 2021, 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 $ 1.4 million, 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.

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

Other Interest Expense, Net

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.

Total other interest expense, net during the three months ended September 30, 2021, decreased $1.5 million, or 10.1%, as compared to the same period in 2020.

For the nine months ended September 30, 2021, other interest expense decreased $8.3 million, or 17.0%, 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 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.

The decrease from both comparative periods was primarily attributable to lower interest rates achieved through debt refinancing activities in the prior year.

Loss on Extinguishment of Debt

During the three and nine months ended September 30, 2021, we recognized a $3.8 million loss on the extinguishment of $15.9 million in aggregate principal amount of real estate related and other debt in Brazil.

During the three months ended September 30, 2020, we recognized a $3.3 million loss on extinguishment of our 5.00% Senior Notes due June 2022 (the “5.00% Senior Notes”).

During the nine months ended September 30, 2020, we recognized a $13.7 million loss on the extinguishment of our 5.00% Senior Notes and 5.25% Senior Notes due June 2023 (the “5.25% Senior Notes”).

Provision for Income Taxes

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.

Provision for income taxes of $52.9 million during the three months ended September 30, 2021, increased by $18.3 million, or 53.1%, as compared to the same period in 2020.

For the nine months ended September 30, 2021, our provision for income taxes of $134.6 million increased $78.8 million, or 141.1%, 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.

For the three months ended September 30, 2021, our effective tax rate increased to 23.5% from 21.5%, as compared to the same period in 2020.

This increase was primarily due to the increase in valuation allowances provided for net operating losses in Brazil that were higher as compared to the same period in 2020.

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

As of September 30, 2021, our total cash on hand was $296.9 million.

The balance of cash on hand excludes $334.7 million of immediately available funds used to pay down our U.S.

Floorplan Line as of June 30, 2021.

Floorplan Line as of September 30, 2021.

We use the pay down of our U.S.

21 unchanged sentences

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

Six Months Ended June 30,

Nine Months Ended September 30,

2021 2020 % Change

17 unchanged sentences

Sources and Uses of Liquidity from Operating Activities

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

For the nine months ended September 30, 2021, we generated $1,117.5 million of net cash flows from operating activities.

On an adjusted basis for the same period, we generated $593.8 million in net cash flows from operating activities, primarily consisting of $465.0 million in net income, coupled with non-cash adjustments related to depreciation and amortization of $57.9 million, stock-based compensation of $19.0 million and operating lease assets of $18.1 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.

Adjusted net cash flows from operating activities also included a $17.5 million adjusted net change in operating assets and liabilities, primarily due to $643.0 million from decreases in inventory levels as a result of global semiconductor chip shortages, $43.1 million from decreases in contracts-in-transit and vehicle receivables, partially offset by $636.2 million of adjusted net floorplan repayments and $21.6 million from decreases in accounts payable and accrued expenses.

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

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

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

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

Working Capital

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

At September 30, 2021, we had a $524.7 million surplus of working capital.

This represents an increase of $363.2 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 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.

During the nine months ended September 30, 2021, we used $163.5 million in net cash flow from investing activities.

On an adjusted basis for the same period, we used $164.6 million in net cash flows from investing activities, primarily consisting of $88.4 million used for purchases of property and equipment and to construct new and improve existing facilities, $69.3 million used for acquisition activity and $20.4 million primarily related to a payment in connection with the Prime Acquisition, partially offset by cash inflows of $13.4 million related to the disposition of franchises and property and equipment.

Of the $88.4 million in property and equipment purchases, $71.8 million was used for non-real estate related capital expenditures and $18.7 million was used for the purchase of real estate associated with existing dealership operations, partially offset by a $2.1 million net increase in the accrual for capital expenditures during the nine months ended September 30, 2021.

During the nine months ended September 30, 2020, we used $78.8 million in net cash flows from investing activities on both an unadjusted and adjusted basis, which represents $78.8 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 $1.3 million related to the disposition of property and equipment.

Of the $78.8 million in property and equipment purchases, $55.4 million was used for non-real estate related capital expenditures, $22.4 million was used for the purchase of real estate associated with existing dealership operations and $1.0 million represented the net decrease in the accrual for capital expenditures during the nine months ended September 30, 2020.

Capital Expenditures

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Sources and Uses of Liquidity from Financing Activities

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

For the nine months ended September 30, 2021, we used $742.2 million in net cash flows from financing activities.

On an adjusted basis for the same period, we used $217.4 million in net cash flows from financing activities, primarily related to cash outflows of $158.3 million in net repayments on our U.S.

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.

Floorplan Line (representing the net cash activity in our floorplan offset account), $33.7 million in net repayments on other debt, $18.6 million related to the repurchase of our common stock and $17.9 million in dividend payments, partially offset by $7.4 million in net borrowings on our Acquisition Line.

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

On an adjusted basis for the same period, we used $236.0 million in net cash flows from financing activities, primarily related to cash outflows of $857.9 million related to the extinguishment of our 5.00% and 5.25% Senior Notes, $48.9 million related to the repurchase of our common stock and $5.5 million in dividend payments.

These cash outflows were partially offset by $550.0 million from the issuance of our 4.00% Senior Notes.

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

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

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 June 30, 2021 (in millions):

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

Commitment Outstanding Available

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$ 2,045.0 $ 133.7 $ 1,911.3

(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 $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.

(1) The available balance at September 30, 2021, includes $331.2 million of immediately available funds.

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

(2) The outstanding balance of $66.7 million is related to outstanding letters of credit of $12.6 million and $54.1 million in borrowings.

The borrowings outstanding under the Acquisition Line included no USD borrowings and £ 40.0 million of GBP borrowings translated at the spot rate on the day borrowed, solely for the purpose of calculating the outstanding and available borrowings under the Acquisition Line in accordance with the credit facility agreement.

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

(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.

(3) The available balance at September 30, 2021, includes $3.5 million of immediately available funds.

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

(4) The outstanding balance excludes $251.0 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.

credit facilities.

We have other credit facilities in the U.S., U.K.

We have other credit facilities in the U.S., the U.K.

and Brazil with third-party financial institutions, most of which are affiliated with the automobile manufacturers that provide financing for portions of our new, used and rental vehicle inventories.

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Debt in our Notes to Condensed Consolidated Financial Statements for further information.

New 4.00% Senior Notes

On October 21, 2021, we issued an additional $200.0 million aggregate principal amount of our 4.00% Senior Notes due 2028 (the “New Notes”) for net proceeds of approximately $199.7 million.

The New Notes will have identical terms as the initial 4.00% Senior Notes issued on August 17, 2020, and will be treated as a single class of securities.

Bridge Facility

In connection with entering into the Purchase Agreement, we entered into a commitment letter, dated September 12, 2021 (the “Commitment Letter”), with Wells Fargo Bank, National Association (“Wells Fargo”), pursuant to which, among other things, Wells Fargo has committed to provide a portion of the debt financing for the Prime Acquisition, consisting of a $250.0 million unsecured bridge loan (the “Bridge Facility”), on the terms and subject to the conditions set forth in the Commitment Letter.

Although Wells Fargo has committed to fund up to $250.0 million under the Bridge Facility, we anticipate utilizing only a portion of such commitment to finance the Prime Acquisition.

The Bridge Facility is subject to mandatory prepayment at 100% of the outstanding principal amount thereof with the net proceeds from the issuance of any debt securities of us and upon other specified events.

The obligation of Wells Fargo to provide this debt financing is subject to a number of customary conditions, including, without limitation, execution and delivery of certain definitive documentation.

Our Revolving Credit Facility, indentures governing our senior notes and certain mortgage term loans contain customary financial and operating covenants that place restrictions on us, including our ability to incur additional indebtedness, create liens or to sell or otherwise dispose of assets and to merge or consolidate with other entities.

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

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

As of September 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 June 30, 2021

As of September 30, 2021

Required Actual

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Fixed charge coverage ratio > 1.20 5.81

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.

As of September 30, 2021, we had $296.9 million of cash on hand and an additional $334.7 million invested in our floorplan offset accounts, bringing total cash liquidity to $631.6 million.

In addition, we had $282.3 million of additional borrowing capacity on our Acquisition Line, bringing total immediate liquidity to $913.9 million as of September 30, 2021.

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

Management's Discussion and Analysis of Financial Condition and Results of Operations, we believe we have sufficient liquidity 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 June 30, 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 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.

During the nine months ended September 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 September 30, 2021, we had $150.1 million available under our current share repurchase authorization.

During the three months ended September 30, 2021, our Board of Directors approved a quarterly cash dividend of $0.34 per share on all shares of our common stock, which resulted in $6.0 million paid to common shareholders and $0.2 million to unvested RSA holders.

During the nine months ended September 30, 2021, we have declared cash dividends of $0.98 per share on all shares of our common stock, for a total of $17.2 million paid to common shareholders and $0.5 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