Item 2. Management’s Discussion and Analysis
Item 2. 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 2021 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.
Overview
We are a leading operator in the automotive retail industry. Through our omni-channel platform, we sell new and used cars and light trucks; arrange related vehicle financing; sell service and insurance contracts; provide automotive maintenance and repair services; and sell vehicle parts. 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 June 30, 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. (“Buyer”). 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 our Brazilian operations (the “Brazil Disposal Group”) for approximately BRL 510 million in cash (the “Brazil Disposal”). 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. On July 1, 2022, we completed the Brazil Disposal. Refer to Note 4. Discontinued Operations and Other Divestitures within our Notes to Condensed Consolidated Financial Statements, for additional information regarding business dispositions.
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 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 15 days as of the quarter ended June 30, 2022 (“Current Quarter”), as compared to 19 days as of the quarter ended June 30, 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 length, impact and outcome 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.
The Russia and Ukraine Conflict and other geopolitical conflicts, as well as related international responses, have exacerbated inflationary pressures, including causing increases in the prices for goods and services and global supply chain disruptions, which have resulted and may continue to result in shortages in materials and services. Such shortages have resulted and may continue to result in inflationary cost increases for labor, fuel, materials and services, and could continue to cause costs to increase as well as result in the scarcity of certain materials.
During the six months ended June 30, 2022 (“Current Year”), the global economy experienced rising inflation and an increase in gasoline and energy prices. In response to inflationary pressures and macroeconomic conditions, the U.S. Federal Reserve, along with other central banks, continued to increase interest rates throughout 2022. Additionally, U.S. Gross Domestic Product (“GDP”) shrank for the second consecutive quarter as of the Current Quarter, indicating that the U.S. economy may be entering a recession. The impact of these macroeconomic developments on our operations cannot be predicted with certainty.
Critical Accounting Policies and Accounting Estimates
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.
23
Table of Contents
Results of Operations
The “same store” amounts presented below include the results of dealerships and corporate headquarters for the identical months in each comparative period, commencing with the first full month in which we owned the dealership. Amounts related to divestitures are excluded from each comparative period, ending with the last full month in which we owned the dealership. 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 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. The constant currency presentation, which is a non-GAAP measure, excludes the impact of fluctuations in foreign currency exchange rates. We believe providing constant currency information provides valuable supplemental information regarding our underlying business and results of operations, consistent with how we evaluate our performance. We calculate constant currency percentages by converting our current period reported results for entities reporting in currencies other than USD using comparative period exchange rates rather than the actual exchange rates in effect during the respective periods. The constant currency performance measures should not be considered a substitute for, or superior to, the measures of financial performance prepared in accordance with U.S. GAAP. Additionally, we caution investors not to place undue reliance on non-GAAP measures, but also to consider them with the most directly comparable U.S. GAAP measures. Our management also uses constant currency and adjusted cash flows from operating, investing and financing activities in conjunction with U.S. GAAP financial measures to assess our business, including communication with our Board of Directors, investors and industry analysts concerning financial performance. We disclose these non-GAAP measures and the related reconciliations because we believe investors use these metrics in evaluating longer-term period-over-period performance. These metrics also allow investors to better understand and evaluate the information used by management to assess operating performance.
Certain amounts in the financial statements may not compute due to rounding. All computations have been calculated using unrounded amounts for all periods presented.
24
Table of Contents
The following tables summarize our operating results on a reported basis and on a same store basis:
Reported Operating Data — Consolidated
(In millions, except unit data)
Three Months Ended June 30,
2022 2021 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change
Revenues:
New vehicle retail sales $ 1,851.3 $ 1,805.5 $ 45.8 2.5 % $ (32.5) 4.3 %
Used vehicle retail sales 1,505.4 1,183.8 321.6 27.2 % (34.5) 30.1 %
Used vehicle wholesale sales 95.8 93.7 2.1 2.3 % (4.1) 6.7 %
Total used 1,601.2 1,277.5 323.7 25.3 % (38.7) 28.4 %
Parts and service sales 502.6 382.9 119.7 31.2 % (6.4) 32.9 %
F&I, net 190.2 159.6 30.6 19.2 % (1.9) 20.4 %
Total revenues $ 4,145.4 $ 3,625.6 $ 519.8 14.3 % $ (79.5) 16.5 %
Gross profit:
New vehicle retail sales $ 210.3 $ 160.1 $ 50.2 31.3 % $ (3.0) 33.2 %
Used vehicle retail sales 89.5 108.1 (18.7) (17.3) % (1.7) (15.6) %
Used vehicle wholesale sales 0.8 8.9 (8.1) (91.4) % 0.1 (92.8) %
Total used 90.3 117.1 (26.8) (22.9) % (1.6) (21.5) %
Parts and service sales 277.7 212.7 65.0 30.6 % (3.9) 32.4 %
F&I, net 190.2 159.6 30.6 19.2 % (1.9) 20.4 %
Total gross profit $ 768.4 $ 649.5 $ 118.9 18.3 % $ (10.5) 19.9 %
Gross margin:
New vehicle retail sales 11.4 % 8.9 % 2.5 %
Used vehicle retail sales 5.9 % 9.1 % (3.2) %
Used vehicle wholesale sales 0.8 % 9.5 % (8.7) %
Total used 5.6 % 9.2 % (3.5) %
Parts and service sales 55.2 % 55.5 % (0.3) %
Total gross margin 18.5 % 17.9 % 0.6 %
Units sold:
Retail new vehicles sold 38,822 41,442 (2,620) (6.3) %
Retail used vehicles sold 48,907 44,502 4,405 9.9 %
Wholesale used vehicles sold 9,514 10,730 (1,216) (11.3) %
Total used 58,421 55,232 3,189 5.8 %
Average sales price per unit sold:
New vehicle retail $ 47,686 $ 43,567 $ 4,119 9.5 % $ (837) 11.4 %
Used vehicle retail $ 30,781 $ 26,601 $ 4,180 15.7 % $ (706) 18.4 %
Gross profit per unit sold:
New vehicle retail sales $ 5,416 $ 3,863 $ 1,553 40.2 % $ (78) 42.2 %
Used vehicle retail sales $ 1,830 $ 2,430 $ (600) (24.7) % $ (36) (23.2) %
Used vehicle wholesale sales $ 81 $ 831 $ (750) (90.3) % $ 13 (91.9) %
Total used $ 1,545 $ 2,119 $ (575) (27.1) % $ (28) (25.8) %
F&I PRU $ 2,168 $ 1,857 $ 311 16.7 % $ (22) 17.9 %
Other:
SG&A expenses $ 460.2 $ 368.6 $ 91.5 24.8 % $ (7.5) 26.9 %
SG&A as % gross profit 59.9 % 56.8 % 3.1 %
Floorplan expense:
Floorplan interest expense $ 5.9 $ 8.6 $ (2.7) (31.8) % $ (0.2) (30.0) %
Less: floorplan assistance (1)
14.1 15.3 (1.1) (7.4) % — (7.3) %
Net floorplan expense $ (8.3) $ (6.6) $ (1.6) $ (0.2)
(1) Floorplan assistance is included within Gross profit — New vehicle retail sales above and Cost of sales — New vehicle retail sales in our Condensed Consolidated Statements of Operations.
25
Table of Contents
Same Store Operating Data — Consolidated
(In millions, except unit data)
Three Months Ended June 30,
2022 2021 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change
Revenues:
New vehicle retail sales $ 1,492.6 $ 1,781.6 $ (289.0) (16.2) % $ (30.0) (14.5) %
Used vehicle retail sales 1,266.7 1,170.2 96.6 8.3 % (30.5) 10.9 %
Used vehicle wholesale sales 78.8 92.9 (14.1) (15.2) % (3.8) (11.1) %
Total used 1,345.5 1,263.1 82.5 6.5 % (34.3) 9.2 %
Parts and service sales 427.7 376.7 51.0 13.5 % (5.7) 15.1 %
F&I, net 157.9 157.4 0.5 0.3 % (1.8) 1.4 %
Total revenues $ 3,423.7 $ 3,578.8 $ (155.0) (4.3) % $ (71.8) (2.3) %
Gross profit:
New vehicle retail sales $ 166.6 $ 157.7 $ 8.9 5.7 % $ (2.8) 7.4 %
Used vehicle retail sales 74.9 106.9 (32.0) (29.9) % (1.5) (28.5) %
Used vehicle wholesale sales 0.4 8.8 (8.4) (95.8) % 0.1 (97.0) %
Total used 75.3 115.7 (40.4) (34.9) % (1.4) (33.7) %
Parts and service sales 231.1 209.0 22.1 10.6 % (3.5) 12.2 %
F&I, net 157.9 157.4 0.5 0.3 % (1.8) 1.4 %
Total gross profit $ 630.9 $ 639.8 $ (9.0) (1.4) % $ (9.5) 0.1 %
Gross margin:
New vehicle retail sales 11.2 % 8.8 % 2.3 %
Used vehicle retail sales 5.9 % 9.1 % (3.2) %
Used vehicle wholesale sales 0.5 % 9.5 % (9.0) %
Total used 5.6 % 9.2 % (3.6) %
Parts and service sales 54.0 % 55.5 % (1.5) %
Total gross margin 18.4 % 17.9 % 0.5 %
Units sold:
Retail new vehicles sold 31,204 40,900 (9,696) (23.7) %
Retail used vehicles sold 40,978 43,975 (2,997) (6.8) %
Wholesale used vehicles sold 7,597 10,615 (3,018) (28.4) %
Total used 48,575 54,590 (6,015) (11.0) %
Average sales price per unit sold:
New vehicle retail $ 47,834 $ 43,561 $ 4,273 9.8 % $ (961) 12.0 %
Used vehicle retail $ 30,912 $ 26,609 $ 4,303 16.2 % $ (745) 19.0 %
Gross profit per unit sold:
New vehicle retail sales $ 5,338 $ 3,855 $ 1,484 38.5 % $ (90) 40.8 %
Used vehicle retail sales $ 1,829 $ 2,431 $ (602) (24.8) % $ (37) (23.2) %
Used vehicle wholesale sales $ 49 $ 829 $ (781) (94.1) % $ 14 (95.8) %
Total used $ 1,550 $ 2,120 $ (569) (26.9) % $ (29) (25.5) %
F&I PRU $ 2,187 $ 1,855 $ 333 17.9 % $ (25) 19.3 %
Other:
SG&A expenses $ 380.0 $ 363.2 $ 16.8 4.6 % $ (6.7) 6.5 %
SG&A as % gross profit 60.2 % 56.8 % 3.5 %
26
Table of Contents
Reported Operating Data — Consolidated
(In millions, except unit data)
Six Months Ended June 30,
2022 2021 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change
Revenues:
New vehicle retail sales $ 3,596.4 $ 3,314.7 $ 281.7 8.5 % $ (43.8) 9.8 %
Used vehicle retail sales 2,865.3 2,071.9 793.4 38.3 % (44.9) 40.5 %
Used vehicle wholesale sales 189.3 172.0 17.4 10.1 % (5.2) 13.1 %
Total used 3,054.6 2,243.8 810.8 36.1 % (50.0) 38.4 %
Parts and service sales 975.5 735.7 239.8 32.6 % (8.3) 33.7 %
F&I, net 363.2 285.3 78.0 27.3 % (2.6) 28.2 %
Total revenues $ 7,989.7 $ 6,579.6 $ 1,410.2 21.4 % $ (104.7) 23.0 %
Gross profit:
New vehicle retail sales $ 411.5 $ 255.7 $ 155.8 60.9 % $ (4.2) 62.5 %
Used vehicle retail sales 177.3 166.6 10.7 6.4 % (2.4) 7.9 %
Used vehicle wholesale sales 3.6 12.7 (9.1) (71.7) % 0.1 (72.9) %
Total used 180.9 179.3 1.6 0.9 % (2.3) 2.2 %
Parts and service sales 537.5 410.4 127.1 31.0 % (5.1) 32.2 %
F&I, net 363.2 285.3 78.0 27.3 % (2.6) 28.2 %
Total gross profit $ 1,493.1 $ 1,130.7 $ 362.4 32.0 % $ (14.2) 33.3 %
Gross margin:
New vehicle retail sales 11.4 % 7.7 % 3.7 %
Used vehicle retail sales 6.2 % 8.0 % (1.9) %
Used vehicle wholesale sales 1.9 % 7.4 % (5.5) %
Total used 5.9 % 8.0 % (2.1) %
Parts and service sales 55.1 % 55.8 % (0.7) %
Total gross margin 18.7 % 17.2 % 1.5 %
Units sold:
Retail new vehicles sold 75,555 77,134 (1,579) (2.0) %
Retail used vehicles sold 92,713 82,045 10,668 13.0 %
Wholesale used vehicles sold 18,613 20,308 (1,695) (8.3) %
Total used 111,326 102,353 8,973 8.8 %
Average sales price per unit sold:
New vehicle retail $ 47,600 $ 42,974 $ 4,626 10.8 % $ (580) 12.1 %
Used vehicle retail $ 30,905 $ 25,253 $ 5,652 22.4 % $ (484) 24.3 %
Gross profit per unit sold:
New vehicle retail sales $ 5,446 $ 3,316 $ 2,131 64.3 % $ (55) 65.9 %
Used vehicle retail sales $ 1,913 $ 2,031 $ (118) (5.8) % $ (26) (4.5) %
Used vehicle wholesale sales $ 193 $ 625 $ (432) (69.1) % $ 8 (70.4) %
Total used $ 1,625 $ 1,752 $ (127) (7.2) % $ (20) (6.1) %
F&I PRU $ 2,159 $ 1,792 $ 367 20.5 % $ (15) 21.3 %
Other:
SG&A expenses $ 878.6 $ 680.0 $ 198.7 29.2 % $ (9.3) 30.6 %
SG&A as % gross profit 58.8 % 60.1 % (1.3) %
Floorplan expense:
Floorplan interest expense $ 11.2 $ 16.1 $ (5.0) (30.9) % $ (0.2) (29.7) %
Less: floorplan assistance (1)
28.2 28.5 (0.3) (1.0) % — (1.0) %
Net floorplan expense $ (17.0) $ (12.3) $ (4.7) $ (0.2)
(1) Floorplan assistance is included within Gross Profit — New vehicle retail sales above and Cost of Sales — New vehicle retail sales in our Condensed Consolidated Statements of Operations.
27
Table of Contents
Same Store Operating Data — Consolidated
(In millions, except unit data)
Six Months Ended June 30,
2022 2021 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change
Revenues:
New vehicle retail sales $ 2,933.4 $ 3,272.0 $ (338.6) (10.3) % $ (40.3) (9.1) %
Used vehicle retail sales 2,429.8 2,048.5 381.4 18.6 % (39.7) 20.6 %
Used vehicle wholesale sales 158.4 170.4 (11.9) (7.0) % (4.7) (4.2) %
Total used 2,588.3 2,218.8 369.4 16.7 % (44.4) 18.7 %
Parts and service sales 832.7 723.8 109.0 15.1 % (7.4) 16.1 %
F&I, net 306.6 281.3 25.2 9.0 % (2.4) 9.8 %
Total revenues $ 6,660.9 $ 6,495.9 $ 165.0 2.5 % $ (94.5) 4.0 %
Gross profit:
New vehicle retail sales $ 330.2 $ 252.3 $ 77.9 30.9 % $ (3.8) 32.4 %
Used vehicle retail sales 148.9 164.9 (16.0) (9.7) % (2.1) (8.4) %
Used vehicle wholesale sales 2.2 12.6 (10.4) (82.6) % 0.1 (83.6) %
Total used 151.0 177.5 (26.4) (14.9) % (2.0) (13.8) %
Parts and service sales 449.9 403.7 46.2 11.5 % (4.5) 12.6 %
F&I, net 306.6 281.3 25.2 9.0 % (2.4) 9.8 %
Total gross profit $ 1,237.7 $ 1,114.8 $ 123.0 11.0 % $ (12.8) 12.2 %
Gross margin:
New vehicle retail sales 11.3 % 7.7 % 3.5 %
Used vehicle retail sales 6.1 % 8.0 % (1.9) %
Used vehicle wholesale sales 1.4 % 7.4 % (6.0) %
Total used 5.8 % 8.0 % (2.2) %
Parts and service sales 54.0 % 55.8 % (1.7) %
Total gross margin 18.6 % 17.2 % 1.4 %
Units sold:
Retail new vehicles sold 61,464 76,163 (14,699) (19.3) %
Retail used vehicles sold 78,393 81,067 (2,674) (3.3) %
Wholesale used vehicles sold 14,974 20,072 (5,098) (25.4) %
Total used 93,367 101,139 (7,772) (7.7) %
Average sales price per unit sold:
New vehicle retail $ 47,725 $ 42,960 $ 4,765 11.1 % $ (656) 12.6 %
Used vehicle retail $ 30,996 $ 25,269 $ 5,727 22.7 % $ (506) 24.7 %
Gross profit per unit sold:
New vehicle retail sales $ 5,372 $ 3,312 $ 2,060 62.2 % $ (62) 64.1 %
Used vehicle retail sales $ 1,899 $ 2,034 $ (135) (6.6) % $ (27) (5.3) %
Used vehicle wholesale sales $ 146 $ 626 $ (480) (76.7) % $ 8 (78.0) %
Total used $ 1,618 $ 1,755 $ (137) (7.8) % $ (21) (6.6) %
F&I PRU $ 2,192 $ 1,789 $ 403 22.5 % $ (17) 23.5 %
Other:
SG&A expenses $ 747.1 $ 669.7 $ 77.3 11.5 % $ (8.5) 12.8 %
SG&A as % gross profit 60.4 % 60.1 % 0.3 %
28
Table of Contents
Reported Operating Data — U.S.
(In millions, except unit data)
Three Months Ended June 30,
2022 2021 Increase/(Decrease) % Change
Revenues:
New vehicle retail sales $ 1,561.7 $ 1,504.4 $ 57.4 3.8 %
Used vehicle retail sales 1,197.6 882.9 314.7 35.6 %
Used vehicle wholesale sales 59.1 61.2 (2.0) (3.3) %
Total used 1,256.8 944.1 312.7 33.1 %
Parts and service sales 445.6 332.6 113.0 34.0 %
F&I, net 173.1 143.9 29.2 20.3 %
Total revenues $ 3,437.2 $ 2,924.9 $ 512.3 17.5 %
Gross profit:
New vehicle retail sales $ 184.5 $ 141.7 $ 42.8 30.2 %
Used vehicle retail sales 73.7 87.3 (13.6) (15.6) %
Used vehicle wholesale sales 1.9 6.4 (4.5) (70.9) %
Total used 75.5 93.7 (18.2) (19.4) %
Parts and service sales 243.1 181.7 61.4 33.8 %
F&I, net 173.1 143.9 29.2 20.3 %
Total gross profit $ 676.3 $ 561.1 $ 115.2 20.5 %
Gross margin:
New vehicle retail sales 11.8 % 9.4 % 2.4 %
Used vehicle retail sales 6.2 % 9.9 % (3.7) %
Used vehicle wholesale sales 3.1 % 10.5 % (7.3) %
Total used 6.0 % 9.9 % (3.9) %
Parts and service sales 54.6 % 54.6 % (0.1) %
Total gross margin 19.7 % 19.2 % 0.5 %
Units sold:
Retail new vehicles sold 31,627 34,047 (2,420) (7.1) %
Retail used vehicles sold 38,523 34,008 4,515 13.3 %
Wholesale used vehicles sold 6,059 6,606 (547) (8.3) %
Total used 44,582 40,614 3,968 9.8 %
Average sales price per unit sold:
New vehicle retail $ 49,380 $ 44,185 $ 5,196 11.8 %
Used vehicle retail $ 31,089 $ 25,962 $ 5,127 19.7 %
Gross profit per unit sold:
New vehicle retail sales $ 5,834 $ 4,162 $ 1,671 40.2 %
Used vehicle retail sales $ 1,913 $ 2,568 $ (655) (25.5) %
Used vehicle wholesale sales $ 307 $ 969 $ (661) (68.3) %
Total used $ 1,694 $ 2,308 $ (613) (26.6) %
F&I PRU $ 2,468 $ 2,114 $ 354 16.7 %
Other:
SG&A expenses $ 393.6 $ 312.6 $ 81.0 25.9 %
SG&A as % gross profit 58.2 % 55.7 % 2.5 %
29
Table of Contents
Same Store Operating Data — U.S.
(In millions, except unit data)
Three Months Ended June 30,
2022 2021 Increase/(Decrease) % Change
Revenues:
New vehicle retail sales $ 1,225.1 $ 1,480.5 $ (255.3) (17.2) %
Used vehicle retail sales 994.6 869.3 125.3 14.4 %
Used vehicle wholesale sales 45.2 60.4 (15.2) (25.2) %
Total used 1,039.7 929.6 110.1 11.8 %
Parts and service sales 376.8 329.1 47.7 14.5 %
F&I, net 142.1 141.7 0.4 0.3 %
Total revenues $ 2,783.8 $ 2,880.9 $ (97.1) (3.4) %
Gross profit:
New vehicle retail sales $ 142.9 $ 139.3 $ 3.6 2.6 %
Used vehicle retail sales 61.0 86.1 (25.0) (29.1) %
Used vehicle wholesale sales 1.3 6.3 (5.0) (79.9) %
Total used 62.3 92.4 (30.1) (32.5) %
Parts and service sales 200.4 179.4 21.0 11.7 %
F&I, net 142.1 141.7 0.4 0.3 %
Total gross profit $ 547.7 $ 552.7 $ (5.0) (0.9) %
Gross margin:
New vehicle retail sales 11.7 % 9.4 % 2.3 %
Used vehicle retail sales 6.1 % 9.9 % (3.8) %
Used vehicle wholesale sales 2.8 % 10.4 % (7.6) %
Total used 6.0 % 9.9 % (3.9) %
Parts and service sales 53.2 % 54.5 % (1.3) %
Total gross margin 19.7 % 19.2 % 0.5 %
Units sold:
Retail new vehicles sold 24,684 33,505 (8,821) (26.3) %
Retail used vehicles sold 32,071 33,481 (1,410) (4.2) %
Wholesale used vehicles sold 4,540 6,491 (1,951) (30.1) %
Total used 36,611 39,972 (3,361) (8.4) %
Average sales price per unit sold:
New vehicle retail $ 49,633 $ 44,186 $ 5,446 12.3 %
Used vehicle retail $ 31,012 $ 25,963 $ 5,048 19.4 %
Gross profit per unit sold:
New vehicle retail sales $ 5,789 $ 4,157 $ 1,631 39.2 %
Used vehicle retail sales $ 1,904 $ 2,571 $ (668) (26.0) %
Used vehicle wholesale sales $ 278 $ 968 $ (689) (71.2) %
Total used $ 1,702 $ 2,311 $ (609) (26.3) %
F&I PRU $ 2,504 $ 2,115 $ 388 18.3 %
Other:
SG&A expenses $ 320.5 $ 308.3 $ 12.2 4.0 %
SG&A as % gross profit 58.5 % 55.8 % 2.7 %
30
Table of Contents
U.S. Region — Three Months Ended June 30, 2022 Compared to 2021
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.
Revenues
Total revenues in the U.S. during the Current Quarter increased $512.3 million, or 17.5%, as compared to the Prior Year Quarter. This increase was primarily driven by the acquisition of stores, higher same store used vehicle retail sales and increased same store parts and service sales, partially offset by fewer same store new vehicle retail sales.
Total same store revenues in the U.S. during the Current Quarter, decreased $97.1 million, or 3.4%, as compared to Prior Year Quarter. This decline was primarily driven by fewer same store new and used vehicle retail unit sales, partially offset by higher same store used vehicle retail sales prices and increased same store parts and service sales.
New and used vehicle retail revenues benefited from the sale of approximately 6,900 units from our online digital platform, AcceleRide®, during the Current Quarter, representing approximately a 22.1% increase as compared to the Prior Year Quarter.
New vehicle retail same store revenues declined compared to the Prior Year Quarter, 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 partially mitigated the 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 11 days, 5 days lower than the Prior Year Quarter.
Used vehicle retail same store revenues outperformed compared to the Prior Year Quarter, despite a modest decline in units sold, as increased demand drove prices higher. Used vehicle wholesale same store revenues declined due to a decline in units sold driven by efforts to sell more used vehicles through retail sales rather than the wholesale market as a result of the increased demand and pricing of used vehicle retail sales described above.
Parts and service same store revenues outperformed compared to the Prior Year Quarter, driven by increases in customer pay, collision and wholesale revenues reflecting increased business activity, partially offset by a decline in warranty revenues. Warranty revenues have declined primarily due to fewer new vehicles sold as a result of new vehicle shortages.
F&I, net same store revenues were consistent with the Prior Year Quarter, driven by higher income per contract on finance, VSCs, other product offerings and improved penetration rates, partially offset by a decrease in same store total retail unit sales.
Gross Profit
Total gross profit in the U.S. during the Current Quarter, increased $115.2 million, or 20.5%, as compared to the Prior Year Quarter, primarily driven by the acquisition of stores and increased same store parts and service sales.
Total same store gross profit in the U.S. during the Current Quarter, decreased $5.0 million, or 0.9%, as compared to the Prior Year Quarter. This decrease was primarily driven by lower same store used vehicle retail gross profit, partially offset by increased same store parts and service gross profit.
New vehicle retail same store gross profit increased 2.6%, driven by an increase in new vehicle retail same store gross profit per unit sold, partially offset by a 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. The inventory shortage also drove the decrease in new vehicle retail same store unit sales.
Used vehicle retail same store gross profit decreased 29.1%, driven by a decrease in used vehicle retail same store gross profit per unit sold, coupled with a decrease in used vehicle retail same store unit sales. The decrease in same store used vehicle gross profit and retail unit sales was driven by inflationary impacts on customers. Additionally, the ongoing new vehicle supply shortage negatively impacted the supply of used vehicles. Our used vehicle wholesale same store gross profit decreased 79.9%, driven by a 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 11.7%, primarily driven by the increase in our customer-pay, collision and wholesale business reflecting increased business activity.
F&I, net same store gross profit was consistent with the Prior Year Quarter, as described above for F&I, net same store revenues.
31
Table of Contents
Total same store gross margin increased 49 basis points, primarily driven by higher new vehicle retail sales prices as a result of the strong new vehicle pricing caused by the new vehicle inventory shortage described above.
SG&A Expenses
SG&A as a percentage of gross profit increased 249 and 275 basis points on an as reported and same store basis, respectively, compared to the Prior Year Quarter, partially driven by the decline in used vehicle gross profit described above as well as the following factors impacting total SG&A.
Total SG&A expenses in the U.S. during the Current Quarter, increased $81.0 million, or 25.9%, as compared to the Prior Year Quarter, primarily driven by the acquisition of stores. Total same store SG&A expenses in the U.S. during the Current Quarter, increased $12.2 million, or 4.0%, as compared to the Prior Year Quarter, primarily driven by increased labor costs and an increase in other variable expenses associated with the rise in certain business activities as described above.
32
Table of Contents
Reported Operating Data — U.S.
(In millions, except unit data)
Six Months Ended June 30,
2022 2021 Increase/(Decrease) % Change
Revenues:
New vehicle retail sales $ 2,994.9 $ 2,750.4 $ 244.5 8.9 %
Used vehicle retail sales 2,235.5 1,579.4 656.1 41.5 %
Used vehicle wholesale sales 116.4 111.6 4.8 4.3 %
Total used 2,351.9 1,691.0 660.9 39.1 %
Parts and service sales 854.0 628.9 225.1 35.8 %
F&I, net 327.9 259.0 68.9 26.6 %
Total revenues $ 6,528.5 $ 5,329.3 $ 1,199.3 22.5 %
Gross profit:
New vehicle retail sales $ 357.8 $ 222.6 $ 135.2 60.8 %
Used vehicle retail sales 142.3 137.6 4.7 3.4 %
Used vehicle wholesale sales 5.1 10.3 (5.2) (50.6) %
Total used 147.4 148.0 (0.5) (0.4) %
Parts and service sales 464.1 346.8 117.3 33.8 %
F&I, net 327.9 259.0 68.9 26.6 %
Total gross profit $ 1,297.2 $ 976.3 $ 320.9 32.9 %
Gross margin:
New vehicle retail sales 11.9 % 8.1 % 3.9 %
Used vehicle retail sales 6.4 % 8.7 % (2.3) %
Used vehicle wholesale sales 4.4 % 9.3 % (4.9) %
Total used 6.3 % 8.8 % (2.5) %
Parts and service sales 54.3 % 55.1 % (0.8) %
Total gross margin 19.9 % 18.3 % 1.5 %
Units sold:
Retail new vehicles sold 61,125 63,199 (2,074) (3.3) %
Retail used vehicles sold 72,463 64,439 8,024 12.5 %
Wholesale used vehicles sold 12,060 13,046 (986) (7.6) %
Total used 84,523 77,485 7,038 9.1 %
Average sales price per unit sold:
New vehicle retail $ 48,996 $ 43,520 $ 5,476 12.6 %
Used vehicle retail $ 30,850 $ 24,510 $ 6,340 25.9 %
Gross profit per unit sold:
New vehicle retail sales $ 5,854 $ 3,522 $ 2,332 66.2 %
Used vehicle retail sales $ 1,964 $ 2,136 $ (172) (8.0) %
Used vehicle wholesale sales $ 423 $ 792 $ (369) (46.6) %
Total used $ 1,744 $ 1,910 $ (165) (8.7) %
F&I PRU $ 2,454 $ 2,029 $ 425 21.0 %
Other:
SG&A expenses $ 747.2 $ 574.3 $ 172.9 30.1 %
SG&A as % gross profit 57.6 % 58.8 % (1.2) %
33
Table of Contents
Same Store Operating Data — U.S.
(In millions, except unit data)
Six Months Ended June 30,
2022 2021 Increase/(Decrease) % Change
Revenues:
New vehicle retail sales $ 2,380.9 $ 2,708.0 $ (327.1) (12.1) %
Used vehicle retail sales 1,872.6 1,556.9 315.7 20.3 %
Used vehicle wholesale sales 91.5 110.1 (18.6) (16.9) %
Total used 1,964.1 1,667.0 297.1 17.8 %
Parts and service sales 724.6 622.4 102.3 16.4 %
F&I, net 274.0 255.1 18.9 7.4 %
Total revenues $ 5,343.6 $ 5,252.5 $ 91.1 1.7 %
Gross profit:
New vehicle retail sales $ 281.2 $ 219.1 $ 62.1 28.3 %
Used vehicle retail sales 118.1 135.9 (17.8) (13.1) %
Used vehicle wholesale sales 3.5 10.2 (6.7) (65.8) %
Total used 121.6 146.1 (24.5) (16.8) %
Parts and service sales 384.8 342.6 42.2 12.3 %
F&I, net 274.0 255.1 18.9 7.4 %
Total gross profit $ 1,061.6 $ 962.9 $ 98.7 10.2 %
Gross margin:
New vehicle retail sales 11.8 % 8.1 % 3.7 %
Used vehicle retail sales 6.3 % 8.7 % (2.4) %
Used vehicle wholesale sales 3.8 % 9.2 % (5.4) %
Total used 6.2 % 8.8 % (2.6) %
Parts and service sales 53.1 % 55.0 % (1.9) %
Total gross margin 19.9 % 18.3 % 1.5 %
Units sold:
Retail new vehicles sold 48,453 62,244 (13,791) (22.2) %
Retail used vehicles sold 60,972 63,518 (2,546) (4.0) %
Wholesale used vehicles sold 9,179 12,835 (3,656) (28.5) %
Total used 70,151 76,353 (6,202) (8.1) %
Average sales price per unit sold:
New vehicle retail $ 49,138 $ 43,506 $ 5,632 12.9 %
Used vehicle retail $ 30,713 $ 24,512 $ 6,201 25.3 %
Gross profit per unit sold:
New vehicle retail sales $ 5,804 $ 3,521 $ 2,283 64.8 %
Used vehicle retail sales $ 1,937 $ 2,140 $ (203) (9.5) %
Used vehicle wholesale sales $ 379 $ 791 $ (413) (52.1) %
Total used $ 1,733 $ 1,913 $ (180) (9.4) %
F&I PRU $ 2,504 $ 2,028 $ 476 23.4 %
Other:
SG&A expenses $ 627.0 $ 566.9 $ 60.1 10.6 %
SG&A as % gross profit 59.1 % 58.9 % 0.2 %
34
Table of Contents
U.S. Region — Six Months Ended June 30, 2022 Compared to 2021
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.
Revenues
Total revenues in the U.S. during the Current Year increased $1.2 billion, or 22.5%, as compared to the same period in 2021 (“Prior Year”), primarily driven by the acquisition of stores.
Total same store revenues in the U.S. during the Current Year increased $91.1 million, or 1.7%, as compared to the Prior Year. This increase was primarily driven by higher same store used vehicle retail sales and increased same store parts and service sales, partially offset by fewer same store new vehicle retail sales.
New and used vehicle retail revenues benefited from the sale of approximately 12,600 units from our online digital platform, AcceleRide®, during the Current Year, representing approximately a 31.2% increase as compared to the Prior Year.
New vehicle retail same store revenues declined compared to the Prior Year, 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 partially mitigated the 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 Year for OEMs, leading to sustained lower vehicle production and deliveries of fewer vehicles to dealerships.
Used vehicle retail same store revenues outperformed the Prior Year, despite a modest decline in units sold, as increased demand drove prices higher. Used vehicle wholesale same store sales revenues declined primarily driven by a decline in units sold driven by efforts to sell more used vehicles through retail sales rather than the wholesale market as a result of the increased demand and pricing of used vehicle retail sales described above.
Parts and service same store revenues outperformed the Prior Year, primarily driven by increases in customer pay, wholesale and collision revenues reflecting increased business activity, partially offset by a decline in warranty revenues. Warranty revenues have declined primarily due to fewer new vehicles sold as a result of new vehicle shortages.
F&I, net same store revenues outperformed the Prior Year, primarily driven by higher income per contract on finance, VSCs and other product offerings and improved penetration rates, partially offset by a decrease in same store total retail unit sales.
Gross Profit
Total gross profit in the U.S. during the Current Year, increased $320.9 million, or 32.9%, as compared to the Prior Year, primarily driven by the acquisition of stores and increased same store parts and service sales.
Total same store gross profit in the U.S. during the Current Year, increased $98.7 million, or 10.2%, as compared to the Prior Year, primarily driven by same store new vehicle retail sales, same store parts and service sales and same store F&I, net.
New vehicle retail same store gross profit increased 28.3%, driven by an increase in new vehicle retail same store gross profit per unit sold, partially offset by a 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 decreased 13.1%, driven by a decrease in used vehicle retail same store gross profit per unit sold, coupled with a decrease in used vehicle retail same store unit sales. The decrease in same store used vehicle gross profit and retail unit sales was driven by inflationary impacts on customers coupled with the ongoing new vehicle supply shortage impacting the supply of used vehicles. Our used vehicle wholesale same store gross profit decreased 65.8%, driven by a 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 12.3%, primarily driven by the increase in our customer-pay, collision and wholesale business reflecting increased business activity.
F&I, net same store gross profit increased 7.4%, as described above for F&I, net same store revenues.
Total same store gross margin increased 153 basis points, primarily driven by higher new vehicle retail sales prices outpacing new vehicle costs of sales. This increase was partially offset by a decrease in same store used vehicle gross margin, driven by inflationary impacts on our used vehicle customers and the ongoing new vehicle supply shortage increasing acquisition costs for used vehicles, as well as a decrease in same store parts and service gross margin primarily due to increased labor costs.
35
Table of Contents
SG&A Expenses
SG&A as a percentage of gross profit declined 122 basis points and increased 19 basis points on an as reported and same store basis, respectively, compared to the Prior Year. The increase in SG&A as a percentage of gross profit on a same store basis was partially driven by the decline in used vehicle same store gross profit described above as well as the following factors impacting total SG&A.
Total SG&A expenses in the U.S. during the Current Year, increased $172.9 million, or 30.1%, as compared to the Prior Year, primarily driven by the acquisition of stores. Total same store SG&A expenses in the U.S. during the Current Year, increased $60.1 million, or 10.6%, as compared to the Prior Year, primarily driven by increased variable commission payments as a result of improvements in gross profits in our new vehicle 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. for the Prior Year, included $2.2 million in disaster pay and insurance deductible expense associated with a February winter storm in Texas and a $1.0 million gain related to a favorable legal settlement.
36
Table of Contents
Reported Operating Data — U.K.
(In millions, except unit data)
Three Months Ended June 30,
2022 2021 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change
Revenues:
New vehicle retail sales $ 289.5 $ 301.2 $ (11.6) (3.9) % $ (32.5) 6.9 %
Used vehicle retail sales 307.8 300.9 6.9 2.3 % (34.5) 13.8 %
Used vehicle wholesale sales 36.7 32.5 4.2 12.8 % (4.1) 25.4 %
Total used 344.5 333.4 11.1 3.3 % (38.7) 14.9 %
Parts and service sales 57.1 50.3 6.7 13.3 % (6.4) 26.1 %
F&I, net 17.1 15.7 1.4 8.7 % (1.9) 21.0 %
Total revenues $ 708.2 $ 700.7 $ 7.5 1.1 % $ (79.5) 12.4 %
Gross profit:
New vehicle retail sales $ 25.8 $ 18.4 $ 7.4 40.2 % $ (3.0) 56.8 %
Used vehicle retail sales 15.8 20.8 (5.0) (24.1) % (1.7) (15.7) %
Used vehicle wholesale sales (1.1) 2.5 (3.6) (143.3) % 0.1 (148.4) %
Total used 14.7 23.3 (8.6) (37.0) % (1.6) (30.0) %
Parts and service sales 34.5 31.0 3.6 11.6 % (3.9) 24.2 %
F&I, net 17.1 15.7 1.4 8.7 % (1.9) 21.0 %
Total gross profit $ 92.1 $ 88.4 $ 3.7 4.2 % $ (10.5) 16.1 %
Gross margin:
New vehicle retail sales 8.9 % 6.1 % 2.8 %
Used vehicle retail sales 5.1 % 6.9 % (1.8) %
Used vehicle wholesale sales (3.0) % 7.7 % (10.7) %
Total used 4.3 % 7.0 % (2.7) %
Parts and service sales 60.5 % 61.5 % (0.9) %
Total gross margin 13.0 % 12.6 % 0.4 %
Units sold:
Retail new vehicles sold 7,195 7,395 (200) (2.7) %
Retail used vehicles sold 10,384 10,494 (110) (1.0) %
Wholesale used vehicles sold 3,455 4,124 (669) (16.2) %
Total used 13,839 14,618 (779) (5.3) %
Average sales price per unit sold:
New vehicle retail $ 40,241 $ 40,727 $ (486) (1.2) % $ (4,517) 9.9 %
Used vehicle retail $ 29,640 $ 28,672 $ 969 3.4 % $ (3,327) 15.0 %
Gross profit per unit sold:
New vehicle retail sales $ 3,580 $ 2,484 $ 1,096 44.1 % $ (423) 61.1 %
Used vehicle retail sales $ 1,521 $ 1,984 $ (463) (23.3) % $ (168) (14.8) %
Used vehicle wholesale sales $ (316) $ 611 $ (927) NM $ 37 NM
Total used $ 1,063 $ 1,597 $ (534) (33.4) % $ (117) (26.1) %
F&I PRU $ 973 $ 879 $ 94 10.6 % $ (110) 23.2 %
Other:
SG&A expenses $ 66.6 $ 56.0 $ 10.5 18.7 % $ (7.5) 32.1 %
SG&A as % gross profit 72.2 % 63.4 % 8.9 %
NM — Not Meaningful
37
Table of Contents
U.K. Region — Three Months Ended June 30, 2022 Compared to 2021
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. The lifting of restrictions in the Prior Year Quarter drove a substantial increase in business activity for our U.K. dealerships due to pent-up demand. This led to the underperformance of Current Quarter same store results as compared to the Prior Year Quarter. However, Current Year same store results exceeded Prior Year same store results, demonstrating that the same store underperformance of the Current Quarter is due to the unique business environment of the Prior Year Quarter as described above.
Revenues
Total revenues in the U.K. during the Current Quarter, increased $7.5 million, or 1.1%, as compared to the Prior Year Quarter. This increase was primarily due to the acquisition of stores, partially offset by the negative impact of foreign currency exchange rates on same store revenues.
Total same store revenues in the U.K. during the Current Quarter, decreased $57.9 million, or 8.3%, as compared to the Prior Year Quarter, primarily driven by the negative impact of foreign currency exchange rates. On a constant currency basis, total same store revenues increased 2.0%, driven by outperformances across all revenue streams except new vehicle retail sales.
New vehicle retail same store revenues, on a constant currency basis, underperformed compared to the Prior Year Quarter, driven by a shortage in new vehicle supply, leading to fewer units sold. The decrease in units sold is due to the 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 31 days; which is consistent with the Prior Year Quarter and two days lower than December 31, 2021 days’ supply of 33. The increase in the average new vehicle retail same store sales price was driven by both supply shortages and strong vehicle demand.
Used vehicle retail same store revenues, on a constant currency basis, modestly outperformed the Prior Year Quarter due to higher used vehicle retail same store average sales prices, benefited by strong consumer demand and new vehicle inventory shortages discussed above, partially offset by a decline in used vehicle retail same store units sold.
Parts and service same store revenues, on a constant currency basis, outperformed the Prior Year Quarter, driven by increases in all of our parts and service business lines 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 improved penetration rates on all of our product offerings and higher income per contract on finance and VSCs, partially offset by a decline in retail units.
Gross Profit
Total gross profit in the U.K. during the Current Quarter, increased $3.7 million, or 4.2%, as compared to the Prior Year Quarter, primarily driven by the acquisition of stores.
Total same store gross profit in the U.K. during the Current Quarter, decreased $3.9 million, or 4.5%, as compared to the Prior Year Quarter. On a constant currency basis, total same store gross profit increased 6.4%, primarily driven by improvements in new vehicle retail gross profit, parts and service gross profit and F&I, net.
New vehicle retail same store gross profit, on a constant currency basis, outperformed compared to the Prior Year Quarter due to an increase in new vehicle retail same store gross profit per unit, resulting from increased prices as discussed above.
Used vehicle retail same store gross profit, on a constant currency basis, underperformed compared to the Prior Year Quarter due to a decrease in used vehicle retail same store gross profit per unit sold, coupled with a decrease in used vehicle retail same store unit sales. The decrease in same store used vehicle gross profit and retail unit sales was driven by inflationary impacts on customers coupled with the ongoing new vehicle supply shortage impacting the supply of used vehicles.
Parts and service same store gross profit, on a constant currency basis, outperformed the Prior Year Quarter, driven by the increases in our parts and service business activities discussed above.
F&I, net same store gross profit, on a constant currency basis, outperformed the Prior Year Quarter as discussed above.
38
Table of Contents
Total same store gross margin in the U.K. increased 52 basis points, primarily driven by higher new vehicle retail sales prices outpacing new vehicle costs of sales as a result of the strong new vehicle pricing caused by the new vehicle inventory shortage described above.
SG&A Expenses
SG&A as a percentage of gross profit increased 885 and 845 basis points, on an as reported and same store basis, respectively, compared to the Prior Year Quarter, partially driven by the decline in used vehicle gross profit described above as well as the following factors impacting total SG&A.
Total SG&A expenses in the U.K. during the Current Quarter, increased $10.5 million, or 18.7%, as compared to the Prior Year Quarter, primarily driven by the acquisition of stores. Total same store SG&A expenses in the U.K. during the Current Quarter, increased $4.5 million, or 8.3%, as compared to the Prior Year Quarter. On a constant currency basis, total same store SG&A expenses increased 20.4%. These increases were primarily driven by higher business activity due to fewer COVID-19 restrictions compared to the Prior Year Quarter, as well as government COVID-19 assistance and the related temporary suspension of city tax in the Prior Year Quarter which did not recur in the Current Quarter.
39
Table of Contents
Same Store Operating Data — U.K.
(In millions, except unit data)
Three Months Ended June 30,
2022 2021 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change
Revenues:
New vehicle retail sales $ 267.5 $ 301.2 $ (33.7) (11.2) % $ (30.0) (1.2) %
Used vehicle retail sales 272.1 300.9 (28.7) (9.6) % (30.5) 0.6 %
Used vehicle wholesale sales 33.7 32.5 1.1 3.5 % (3.8) 15.1 %
Total used 305.8 333.4 (27.6) (8.3) % (34.3) 2.0 %
Parts and service sales 50.8 47.5 3.3 6.9 % (5.7) 18.9 %
F&I, net 15.8 15.7 0.1 0.5 % (1.8) 11.9 %
Total revenues $ 639.9 $ 697.9 $ (57.9) (8.3) % $ (71.8) 2.0 %
Gross profit:
New vehicle retail sales $ 23.7 $ 18.4 $ 5.3 29.0 % $ (2.8) 44.2 %
Used vehicle retail sales 13.9 20.8 (6.9) (33.3) % (1.5) (25.9) %
Used vehicle wholesale sales (0.9) 2.5 (3.4) (135.5) % 0.1 (139.7) %
Total used 13.0 23.3 (10.3) (44.3) % (1.4) (38.2) %
Parts and service sales 30.7 29.7 1.0 3.4 % (3.5) 15.1 %
F&I, net 15.8 15.7 0.1 0.5 % (1.8) 11.9 %
Total gross profit $ 83.2 $ 87.1 $ (3.9) (4.5) % $ (9.5) 6.4 %
Gross margin:
New vehicle retail sales 8.9 % 6.1 % 2.8 %
Used vehicle retail sales 5.1 % 6.9 % (1.8) %
Used vehicle wholesale sales (2.7) % 7.7 % (10.4) %
Total used 4.2 % 7.0 % (2.8) %
Parts and service sales 60.4 % 62.4 % (2.1) %
Total gross margin 13.0 % 12.5 % 0.5 %
Units sold:
Retail new vehicles sold 6,520 7,395 (875) (11.8) %
Retail used vehicles sold 8,907 10,494 (1,587) (15.1) %
Wholesale used vehicles sold 3,057 4,124 (1,067) (25.9) %
Total used 11,964 14,618 (2,654) (18.2) %
Average sales price per unit sold:
New vehicle retail $ 41,026 $ 40,727 $ 299 0.7 % $ (4,600) 12.0 %
Used vehicle retail $ 30,554 $ 28,672 $ 1,882 6.6 % $ (3,427) 18.5 %
Gross profit per unit sold:
New vehicle retail sales $ 3,634 $ 2,484 $ 1,150 46.3 % $ (429) 63.6 %
Used vehicle retail sales $ 1,560 $ 1,984 $ (425) (21.4) % $ (172) (12.7) %
Used vehicle wholesale sales $ (293) $ 611 $ (904) (147.9) % $ 35 NM
Total used $ 1,086 $ 1,597 $ (511) (32.0) % $ (119) (24.5) %
F&I PRU $ 1,024 $ 879 $ 145 16.5 % $ (116) 29.7 %
Other:
SG&A expenses $ 59.5 $ 54.9 $ 4.5 8.3 % $ (6.7) 20.4 %
SG&A as % gross profit 71.5 % 63.1 % 8.5 %
NM — Not Meaningful
40
Table of Contents
Reported Operating Data — U.K.
(In millions, except unit data)
Six Months Ended June 30,
2022 2021 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change
Revenues:
New vehicle retail sales $ 601.6 $ 564.3 $ 37.2 6.6 % $ (43.8) 14.4 %
Used vehicle retail sales 629.8 492.5 137.3 27.9 % (44.9) 37.0 %
Used vehicle wholesale sales 72.9 60.4 12.6 20.8 % (5.2) 29.4 %
Total used 702.7 552.8 149.9 27.1 % (50.0) 36.2 %
Parts and service sales 121.5 106.8 14.7 13.8 % (8.3) 21.5 %
F&I, net 35.4 26.3 9.1 34.5 % (2.6) 44.4 %
Total revenues $ 1,461.2 $ 1,250.3 $ 210.9 16.9 % $ (104.7) 25.2 %
Gross profit:
New vehicle retail sales $ 53.7 $ 33.2 $ 20.5 61.9 % $ (4.2) 74.5 %
Used vehicle retail sales 35.0 29.0 6.0 20.6 % (2.4) 29.0 %
Used vehicle wholesale sales (1.5) 2.4 (3.9) NM 0.1 NM
Total used 33.5 31.4 2.1 6.7 % (2.3) 14.0 %
Parts and service sales 73.4 63.6 9.8 15.4 % (5.1) 23.4 %
F&I, net 35.4 26.3 9.1 34.5 % (2.6) 44.4 %
Total gross profit $ 195.9 $ 154.4 $ 41.5 26.9 % $ (14.2) 36.1 %
Gross margin:
New vehicle retail sales 8.9 % 5.9 % 3.1 %
Used vehicle retail sales 5.6 % 5.9 % (0.3) %
Used vehicle wholesale sales (2.1) % 3.9 % (6.0) %
Total used 4.8 % 5.7 % (0.9) %
Parts and service sales 60.4 % 59.5 % 0.8 %
Total gross margin 13.4 % 12.3 % 1.1 %
Units sold:
Retail new vehicles sold 14,430 13,935 495 3.6 %
Retail used vehicles sold 20,250 17,606 2,644 15.0 %
Wholesale used vehicles sold 6,553 7,262 (709) (9.8) %
Total used 26,803 24,868 1,935 7.8 %
Average sales price per unit sold:
New vehicle retail $ 41,689 $ 40,498 $ 1,191 2.9 % $ (3,037) 10.4 %
Used vehicle retail $ 31,101 $ 27,973 $ 3,128 11.2 % $ (2,216) 19.1 %
Gross profit per unit sold:
New vehicle retail sales $ 3,721 $ 2,379 $ 1,342 56.4 % $ (289) 68.5 %
Used vehicle retail sales $ 1,727 $ 1,647 $ 80 4.9 % $ (120) 12.1 %
Used vehicle wholesale sales $ (230) $ 325 $ (555) NM $ 23 NM
Total used $ 1,249 $ 1,261 $ (12) (1.0) % $ (85) 5.8 %
F&I PRU $ 1,020 $ 834 $ 186 22.3 % $ (75) 31.3 %
Other:
SG&A expenses $ 131.4 $ 105.7 $ 25.7 24.4 % $ (9.3) 33.1 %
SG&A as % gross profit 67.1 % 68.4 % (1.4) %
NM — Not Meaningful
41
Table of Contents
Same Store Operating Data — U.K.
(In millions, except unit data)
Six Months Ended June 30,
2022 2021 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change
Revenues:
New vehicle retail sales $ 552.5 $ 564.0 $ (11.5) (2.0) % $ (40.3) 5.1 %
Used vehicle retail sales 557.2 491.5 65.7 13.4 % (39.7) 21.4 %
Used vehicle wholesale sales 66.9 60.2 6.7 11.1 % (4.7) 18.9 %
Total used 624.2 551.8 72.4 13.1 % (44.4) 21.2 %
Parts and service sales 108.1 101.4 6.7 6.6 % (7.4) 13.9 %
F&I, net 32.6 26.2 6.3 24.1 % (2.4) 33.2 %
Total revenues $ 1,317.3 $ 1,243.4 $ 73.9 5.9 % $ (94.5) 13.5 %
Gross profit:
New vehicle retail sales $ 49.0 $ 33.1 $ 15.9 47.9 % $ (3.8) 59.4 %
Used vehicle retail sales 30.8 29.0 1.8 6.2 % (2.1) 13.6 %
Used vehicle wholesale sales (1.3) 2.4 (3.7) NM 0.1 NM
Total used 29.5 31.4 (1.9) (6.1) % (2.0) 0.3 %
Parts and service sales 65.1 61.1 4.0 6.6 % (4.5) 14.0 %
F&I, net 32.6 26.2 6.3 24.1 % (2.4) 33.2 %
Total gross profit $ 176.1 $ 151.8 $ 24.3 16.0 % $ (12.8) 24.4 %
Gross margin:
New vehicle retail sales 8.9 % 5.9 % 3.0 %
Used vehicle retail sales 5.5 % 5.9 % (0.4) %
Used vehicle wholesale sales (1.9) % 4.0 % (5.9) %
Total used 4.7 % 5.7 % (1.0) %
Parts and service sales 60.2 % 60.3 % — %
Total gross margin 13.4 % 12.2 % 1.2 %
Units sold:
Retail new vehicles sold 13,011 13,919 (908) (6.5) %
Retail used vehicles sold 17,421 17,549 (128) (0.7) %
Wholesale used vehicles sold 5,795 7,237 (1,442) (19.9) %
Total used 23,216 24,786 (1,570) (6.3) %
Average sales price per unit sold:
New vehicle retail $ 42,461 $ 40,518 $ 1,943 4.8 % $ (3,100) 12.4 %
Used vehicle retail $ 31,985 $ 28,009 $ 3,977 14.2 % $ (2,277) 22.3 %
Gross profit per unit sold:
New vehicle retail sales $ 3,765 $ 2,380 $ 1,385 58.2 % $ (294) 70.6 %
Used vehicle retail sales $ 1,765 $ 1,650 $ 116 7.0 % $ (122) 14.4 %
Used vehicle wholesale sales $ (223) $ 333 $ (556) NM $ 22 NM
Total used $ 1,269 $ 1,265 $ 4 0.3 % $ (86) 7.1 %
F&I PRU $ 1,070 $ 834 $ 236 28.3 % $ (79) 37.8 %
Other:
SG&A expenses $ 120.0 $ 102.8 $ 17.2 16.7 % $ (8.5) 25.0 %
SG&A as % gross profit 68.1 % 67.7 % 0.4 %
NM — Not Meaningful
42
Table of Contents
U.K. Region — Six Months Ended June 30, 2022 Compared to 2021
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.
Revenues
Total revenues in the U.K. during the Current Year, increased $210.9 million, or 16.9%, as compared to the Prior Year, primarily driven by the acquisition of stores.
Total same store revenues in the U.K. during the Current Year, increased $73.9 million, or 5.9%, as compared to the Prior Year. On a constant currency basis, total same store revenues increased 13.5%, driven by outperformances across all revenue streams.
New vehicle retail same store revenues, on a constant currency basis, outperformed the Prior Year due to an increase in new vehicle retail same store average sales price per unit sold, partially offset by fewer same store new vehicle retail units sold. The increase in the average new vehicle retail same store sales price was driven by both new vehicle shortages, as described above, and strong vehicle demand, which was pent-up over past years due to Brexit and the COVID-19 pandemic.
Used vehicle retail same store revenues, on a constant currency basis, outperformed the Prior Year, despite a slight decline in units sold, as increased demand drove higher prices.
Parts and service same store revenues, on a constant currency basis, outperformed the Prior Year, 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.
F&I, net same store revenues, on a constant currency basis, outperformed the Prior Year, driven by improved penetration rates on finance and other products and higher income per contract for finance and VSCs, partially offset by lower retail units sold.
Gross Profit
Total gross profit in the U.K. during the Current Year, increased $41.5 million, or 26.9%, as compared to the Prior Year, primarily driven by the acquisition of stores and increased same store new vehicle retail sales, same store parts and service sales, F&I, net and same store used vehicle retail sales.
Total same store gross profit in the U.K. during the Current Year, increased $24.3 million, or 16.0%, as compared to the Prior Year. On a constant currency basis, total same store gross profit increased 24.4%, 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 due to an increase in new vehicle retail same store gross profit per unit, resulting from increased prices as discussed above, partially offset by a modest decline in new vehicle retail same store units sold.
Used vehicle retail same store gross profit, on a constant currency basis, outperformed the Prior Year due to an increase in used vehicle retail same store gross profit per unit sold, partially offset by a decrease in used vehicle retail same store units sold. The increase in used vehicle retail same store gross profit per unit sold, on a constant currency basis, resulted from increased prices as discussed above.
Parts and service same store gross profit, on a constant currency basis, outperformed the Prior Year, driven by the increases in our parts and service businesses discussed above.
F&I, net same store gross profit, on a constant currency basis, outperformed the Prior Year as discussed above.
Total same store gross margin in the U.K. increased 116 basis points, driven by improvements in new vehicle retail sales due to increased customer demand and vehicle supply constraints. The increase was partially offset by a decrease in same store total used vehicle gross margin, resulting from inflationary impacts on our used vehicle customers and the ongoing new vehicle supply shortage increasing acquisition costs for used vehicles.
SG&A Expenses
SG&A as a percentage of gross profit declined 136 basis points on an as reported basis and improved 42 basis points on a same store basis, respectively, compared to the Prior Year.
43
Table of Contents
Total SG&A expenses in the U.K. during the Current Year, increased $25.7 million, or 24.4%, as compared to the Prior Year, primarily driven by increases in same store SG&A and the acquisition of stores. Total same store SG&A expenses in the U.K. during the Current Year, increased $17.2 million, or 16.7%, as compared to the Prior Year. On a constant currency basis, total same store SG&A expenses increased 25.0%. These increases were primarily driven by higher business activity due to fewer COVID-19 restrictions compared to the Prior Year, as well as government COVID-19 assistance and the related temporary suspension of city tax in the Prior Year which did not recur in the Current Year.
Consolidated Selected Comparisons — Three and Six Months Ended June 30, 2022 Compared to 2021
The following tables (in millions) and discussion of our results of operations are on a consolidated basis, unless otherwise noted.
Three Months Ended June 30,
2022 2021 Increase/ (Decrease) % Change
Depreciation and amortization expense $ 23.0 $ 18.4 $ 4.6 24.9 %
Floorplan interest expense $ 5.9 $ 8.6 $ (2.7) (31.8) %
Other interest expense, net $ 18.5 $ 13.6 $ 4.9 36.1 %
Provision for income taxes $ 60.8 $ 51.5 $ 9.3 18.1 %
Six Months Ended June 30,
2022 2021 Increase/ (Decrease) % Change
Depreciation and amortization expense $ 44.2 $ 37.6 $ 6.6 17.5 %
Floorplan interest expense $ 11.2 $ 16.1 $ (5.0) (30.9) %
Other interest expense, net $ 35.9 $ 26.7 $ 9.2 34.3 %
Provision for income taxes $ 122.0 $ 80.6 $ 41.4 51.4 %
Depreciation and Amortization Expense
Total depreciation and amortization expense for both the Current Quarter and Current Year, was higher compared to the Prior Year Quarter and Prior Year, 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 Current Quarter, decreased $2.7 million, or 31.8%, as compared to the Prior Year Quarter. For the Current Year, floorplan interest expense decreased $5.0 million, or 30.9%, as compared to the Prior Year. Our floorplan interest expense fluctuates with changes in our outstanding borrowings and associated interest rates, which are based on 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 in floorplan interest expense during the Current Quarter and Current Year, 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 and an unrealized loss on interest rate swaps of $2.3 million in the Prior Year Quarter which did not recur in the Current Quarter. 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. Re fer to Note 7. Financial Instruments and Fair Value Measurements within our Notes to Condensed Consolidated Financial Statements for additional discussion of interest rate swaps.
Other Interest Expense, Net
Total other interest expense, net during the Current Quarter, increased $4.9 million, or 36.1%, as compared to the Prior Year Quarter. For the Current Year, other interest expense increased $9.2 million, or 34.3%, as compared to the Prior Year. 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 increase in other interest expense during the Current Quarter and Current Year, was primarily attributable to the additional 4.00% Senior Notes issued in October 2021 and an increase in borrowings used to acquire property in our U.S. region. Refer to Note 9. Debt within our Notes to Condensed Consolidated Financial Statements for additional discussion of our debt.
44
Table of Contents
Provision for Income Taxes
Provision for income taxes of $60.8 million during the Current Quarter increased by $9.3 million, or 18.1%, as compared to the Prior Year Quarter. For the Current Year, our provision for income taxes of $122.0 million increased $41.4 million, or 51.4%, as compared to the Prior Year. The tax expense increases in the Current Quarter and Current Year, as compared to the Prior Year, were primarily due to higher pre-tax book income. Our Current Quarter effective tax rate increased to 23.4% from 21.4%, as compared to the Prior Year Quarter. The tax rate increase was primarily due to the increase of state income taxes due to the mix of earnings in the Current Quarter, and the absence of a deferred tax benefit from the U.K. tax rate increase on deferred tax assets applicable in the Prior Year Quarter which did not recur in the Current Quarter.
We expect our effective tax rate for the remainder of 2022 will be between 23.5 % and 24.0%. We b elieve that it is more-likely-than-not that our deferred tax assets, net of valuation allowances provided, will be realized, based primarily on assumptions of our future taxable income, considering future reversals of existing taxable temporary differences.
Liquidity and Capital Resources
Our liquidity and capital resources are primarily derived from cash on hand, cash temporarily invested as a pay down of our U.S. 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, 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):
June 30, 2022
Cash and cash equivalents $ 26.3
Floorplan offset accounts 83.4
Available capacity under Acquisition Line 235.9
Total liquidity $ 345.6
Cash Flows
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. 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. GAAP.
45
Table of Contents
The following table reconciles cash flows on a U.S. GAAP basis to the corresponding adjusted amounts (in millions):
Six Months Ended June 30,
2022 2021 % Change
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by operating activities: $ 360.2 $ 752.1 (52.1) %
Change in Floorplan notes payable — credit facilities and other, excluding floorplan offset and net acquisitions and dispositions 94.1 (376.8)
Change in Floorplan notes payable — manufacturer affiliates associated with net acquisitions and dispositions and floorplan offset activity 2.2 (16.0)
Adjusted net cash provided by operating activities $ 456.5 $ 359.4 27.0 %
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash used in investing activities: $ (295.6) $ (93.8) (215.2) %
Change in cash paid for acquisitions, associated with Floorplan notes payable 2.4 5.3
Change in proceeds from disposition of franchises, property and equipment, associated with Floorplan notes payable (3.2) (6.4)
Adjusted net cash used in investing activities $ (296.4) $ (94.9) (212.5) %
CASH FLOWS FROM FINANCING ACTIVITIES:
Net cash used in financing activities: $ (43.9) $ (547.1) 92.0 %
Change in Floorplan notes payable, excluding floorplan offset (95.6) 393.9
Adjusted net cash used in financing activities $ (139.4) $ (153.3) 9.0 %
Sources and Uses of Liquidity from Operating Activities — Six Months Ended June 30, 2022 Compared to 2021
For the Current Year, net cash provided by operating activities decreased by $391.9 million, as compared to the Prior Year. On an adjusted basis for the same period, adjusted net cash provided by operating activities increased by $97.2 million. The increase on an adjusted basis was primarily driven by a $518.3 million increase in adjusted net floorplan borrowings and a $106.0 million increase in net income, partially offset by a $527.9 million increase in inventory levels.
Sources and Uses of Liquidity from Investing Activities — Six Months Ended June 30, 2022 Compared to 2021
For the Current Year, net cash used in investing activities increased by $201.8 million, as compared to the Prior Year. On an adjusted basis for the same period, adjusted net cash used in investing activities increased by $190.7 million, primarily driven by a $271.1 million increase in acquisition activity, partially offset by a $79.6 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 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. We critically evaluate all planned future capital spending, working closely with our manufacturer partners to maximize the return on our investments. 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.
For the Current Year, $63.0 million was used to purchase property and equipment, primarily consisting of $55.1 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 — Six Months Ended June 30, 2022 Compared to 2021
For the Current Year, net cash used in financing activities decreased by $503.2 million, as compared to the Prior Year. On an adjusted basis for the same period, adjusted net cash used in financing activities decreased by $13.8 million. The decrease on an adjusted basis was primarily driven by Current Year increases in net borrowings on our Floorplan lines of $338.1 million (representing the net cash activity in our floorplan offset account), partially offset by increases in share repurchases of $235.5 million and net repayment of debt of $87.5 million.
46
Table of Contents
Credit Facilities, Debt Instruments and Other Financing Arrangements
Our various credit facilities, debt instruments and other financing arrangements are used to finance the purchase of inventory and real estate, provide acquisition funding and provide working capital for general corporate purposes.
The following table summarizes the commitment of our credit facilities as of June 30, 2022 (in millions):
Total
Commitment Outstanding Available
U.S. Floorplan Line (1)
$ 1,500.0 $ 529.9 $ 970.1
Acquisition Line (2)
497.4 261.5 235.9
Total revolving credit facility 1,997.4 791.5 1,206.0
FMCC Facility (3)
300.0 19.6 280.4
Total U.S. credit facilities (4)
$ 2,297.4 $ 811.0 $ 1,486.4
(1) The available balance at June 30, 2022, includes $77.9 million of immediately available funds. The remaining available balance can be used for vehicle inventory financing.
(2) The outstanding balance of $261.5 million is related to outstanding letters of credit of $12.6 million and $ 248.9 million in borrowings. The borrowings outstanding under the Acquisition Line included $230.0 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 June 30, 2022, includes $5.5 million of immediately available funds. The remaining available balance can be used for Ford new vehicle inventory financing.
(4) The outstanding balance excludes $231.4 million of borrowings with manufacturer-affiliates and third-party financial institutions for foreign and rental vehicle financing not associated with any of our U.S. credit facilities.
We have other credit facilities in the U.S. and the U.K. 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. Refer to Note 9. Debt in our Notes to Condensed Consolidated Financial Statements for further information.
Covenants
Our Revolving Credit Facility, indentures governing our senior notes and certain mortgage term loans contain customary financial and operating covenants that place restrictions on us, including our ability to incur additional indebtedness, create liens or to sell or otherwise dispose of assets and to merge or consolidate with other entities. Certain of our mortgage agreements contain cross-default provisions that, in the event of a default of certain mortgage agreements and of our Revolving Credit Facility, could trigger an uncured default.
As of June 30, 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 June 30, 2022
Required Actual
Total adjusted leverage ratio < 5.75 1.80
Fixed charge coverage ratio > 1.20 6.10
Based on our position as of June 30, 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.
Refer to Note 9. 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 June 30, 2022.
47
Table of Contents
Share Repurchases and Dividends
From time to time, our Board of Directors authorizes the repurchase of shares of our common stock up to a certain monetary limit. During the Current Quarter, the Board of Directors increased the existing authorization to repurchase shares of our common stock by $174.6 million to $250.0 million. This authorization was incremental to the $144.2 million that was authorized previously by our Board of Directors in February 2022. During the six months ended June 30, 2022, 1,437,729 shares were repurchased at an average price of $176.74 per share, for a total of $254.1 million. As of June 30, 2022, we had $139.0 million available under our current stock repurchase authorization.
During the Current Quarter, our Board of Directors approved a quarterly cash dividend of $0.37 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.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.