What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-07-29 compared with 2022-05-05 · 156 added, 127 removed, 542 unchanged (34% of the section changed)

3 unchanged sentences

(In millions, except share data)

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

CURRENT ASSETS:

45 unchanged sentences

(In millions, except per share data)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

New vehicle retail sales $ 1,851.3 $ 1,805.5 $ 3,596.4 $ 3,314.7

13 unchanged sentences

Depreciation and amortization expense 23.0 18.4 44.2 37.6

Asset impairments 0.8 — 0.8 —

INCOME FROM OPERATIONS 284.5 262.5 569.5 413.2

4 unchanged sentences

Net income from continuing operations 199.3 188.8 400.4 289.7

Net income from discontinued operations 1.8 1.0

Net (loss) income from discontinued operations ( 3.4 ) 2.2 ( 1.6 ) 3.2

NET INCOME $ 195.9 $ 191.0 $ 398.9 $ 292.9

14 unchanged sentences

(In millions)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

NET INCOME $ 195.9 $ 191.0 $ 398.9 $ 292.9

2 unchanged sentences

Net unrealized gain (loss) on interest rate risk management activities, net of tax:

Unrealized gain arising during the period, net of tax provision of $( 10.5 ) and $( 9.4 ), respectively

Unrealized gain (loss) arising during the period, net of tax (provision) benefit of $( 5.8 ), $ 3.4 , $( 16.3 ) and $( 5.1 ), respectively

19.0 ( 11.1 ) 53.0 16.7

Reclassification adjustment for loss included in interest expense, net of tax benefit of $ 0.4 , $ 0.6 , $ 0.9 and $ 1.3 , respectively

Unrealized gain on interest rate risk management activities, net of tax 35.9 30.2

OTHER COMPREHENSIVE INCOME, NET OF TAX 35.7 27.9

1.2 1.9 3.0 4.2

Reclassification related to de-designated interest rate swaps, net of tax benefit of $ — , $ 0.7 , $ — and $ 0.7 , respectively

Unrealized gain (loss) on interest rate risk management activities, net of tax 20.1 ( 6.9 ) 56.0 23.3

OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAX ( 7.7 ) 0.3 28.0 28.1

COMPREHENSIVE INCOME $ 188.2 $ 191.2 $ 426.8 $ 321.0

7 unchanged sentences

Shares Amount

BALANCE, DECEMBER 31, 2021

BALANCE, MARCH 31, 2022 25,266,915 $ 0.3 $ 324.2 $ 2,542.7 $ ( 120.6 ) $ ( 797.3 ) $ 1,949.2

Net income — — — 195.9 — — 195.9

Other comprehensive loss, net of taxes — — — — ( 7.7 ) — ( 7.7 )

Purchases of treasury stock — — — — — ( 138.9 ) ( 138.9 )

Net issuance of treasury shares to stock compensation plans ( 8,171 ) — 0.6 — — 4.4 5.0

Stock-based compensation — — 7.0 — — — 7.0

Dividends declared ($ 0.37 per share)

— — — ( 6.1 ) — — ( 6.1 )

BALANCE, JUNE 30, 2022 25,258,744 $ 0.3 $ 331.8 $ 2,732.5 $ ( 128.3 ) $ ( 931.8 ) $ 2,004.5

Common Stock Additional

Paid-in Capital Retained Earnings Accumulated

Comprehensive Income (Loss) Treasury Stock Total

Shares Amount

BALANCE, DECEMBER 31, 2021 25,336,054 $ 0.3 $ 325.8 $ 2,345.9 $ ( 156.2 ) $ ( 690.4 ) $ 1,825.2

Net income — — — 398.9 — — 398.9

5 unchanged sentences

— — — ( 12.2 ) — — ( 12.2 )

BALANCE, JUNE 30, 2022 25,258,744 $ 0.3 $ 331.8 $ 2,732.5 $ ( 128.3 ) $ ( 931.8 ) $ 2,004.5

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

GROUP 1 AUTOMOTIVE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In millions, except share data)

Common Stock Additional

Paid-in Capital Retained Earnings Accumulated

Comprehensive Income (Loss) Treasury Stock Total

Shares Amount

BALANCE, MARCH 31, 2021 25,367,736 $ 0.3 $ 305.7 $ 1,914.2 $ ( 156.2 ) $ ( 487.3 ) $ 1,576.6

Net income — — — 191.0 — — 191.0

Other comprehensive income, net of taxes — — — — 0.3 — 0.3

Purchases of treasury stock — — — — — ( 18.6 ) ( 18.6 )

Net issuance of treasury shares to stock compensation plans ( 10,059 ) — 1.1 — — 2.9 4.0

Stock-based compensation — — 6.8 — — — 6.8

Dividends declared ($ 0.33 per share)

— — — ( 6.0 ) — — ( 6.0 )

BALANCE, JUNE 30, 2021 25,357,677 $ 0.3 $ 313.6 $ 2,099.1 $ ( 155.9 ) $ ( 503.1 ) $ 1,754.0

Common Stock Additional

3 unchanged sentences

BALANCE, DECEMBER 31, 2020 25,433,048 $ 0.3 $ 308.3 $ 1,817.9 $ ( 184.0 ) $ ( 492.8 ) $ 1,449.6

25,433,048 $ 0.3 $ 308.3 $ 1,817.9 $ ( 184.0 ) $ ( 492.8 ) $ 1,449.6

Net income — — — 292.9 — — 292.9

Other comprehensive income, net of taxes — — — — 28.1 — 28.1

Purchases of treasury stock — — — — — ( 18.6 ) ( 18.6 )

Net issuance of treasury shares to stock compensation plans ( 75,371 ) — ( 7.9 ) — — 8.4 0.5

2 unchanged sentences

— — — ( 11.7 ) — — ( 11.7 )

BALANCE, MARCH 31, 2021

25,367,736 $ 0.3 $ 305.7 $ 1,914.2 $ ( 156.2 ) $ ( 487.3 ) $ 1,576.6

BALANCE, JUNE 30, 2021 25,357,677 $ 0.3 $ 313.6 $ 2,099.1 $ ( 155.9 ) $ ( 503.1 ) $ 1,754.0

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

2 unchanged sentences

(In millions)

Three Months Ended March 31,

Six Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

4 unchanged sentences

Deferred income taxes 11.3 4.4

Asset impairments 7.1 —

Stock-based compensation 15.0 13.2

1 unchanged sentence

Gain on disposition of assets ( 24.6 ) ( 2.1 )

Unrealized loss on derivative instruments — 2.3

Other 2.5 0.3

6 unchanged sentences

Floorplan notes payable — manufacturer affiliates

( 27.5 ) ( 56.6 )

Deferred revenues ( 0.1 ) ( 1.0 )

15 unchanged sentences

Repayments on credit facility — acquisition line

( 346.3 ) ( 32.2 )

Debt issuance costs ( 4.0 ) —

7 unchanged sentences

Effect of exchange rate changes on cash ( 2.7 ) 0.2

Net increase (decrease) in cash and cash equivalents 13.1 ( 4.3 )

Net increase in cash and cash equivalents 18.0 111.4

CASH AND CASH EQUIVALENTS, beginning of period 18.7 87.3

13 unchanged sentences

On November 12, 2021, the Company 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 the Company’s Brazilian operations (the “Brazil Disposal Group”) for approximately BRL 510.0 million in cash (the “Brazil Disposal”).

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

Pursuant to the terms and conditions set forth in the Brazil Agreement, Buyer agreed to acquire 100 % of the issued and outstanding equity interests of the Company’s Brazilian operations (the “Brazil Disposal Group”) for approximately BRL 510.0 million in cash (the “Brazil Disposal”).

On July 1, 2022, the Company completed the Brazil Disposal.

The Brazil Disposal Group met the criteria to be reported as held for sale and discontinued operations.

7 unchanged sentences

Refer to Note 4.

Discontinued Operations and Other Divestitures for additional information on the Brazil Discontinued Operations.

Discontinued Operations and Other Divestitures for additional information.

Certain amounts in the Condensed Consolidated Financial Statements and the accompanying notes may not compute due to rounding.

10 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

Recent Accounting Pronouncements

Reference Rate Reform

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“Topic 848”).

Topic 848 provides optional expedients and exceptions for companies that have contracts, hedging relationships and other transactions that reference LIBOR or other reference rates expected to be discontinued because of reference rate reform.

The optional expedients and exceptions are intended to ease the financial reporting burdens mainly related to contract modification accounting, hedge accounting and lease accounting.

In January 2021, the FASB issued ASU 2021-01 which clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition.

The guidance is effective for all entities as of March 12, 2020 and will apply through December 31, 2022.

LIBOR is used as an interest rate “benchmark” for certain of the Company’s mortgages, other debt and lease contracts.

Additionally, certain of the Company’s derivative instruments are benchmarked to LIBOR.

The Company applied the relief described for the modification of its Revolving Credit Facility (as defined in Note 10.

Floorplan Notes Payable) to SOFR in 2021.

The Company will continue to apply the relief as its arrangements are modified and does not expect the adoption will have a material impact on the Company’s condensed consolidated financial statements.

The following tables present the Company’s revenues disaggregated by its geographical segments (in millions):

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022 Six Months Ended June 30, 2022

New vehicle retail sales $ 1,561.7 $ 289.5 $ 1,851.3 $ 2,994.9 $ 601.6 $ 3,596.4

7 unchanged sentences

Total revenues $ 3,437.2 $ 708.2 $ 4,145.4 $ 6,528.5 $ 1,461.2 $ 7,989.7

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021 Six Months Ended June 30, 2021

New vehicle retail sales $ 1,504.4 $ 301.2 $ 1,805.5 $ 2,750.4 $ 564.3 $ 3,314.7

8 unchanged sentences

(1) The Company has elected not to disclose revenues related to remaining performance obligations on its maintenance and repair services as the duration of these contracts is less than one year.

(2) Includes variable consideration recognized of $ 10.1 million and $ 6.0 million during the three months ended March 31, 2022 and 2021, respectively, relating to performance obligations satisfied in previous periods on the Compa ny’s retrospective commission income contracts.

(2) Includes variable consideration recognized of $ 6.8 million and $ 7.7 million during the three months ended June 30, 2022 and 2021, respectively, and $ 16.9 million and $ 13.7 million during the six months ended June 30, 2022 and 2021, respectively, relating to performance obligations satisfied in previous periods on the Compa ny’s retrospective commission income contracts.

Refer to Note 8.

Receivables, Net and Contract Assets for the balance of the Company’s contract assets associated with revenues from the arrangement of financing and sale of service and insurance contracts.

The Company accounts for business combinations under the acquisition method of accounting, under which the Company allocates the purchase price to the assets and liabilities assumed based on an estimate of fair value.

The Company accounts for business combinations under the acquisition method of accounting, under which the Company allocates the purchase price to the assets acquired and liabilities assumed based on an estimate of fair value.

Prime Acquisition

1 unchanged sentence

(collectively referred to as the “Prime Acquisition”), for aggregate consideration of $ 934.2 million.

GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

The Company analyzed and assessed all available information related to property and equipment and property lease contracts, determining the preliminary fair values were appropriate and no material adjustments were recorded.

The Company previously recorded a $ 33.4 million deposit for the purchase of an additional dealership as part of the Prime Acquisition, which had not closed as of December 31, 2021.

As of March 31, 2022, the Company is still waiting for distributor approval to obtain ownership of the additional dealership.

Pursuant to purchase agreement with the seller, the seller initiated legal action against the distributor to compel the approval of the sale of the dealership.

As of June 30, 2022, the Company is still waiting for distributor approval to obtain ownership of the additional dealership.

Pursuant to the purchase agreement with the seller, the seller initiated legal action against the distributor to compel the approval of the sale of the dealership.

In March 2022, upon the contractual release of funds from escrow to the seller related to the dealership, the deposit was recognized as additional consideration paid and reflected as additional goodwill, resulting in total consideration associated with the Prime Acquisition of $ 967.6 million.

2 unchanged sentences

The goodwill is deductible for income tax purposes.

GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

The following table summarizes the consideration paid and aggregate amounts of assets acquired and liabilities assumed (in millions):

16 unchanged sentences

See the table below for additional details.

Prime assets classified as held for sale (in millions)

Prime assets classified as held for sale as of the acquisition date (in millions)

Inventories $ 10.4

3 unchanged sentences

Total other assets classified as held for sale $ 55.3

Prime liabilities classified as held for sale (in millions)

Prime liabilities classified as held for sale as of the acquisition date (in millions)

Operating lease liabilities $ 1.7

The Company’s Condensed Consolidated Statement of Operations included revenues and net income attributable to Prime for the three months ended March 31, 2022, of $ 414.1 million and $ 27.5 million, respectively.

The Company’s Condensed Consolidated Statement of Operations included revenues attributable to Prime for the three and six months ended June 30, 2022, of $ 456.9 million and $ 871.0 million, respectively, and net income attributable to Prime for the three and six months ended June 30, 2022 of $ 27.2 million and $ 54.8 million, respectively.

These revenue and net income amounts attributable to Prime include amounts up to the date of disposal, from certain stores which have been disposed of since the date of the Prime Acquisition.

Other Acquisitions

During the three months ended March 31, 2022, the Company acquired one Toyota dealership in the U.S.

Total consideration paid for this dealership, which was accounted for as a business combination, was $ 250.4 million, consisting of cash paid of $ 247.7 million and a payable of $ 2.7 million.

Goodwill and franchise rights intangibles associated with this acquisition totaled $ 136.0 million and $ 70.5 million, respectively.

During the three months ended March 31, 2021, the Company acquired two Toyota dealerships in the U.S.

Aggregate consideration paid for these dealerships, which were accounted for as business combinations, totaled $ 49.9 million.

During the six months ended June 30, 2022, the Company acquired two Toyota dealerships in the U.S.

Aggregate consideration paid for these dealerships, which were accounted for as business combinations, was $ 319.0 million, consisting of cash paid of $ 318.2 million and a payable of $ 0.8 million.

Goodwill and franchise rights intangibles associated with these acquisitions totaled $ 171.6 million and $ 84.3 million, respectively.

During the six months ended June 30, 2021, the Company acquired two Toyota dealerships in the U.S.

Aggregate consideration paid for these dealerships, which were accounted for as business combinations, was $ 49.9 million.

Goodwill associated with these acquisitions totaled $ 22.6 million.

3 unchanged sentences

Brazil Discontinued Operations

On November 12, 2021, the Company entered into the Brazil Disposal.

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

On November 12, 2021, the Company entered into an agreement to effect the Brazil Disposal.

The sale price of BRL 510.0 million includes a holdback amount, for general representations and warranties, of BRL 115.0 million or approximately $ 22.1 million, to be held in escrow for a period of five years from the close of the transaction.

1 unchanged sentence

This amount has been included in the estimated proceeds.

The Brazil Disposal closed on July 1, 2022.

During the fourth quarter of 2021, the Company recognized a net loss of $ 77.5 million on the Brazil Disposal.

During the three months ended March 31, 2022, the Company did not recognize any additional net loss on the disposal of the Brazil Disposal Group.

The following table summarizes the estimated fair value of proceeds expected and net carrying value of the assets disposed as of March 31, 2022 (in millions):

During the three and six months ended June 30, 2022, the Company recognized an additional net loss of $ 6.3 million on the disposal of the Brazil Disposal Group.

The following table summarizes the estimated fair value of the proceeds received from the disposition and net carrying value of the assets disposed as of June 30, 2022 (in millions):

Estimated fair value of proceeds from disposition $ 96.2

3 unchanged sentences

Estimated incremental costs to sell 8.4

Net loss on disposal of the Brazil Disposal Group $ ( 77.5 )

Net loss on the Brazil Disposal $ ( 83.8 )

Upon sale of a foreign entity, amounts recorded within Accumulated Other Comprehensive Income (loss) (“AOCI”) on the Condensed Consolidated Balance Sheets, are required to be reclassified into earnings on the date of disposition.

1 unchanged sentence

The loss on sale indicates an impairment of assets, however, the loss was entirely the result of the reclassification of the non-cash currency translation adjustment from AOCI .

For the three months ended March 31, 2022, the Company has presented a valuation allowance against assets held for sale of the Brazil Disposal Group to reflect the expected loss not attributable to a particular asset within the Brazil Disposal Group.

In addition, the purchase price is denominated in BRL, which is subject to foreign currency exchange risk.

For the six months ended June 30, 2022, the Company has presented a valuation allowance against the assets held for sale of the Brazil Disposal Group to reflect the expected loss not attributable to a particular asset within the Brazil Disposal Group.

In addition, the purchase price of the Brazil Disposal is denominated in BRL, which is subject to foreign currency exchange risk.

In order to partially mitigate this risk, the Company entered into a foreign currency derivative for the conversion of BRL to USD in the form of a costless collar which protects the Company from significant downside exposure on $ 70.0 million of the expected purchase consideration.

Any gains or losses associated with the foreign currency derivative are presented as estimated incremental costs to sell in the table above and are fully offset by corresponding foreign currency impacts to the estimated fair value of proceeds from the disposition.

On June 30, 2022, the Company settled the foreign currency derivative for a loss of $ 8.4 million.

GROUP 1 AUTOMOTIVE, INC.

1 unchanged sentence

Results of the Brazil Discontinued Operations were as follows (in millions):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

New vehicle retail sales $ 60.4 $ 49.8 $ 109.0 $ 83.9

13 unchanged sentences

Depreciation and amortization expense 0.5 0.4 0.9 0.7

INCOME FROM DISCONTINUED OPERATIONS 3.1 2.1

Asset impairments 6.3 — 6.3 —

(LOSS) INCOME FROM OPERATIONS — DISCONTINUED ( 3.6 ) 3.3 ( 0.5 ) 5.3

Floorplan interest expense 0.7 0.2 1.4 0.2

Other interest (income) expense, net ( 0.3 ) 0.1 ( 0.4 ) 0.8

INCOME BEFORE INCOME TAXES — DISCONTINUED OPERATIONS 2.5 1.4

Provision for income taxes 0.7 0.4

NET INCOME — DISCONTINUED OPERATIONS $ 1.8 $ 1.0

(LOSS) INCOME BEFORE INCOME TAXES — DISCONTINUED OPERATIONS ( 4.0 ) 3.0 ( 1.5 ) 4.3

(Benefit) provision for income taxes ( 0.6 ) 0.8 0.1 1.1

NET (LOSS) INCOME — DISCONTINUED OPERATIONS $ ( 3.4 ) $ 2.2 $ ( 1.6 ) $ 3.2

The following table presents cash flows from operating and investing activities for the Brazil Discontinued Operations (in millions):

Three Months Ended March 31,

Net cash provided by (used in) operating activities — discontinued operations $ 11.8 $ ( 6.6 )

Six Months Ended June 30,

Net cash provided by operating activities — discontinued operations $ 26.3 $ 9.2

Net cash used in investing activities — discontinued operations $ ( 8.7 ) $ ( 1.2 )

2 unchanged sentences

Assets and liabilities of the Brazil Discontinued Operations were as follows (in millions):

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Cash and cash equivalents $ 10.4 $ 3.7

3 unchanged sentences

Prepaid expenses 1.4 1.9

Assets of Brazil Discontinued Operations — current 71.8 56.9

Current assets of discontinued operations 59.2 56.9

Property and equipment, net 23.3 22.3

1 unchanged sentence

Other long-term assets 8.8 7.8

Assets of Brazil Discontinued Operations — non-current (1)

Non-current assets of discontinued operations (1)

Total assets, before valuation allowance 93.4 89.5

7 unchanged sentences

Accrued expenses and other current liabilities 7.6 8.7

Liabilities of Brazil Discontinued Operations — current $ 72.5 $ 48.3

(1) The assets of the Brazil Discontinued Operations are classified in current assets in the Condensed Consolidated Balance Sheet as of March 31, 2022 and December 31, 2021, as the Brazil Disposal is expected to close before the end of the second quarter of 2022.

Current liabilities of discontinued operations $ 43.8 $ 48.3

(1) The assets of the Brazil Discontinued Operations are classified as current assets in the Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021, respectively, as the Brazil Disposal was expected to close in less than twelve months.

Assets and Liabilities Held for Sale

Assets and liabilities classified as held for sale consisted of the following (in millions):

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Current assets classified as held for sale

8 unchanged sentences

Acquisitions.

(2) Includes $ 7.5 million and $ 9.9 million of goodwill reclassified to assets held for sale as of March 31, 2022 and December 31, 2021.

(2) Includes $ 19.3 million and $ 9.9 million of goodwill reclassified to assets held for sale as of June 30, 2022 and December 31, 2021, respectively.

Other Divestitures

1 unchanged sentence

Gains and losses on dispositions are recorded in Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

During the three months ended March 31, 2022, the Company recorded a net pre-tax gain totaling $ 18.7 million related to the disposition of two dealerships representing two franchises in the U.S.

During the six months ended June 30, 2022, the Company recorded a net pre-tax gain totaling $ 24.1 million related to the disposition of four dealerships representing four franchises in the U.S.

The dispositions reduced goodwill by $ 24.1 million.

During the three months ended March 31, 2021, the Company recorded a net pre-tax gain totaling $ 1.0 million related to the disposition of one dealership representing one franchise and one franchise within an existing dealership in the U.S.

The Company also terminated one franchise representing one dealership in the U.K.

GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

During the six months ended June 30, 2021, the Company recorded a net pre-tax gain totaling $ 1.8 million related to the disposition of two dealerships representing two franchises and one franchise within an existing dealership in the U.S.

The dispositions reduced goodwill by $ 2.2 million.

The Company also terminated one franchise representing one dealership in the U.K.

SEGMENT INFORMATION

As of March 31, 2022, the Company had two reportable segments:

As of June 30, 2022, the Company had two reportable segments:

The Company defines its segments as those operations whose results the Company’s Chief Executive Officer, who is the chief operating decision maker, regularly reviews to analyze performance and allocate resources.

4 unchanged sentences

and sell vehicle parts.

Selected reportable segment data is as follows for the three months ended March 31, 2022 and 2021 (in millions):

Three Months Ended March 31, 2022

Selected reportable segment data is as follows for the three and six months ended June 30, 2022 and 2021 (in millions):

Three Months Ended June 30, 2022 Six Months Ended June 30, 2022

Total revenues $ 3,437.2 $ 708.2 $ 4,145.4 $ 6,528.5 $ 1,461.2 $ 7,989.7

Income before income taxes $ 241.7 $ 18.4 $ 260.1 $ 472.3 $ 50.1 $ 522.4

$ 230.6 $ 31.7 $ 262.3

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021 Six Months Ended June 30, 2021

Total revenues $ 2,924.9 $ 700.7 $ 3,625.6 $ 5,329.3 $ 1,250.3 $ 6,579.6

Income before income taxes $ 215.1 $ 25.2 $ 240.3 $ 336.6 $ 33.6 $ 370.3

(1) For the three months ended March 31, 2022, income before income taxes includes net gains of $ 18.7 million and $ 2.7 million on dealership and real estate dispositions in the U.S.

segments, respectively.

Refer to Note 4.

Discontinued Operations and Other Divestitures for additional information .

EARNINGS PER SHARE

5 unchanged sentences

Diluted EPS is computed by dividing net income available to diluted common shares by the weighted average number of dilutive common shares outstanding during the period.

The following table sets forth the calculation of EPS on total net income for the three months ended March 31, 2022 and 2021 (in millions, except share and per share data):

Three Months Ended March 31,

GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

The following table sets forth the calculation of EPS on total net income for the three and six months ended June 30, 2022 and 2021 (in millions, except share and per share data):

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Weighted average basic common shares outstanding 15,956,258 17,747,518 16,241,221 17,752,577

3 unchanged sentences

Earnings allocated to participating securities from continued operations 5.5 6.4 11.3 9.8

Earnings allocated to participating securities from discontinued operations 0.1 —

(Loss) earnings allocated to participating securities from discontinued operations ( 0.1 ) 0.1 — 0.1

Net income available to basic common shares $ 190.6 $ 184.5 $ 387.6 $ 283.0

2 unchanged sentences

Earnings allocated to participating securities from continued operations 5.4 6.3 11.3 9.8

Earnings allocated to participating securities from discontinued operations 0.1 —

(Loss) earnings allocated to participating securities from discontinued operations ( 0.1 ) 0.1 — 0.1

Net income available to diluted common shares $ 190.6 $ 184.5 $ 387.6 $ 283.0

Diluted earnings per common share $ 11.90 $ 10.35 $ 23.79 $ 15.88

GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

12 unchanged sentences

Debt for further discussion of the Company’s long-term debt arrangements.

GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

The carrying value and fair value of the Company’s 4.00 % Senior Notes and fixed rate mortgages were as follows (in millions):

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Carrying Value (1)

6 unchanged sentences

Derivative Financial Instruments

The Company holds the majority of its interest rate swaps to hedge against variability of interest payments indexed to LIBOR and SOFR.

The Company’s interest rate swaps are measured at fair value utilizing a one-month LIBOR or SOFR forward yield curve matched to the identical maturity term of the instrument being measured.

The Company holds its interest rate swaps to hedge against variability of interest payments indexed to SOFR.

The Company’s interest rate swaps are measured at fair value utilizing a SOFR forward yield curve matched to the identical maturity term of the instrument being measured.

Observable inputs utilized in the income approach valuation technique incorporate identical contractual notional amounts, fixed coupon rates, periodic terms for interest payments and contract maturity.

The fair value of the interest rate swaps also considers the credit risk of the Company for instruments in a liability position or the counterparty for instruments in an asset position.

The credit risk is calculated using the spread between the one-month LIBOR or SOFR yield curve and the relevant interest rate according to rating agencies.

The credit risk is calculated using the spread between the SOFR yield curve and the relevant interest rate according to rating agencies.

The inputs to the fair value measurements reflect Level 2 of the hierarchy framework.

GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

Assets and liabilities associated with the Company’s interest rate swaps, as reflected gross in the Condensed Consolidated Balance Sheets, were as follows (in millions):

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Other current assets $ 0.1 $ —

4 unchanged sentences

Total liabilities $ — $ 11.2

Interest Rate Swaps Designated as Cash Flow Hedges

Interest rate swaps designated as cash flow hedges and the related gains or losses are deferred in stockholders’ equity as a component of AOCI in the Company’s Condensed Consolidated Balance Sheets.

2 unchanged sentences

Gains or losses for periods where future forecasted hedged transactions are deemed probable of not occurring are reclassified from AOCI into income as Floorplan interest expense .

As of March 31, 2022, the Company held 41 interest rate swaps designated as cash flow hedges with a total notional value of $ 962.1 million that fixed its underlying one-month LIBOR or SOFR at a weighted average rate of 1.26 % .

The Company also held 2 additional interest rate swaps designated as cash flow hedges with forward start dates beginning in December 2023, that had an aggregate notional value of $ 100.0 million and a weighted average interest rate of 0.94 % as of March 31, 2022.

As of June 30, 2022, the Company held 41 interest rate swaps designated as cash flow hedges with a total notional value of $ 955.8 million that fixed its underlying SOFR at a weighted average rate of 1.23 % .

The maturity dates of the Company’s designated interest rate swaps with forward start dates range between December 2027 and December 2028.

As of June 30, 2021, the Company held 34 interest rate swaps designated as cash flow hedges with a total notional value of $ 700.4 million that fixed the underlying one-month LIBOR at a weighted average rate of 1.38 %.

GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

The following tables present the impact of the Company’s interest rate swaps designated as cash flow hedges (in millions):

Amount of Unrealized Income (Loss), Net of Tax, Recognized in Other Comprehensive Income (Loss)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

Derivatives in Cash Flow Hedging Relationship 2022 2021 2022 2021

1 unchanged sentence

Amount of Loss Reclassified from Other Comprehensive Income (Loss) into Statements of Operations

Statement of Operations Classification Three Months Ended March 31,

Statement of Operations Classification Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Floorplan interest expense $ ( 0.9 ) $ ( 1.4 ) $ ( 2.1 ) $ ( 3.7 )

1 unchanged sentence

The amount of gain expected to be reclassified out of AOCI into earnings as an offset to Floorplan interest expense or Other interest expense, net in the next twelve months is $ 15.0 million .

GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

RECEIVABLES, NET AND CONTRACT ASSETS

The Company’s receivables, net and contract assets consisted of the following (in millions):

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Contracts-in-transit and vehicle receivables, net:

15 unchanged sentences

$ 43.7 $ 37.5

(1) No allowance for doubtful accounts was recorded for contract assets as of March 31, 2022 or December 31, 2021.

(1) No allowance for doubtful accounts was recorded for contract assets as of June 30, 2022 or December 31, 2021.

GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

Debt consisted of the following (in millions):

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

4.00 % Senior Notes due August 15, 2028

12 unchanged sentences

Floorplan Notes Payable) are used for working capital, general corporate and acquisition purposes.

As of March 31, 2022, borrowings under the Acquisition Line, a component of the Revolving Credit Facility (as defined in Note 10.

As of June 30, 2022, borrowings under the Acquisition Line, a component of the Revolving Credit Facility (as defined in Note 10.

Floorplan Notes Payable), totaled $ 248.2 million .

The average interest rate on this facility was 1.39 % during the three months ended March 31, 2022.

The average interest rate on this facility was 1.75 % during the three months ended June 30, 2022.

Real Estate Related

1 unchanged sentence

that are paid in installments.

As of March 31, 2022, borrowings ou tstanding under these facilities totaled $ 760.9 million, gross of debt issuance costs, comprised of $ 649.0 million in the U.S.

As of June 30, 2022, borrowings ou tstanding under these facilities totaled $ 792.4 million, gross of debt issuance costs, comprised of $ 692.1 million in the U.S.

and $ 100.3 million in the U.K.

GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

Bridge Facility

2 unchanged sentences

During the three months ended March 31, 2022, the Company paid off the total outstanding borrowings under the Bridge Facility of $ 140.0 million.

GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

FLOORPLAN NOTES PAYABLE

The Company’s floorplan notes payable consisted of the following (in millions):

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Revolving Credit Facility — floorplan notes payable $ 607.9 $ 511.7

20 unchanged sentences

Th e Acquisition Line includes a $ 100.0 million sub-limit for letters of credit.

The Company had $ 12.6 million in letters of credit outstanding as of both March 31, 2022 and December 31, 2021.

The Company had $ 12.6 million in letters of credit outstanding as of both June 30, 2022 and December 31, 2021.

Floorplan Line bears interest at rates equal to SOFR plus 120 basis points for new vehicle inventory and SOFR plus 150 basis points for used vehicle inventory.

The weighted average interest rate on the U.S.

Floorplan Line was 1.57 % as of March 31, 2022, excluding the impact of the Company’s interest rate swap derivative instruments.

Floorplan Line was 2.81 % as of June 30, 2022, excluding the impact of the Company’s interest rate swap derivative instruments.

The Acquisition Line bears interest at SOFR or a SOFR equivalent plus 110 to 210 basis points , depending on the Company’s total adjusted leverage ratio, on borrowings in USD, Euros or GBP.

3 unchanged sentences

The Acquisition Line requires a commitment fee ranging fr om 0.15 % to 0.40 % per annum, depending on the Company’s total adjusted leverage ratio, based on a minimum commitment of $ 50.0 million less outstanding borrowings.

In conjunction with the amended Revolving Credit Facility described above, the Company incurred $ 3.4 million in additional debt issuance costs.

The Company had $ 5.5 million and $ 2.6 million of related unamortized debt issuance costs as of March 31, 2022 and December 31, 2021, respectively, which are included in Prepaid expenses and Other long-term assets in the Company’s Condensed Consolidated Balance Sheets and amortized over the term of the facility.

GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

In conjunction wit h the amended Revolving Credit Facility described above, the Company incurred $ 3.4 million in additional debt issuance costs.

The Company had $ 5.3 million and $ 2.6 million of related unamortized debt issuance costs as of June 30, 2022 and December 31, 2021, respectively, which are included in Prepaid expenses and Other long-term assets in the Company’s Condensed Consolidated Balance Sheets and amortized over the term of the facility.

Floorplan Notes Payable — Manufacturer Affiliates

4 unchanged sentences

Prime rate or a Prime floor of 4.00 % , plus 150 basis points minus certain incentives.

The interest rate on the FMCC Facility was 5.50 % before considering the applicable incentives as of March 31, 2022.

The interest rate on the FMCC Facility was 4.75 % before considering the applicable incentives as of June 30, 2022.

GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

Other Manufacturer Facilities

1 unchanged sentence

with financial institutions affiliated with manufacturers for financing of new, used and rental vehicle inventories.

As of March 31, 2022, borrowings outstanding under these facilities totaled $ 227.5 million , comprised of $ 92.4 million in the U.S., with annual interest rates ranging from less than 1 % to approximately 5 % , and $ 135.1 million in the U.K., with annual interest rates ranging from approximately 1 % to 4 % .

As of June 30, 2022, borrowings outstanding under these facilities totaled $ 185.3 million , comprised of $ 100.0 million in the U.S., with annual interest rates ranging from less than 1 % to approximately 5 % , and $ 85.3 million in the U.K., with annual interest rates ranging from approximately 2 % to 5 % .

Offset Accounts

4 unchanged sentences

Non-Cash Activities

The accrual for capital expenditures decreased $ 0.4 million an d increased $ 2.4 million during the three months ended March 31, 2022 and 2021, respectively.

The accrual for capital expenditures increased $ 0.1 million an d $ 1.4 million during the six months ended June 30, 2022 and 2021, respectively.

Interest and Income Taxes Paid

Cash paid for interest, including the monthly settlement of the Company’s interest rate swaps, was $ 28.6 million and $ 24.6 million for the three months ended March 31, 2022 and 2021, respectively.

Cash paid for interest, including the monthly settlement of the Company’s interest rate swaps, was $ 42.8 million and $ 37.6 million for the six months ended June 30, 2022 and 2021, respectively.

Refer to Note 7.

Financial Instruments and Fair Value Measurements for further discussion of the Company’s interest rate swaps.

Cash paid for income taxes, net of refunds, was $ 7.8 million and $ 0.7 million for the three months ended March 31, 2022 and 2021, respectively.

Cash paid for income taxes, net of refunds, was $ 99.2 million and $ 52.7 million for the six months ended June 30, 2022 and 2021, respectively.

COMMITMENTS AND CONTINGENCIES

4 unchanged sentences

Legal Proceedings

As of March 31, 2022, the Company was not party to any legal proceedings that, individually or in the aggregate, are reasonably expected to have a material adverse effect on the Company’s results of operations, financial condition or cash flows.

As of June 30, 2022, the Company was not party to any legal proceedings that, individually or in the aggregate, are reasonably expected to have a material adverse effect on the Company’s results of operations, financial condition or cash flows.

However, the results of current or future matters cannot be predicted with certainty;

3 unchanged sentences

In those instances where the Company did not own the real estate and was a tenant, it assigned the lease to the purchaser but remained liable as a guarantor for the remaining lease payments in the event of non-payment by the purchaser.

Although the Company has no reason to believe that it will be called upon to perform under any such assigned leases, the Company estimates that lessee remaining rental obligations were $ 23.2 million as of March 31, 2022.

In certain instances, the Company obtains collateral support for the rental obligations that the Company remains obligated for upon sale of a dealership to a lessee.

Total associated letters of credit issued on behalf of the lessee where the Company is the beneficiary was $ 3.3 million as of March 31, 2022.

Total associated letters of credit issued on behalf of the lessee where the Company is the beneficiary was $ 3.3 million as of June 30, 2022.

GROUP 1 AUTOMOTIVE, INC.

2 unchanged sentences

Changes in the balances of each component of Accumulated other comprehensive income (loss) were as follows (in millions):

Three Months Ended March 31, 2022

Six Months Ended June 30, 2022

Accumulated Income (Loss) On Foreign Currency Translation Accumulated Income (Loss) On Interest Rate Swaps Total

7 unchanged sentences

Benefit for income taxes — ( 0.9 ) ( 0.9 )

Net current period other comprehensive income (loss) ( 0.2 ) 35.9 35.7

Balance, March 31, 2022 $ ( 158.4 ) $ 37.9 $ ( 120.6 )

Three Months Ended March 31, 2021

Net current period other comprehensive (loss) income ( 28.1 ) 56.0 28.0

Balance, June 30, 2022 $ ( 186.3 ) $ 58.0 $ ( 128.3 )

Six Months Ended June 30, 2021

Accumulated Income (Loss) On Foreign Currency Translation Accumulated Income (Loss) On Interest Rate Swaps Total

6 unchanged sentences

Other interest expense (pre-tax) — 1.9 1.9

Reclassification related to de-designated interest rate swaps (pre-tax) — 3.1 3.1

Benefit for income taxes — ( 2.0 ) ( 2.0 )

Net current period other comprehensive income (loss) ( 2.3 ) 30.2 27.9

Balance, March 31, 2021 $ ( 153.9 ) $ ( 2.3 ) $ ( 156.2 )

Net current period other comprehensive income 4.9 23.3 28.1

Balance, June 30, 2021 $ ( 146.7 ) $ ( 9.2 ) $ ( 155.9 )

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 1. Financial Statements