What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-10-28 compared with 2022-07-29 · 141 added, 111 removed, 587 unchanged (30% of the section changed)

3 unchanged sentences

(In millions, except share data)

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

CURRENT ASSETS:

45 unchanged sentences

(In millions, except per share data)

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

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

18 unchanged sentences

Other interest expense, net 19.6 13.1 55.5 39.8

Other income ( 3.4 ) — ( 3.4 ) —

INCOME BEFORE INCOME TAXES 257.2 224.1 779.6 594.4

18 unchanged sentences

(In millions)

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

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

1 unchanged sentence

Other comprehensive income (loss), net of taxes:

Foreign currency translation adjustment ( 27.8 ) 7.2 ( 28.1 ) 4.9

Net foreign currency translation adjustments:

Unrealized foreign currency translation adjustments ( 31.2 ) ( 11.5 ) ( 59.3 ) ( 6.7 )

Reclassification of cumulative foreign currency translation adjustments associated with the Brazil Disposal 122.8 — 122.8 —

Reclassification of other cumulative foreign currency translation adjustments 1.5 — 1.5 —

Foreign currency translation adjustments, net of reclassifications 93.1 ( 11.5 ) 65.1 ( 6.7 )

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

1 unchanged sentence

31.9 ( 0.6 ) 84.8 16.1

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

Reclassification adjustment for (gain) loss included in interest expense, net of tax (provision) benefit of $( 0.4 ), $ 0.6 , $ 0.5 and $ 1.9 , respectively

( 1.4 ) 1.8 1.6 6.1

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

Unrealized gain on interest rate risk management activities, net of tax 30.4 1.3 86.4 24.5

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX 123.5 ( 10.2 ) 151.5 17.9

COMPREHENSIVE INCOME $ 319.3 $ 161.9 $ 746.1 $ 482.9

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In millions, except share data)

(In millions, except share and per share data)

Common Stock Additional

2 unchanged sentences

Shares Amount

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

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

Net income — — — 195.7 — — 195.7

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

Other comprehensive income, net of taxes — — — — 123.5 — 123.5

Purchases of treasury stock — — — — — ( 105.4 ) ( 105.4 )

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

Net issuance of treasury shares to stock compensation plans and other ( 19,237 ) — ( 1.2 ) — — ( 3.3 ) ( 4.5 )

Stock-based compensation — — 6.2 — — — 6.2

1 unchanged sentence

— — — ( 6.0 ) — — ( 6.0 )

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

BALANCE, SEPTEMBER 30, 2022 25,239,507 $ 0.3 $ 336.8 $ 2,922.3 $ ( 4.7 ) $ ( 1,040.5 ) $ 2,214.1

Common Stock Additional

6 unchanged sentences

Purchases of treasury stock — — — — — ( 359.5 ) ( 359.5 )

Net issuance of treasury shares to stock compensation plans ( 77,310 ) — ( 9.0 ) — — 12.7 3.7

Net issuance of treasury shares to stock compensation plans and other ( 96,547 ) — ( 10.2 ) — — 9.4 ( 0.8 )

Stock-based compensation — — 21.2 — — — 21.2

1 unchanged sentence

— — — ( 18.2 ) — — ( 18.2 )

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

BALANCE, SEPTEMBER 30, 2022 25,239,507 $ 0.3 $ 336.8 $ 2,922.3 $ ( 4.7 ) $ ( 1,040.5 ) $ 2,214.1

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In millions, except share data)

(In millions, except share and per share data)

Common Stock Additional

2 unchanged sentences

Shares Amount

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

Net income — — — 172.1 — — 172.1

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

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

Other comprehensive loss, net of taxes — — — — ( 10.2 ) — ( 10.2 )

Net issuance of treasury shares to stock compensation plans ( 14,621 ) — 0.8 — — 2.3 3.2

2 unchanged sentences

— — — ( 6.3 ) — — ( 6.3 )

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

BALANCE, SEPTEMBER 30, 2021 25,343,056 $ 0.3 $ 320.2 $ 2,265.0 $ ( 166.1 ) $ ( 500.8 ) $ 1,918.6

Common Stock Additional

10 unchanged sentences

— — — ( 17.9 ) — — ( 17.9 )

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

BALANCE, SEPTEMBER 30, 2021 25,343,056 $ 0.3 $ 320.2 $ 2,265.0 $ ( 166.1 ) $ ( 500.8 ) $ 1,918.6

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

2 unchanged sentences

(In millions)

Six Months Ended June 30,

Nine Months Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

8 unchanged sentences

Gain on disposition of assets ( 40.8 ) ( 2.1 )

Loss on extinguishment of debt — 3.8

Unrealized loss on derivative instruments — 1.4

16 unchanged sentences

Purchases of property and equipment ( 93.3 ) ( 88.4 )

Proceeds from sale of discontinued operations, net 59.4 —

Other ( 0.5 ) ( 20.4 )

15 unchanged sentences

Dividends paid ( 18.1 ) ( 17.9 )

Other ( 1.2 ) —

Net cash used in financing activities ( 198.4 ) ( 742.2 )

14 unchanged sentences

All intercompany balances and transactions have been eliminated in consolidation.

The accompanying Condensed Consolidated Financial Statements reflect the consolidated accounts of the parent company, Group 1 Automotive, Inc., and its subsidiaries, all of which are wholly owned.

The accompanying Condensed Consolidated Financial Statements reflect the consolidated accounts of the parent company, Group 1 Automotive, Inc.

(the “Company”), and its subsidiaries, all of which are wholly owned.

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

24 unchanged sentences

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

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

Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022

New vehicle retail sales $ 1,586.9 $ 296.4 $ 1,883.3 $ 4,581.8 $ 898.0 $ 5,479.8

7 unchanged sentences

Total revenues $ 3,484.3 $ 679.1 $ 4,163.4 $ 10,012.8 $ 2,140.3 $ 12,153.1

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

Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021

New vehicle retail sales $ 1,208.5 $ 305.4 $ 1,513.9 $ 3,958.9 $ 869.7 $ 4,828.6

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 $ 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.

(2) Includes variable consideration recognized of $ 5.3 million and $ 5.1 million during the three months ended September 30, 2022 and 2021, respectively, and $ 22.2 million and $ 18.7 million during the nine months ended September 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.

4 unchanged sentences

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

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 analyzed and assessed all available information related to property and equipment and property lease contracts, determining the preliminary fair values established in 2021,were appropriate and no material adjustments were recorded to these fair values in the nine months ended September 30, 2022.

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

As of September 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.

31 unchanged sentences

Operating lease liabilities $ 1.7

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.

The Company’s Condensed Consolidated Statement of Operations included revenues attributable to Prime for the three and nine months ended September 30, 2022, of $ 448.0 million and $ 1.3 billion, respectively, and net income attributable to Prime for the three and nine months ended September 30, 2022 of $ 34.2 million and $ 89.0 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 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.

During the nine months ended September 30, 2022, the Company acquired five dealerships and a collision center in the U.S.

Aggregate consideration paid for these dealerships, which were accounted for as business combinations, was $ 393.0 million, net of cash acquired.

Goodwill and franchise rights intangibles associated with these acquisitions totaled $ 194.0 million and $ 93.4 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.

During the nine months ended September 30, 2022, the Company acquired a dealership and related collision center in the U.K.

C onsideration paid, which was accounted for as a business combination, was $ 32.8 million, net of cash acquired.

Goodwill associated with the acquisition totaled $ 9.2 million.

The accounting for the U.K.

acquisition is considered to be preliminary, as the acquisition was announced on September 6, 2022.

The Company is continuing to analyze and assess relevant information related to the valuation of property, equipment and intangible assets.

Due to the recent timing of the U.K.

acquisition, the related amounts are provisional and subject to change as the Company’s fair value assessments are finalized.

The Company will reflect any such adjustments in subsequent filings with the SEC.

During the nine months ended September 30, 2021 , the Company acquired two dealerships in the U.S.

and seven dealerships in the U.K.

Aggregate consideration paid for these dealerships, which were accounted for as business combinations, was $ 74.6 million, net of cash acquired.

Goodwill associated with these acquisitions totaled $ 41.4 million.

4 unchanged sentences

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.

At the conclusion of the five-year period, the remaining funds held in escrow would be released to the Company.

This amount has been included in the estimated proceeds.

The Brazil Disposal closed on July 1, 2022.

The sale price of approximately BRL 510.0 million included a holdback amount as of the Brazil Disposition Date (as defined herein), for general representations and warranties, of BRL 115.0 million, to be held in escrow for a period of five years from the close of the transaction (the “Brazil Disposal Escrow”).

At the conclusion of the five-year period, the remaining funds held in the Brazil Disposal Escrow will be released to the Company.

This amount has been included in the proceeds received.

On July 1, 2022 (“Brazil Disposition Date”), the Company closed on the Brazil Disposal.

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

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

Estimated net assets disposed 48.8

Estimated gain before currency translation adjustments 47.4

Estimated amount of currency translation loss recorded in AOCI ( 122.8 )

Estimated incremental costs to sell 8.4

Net loss on the Brazil Disposal $ ( 83.8 )

During the three and nine months ended September 30, 2022, the Company recognized additional net losses of $ 3.7 million and $ 10.0 million on the disposal of the Brazil Disposal Group.

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.

For purposes of determining the net gain or loss on the Brazil Disposal Group, the Company included the non-cash currency translation adjustment recorded in AOCI of a loss of $ 122.8 million attributable to the Brazil Disposal Group.

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 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.

For purposes of determining the net gain or loss on the Brazil Disposal, the Company included the currency translation adjustments recorded in AOCI as a loss of $ 122.8 million attributable to the Brazil Disposal Group.

The loss on sale indicated an impairment of assets, however, the loss was entirely the result of the reclassification of the translation adjustment from AOCI .

Prior to the Brazil Disposition Date, the Company recorded a valuation allowance against the assets held for sale for the Brazil Disposal to reflect the expected loss not attributable to a particular asset within the Brazil Disposal Group.

On and following the Brazil Disposition Date, the Company reclassified into earnings the currency translation loss attributable to the Brazil Disposal Group.

The currency translation loss was offset by the reversal of the previously recorded valuation allowance.

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.

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.

During the three months ended September 30, 2022, the Company received additional proceeds for final working capital adjustments related to the Brazil Disposal of $ 4.1 million.

The resulting gain was recognized within Discontinued Operations and included within the net loss recorded during the three months ended September 30, 2022, as described above.

Additionally, during the three months ended September 30, 2022, the Buyer, with approval by the Company, entered into a tax settlement associated with the Brazil Disposal with the Brazilian tax authority for BRL 23.0 million or approximately $ 4.5 million.

The settlement was accrued within Accrued expenses and other current liabilities on the Condensed Consolidated Balance Sheet and recorded as Provision for income taxes within Discontinued Operations and included within the net loss recorded during the three months ended September 30, 2022, as described above.

The settlement will be paid out of the existing Brazil Disposal Escrow balance within one year.

As of September 30, 2022, the Company had a remaining receivable balance of $ 21.8 million associated with the Brazil Disposal Escrow recorded in Other long-term assets on the Condensed Consolidated Balance Sheet, of which $ 7.5 million is expected to be paid to settle the Company’s portion of accrued liabilities retained subsequent to the Brazil Disposition Date, including the tax settlement described above.

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

Fair value of proceeds from disposition $ 92.5

Net assets disposed 48.8

Gain before currency translation adjustments 43.7

Amount of currency translation loss recorded in AOCI ( 122.8 )

Incremental costs to sell 8.4

Net loss on the Brazil Disposal $ ( 87.5 )

GROUP 1 AUTOMOTIVE, INC.

1 unchanged sentence

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

15 unchanged sentences

Asset impairments 0.1 — 6.3 —

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

INCOME FROM OPERATIONS — DISCONTINUED OPERATIONS 4.5 5.3 4.0 10.6

Floorplan interest expense — 0.4 1.4 0.7

Other interest (income) expense, net ( 0.7 ) 0.1 ( 1.1 ) 0.8

(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

Loss on extinguishment of debt — 3.8 — 3.8

Other expenses 1.5 — 1.5 —

INCOME BEFORE INCOME TAXES — DISCONTINUED OPERATIONS 3.7 0.9 2.2 5.2

Provision for income taxes 5.0 1.3 5.1 2.4

NET (LOSS) INCOME — DISCONTINUED OPERATIONS $ ( 1.3 ) $ ( 0.4 ) $ ( 2.9 ) $ 2.8

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

Six Months Ended June 30,

Nine Months Ended September 30,

Net cash provided by operating activities — discontinued operations $ 26.6 $ 8.1

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

Net cash provided by (used in) investing activities — discontinued operations $ 59.1 $ ( 1.4 )

GROUP 1 AUTOMOTIVE, INC.

1 unchanged sentence

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

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Cash and cash equivalents $ — $ 3.7

3 unchanged sentences

Prepaid expenses — 1.9

Other current assets 1.3 —

Current assets of discontinued operations 1.3 56.9

6 unchanged sentences

Total assets, net of valuation allowance $ 23.2 $ 13.0

$ 18.0 $ 13.0

Floorplan notes payable — credit facility and other $ — $ 3.3

4 unchanged sentences

Current liabilities of discontinued operations $ 7.5 $ 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):

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Current assets classified as held for sale

8 unchanged sentences

Acquisitions.

(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.

(2) Includes $ 11.3 million and $ 9.9 million of goodwill reclassified to assets held for sale as of September 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 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.

During the nine months ended September 30, 2022, the Company recorded a net pre-tax gain totaling $ 31.3 million related to the disposition of five dealerships representing five franchises in the U.S.

The dispositions reduced goodwill by $ 36.9 million.

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.

During the nine months ended September 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.

1 unchanged sentence

SEGMENT INFORMATION

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

As of September 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 and six months ended June 30, 2022 and 2021 (in millions):

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

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

Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022

Total revenues $ 3,484.3 $ 679.1 $ 4,163.4 $ 10,012.8 $ 2,140.3 $ 12,153.1

Income before income taxes $ 231.5 $ 25.7 $ 257.2 $ 703.8 $ 75.9 $ 779.6

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

Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021

Total revenues $ 2,662.4 $ 750.4 $ 3,412.8 $ 7,991.6 $ 2,000.7 $ 9,992.3

9 unchanged sentences

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,

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

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

29 unchanged sentences

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

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Carrying Value (1)

6 unchanged sentences

Derivative Financial Instruments

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

The Company holds 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.

4 unchanged sentences

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):

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Other current assets $ 0.2 $ —

8 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 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 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 June 30, 2022 .

As of September 30, 2022, the Company held 41 interest rate swaps designated as cash flow hedges with a total notional value of $ 949.1 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 %.

As of September 30, 2021, the Company held 33 interest rate swaps designated as cash flow hedges with a total notional value of $ 686.1 million that fixed the underlying one-month LIBOR at a weighted average rate of 1.37 % .

The Company transitioned from the use of LIBOR to SOFR subsequent to September 30, 2021.

GROUP 1 AUTOMOTIVE, INC.

2 unchanged sentences

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

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

Three Months Ended September 30, Nine Months Ended September 30,

Derivatives in Cash Flow Hedging Relationship 2022 2021 2022 2021

Interest rate swaps $ 31.9 $ ( 0.6 ) $ 84.8 $ 16.1

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

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

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

Statement of Operations Classification Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

4 unchanged sentences

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

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Contracts-in-transit and vehicle receivables, net:

15 unchanged sentences

$ 44.7 $ 37.5

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

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

GROUP 1 AUTOMOTIVE, INC.

1 unchanged sentence

Debt consisted of the following (in millions):

June 30, 2022 December 31, 2021

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

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

Floorplan Notes Payable), totaled $ 200.0 million.

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

The average interest rate on this facility was 2.90 % during the three months ended September 30, 2022.

Real Estate Related

1 unchanged sentence

that are paid in installments.

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.

As of September 30, 2022, borrowings outstanding under these facilities totaled $ 807.7 million, gross of debt issuance costs, comprised of $ 718.7 million in the U.S.

and $ 89.0 million in the U.K.

1 unchanged sentence

In connection with the Prime Acquisition, the Company entered into a commitment letter with Wells Fargo Bank (“Bridge Facility”) to provide a portion of the debt financing.

As of December 31, 2021, borrowings outstanding under the Bridge Facility totaled $ 140.0 million.

As of December 31, 2021, borrowings outstanding under the Bridge Facility totaled $ 140.0 million, and is reflected within Other, under Other Debt in the table above, and reflected within current maturities.

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

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

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Revolving Credit Facility — floorplan notes payable $ 702.3 $ 511.7

11 unchanged sentences

On March 9, 2022, in the U.S., the Company entered into an amended revolving syndicated credit arrangement with 21 participating financial institutions that matures on March 9, 2027 (“Revolving Credit Facility”).

On August 18, 2022, the company entered into a first amendment on the twelfth amended Revolving Credit Facility.

In addition to extending the term, the amendment increases the availability to $ 2.0 billion, with the ability to increase to $ 2.4 billion, as further described below.

The Revolving Credit Facility consists of two tranches:

The Revolving Credit Facility currently consists of two tranches:

(i ) a $ 1.2 billion maximum capacity tranche for U.S.

1 unchanged sentence

Floorplan Line”) which the outstanding balance, net of offset account discussed below, is reported in Floorplan notes payable — credit facility and other, net ;

and (ii) a $ 500.0 million maximum capacity and $ 50.0 million minimum capacity tranche (“Acquisition Line”), which is not due until maturity of the Revolving Credit Facility and is therefore classified in Long-term debt on the Condensed Consolidated Balance Sheets — refer to Note 9.

and (ii) an $ 800.0 million maximum capacit y tranche (“Acquisition Line”), which is not due until maturity of the Revolving Credit Facility and is therefore classified in Long-term debt on the Condensed Consolidated Balance Sheets — refer to Note 9.

Debt for additional discussion.

The capacity under these two tranches can be re-designated within the overall $ 2.0 billion commitment.

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 June 30, 2022 and December 31, 2021.

Th e Acquisition Line includes a $ 100.0 million sub-limit for letters of credit and $ 50.0 million minimum capacity tranche.

The Company had $ 12.2 million in letters of credit outstanding as of both September 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 2.81 % as of June 30, 2022, excluding the impact of the Company’s interest rate swap derivative instruments.

Floorplan Line was 4.25 % as of September 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.

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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 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.

In conjunction wit h the amendment to the Revolving Credit Facility described above, the Company incurred $ 3.7 million in additional debt issuance costs.

The Company had $ 5.3 million and $ 2.6 million of related unamortized debt issuance costs as of September 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

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(the “FMCC Facility”).

This facility bears interest at the higher of the actual U.S.

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

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

This facility bears interest at the U.S.

prime rate which was 6.25 % as of September 30, 2022.

GROUP 1 AUTOMOTIVE, INC.

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

Other Manufacturer Facilities

Other M anufacturer Facilities

The Company has other credit facilities in the U.S.

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

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 % .

As of September 30, 2022, borrowings outstanding under these facilities totaled $ 184.9 million, comprised of $ 104.4 million in the U.S., with annual interest rates ranging from less than 1 % to approximately 7 %, and $ 80.5 million in the U.K., with annual interest rates ranging from approximately 2 % to 6 %.

Offset Accounts

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Non-Cash Activities

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.

The accrual for capital expenditures increased $ 0.4 million an d $ 2.1 million during the nine months ended September 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 $ 42.8 million and $ 37.6 million for the six months ended June 30, 2022 and 2021, respectively.

Cash paid for interest, including the monthly settlement of the Company’s interest rate swaps, was $ 73.8 million and $ 59.9 million for the nine months ended September 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 $ 99.2 million and $ 52.7 million for the six months ended June 30, 2022 and 2021, respectively.

Cash paid for income taxes, net of refunds, was $ 155.9 million and $ 100.7 million for the nine months ended September 30, 2022 and 2021, respectively.

COMMITMENTS AND CONTINGENCIES

From time to time, the Company’s dealerships are named in various types of litigation involving customer claims, employment matters, class action claims, purported class action claims, claims involving the manufacturers of automobiles, contractual disputes and other matters arising in the ordinary course of business.

From time to time, the Company’s dealerships are named in various types of litigation involving customer claims, employment matters, class action claims, purported class action claims, claims involving the manufacturers of automobiles, contractual disputes, vehicle related incidents and other matters arising in the ordinary course of business.

The Company may be involved in legal proceedings or suffer losses that could have a material adverse effect on the Company’s results of operations, financial condition or cash flows.

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Legal Proceedings

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.

As of September 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;

1 unchanged sentence

Other Matters

From time to time, the Company sells its dealerships to third parties.

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 $ 22.4 million as of June 30, 2022.

In connection with dealership dispositions 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.

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 June 30, 2022.

Total associated letters of credit issued on behalf of the lessee where the Company is the beneficiary was $ 2.9 million as of September 30, 2022.

GROUP 1 AUTOMOTIVE, INC.

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

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

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

6 unchanged sentences

Other interest expense, net (pre-tax) — 0.7 0.7

Cumulative foreign currency translation adjustments associated with the Brazil Disposal 122.8 — 122.8

Other cumulative foreign currency translation adjustments 1.5 — 1.5

Benefit for income taxes — ( 0.5 ) ( 0.5 )

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

Net current period other comprehensive income 65.1 86.4 151.5

Balance, September 30, 2022 $ ( 93.1 ) $ 88.4 $ ( 4.7 )

Nine Months Ended September 30, 2021

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

8 unchanged sentences

Benefit for income taxes — ( 2.6 ) ( 2.6 )

Net current period other comprehensive income 4.9 23.3 28.1

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

Net current period other comprehensive (loss) income ( 6.7 ) 24.5 17.9

Balance, September 30, 2021 $ ( 158.2 ) $ ( 7.9 ) $ ( 166.1 )

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