What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-05-05 compared with 2021-11-04 · 160 added, 939 removed, 376 unchanged (75% of the section changed)

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

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.

Through our dealerships, we sell new and used cars and light trucks;

Through our omni-channel platform, we sell new and used cars and light trucks;

arrange related vehicle financing;

sell service and other insurance contracts;

sell service and insurance contracts;

provide automotive maintenance and repair services;

and sell vehicle parts.

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

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.

The President, U.S.

and Brazilian Operations and the U.K.

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

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.

Our operations are primarily located in major metropolitan areas in 15 states in the U.S., 35 towns in the U.K.

and three states in Brazil.

Long-Term Strategy

Our business strategy focuses on improving the performance of our existing dealerships and enhancing our dealership portfolio through strategic acquisitions and dispositions to achieve growth, capture market share and maximize the investment return to our stockholders.

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

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 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.

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 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.

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.

We operate in geographically diverse markets that extend across 17 states in the U.S.

and 35 towns and cities in the U.K.

As of March 31, 2022, our retail network consisted of 146 dealerships in the U.S.

and 55 dealerships in the U.K.

On November 12, 2021, we entered into a Share Purchase Agreement (the “Brazil Agreement”) with Original Holdings S.A.

Pursuant to the terms and conditions set forth in the Brazil Agreement, Buyer will acquire 100% of the issued and outstanding equity interests of our Brazilian operations (the “Brazil Disposal Group”) for approximately BRL 510 million in cash (the “Brazil Disposal”).

The transaction is expected to close before the end of the second quarter of 2022.

The Brazil Disposal Group met the criteria to be reported as discontinued operations.

Therefore, the related assets, liabilities and operating results of the Brazil Disposal Group are reported as discontinued operations (the “Brazil Discontinued Operations”) for all periods presented.

Effective as of the fourth quarter of 2021, we are aligned into two reportable segments:

Refer to Note 4.

Acquisitions and Dispositions within our Notes to Condensed Consolidated Financial Statements for further discussion.

Digital Initiatives to Enhance the Customer Experience

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

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

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

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 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.

dealerships in the first quarter of 2021.

Our parts and service digital efforts focus on our online customer scheduling appointment system.

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

We have also focused on improved interaction with our parts and service customers by offering preferred communication options via dealership apps, phone, text or email and online payment options.

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

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 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.

Our online service appointment platform and centralized call centers have improved the customer experience.

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

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

Used Vehicle Retail Growth

Used vehicle gross profit depends primarily on a dealership’s ability to obtain a high-quality supply of used vehicles at reasonable prices.

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

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

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

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

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

Cost Management

We continue our efforts to fully leverage our scale and cost structure.

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

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

As part of the digital efforts discussed above, we have improved our productivity for our sales and service departments.

Employee Training and Retention

A key to the execution of our business strategy is the leverage of what we believe to be one of our key strengths — the talent of our people.

We are focused on the retention and training of our talented dealership employees.

We believe that we have developed a distinguished management team with substantial industry expertise.

With our management structure and level of executive talent, we plan to continue empowering the operators of our dealerships to make appropriate decisions to grow their respective dealership operations and to control fixed and variable costs.

We believe this approach allows us to provide the best possible service to our customers, as well as attract and retain talented employees.

Diversity, Equity and Inclusion (“DEI”)

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.

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

The council has four primary areas of focus:

Workforce, Workplace, Community Involvement and Women’s Initiative.

The council consists of a diverse group of employees providing representation across the organization.

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

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

COVID-19 Pandemic and New Vehicle Inventory Levels

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

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

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

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

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

Discontinued Operations and Other Divestitures within the Notes to Condensed Consolidated Financial Statements within this Form 10-Q, for additional information regarding business dispositions.

Unless otherwise specified, disclosures in this Form 10-Q reflect continuing operations only.

Recent Events

There has continued to be widespread impact from the COVID-19 pandemic.

Infection rates and regulations continue to fluctuate in various regions and there are ongoing global impacts resulting from the pandemic, including challenges and increases in costs for logistics and supply chains, such as increased port congestion, intermittent supplier delays and a shortfall of semiconductor and other parts supplies, all of which impact our business either directly or indirectly.

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

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

Our new vehicle days’ supply of inventory was approximately 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.

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

Our new vehicle days’ supply of inventory was approximately 11 days as of the quarter ended March 31, 2022 (“Current Quarter”), as compared to 12 days as of the quarter ended December 31, 2021, and 33 days as of the quarter ended March 31, 2021 (“Prior Year Quarter”).

On February 24, 2022, Russia launched a military invasion of Ukraine (the “Russia and Ukraine Conflict”).

The ongoing Russia and Ukraine Conflict has provoked strong reactions from the U.S., the U.K., the European Union and various other countries around the world, including the imposition of broad financial and economic sanctions against Russia.

While the precise effects of the ongoing military conflict and these sanctions on the Russian and global economies remain uncertain, they have already resulted in significant volatility in financial markets, an increase in energy and commodity prices globally and further disruption of the global supply chain for certain raw materials and manufactured goods, including vehicle parts.

Critical Accounting Policies and Accounting Estimates

The preparation of our Condensed Consolidated Financial Statements in conformity with U.S.

GAAP requires management to make certain estimates and assumptions.

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.

For discussion of our critical accounting policies and accounting estimates, refer to Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2021 Form 10-K.

There have been no material changes to our critical accounting policies or accounting estimates since December 31, 2021.

Results of Operations

3 unchanged sentences

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

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

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

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

14 unchanged sentences

(In millions, except unit data)

Three Months Ended September 30,

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

New vehicle retail sales $ 1,576.2 $ 1,580.7 $ (4.5) (0.3) % $ 21.4 (1.6) %

Used vehicle retail sales 1,248.3 867.2 381.1 44.0 % 21.4 41.5 %

Used vehicle wholesale sales 109.4 86.7 22.7 26.2 % 2.5 23.3 %

Total used 1,357.7 953.9 403.8 42.3 % 23.9 39.8 %

Parts and service sales 427.6 375.6 52.0 13.8 % 4.3 12.7 %

F&I, net 147.7 129.5 18.2 14.1 % 1.0 13.3 %

Total revenues $ 3,509.2 $ 3,039.6 $ 469.6 15.4 % $ 50.8 13.8 %

Gross profit:

New vehicle retail sales $ 167.7 $ 99.2 $ 68.4 69.0 % $ 1.5 67.4 %

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

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 %

Parts and service sales 231.7 206.2 25.5 12.3 % 2.6 11.1 %

F&I, net 147.7 129.5 18.2 14.1 % 1.0 13.3 %

Total gross profit $ 653.2 $ 512.0 $ 141.3 27.6 % $ 7.0 26.2 %

Gross margin:

New vehicle retail sales 10.6 % 6.3 % 4.4 %

Used vehicle retail sales 7.9 % 8.2 % (0.3) %

Used vehicle wholesale sales 7.0 % 6.9 % 0.1 %

Total used 7.8 % 8.1 % (0.3) %

Parts and service sales 54.2 % 54.9 % (0.7) %

Total gross margin 18.6 % 16.8 % 1.8 %

Retail new vehicles sold 35,126 39,869 (4,743) (11.9) %

Retail used vehicles sold 43,240 38,347 4,893 12.8 %

Wholesale used vehicles sold 11,261 11,581 (320) (2.8) %

Total used 54,501 49,928 4,573 9.2 %

Average sales price per unit sold:

New vehicle retail $ 44,872 $ 39,647 $ 5,226 13.2 % $ 609 11.6 %

Used vehicle retail $ 28,870 $ 22,614 $ 6,256 27.7 % $ 494 25.5 %

Gross profit per unit sold:

New vehicle retail sales $ 4,773 $ 2,489 $ 2,285 91.8 % $ 43 90.1 %

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

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

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

F&I PRU $ 1,885 $ 1,655 $ 229 13.9 % $ 13 13.1 %

SG&A expenses $ 385.1 $ 305.8 $ 79.3 25.9 % $ 4.5 24.5 %

SG&A as % gross profit 59.0 % 59.7 % (0.8) %

Floorplan expense:

Floorplan interest expense $ 4.8 $ 8.1 $ (3.3) (40.9) % $ 0.1 (42.4) %

floorplan assistance (1)

12.2 12.7 (0.5) (4.0) % — (4.0) %

Net floorplan expense $ (7.4) $ (4.6) $ (2.8) $ 0.1

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

Same Store Operating Data — Consolidated

(In millions, except unit data)

Three Months Ended September 30,

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

New vehicle retail sales $ 1,530.1 $ 1,565.4 $ (35.3) (2.3) % $ 19.5 (3.5) %

Used vehicle retail sales 1,199.9 857.6 342.3 39.9 % 18.8 37.7 %

Used vehicle wholesale sales 105.0 85.5 19.5 22.8 % 2.3 20.1 %

Total used 1,304.9 943.1 361.8 38.4 % 21.1 36.1 %

Parts and service sales 416.6 368.8 47.8 13.0 % 3.9 11.9 %

F&I, net 145.1 128.1 17.0 13.3 % 1.0 12.5 %

Total revenues $ 3,396.7 $ 3,005.4 $ 391.2 13.0 % $ 45.5 11.5 %

Gross profit:

New vehicle retail sales $ 163.8 $ 98.3 $ 65.4 66.6 % $ 1.4 65.1 %

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

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 %

Parts and service sales 225.1 202.3 22.7 11.2 % 2.3 10.1 %

F&I, net 145.1 128.1 17.0 13.3 % 1.0 12.5 %

Total gross profit $ 635.8 $ 505.1 $ 130.6 25.9 % $ 6.3 24.6 %

Gross margin:

New vehicle retail sales 10.7 % 6.3 % 4.4 %

Used vehicle retail sales 7.9 % 8.2 % (0.3) %

Used vehicle wholesale sales 6.9 % 6.9 % — %

Total used 7.8 % 8.1 % (0.3) %

Parts and service sales 54.0 % 54.9 % (0.8) %

Total gross margin 18.7 % 16.8 % 1.9 %

Retail new vehicles sold 33,795 39,431 (5,636) (14.3) %

Retail used vehicles sold 41,219 37,819 3,400 9.0 %

Wholesale used vehicles sold 10,581 11,415 (834) (7.3) %

Total used 51,800 49,234 2,566 5.2 %

Average sales price per unit sold:

New vehicle retail $ 45,275 $ 39,700 $ 5,575 14.0 % $ 578 12.6 %

Used vehicle retail $ 29,110 $ 22,676 $ 6,433 28.4 % $ 455 26.4 %

Gross profit per unit sold:

New vehicle retail sales $ 4,846 $ 2,493 $ 2,352 94.3 % $ 41 92.7 %

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

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

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

F&I PRU $ 1,934 $ 1,658 $ 276 16.6 % $ 13 15.9 %

SG&A expenses $ 372.2 $ 300.7 $ 71.5 23.8 % $ 3.9 22.5 %

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

Reported Operating Data — Consolidated

(In millions, except unit data)

Nine Months Ended September 30,

Three Months Ended March 31,

2022 2021 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change

44 unchanged sentences

(In millions, except unit data)

Nine Months Ended September 30,

Three Months Ended March 31,

2022 2021 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change

38 unchanged sentences

(In millions, except unit data)

Three Months Ended September 30,

2021 2020 Increase/(Decrease) % Change

New vehicle retail sales $ 1,208.5 $ 1,172.2 $ 36.3 3.1 %

Used vehicle retail sales 902.3 608.2 294.1 48.4 %

Used vehicle wholesale sales 68.0 44.8 23.2 51.8 %

Total used 970.3 653.0 317.4 48.6 %

Parts and service sales 353.1 306.4 46.7 15.3 %

F&I, net 130.5 113.0 17.4 15.4 %

Total revenues $ 2,662.4 $ 2,244.6 $ 417.8 18.6 %

Gross profit:

New vehicle retail sales $ 140.0 $ 79.8 $ 60.2 75.5 %

Used vehicle retail sales 73.1 52.8 20.2 38.3 %

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

Total used 76.3 56.6 19.7 34.9 %

Parts and service sales 188.2 166.3 21.9 13.2 %

F&I, net 130.5 113.0 17.4 15.4 %

Total gross profit $ 535.0 $ 415.7 $ 119.3 28.7 %

Gross margin:

New vehicle retail sales 11.6 % 6.8 % 4.8 %

Used vehicle retail sales 8.1 % 8.7 % (0.6) %

Used vehicle wholesale sales 4.8 % 8.3 % (3.6) %

Total used 7.9 % 8.7 % (0.8) %

Parts and service sales 53.3 % 54.3 % (1.0) %

Total gross margin 20.1 % 18.5 % 1.6 %

Retail new vehicles sold 25,984 27,980 (1,996) (7.1) %

Retail used vehicles sold 31,704 27,694 4,010 14.5 %

Wholesale used vehicles sold 6,758 6,195 563 9.1 %

Total used 38,462 33,889 4,573 13.5 %

Average sales price per unit sold:

New vehicle retail $ 46,510 $ 41,895 $ 4,614 11.0 %

Used vehicle retail $ 28,461 $ 21,961 $ 6,500 29.6 %

Gross profit per unit sold:

New vehicle retail sales $ 5,388 $ 2,852 $ 2,536 88.9 %

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

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

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

F&I PRU $ 2,261 $ 2,030 $ 231 11.4 %

SG&A expenses $ 308.7 $ 245.2 $ 63.5 25.9 %

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

Same Store Operating Data — U.S.

(In millions, except unit data)

Three Months Ended September 30,

2021 2020 Increase/(Decrease) % Change

New vehicle retail sales $ 1,191.1 $ 1,158.8 $ 32.3 2.8 %

Used vehicle retail sales 894.3 600.7 293.6 48.9 %

Used vehicle wholesale sales 67.2 43.8 23.5 53.7 %

Total used 961.5 644.4 317.1 49.2 %

Parts and service sales 349.6 302.8 46.8 15.5 %

F&I, net 129.0 111.8 17.3 15.5 %

Total revenues $ 2,631.3 $ 2,217.8 $ 413.5 18.6 %

Gross profit:

New vehicle retail sales $ 138.0 $ 79.0 $ 59.1 74.8 %

Used vehicle retail sales 71.5 52.4 19.2 36.6 %

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

Total used 74.5 56.1 18.5 33.0 %

Parts and service sales 186.0 164.0 21.9 13.4 %

F&I, net 129.0 111.8 17.3 15.5 %

Total gross profit $ 527.6 $ 410.8 $ 116.7 28.4 %

Gross margin:

New vehicle retail sales 11.6 % 6.8 % 4.8 %

Used vehicle retail sales 8.0 % 8.7 % (0.7) %

Used vehicle wholesale sales 4.5 % 8.4 % (4.0) %

Total used 7.8 % 8.7 % (0.9) %

Parts and service sales 53.2 % 54.2 % (1.0) %

Total gross margin 20.0 % 18.5 % 1.5 %

Retail new vehicles sold 25,522 27,626 (2,104) (7.6) %

Retail used vehicles sold 31,366 27,299 4,067 14.9 %

Wholesale used vehicles sold 6,611 6,076 535 8.8 %

Total used 37,977 33,375 4,602 13.8 %

Average sales price per unit sold:

New vehicle retail $ 46,670 $ 41,947 $ 4,723 11.3 %

Used vehicle retail $ 28,512 $ 22,003 $ 6,509 29.6 %

Gross profit per unit sold:

New vehicle retail sales $ 5,409 $ 2,858 $ 2,551 89.2 %

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

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

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

F&I PRU $ 2,268 $ 2,035 $ 234 11.5 %

SG&A expenses $ 304.5 $ 241.6 $ 62.9 26.0 %

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

The following discussion of our U.S.

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.

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

Total revenues in the U.S.

during the three months ended 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 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 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 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

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

Total SG&A expenses in the U.S.

during the three months ended 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 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.

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)

Nine Months Ended September 30,

Three Months Ended March 31,

2022 2021 Increase/(Decrease) % Change

38 unchanged sentences

(In millions, except unit data)

Nine Months Ended September 30,

Three Months Ended March 31,

2022 2021 Increase/(Decrease) % Change

36 unchanged sentences

SG&A as % gross profit 59.6 % 63.1 % (3.4) %

Region — Three Months Ended March 31, 2022 Compared to 2021

The following discussion of our U.S.

1 unchanged sentence

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.

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

Total revenues in the U.S.

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

during the Current Quarter, increased $687.0 million, or 28.6%, as compared to the Prior Year Quarter, driven by increases across all business lines.

Total same store revenues in the U.S.

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.

during the Current Quarter, increased $188.2 million, or 7.9%.

New and used vehicle retail sales revenues benefited from the sale of approximately 5,800 units from our online digital platform, AcceleRide®, during the Current Quarter, a 44.0% increase as compared to the Prior Year Quarter.

New vehicle retail same store sales revenues declined modestly, driven by a shortage in new vehicle supply, leading to fewer units sold.

The shortage of new vehicle inventory continues to drive strong pricing, which mitigated the sales revenue impact of lower unit sales.

Supply chain issues, including an ongoing semiconductor and vehicle parts shortage, and other logistics challenges, continued into the Current Quarter for OEMs, leading to sustained lower vehicle production and deliveries of fewer vehicles to dealerships.

We ended the Current Quarter with a U.S.

new vehicle inventory supply of 9 days, 26 days lower than the Prior Year Quarter, and consistent with the December 31, 2021 days’ supply of 9.

Used vehicle retail same store sales revenues outperformed the Prior Year Quarter, despite a modest decline in units sold, as increased demand drove prices higher.

Used vehicle wholesale same store sales revenues declined only modestly as increased used vehicle demand drove higher prices, which partially offset a decline in units sold.

Parts and service same store revenues outperformed the Prior Year Quarter, driven by increases in customer pay revenues, wholesale revenues and collision revenues, partially offset by a slight decline in warranty revenues.

F&I, net same store revenues outperformed the Prior Year Quarter, primarily driven by higher income per contract on finance, VSCs and other insurance product offerings and higher penetration rates.

These increases were partially offset by a decrease in same store total retail unit sales and an increase in our overall chargeback experience.

Total gross profit in the U.S.

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

during the Current Quarter, increased $205.6 million, or 49.5%, as compared to the Prior Year Quarter.

Total same store gross profit in the U.S.

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 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.

during the Current Quarter, increased $103.7 million, or 25.3%, as compared to the Prior Year Quarter.

New vehicle retail same store gross profit increased 73.2%, driven by a 109.4% increase in new vehicle retail same store gross profit per unit sold, partially offset by a 17.3% decrease in new vehicle retail same store unit sales.

The increase in new vehicle retail same store gross profit per unit sold reflects the strong demand resulting from the shortage of new vehicle inventory discussed above.

Used vehicle retail same store gross profit increased 14.4%, driven by an increase of 18.9% in used vehicle retail same store gross profit per unit sold, partially offset by a 3.8% decrease 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.

Our used vehicle wholesale same store gross profit decreased 42.9%, driven by a 21.9% decrease in used vehicle wholesale same store gross profit per unit sold, coupled with a decrease in used vehicle same store wholesale units.

Parts and service same store gross profit increased 13.0%, primarily driven by the increase in our customer-pay business reflecting increased business activity.

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.

F&I, net same store gross profit increased 16.3%, driven by increases in revenue discussed above.

Total same store gross margin increased 278 basis points, primarily driven by higher new vehicle retail sales prices outpacing new vehicle costs of sales.

SG&A Expenses

SG&A as a percentage of gross profit declined 607 and 341 basis points on an as reported and same store basis, respectively, compared to the Prior Year Quarter.

Total SG&A expenses in the U.S.

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 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.

during the Current Quarter, increased $91.9 million, or 35.1%, as compared to the Prior Year Quarter.

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

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.

during the Current Quarter, increased $47.9 million, or 18.5%, as compared to the Prior Year Quarter, primarily driven by increased variable commission payments as a result of improvements in gross profits in our operations and an increase in other variable expenses associated with the rise in certain business activities as described above.

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

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 September 30,

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

New vehicle retail sales $ 305.4 $ 376.6 $ (71.2) (18.9) % $ 19.8 (24.2) %

Used vehicle retail sales 328.0 248.1 80.0 32.2 % 20.9 23.8 %

Used vehicle wholesale sales 38.1 39.5 (1.4) (3.6) % 2.4 (9.8) %

Total used 366.1 287.6 78.5 27.3 % 23.3 19.2 %

Parts and service sales 63.4 61.3 2.1 3.4 % 4.0 (3.2) %

F&I, net 15.6 15.4 0.2 1.4 % 1.0 (5.1) %

Total revenues $ 750.4 $ 740.8 $ 9.6 1.3 % $ 48.2 (5.2) %

Gross profit:

New vehicle retail sales $ 21.5 $ 16.8 $ 4.7 27.9 % $ 1.4 19.7 %

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

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 %

Parts and service sales 38.5 36.2 2.3 6.3 % 2.5 (0.5) %

F&I, net 15.6 15.4 0.2 1.4 % 1.0 (5.1) %

Total gross profit $ 103.7 $ 87.6 $ 16.0 18.3 % $ 6.6 10.8 %

Gross margin:

New vehicle retail sales 7.0 % 4.5 % 2.6 %

Used vehicle retail sales 7.3 % 6.9 % 0.4 %

Used vehicle wholesale sales 10.9 % 5.1 % 5.8 %

Total used 7.7 % 6.7 % 1.0 %

Parts and service sales 60.8 % 59.1 % 1.6 %

Total gross margin 13.8 % 11.8 % 2.0 %

Retail new vehicles sold 7,381 10,689 (3,308) (30.9) %

Retail used vehicles sold 10,810 10,101 709 7.0 %

Wholesale used vehicles sold 4,202 5,104 (902) (17.7) %

Total used 15,012 15,205 (193) (1.3) %

Average sales price per unit sold:

New vehicle retail $ 41,370 $ 35,230 $ 6,140 17.4 % $ 2,677 9.8 %

Used vehicle retail $ 30,346 $ 24,561 $ 5,785 23.6 % $ 1,932 15.7 %

Gross profit per unit sold:

New vehicle retail sales $ 2,910 $ 1,571 $ 1,338 85.2 % $ 185 73.4 %

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

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

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

F&I PRU $ 857 $ 739 $ 117 15.9 % $ 55 8.5 %

SG&A expenses $ 67.6 $ 53.7 $ 13.9 25.9 % $ 4.2 18.0 %

SG&A as % gross profit 65.2 % 61.2 % 3.9 %

NM — Not Meaningful

Same Store Operating Data — U.K.

(In millions, except unit data)

Three Months Ended September 30,

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

New vehicle retail sales $ 276.6 $ 374.7 $ (98.1) (26.2) % $ 17.9 (31.0) %

Used vehicle retail sales 287.6 246.0 41.6 16.9 % 18.3 9.5 %

Used vehicle wholesale sales 34.5 39.3 (4.9) (12.4) % 2.2 (18.0) %

Total used 322.1 285.4 36.7 12.9 % 20.5 5.7 %

Parts and service sales 55.9 58.1 (2.1) (3.7) % 3.6 (9.8) %

F&I, net 14.4 15.3 (0.9) (5.8) % 0.9 (11.8) %

Total revenues $ 669.0 $ 733.4 $ (64.4) (8.8) % $ 43.0 (14.6) %

Gross profit:

New vehicle retail sales $ 19.5 $ 16.7 $ 2.8 16.8 % $ 1.2 9.4 %

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

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 %

Parts and service sales 34.2 34.6 (0.4) (1.2) % 2.2 (7.5) %

F&I, net 14.4 15.3 (0.9) (5.8) % 0.9 (11.8) %

Total gross profit $ 93.7 $ 85.7 $ 8.0 9.3 % $ 5.9 2.4 %

Gross margin:

New vehicle retail sales 7.1 % 4.5 % 2.6 %

Used vehicle retail sales 7.5 % 6.9 % 0.5 %

Used vehicle wholesale sales 11.7 % 5.1 % 6.6 %

Total used 7.9 % 6.7 % 1.2 %

Parts and service sales 61.2 % 59.7 % 1.6 %

Total gross margin 14.0 % 11.7 % 2.3 %

Retail new vehicles sold 6,512 10,605 (4,093) (38.6) %

Retail used vehicles sold 9,127 9,968 (841) (8.4) %

Wholesale used vehicles sold 3,669 5,057 (1,388) (27.4) %

Total used 12,796 15,025 (2,229) (14.8) %

Average sales price per unit sold:

New vehicle retail $ 42,479 $ 35,333 $ 7,146 20.2 % $ 2,748 12.4 %

Used vehicle retail $ 31,513 $ 24,681 $ 6,831 27.7 % $ 2,006 19.6 %

Gross profit per unit sold:

New vehicle retail sales $ 3,000 $ 1,577 $ 1,423 90.3 % $ 190 78.2 %

Used vehicle retail sales $ 2,358 $ 1,715 $ 643 37.5 % $ 148 28.9 %

Used vehicle wholesale sales $ 1,099 $ 396 $ 703 NM $ 72 NM

Total used $ 1,997 $ 1,271 $ 726 57.1 % $ 126 47.2 %

F&I PRU $ 919 $ 742 $ 177 23.9 % $ 58 16.0 %

SG&A expenses $ 58.9 $ 52.2 $ 6.8 12.9 % $ 3.7 5.8 %

SG&A as % gross profit 62.9 % 60.9 % 2.0 %

NM — Not Meaningful

The following discussion of our U.K.

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.

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 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 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 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 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 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 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 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.

for the Prior Year Quarter, 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 favorable legal settlement.

Reported Operating Data — U.K.

(In millions, except unit data)

Nine Months Ended September 30,

Three Months Ended March 31,

2022 2021 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change

39 unchanged sentences

(In millions, except unit data)

Nine Months Ended September 30,

Three Months Ended March 31,

2022 2021 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change

37 unchanged sentences

NM — Not Meaningful

Region — Three Months Ended March 31, 2022 Compared to 2021

The following discussion of our U.K.

1 unchanged sentence

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.

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.

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

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

Total revenues in the U.K.

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

during the Current Quarter, increased $203.4 million, or 37.0%, as compared to the Prior Year Quarter.

Total same store revenues in the U.K.

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.

during the Current Quarter, increased $131.8 million, or 24.2%, as compared to the Prior Year Quarter.

On a constant currency basis, total same store revenues increased 28.1%, driven by out performances across all revenue streams.

New vehicle retail same store revenues, on a constant currency basis, outperformed the Prior Year Quarter due to an increase in new vehicle retail same store average sales price per unit sold.

New vehicle units sold remained consistent amid an ongoing semiconductor shortage and other logistics challenges, which continued into the Current Quarter for OEMs, leading to sustained lower vehicle production and deliveries of fewer vehicles to dealerships.

We ended the Current Quarter with a U.K.

new vehicle inventory supply of 17 days;

12 days lower than the Prior Year Quarter and 16 days lower than December 31, 2021 days’ supply of 33.

Used vehicle retail same store revenues, on a constant currency basis, outperformed the Prior Year Quarter due to increased used vehicle retail same store unit sales, coupled with higher used vehicle retail same store average sales prices, benefited by strong consumer demand and new vehicle inventory shortages.

Parts and service same store revenues, on a constant currency basis, outperformed the Prior Year Quarter, driven by increases in our customer-pay, collision and wholesale businesses reflecting increased business activity with the reduction of COVID-19 restrictions compared to the Prior Year Quarter.

F&I, net same store revenues, on a constant currency basis, outperformed the Prior Year Quarter, driven by higher income per contract, as well as improved penetration rates on all of our product offerings, coupled with an increase in used vehicle retail sales same store units sold.

Total gross profit in the U.K.

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

during the Current Quarter, increased $37.8 million, or 57.3%, as compared to the Prior Year Quarter.

Total same store gross profit in the U.K.

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 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 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.

during the Current Quarter, increased $28.2 million, or 43.6%, as compared to the Prior Year Quarter.

On a constant currency basis, total same store gross profit increased 48.4%, driven by improvements in new and used retail sales, parts and service sales and F&I, net.

New vehicle retail same store gross profit, on a constant currency basis, outperformed the Prior Year Quarter due to an increase in new vehicle retail same store average gross profit per unit, resulting from increased prices as discussed above.

Used vehicle retail same store gross profit, on a constant currency basis, outperformed the Prior Year Quarter due to an increase in used vehicle retail same store average gross profit per unit sold, coupled with an increase in used vehicle retail same store unit sales.

The increase in used vehicle retail same store average gross profit per unit sold resulted from increased prices as discussed above.

Parts and service same store gross profit, on a constant currency basis, outperformed the Prior Year Quarter, driven by the increases in our businesses discussed above.

F&I, net same store gross profit, on a constant currency basis, outperformed the Prior Year Quarter as discussed above.

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.

increased 186 basis points, driven by improvements in new vehicle retail sales, used vehicle retail sales and parts and service sales margins due to increased customer demand and vehicle supply constraints.

SG&A Expenses

SG&A as a percentage of gross profit declined 1,271 and 885 basis points, on an as reported and same store basis, respectively, compared to the Prior Year Quarter.

Total SG&A expenses in the U.K.

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

during the Current Quarter, increased $15.2 million, or 30.7%, as compared to the Prior Year Quarter.

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

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 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.

Reported Operating Data — Brazil

(In millions, except unit data)

Three Months Ended September 30,

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

New vehicle retail sales $ 62.3 $ 31.9 $ 30.5 95.6 % $ 1.6 90.5 %

Used vehicle retail sales 18.0 10.9 7.0 64.6 % 0.5 60.3 %

Used vehicle wholesale sales 3.3 2.4 0.9 36.7 % 0.1 33.2 %

Total used 21.3 13.4 7.9 59.5 % 0.6 55.3 %

Parts and service sales 11.1 8.0 3.2 39.9 % 0.3 36.2 %

F&I, net 1.7 1.1 0.6 54.5 % — 50.1 %

Total revenues $ 96.4 $ 54.3 $ 42.2 77.7 % $ 2.5 73.0 %

Gross profit:

New vehicle retail sales $ 6.2 $ 2.6 $ 3.5 134.6 % $ 0.2 128.6 %

Used vehicle retail sales 1.5 1.0 0.5 49.4 % — 45.2 %

Used vehicle wholesale sales 0.2 0.2 — 21.5 % — 18.1 %

Total used 1.8 1.2 0.5 44.9 % — 40.9 %

Parts and service sales 4.9 3.7 1.2 33.3 % 0.1 29.7 %

F&I, net 1.7 1.1 0.6 54.5 % — 50.1 %

Total gross profit $ 14.5 $ 8.6 $ 5.9 68.7 % $ 0.4 64.1 %

Gross margin:

New vehicle retail sales 9.9 % 8.3 % 1.6 %

Used vehicle retail sales 8.4 % 9.3 % (0.9) %

Used vehicle wholesale sales 7.1 % 8.0 % (0.9) %

Total used 8.2 % 9.1 % (0.8) %

Parts and service sales 43.9 % 46.1 % (2.2) %

Total gross margin 15.0 % 15.8 % (0.8) %

Retail new vehicles sold 1,761 1,200 561 46.8 %

Retail used vehicles sold 726 552 174 31.5 %

Wholesale used vehicles sold 301 282 19 6.7 %

Total used 1,027 834 193 23.1 %

Average sales price per unit sold:

New vehicle retail $ 35,394 $ 26,558 $ 8,836 33.3 % $ 924 29.8 %

Used vehicle retail $ 24,732 $ 19,766 $ 4,967 25.1 % $ 644 21.9 %

Gross profit per unit sold:

New vehicle retail sales $ 3,510 $ 2,196 $ 1,314 59.8 % $ 90 55.7 %

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

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

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

F&I PRU $ 675 $ 621 $ 55 8.9 % $ 19 5.7 %

SG&A expenses $ 8.8 $ 6.9 $ 2.0 28.5 % $ 0.2 25.0 %

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

Same Store Operating Data — Brazil

(In millions, except unit data)

Three Months Ended September 30,

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

New vehicle retail sales $ 62.3 $ 31.9 $ 30.5 95.6 % $ 1.6 90.5 %

Used vehicle retail sales 18.0 10.9 7.0 64.6 % 0.5 60.3 %

Used vehicle wholesale sales 3.3 2.4 0.9 36.7 % 0.1 33.2 %

Total used 21.3 13.4 7.9 59.5 % 0.6 55.3 %

Parts and service sales 11.1 7.9 3.2 39.9 % 0.3 36.2 %

F&I, net 1.7 1.1 0.6 54.5 % — 50.1 %

Total revenues $ 96.4 $ 54.3 $ 42.2 77.7 % $ 2.5 73.1 %

Gross profit:

New vehicle retail sales $ 6.2 $ 2.6 $ 3.5 134.6 % $ 0.2 128.6 %

Used vehicle retail sales 1.5 1.0 0.5 49.4 % — 45.2 %

Used vehicle wholesale sales 0.2 0.2 — 21.5 % — 18.1 %

Total used 1.8 1.2 0.5 44.9 % — 40.9 %

Parts and service sales 4.9 3.7 1.2 33.4 % 0.1 29.7 %

F&I, net 1.7 1.1 0.6 54.5 % — 50.1 %

Total gross profit $ 14.5 $ 8.6 $ 5.9 68.7 % $ 0.4 64.1 %

Gross margin:

New vehicle retail sales 9.9 % 8.3 % 1.6 %

Used vehicle retail sales 8.4 % 9.3 % (0.9) %

Used vehicle wholesale sales 7.1 % 8.0 % (0.9) %

Total used 8.2 % 9.1 % (0.8) %

Parts and service sales 43.9 % 46.1 % (2.2) %

Total gross margin 15.0 % 15.8 % (0.8) %

Retail new vehicles sold 1,761 1,200 561 46.8 %

Retail used vehicles sold 726 552 174 31.5 %

Wholesale used vehicles sold 301 282 19 6.7 %

Total used 1,027 834 193 23.1 %

Average sales price per unit sold:

New vehicle retail $ 35,394 $ 26,558 $ 8,836 33.3 % $ 924 29.8 %

Used vehicle retail $ 24,732 $ 19,766 $ 4,967 25.1 % $ 644 21.9 %

Gross profit per unit sold:

New vehicle retail sales $ 3,510 $ 2,196 $ 1,314 59.8 % $ 90 55.7 %

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

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

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

F&I PRU $ 675 $ 621 $ 55 8.9 % $ 19 5.7 %

SG&A expenses $ 8.8 $ 6.9 $ 1.9 27.7 % $ 0.2 24.2 %

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

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.

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 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 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)

Nine Months Ended September 30,

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

New vehicle retail sales $ 146.3 $ 109.1 $ 37.1 34.0 % $ (12.9) 45.9 %

Used vehicle retail sales 40.5 38.3 2.1 5.6 % (3.7) 15.2 %

Used vehicle wholesale sales 8.0 9.2 (1.2) (12.8) % (0.5) (7.0) %

Total used 48.4 47.5 1.0 2.0 % (4.2) 10.8 %

Parts and service sales 28.2 23.4 4.8 20.4 % (1.9) 28.6 %

F&I, net 4.4 3.4 1.1 31.1 % (0.4) 42.8 %

Total revenues $ 227.3 $ 183.4 $ 43.9 23.9 % $ (19.4) 34.5 %

Gross profit:

New vehicle retail sales $ 14.8 $ 7.5 $ 7.2 95.9 % $ (1.1) 111.0 %

Used vehicle retail sales 3.6 2.5 1.1 44.2 % (0.2) 54.1 %

Used vehicle wholesale sales 0.6 0.5 0.1 26.5 % — 34.7 %

Total used 4.2 3.0 1.2 41.3 % (0.3) 51.0 %

Parts and service sales 12.3 10.3 1.9 18.8 % (0.8) 26.8 %

F&I, net 4.4 3.4 1.1 31.1 % (0.4) 42.8 %

Total gross profit $ 35.7 $ 24.2 $ 11.5 47.3 % $ (2.6) 58.1 %

Gross margin:

New vehicle retail sales 10.1 % 6.9 % 3.2 %

Used vehicle retail sales 8.9 % 6.5 % 2.4 %

Used vehicle wholesale sales 7.6 % 5.2 % 2.4 %

Total used 8.7 % 6.3 % 2.4 %

Parts and service sales 43.5 % 44.1 % (0.6) %

Total gross margin 15.7 % 13.2 % 2.5 %

Retail new vehicles sold 4,383 3,865 518 13.4 %

Retail used vehicles sold 1,742 2,006 (264) (13.2) %

Wholesale used vehicles sold 770 1,081 (311) (28.8) %

Total used 2,512 3,087 (575) (18.6) %

Average sales price per unit sold:

New vehicle retail $ 33,370 $ 28,238 $ 5,133 18.2 % $ (2,947) 28.6 %

Used vehicle retail $ 23,222 $ 19,100 $ 4,122 21.6 % $ (2,106) 32.6 %

Gross profit per unit sold:

New vehicle retail sales $ 3,368 $ 1,950 $ 1,419 72.8 % $ (260) 86.1 %

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

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

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

F&I PRU $ 724 $ 576 $ 148 25.7 % $ (64) 36.9 %

SG&A expenses $ 24.0 $ 23.1 $ 0.9 4.0 % $ (1.8) 11.8 %

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

Same Store Operating Data — Brazil

(In millions, except unit data)

Nine Months Ended September 30,

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

New vehicle retail sales $ 146.3 $ 109.1 $ 37.1 34.0 % $ (12.9) 45.9 %

Used vehicle retail sales 40.5 38.3 2.2 5.7 % (3.7) 15.2 %

Used vehicle wholesale sales 8.0 9.2 (1.2) (12.8) % (0.5) (7.0) %

Total used 48.4 47.4 1.0 2.1 % (4.2) 10.9 %

Parts and service sales 28.2 23.4 4.8 20.5 % (1.9) 28.6 %

F&I, net 4.4 3.4 1.1 31.1 % (0.4) 42.8 %

Total revenues $ 227.3 $ 183.4 $ 44.0 24.0 % $ (19.4) 34.5 %

Gross profit:

New vehicle retail sales $ 14.8 $ 7.5 $ 7.2 95.9 % $ (1.1) 111.0 %

Used vehicle retail sales 3.6 2.5 1.1 44.5 % (0.2) 54.5 %

Used vehicle wholesale sales 0.6 0.5 0.1 26.5 % — 34.7 %

Total used 4.2 3.0 1.2 41.6 % (0.3) 51.3 %

Parts and service sales 12.3 10.3 1.9 18.8 % (0.8) 26.8 %

F&I, net 4.4 3.4 1.1 31.1 % (0.4) 42.8 %

Total gross profit $ 35.7 $ 24.2 $ 11.5 47.3 % $ (2.6) 58.1 %

Gross margin:

New vehicle retail sales 10.1 % 6.9 % 3.2 %

Used vehicle retail sales 8.9 % 6.5 % 2.4 %

Used vehicle wholesale sales 7.6 % 5.2 % 2.4 %

Total used 8.7 % 6.3 % 2.4 %

Parts and service sales 43.5 % 44.1 % (0.6) %

Total gross margin 15.7 % 13.2 % 2.5 %

Retail new vehicles sold 4,383 3,865 518 13.4 %

Retail used vehicles sold 1,742 2,006 (264) (13.2) %

Wholesale used vehicles sold 770 1,081 (311) (28.8) %

Total used 2,512 3,087 (575) (18.6) %

Average sales price per unit sold:

New vehicle retail $ 33,370 $ 28,238 $ 5,133 18.2 % $ (2,947) 28.6 %

Used vehicle retail $ 23,222 $ 19,086 $ 4,136 21.7 % $ (2,107) 32.7 %

Gross profit per unit sold:

New vehicle retail sales $ 3,368 $ 1,950 $ 1,419 72.8 % $ (260) 86.1 %

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

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

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

F&I PRU $ 724 $ 576 $ 148 25.7 % $ (64) 36.9 %

SG&A expenses $ 23.9 $ 23.0 $ 0.9 3.7 % $ (1.8) 11.4 %

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

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 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 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 %

Nine Months Ended September 30,

during the Current Quarter, increased $12.7 million, or 26.4%, as compared to the Prior Year Quarter.

On a constant currency basis, total same store SG&A expenses increased 30.1%.

These increases were primarily driven by higher business activity due to fewer COVID-19 restrictions compared to the Prior Year Quarter.

Consolidated Selected Comparisons — Three Months Ended March 31, 2022 Compared to 2021

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

Three Months Ended March 31,

2022 2021 Increase/ (Decrease) % Change

Depreciation and amortization expense $ 21.2 $ 19.2 $ 2.0 10.3 %

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

Floorplan interest expense $ 5.3 $ 7.5 $ (2.2) (29.9) %

Other interest expense, net $ 17.4 $ 13.2 $ 4.3 32.5 %

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

Provision for income taxes $ 61.2 $ 29.1 $ 32.1 110.4 %

Depreciation and Amortization Expense

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.

Total depreciation and amortization expense for the Current Quarter, was higher compared to the Prior Year Quarter, primarily attributable to acquired property and equipment in our U.S.

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

Floorplan Interest Expense

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.

Total floorplan interest expense during the Current Quarter, decreased $2.2 million, or 29.9%, as compared to the Prior Year Quarter.

Our floorplan interest expense fluctuates with changes in our outstanding borrowings and associated interest rates, which are based on LIBOR, SOFR, U.S.

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 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.

The decrease in floorplan interest expense during the Current Quarter, is primarily due to lower floorplan interest expense on new vehicles due to a decrease in new vehicle inventories between periods, as well as lower realized losses on our interest rate swap portfolio due to increases in corresponding interest rates.

These decreases were partially offset by an increase in floorplan interest expense on used vehicles due to an increase in used vehicle inventories between periods.

Refer to Note 7.

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Other Interest Expense, Net

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.

Total other interest expense, net during the Current Quarter, increased $4.3 million, or 32.5%, as compared to the Prior Year Quarter.

Other interest expense, net consists of interest charges primarily on our 4.00% Senior Notes, real estate related debt and other debt, partially offset by interest income.

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”).

The increase was primarily attributable to the additional 4.00% Senior Notes issued in October 2021 and the Bridge Facility established in conjunction with the Prime Acquisition in November 2021.

Refer to Note 9.

Debt within our Notes to Condensed Consolidated Financial Statements for additional discussion of our Debt.

Provision for Income Taxes

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 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.

Provision for income taxes of $61.2 million during the Current Quarter, increased by $32.1 million, or 110.4%, as compared to the Prior Year Quarter.

The tax expense increase was primarily due to higher pre-tax book income in the Current Quarter.

Our Current Quarter effective tax rate increased to 23.3% from 22.4% in the Prior Year Quarter, primarily due to lower excess tax deductions for stock based compensation in the Current Quarter.

We expect our effective tax rate for the remainder of 2022 will be between 23.5 % and 24.0%.

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Floorplan Line and FMCC Facility levels (refer to Note 10.

Floorplan Notes Payable in our Notes to Condensed Consolidated Financial Statements for additional information), cash from operations, borrowings under our credit facilities, which provide vehicle floorplan financing, working capital, dealership and real estate acquisition financing and proceeds from debt and equity offerings.

Based on current facts and circumstances, we believe we will have adequate cash flow, coupled with available borrowing capacity, to fund our current operations, capital expenditures and acquisitions for the next 12 months.

If economic and business conditions deteriorate or if our capital expenditures or acquisition plans for 2021 change, we may need to access the private or public capital markets to obtain additional funding.

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

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 September 30, 2021.

We use the pay down of our U.S.

Floorplan Line and FMCC Facility as a channel for the short-term investment of excess cash.

We utilize various credit facilities to finance the purchase of our new and used vehicle inventory.

With respect to all new vehicle floorplan borrowings in the normal course of business, the manufacturers of the vehicles draft our credit facilities directly with no cash flows to or from us.

With respect to borrowings for used vehicle financing, we finance up t o 85% o f the value of our used vehicle inventory in the U.S., and the funds flow directly between us and the lender.

We categorize the cash flows associated with borrowings and repayments on these various credit facilities as Cash Flows from Operating Activities or Cash Flows from Financing Activities in our Condensed Consolidated Statements of Cash Flows.

All borrowings from, and repayments to, lenders affiliated with our vehicle manufacturers (excluding the cash flows from or to manufacturer-affiliated lenders participating in our syndicated lending group) are presented within Cash Flows from Operating Activities in the Condensed Consolidated Statements of Cash Flows in conformity with U.S.

All borrowings from, and repayments to, the Revolving Credit Facility (refer to Note 9.

Floorplan Notes Payable in the Notes to Condensed Consolidated Financial Statements for additional information) (including the cash flows from or to manufacturer-affiliated lenders participating in the facility) and other credit facilities in the U.K.

and Brazil, unaffiliated with our manufacturer partners (collectively, “Non-OEM Floorplan Credit Facilities”), are presented within Cash Flows from Financing Activities in conformity with U.S.

However, the incurrence of all floorplan notes payable represents an activity necessary to acquire inventory for resale, resulting in a trade payable.

Our decision to utilize our Revolving Credit Facility does not substantially alter the process by which our vehicle inventory is financed, nor does it significantly impact the economics of our vehicle procurement activities.

Therefore, we believe that all floorplan financing of inventory purchases in the normal course of business should correspond with the related inventory activity and be classified as an operating activity.

Floorplan Notes Payable in our Notes to Condensed Consolidated Financial Statements for additional information), cash from operations, borrowings under our credit facilities, working capital, dealership and real estate acquisition financing and proceeds from debt and equity offerings.

We anticipate we will generate sufficient cash flows from operations, coupled with cash on hand and available borrowing capacity under our credit facilities, to fund our working capital requirements, service our debt and meet any other recurring operating expenditures.

Available Liquidity Resources

We had the following sources of liquidity available (in millions):

March 31, 2022

Cash and cash equivalents $ 16.6

Floorplan offset accounts 199.6

Available capacity under Acquisition Line 185.1

Total liquidity $ 401.3

We arrange our new and used vehicle inventory floorplan financing through lenders affiliated with our vehicle manufacturers and our Revolving Credit Facility (as defined in Note 10.

Floorplan Notes Payable in the Notes to Condensed Consolidated Financial Statements).

In accordance with U.S.

GAAP, we report floorplan financed with lenders affiliated with our vehicle manufacturers (excluding the cash flows from or to manufacturer-affiliated lenders participating in our syndicated lending group) within Cash Flows from Operating Activities in the Condensed Consolidated Statements of Cash Flows.

We report floorplan financed with the Revolving Credit Facility (including the cash flows from or to manufacturer-affiliated lenders participating in the facility) and other credit facilities in the U.K.

unaffiliated with our manufacturer partners, within Cash Flows from Financing Activities in the Condensed Consolidated Statements of Cash Flows.

Refer to Note 10.

Floorplan Notes Payable within our Notes to Condensed Consolidated Financial Statements for additional discussion of our Revolving Credit Facility.

However, we believe that all floorplan financing of inventory purchases in the normal course of business should correspond with the related inventory activity and be classified as an operating activity.

As a result, we use the non-GAAP measure “Adjusted net cash provided by/used in operating activities” and “Adjusted net cash provided by/used in financing activities” to further evaluate our cash flows.

We believe that this classification eliminates excess volatility in our operating cash flows prepared in accordance with U.S.

GAAP and avoids the potential to mislead the users of our financial statements.

In addition, for dealership acquisitions and dispositions that are negotiated as asset purchases, we do not assume transfer of liabilities for floorplan financing in the execution of the transactions.

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

GAAP, depending on the relationship described above.

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

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

The following table reconciles cash flows provided by (used in) operating, investing and financing activities on a U.S.

In addition, floorplan financing associated with dealership acquisitions and dispositions are classified as investing activities on an adjusted basis to eliminate excess volatility in our operating cash flows prepared in accordance with U.S.

The following table reconciles cash flows on a U.S.

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

Nine Months Ended September 30,

Three Months Ended March 31,

2022 2021 % Change

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Adjusted net cash used in financing activities $ (102.3) $ (82.8) (23.6) %

Sources and Uses of Liquidity 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 $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 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.

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

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

Borrowings on our used vehicle floorplan notes payable, subject to agreed-upon pay-off terms, are limited to 85% of the aggregate book value of our used vehicle inventory, except in the U.K.

At times, we have made payments on our floorplan notes payable using excess cash flows from operations and the proceeds of debt and equity offerings.

As needed, we re-borrow the amounts later, up to the limits on the floorplan notes payable discussed above, for working capital, acquisitions, capital expenditures or general corporate purposes.

Sources and Uses of Liquidity from Investing Activities

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.

Sources and Uses of Liquidity from Operating Activities — Three Months Ended March 31, 2022 Compared to 2021

For the Current Quarter, net cash provided by operating activities decreased by $12.5 million, as compared to the Prior Year Quarter.

On an adjusted basis for the same period, adjusted net cash provided by operating activities increased by $162.0 million.

The increase on an adjusted basis was primarily driven by an increase from changes in floorplan notes payable.

Sources and Uses of Liquidity from Investing Activities — Three Months Ended March 31, 2022 Compared to 2021

For the Current Quarter, net cash used in investing activities increased by $127.8 million, as compared to the Prior Year Quarter.

On an adjusted basis for the same period, adjusted net cash used in investing activities increased by $126.7 million, primarily driven by a $201.2 million increase in acquisition activity, partially offset by a $73.6 million increase in proceeds from disposition of franchises and property and equipment.

Capital Expenditures

Our capital expenditures include costs to extend the useful lives of current facilities, as well as to start or expand operations.

Our capital expenditures include costs to extend the useful lives of current dealership facilities, as well as to start or expand operations.

In general, expenditures relating to the construction or expansion of dealership facilities are driven by dealership acquisition activity, new franchises being granted to us by a manufacturer, significant growth in sales at an existing facility, relocation opportunities or manufacturer imaging programs.

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We forecast our capital expenditures for the full year of 2022 will be approximately $130.0 million, excluding expenditures related to real estate purchases and future acquisitions, which could generally be funded from excess cash.

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

Cash needed to complete our acquisitions generally comes from excess working capital, operating cash flows of our dealerships and borrowings under our floorplan facilities, term loans and our Acquisition Line.

Sources and Uses of Liquidity 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), $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.

For the Current Quarter, $33.9 million was used to purchase property and equipment, consisting of $25.5 million in capital expenditures and $8.0 million in purchases of real estate associated with existing dealership operations.

Sources and Uses of Liquidity from Financing Activities — Three Months Ended March 31, 2022 Compared to 2021

For the Current Quarter, net cash used in financing activities decreased by $156.0 million, as compared to the Prior Year Quarter.

On an adjusted basis for the same period, adjusted net cash used in financing activities increased by $19.5 million.

The increase on an adjusted basis was primarily driven by Current Quarter increases in share repurchases of $115.2 million and net repayments of debt of $43.1 million, partially offset by increased net borrowings on our Floorplan lines of $140.7 million (representing the net cash activity in our floorplan offset account).

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 September 30, 2021 (in millions):

The following table summarizes the commitment of our credit facilities as of March 31, 2022 (in millions):

Commitment Outstanding Available

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$ 2,297.4 $ 731.1 $ 1,566.3

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

(1) The available balance at March 31, 2022, includes $197.2 million of immediately available funds.

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

(2) The outstanding balance of $312.3 million is related to outstanding letters of credit of $12.6 million and $ 299.7 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 borrowings outstanding under the Acquisition Line included $280.0 million USD borrowings and £15.0 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 September 30, 2021, includes $3.5 million of immediately available funds.

(3) The available balance at March 31, 2022, includes $2.4 million of immediately available funds.

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

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credit facilities.

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.

We have other credit facilities in the U.S.

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.

In addition, we have outstanding debt instruments, including our 4.00% Senior Notes, as well as real estate related and other debt instruments.

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

As of March 31, 2022, 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 September 30, 2021

As of March 31, 2022

Required Actual

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Fixed charge coverage ratio > 1.20 6.51

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.

Based on our position as of March 31, 2022, 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.

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Debt and Note 10.

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

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

As of January 1, 2022, we had $74.3 million available share repurchase program.

From January 1, 2022 to February 16, 2022, we utilized $18.5 million of the then-available authorized share repurchase program.

On February 16, 2022, the Board of Directors increased the authorization to repurchase shares of our common stock by $144.2 million to $200.0 million.

During the period February 17, 2022 to March 31, 2022, we utilized $96.7 million of the available share repurchase program, leaving $103.3 million available under our current authorization to repurchase our common stock.

During the three months ended March 31, 2022, 638,696 shares were repurchased at an average price of $180.30 per share, for a total of $115.2 million.

During the Current Quarter, our Board of Directors approved a quarterly cash dividend of $0.36 per share on all shares of our common stock, which resulted in $5.9 million paid to common shareholders and $0.2 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.

Quantitative and Qualitative Disclosures About Market Risk

For quantitative and qualitative disclosures about market risk affecting us, refer to Item 7A.

Quantitative and Qualitative Disclosures About Market Risk of our 2021 Form 10-K.

Our exposure to market risk has not changed materially since December 31, 2021.

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