What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-10-28 compared with 2022-07-29 · 185 added, 188 removed, 703 unchanged (35% of the section changed)

11 unchanged sentences

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.

As of September 30, 2022, our retail network consisted of 148 dealerships in the U.S.

and 55 dealerships in the U.K.

5 unchanged sentences

Refer to Note 4.

Discontinued Operations and Other Divestitures within our Notes to Condensed Consolidated Financial Statements, for additional information regarding business dispositions.

Discontinued Operations and Other Divestitures within our Notes to Condensed Consolidated Financial Statements, for additional information.

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”).

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

Conversely, the shortage of new vehicles has led to sharply higher new vehicle sales prices and gross margins.

Our new vehicle days’ supply of inventory was approximately 16 day s as of the quarter ended September 30, 2022 (“Current Quarter”), as compared to 13 days as of the quarter ended September 30, 2021 (“Prior Year Quarter”).

In August 2022, we announced certain upcoming management changes, including the retirement of our Chief Executive Officer Earl J.

Hesterberg, effective as of December 31, 2022, and the promotion of Daryl Kenningham to succeed Mr.

Hesterberg, effective January 1, 2023.

Please see our Current Report on Form 8-K, filed with the SEC on August 24, 2022, for additional information.

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

3 unchanged sentences

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 particular, the Russia and Ukraine Conflict has further impacted the ability of certain OEMs to produce new vehicles and new vehicle parts, which may result in continued disruptions to the supply of new and used vehicles.

During the nine months ended September 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.

Federal Reserve, along with other central banks, including in the U.K., 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.

Gross Domestic Product (“GDP”) shrank for the second consecutive quarter as of the quarter ended June 30,2022, 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.

In addition to the macroeconomic issues described above, the U.K.

faces additional political and economic uncertainty as a result of recent leadership changes in the country’s government.

This uncertainty has led to increased foreign currency exchange rate volatility for the country’s currency.

During the Current Quarter, the GBP to USD foreign currency exchange rate has declined 8.3% from £1 to $1.21 at June 30, 2022, to £1 to $1.11 at September 30, 2022, and as compared to the Prior Year Quarter, the GBP to USD foreign currency exchange rate has declined 17.3%, from £1 to $1.35 at September 30, 2021, to £1 to $1.11 at September 30, 2022.

Critical Accounting Policies and Accounting Estimates

23 unchanged sentences

(In millions, except unit data)

Three Months Ended June 30,

Three Months Ended September 30,

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

44 unchanged sentences

(In millions, except unit data)

Three Months Ended June 30,

Three Months Ended September 30,

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

38 unchanged sentences

(In millions, except unit data)

Six Months Ended June 30,

Nine Months Ended September 30,

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

44 unchanged sentences

(In millions, except unit data)

Six Months Ended June 30,

Nine Months Ended September 30,

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

38 unchanged sentences

(In millions, except unit data)

Three Months Ended June 30,

Three Months Ended September 30,

2022 2021 Increase/(Decrease) % Change

38 unchanged sentences

(In millions, except unit data)

Three Months Ended June 30,

Three Months Ended September 30,

2022 2021 Increase/(Decrease) % Change

36 unchanged sentences

SG&A as % gross profit 60.9 % 57.6 % 3.3 %

Region — Three Months Ended June 30, 2022 Compared to 2021

Region — Three Months Ended September 30, 2022 Compared to 2021

The following discussion of our U.S.

3 unchanged sentences

during the Current Quarter increased $821.9 million, or 30.9%, 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.

This increase was driven by the acquisition of stores and higher same store revenues.

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.

during the Current Quarter increased $198.6 million, or 7.6%, as compared to Prior Year Quarter.

This increase was primarily driven by higher same store revenues from new and used vehicle retail sales, parts and service sales and F&I, net, partially offset by lower same store revenues from used vehicle wholesale sales.

New and used vehicle retail revenues benefited from the sale of approximately 7,700 units from our online digital platform, AcceleRide®, during the Current Quarter, representing a 47.0% increase as compared to the Prior Year Quarter.

New vehicle retail same store revenues outperformed the Prior Year Quarter.

A shortage in new vehicle supply continued to drive strong pricing in the Current Quarter, mitigating the modestly lower new vehicle retail unit sales.

Supply chain issues, including an ongoing semiconductor and vehicle parts shortage, an d 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.

new vehicle inventory supply of 15 days, 4 days higher than the Prior Year Quarter.

Used vehicle retail same store revenues outperformed the Prior Year Quarter, driven by strong used vehicle retail pricing due to increased demand, coupled with a modest increase in retail used vehicle unit sales.

Used vehicle wholesale same store revenues underperformed due to a decline in wholesale used vehicle unit sales.

We have increased our efforts to sell more used vehicles through retail sales channels 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 Quarter, driven by increases across all business lines, reflecting increased business activity and increased same store technician headcount as a result of our technician recruiting and retention efforts providing greater capacity to meet increased demand.

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

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.

during the Current Quarter increased $124.3 million, or 23.2%, as compared to the Prior Year Quarter, primarily driven by the acquisition of stores.

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.

during the Current Quarter increased $5.4 million, or 1.0%, as compared to the Prior Year Quarter.

This increase was primarily driven by higher same store gross profit from parts and service sales, F&I, net and new vehicle retail sales, partially offset by lower same store gross profit from used vehicle retail and wholesale sales.

New vehicle retail same store gross profit outperformed the Prior Year Quarter, driven by an increase in new vehicle retail same store gross profit per unit sold, partially offset by a modest decrease in same store retail new vehicle 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.

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.

The inventory shortage also drove the decrease in same store retail new vehicle unit sales.

Used vehicle retail same store gross profit underperformed the Prior Year Quarter, driven by a decrease in used vehicle retail same store gross profit per unit sold, partially offset by modestly higher same store retail used vehicle unit sales.

The decrease in same store used vehicle retail gross profit was driven by inflationary impacts on our used vehicle customers and higher used vehicle acquisition prices.

Our used vehicle wholesale same store gross profit underperformed the Prior Year Quarter , 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 unit sales.

The decreases in wholesale gross profit per unit sold and in wholesale units were driven by efforts to sell more used vehicles through retail sales rather than the wholesale market as described above.

Parts and service same store gross profit outperformed the Prior Year Quarter, as described above for parts and service same store revenues.

F&I, net same store gross profit increased 9.6%, as described above for F&I, net same store revenues.

Total same store gross ma rgin decreased 123 basis points, primarily driven by lower same store used vehicle retail gross margin caused by inflationary impacts on our used vehicle customers and higher used vehicle acquisition prices.

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.

SG&A as a percentage of gross profit increase d 83 and 332 basi s points on an as reported and same store basis, respectively, compared to the Prior Year Quarter, primarily driven by increases in SG&A expenses.

Total SG&A expenses in the U.S.

1 unchanged sentence

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.

during the Current Quarter, increased $20.7 million, or 6.9%, as compared to the Prior Year Quarter, primarily driven by increased labor costs, favorable non-recurring legal settlements in the Prior Year Quarter, and an increase in other variable expenses associated with the rise in certain business activities described above.

Reported Operating Data — U.S.

(In millions, except unit data)

Six Months Ended June 30,

Nine Months Ended September 30,

2022 2021 Increase/(Decrease) % Change

38 unchanged sentences

(In millions, except unit data)

Six Months Ended June 30,

Nine Months Ended September 30,

2022 2021 Increase/(Decrease) % Change

36 unchanged sentences

SG&A as % gross profit 59.7 % 58.4 % 1.3 %

Region — Six Months Ended June 30, 2022 Compared to 2021

Region — Nine Months Ended September 30, 2022 Compared to 2021

The following discussion of our U.S.

5 unchanged sentences

during the Current Year increased $289.7 million, or 3.7%, 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.

This increase was primarily driven by higher same store revenues from used vehicle retail sales, parts and service sales and F&I, net, partially offset by lower same store revenues from new vehicle retail and used vehicle wholesale sales.

New and used vehicle retail revenues benefited from the sale of approx imately 20,300 units from our online digital platform, AcceleRide®, during the Current Year, representing approximately a 36.8% increase as compared to the Prior Year.

New vehicle retail same store revenues underperformed the Prior Year, driven by a shortage in new vehicle supply, leading to fewer unit sales.

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

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

Used vehicle wholesale same store revenues declined primarily driven by a decline in unit sales 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 and increased same store technician headcount through our technician recruiting and retention efforts providing greater capacity to meet increased demand.

These increases were partially offset by a decrease in warranty revenues, due to fewer new vehicles sold as a result of new vehicle shortages described above.

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.

during the Current Year increased $445.1 million, or 29.5%, as compared to the Prior Year, primarily driven by the acquisition of stores and higher same store results.

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.

during the Current Year increased $104.1 million, or 7.0%, as compared to the Prior Year, primarily driven by higher same store gross profit from new vehicle retail sales, parts and service sales and F&I, net.

New vehicle retail same store gross profit outperformed the Prior Year, driven by an increase in new vehicle retail same store gross profit per unit sold, partially offset by a decrease in same store retail new vehicle unit sales.

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

Used vehicle retail same store gross profit underperformed the Prior Year, driven by a decrease in used vehicle retail same store gross profit per unit sold, coupled with a decrease in same store retail used vehicle unit sales.

The decrease in same store used vehicle retail gross profit and retail used vehicle unit sales was driven by inflationary impacts on used vehicle customers coupled with higher used vehicle acquisition costs.

Our used vehicle wholesale same store gross profit underperformed the Prior Year, driven by a decrease in used vehicle wholesale same store gross profit per unit sold, coupled with a decrease in same store wholesale used vehicle unit sales.

The decrease in used vehicle wholesale gross profit per unit sold and in wholesale used vehicle unit sales was driven by efforts to sell more used vehicles through retail sales rather than the wholesale market as described above.

Parts and service same store gross profit outperformed the Prior Year, as described above for parts and service revenues.

F&I, net same store gross profit outperformed the Prior Year, as described above for F&I, net same store revenues.

Total same store gross margin increased 60 basis points, primarily driven by higher new vehicle retail sales prices outpacing new vehicle costs of sales.

6 unchanged sentences

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.

during the Current Year increased $80.8 million, or 9.3%, as compared to the Prior Year, primarily driven by increased labor costs and an increase in other variable expenses associated with the rise in certain business activities.

Reported Operating Data — U.K.

(In millions, except unit data)

Three Months Ended June 30,

Three Months Ended September 30,

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

31 unchanged sentences

Used vehicle retail sales $ 1,507 $ 2,215 $ (709) (32.0) % $ (259) (20.3) %

Used vehicle wholesale sales $ (316) $ 611 $ (927) NM $ 37 NM

Used vehicle wholesale sales $ (87) $ 987 $ (1,074) (108.8) % $ 15 (110.3) %

Total used $ 1,146 $ 1,872 $ (726) (38.8) % $ (197) (28.2) %

2 unchanged sentences

SG&A as % gross profit 69.8 % 65.2 % 4.6 %

NM — Not Meaningful

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.

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.

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.

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.

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.

Same Store Operating Data — U.K.

(In millions, except unit data)

Three Months Ended June 30,

Three Months Ended September 30,

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

31 unchanged sentences

Used vehicle retail sales $ 1,496 $ 2,215 $ (719) (32.5) % $ (256) (20.9) %

Used vehicle wholesale sales $ (293) $ 611 $ (904) (147.9) % $ 35 NM

Used vehicle wholesale sales $ (87) $ 987 $ (1,074) (108.8) % $ 15 (110.3) %

Total used $ 1,137 $ 1,872 $ (735) (39.3) % $ (195) (28.9) %

2 unchanged sentences

SG&A as % gross profit 69.7 % 64.9 % 4.8 %

NM — Not Meaningful

Region — Three Months Ended September 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.

The GBP to USD foreign currency exchange rate has fluctuated from £1 to $1.35 at September 30, 2021, to £1 to $1.11 at September 30, 2022, or a decline of 17.3%, leading to a decrease in U.K.

results when translated from GBP to USD in the Current Quarter when compared to the Prior Year Quarter.

Total revenues in the U.K.

during the Current Quarter decreased $71.3 million, or 9.5%, as compared to the Prior Year Quarter.

This decrease was primarily driven by the negative impact of foreign currency exchange rates, partially offset by the acquisition of stores.

Total same store revenues in the U.K.

during the Current Quarter decreased $78.7 million, or 10.5%, 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 5.2%, driven by outperformances across all revenue streams except used vehicle retail and wholesale sales.

New vehicle retail same store revenues, on a constant currency basis, outperformed the Prior Year Quarter.

A shortage in new vehicle supply continues to drive strong pricing on a constant currency basis.

Supply chain issues, including an ongoing semiconductor and vehicle parts shortage, an d 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.K.

new vehicle inventory supply of 20 days, which is consistent with the Prior Year Quarter’s new inventory supply of 19 days.

Used vehicle retail same store revenues, on a constant currency basis, underperformed the Prior Year Quarter due to a decline in retail used vehicle unit sales, driven by inflationary impacts on our used vehicle customers and the ongoing new vehicle supply shortage impacting the supply of used vehicles, partially offset by a higher average sales price on a constant currency basis.

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 higher business activity as 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 the majority of our products and higher income per contract on finance and VSCs, partially offset by fewer retail used vehicles sold in the Current Quarter.

Total gross profit in the U.K.

during the Current Quarter decreased $10.3 million, or 10.0%, as compared to the Prior Year Quarter, primarily driven by the negative impact of foreign currency exchange rates.

Total same store gross profit in the U.K.

during the Current Quarter decreased $11.1 million, or 10.9%, as compared to the Prior Year Quarter.

On a constant currency basis, total same store gross profit increased 5.0%, primarily driven by improvements in gross profit from new vehicle retail sales, parts and service sales and F&I, net.

New vehicle retail same store gross profit, on a constant currency basis, outperformed the Prior Year Quarter, driven by 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 the Prior Year Quarter, driven by a decrease in same store used vehicle retail gross profit per unit sold, coupled with fewer same store retail used vehicle unit sales.

The decrease in same store used vehicle retail gross profit and retail used vehicle 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 described above for F&I, net same store revenues.

Total same store gross margin in the U.K.

decreased 5 basis points, primarily driven by lower same store used vehicle retail gross margin caused by inflationary impacts on our used vehicle customers and the ongoing new vehicle supply shortage impacting the supply of used vehicles, and lower parts and service gross margin caused by increased labor costs.

SG&A Expenses

SG&A as a percentage of gross profit increased 459 and 484 basis points, on an as reported and same store basis, respectively, compared to the Prior Year Quarter, primarily driven by the decline in used vehicle retail and parts and service gross profit as described above, as well as the factors below impacting SG&A.

Total SG&A expenses in the U.K.

during the Current Quarter decreased $2.5 million, or 3.6%, as compared to the Prior Year Quarter.

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

during the Current Quarter decreased $2.8 million, or 4.2%, as compared to the Prior Year Quarter.

These decreases were primarily driven by the impact of foreign currency exchange rates.

On a constant currency basis, total same store SG&A expenses increased 12.4%, primarily driven by increased labor costs, an increase in other variable expenses associated with the rise in certain business activities, including costs associated with recent acquisitions, and Prior Year government COVID-19 assistance, inclusive of the temporary suspension of city tax, which did not recur in the Current Year.

Reported Operating Data — U.K.

(In millions, except unit data)

Six Months Ended June 30,

Nine Months Ended September 30,

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

9 unchanged sentences

Used vehicle retail sales 50.4 52.9 (2.5) (4.7) % (5.0) 4.7 %

Used vehicle wholesale sales (1.5) 2.4 (3.9) NM 0.1 NM

Used vehicle wholesale sales (1.8) 6.5 (8.3) (127.2) % 0.2 (129.9) %

Total used 48.7 59.5 (10.8) (18.1) % (4.8) (10.0) %

19 unchanged sentences

Used vehicle retail sales $ 1,653 $ 1,863 $ (210) (11.3) % $ (164) (2.5) %

Used vehicle wholesale sales $ (230) $ 325 $ (555) NM $ 23 NM

Used vehicle wholesale sales $ (185) $ 568 $ (753) (132.6) % $ 19 (135.9) %

Total used $ 1,215 $ 1,491 $ (276) (18.5) % $ (121) (10.4) %

2 unchanged sentences

SG&A as % gross profit 68.0 % 67.1 % 0.8 %

NM — Not Meaningful

Same Store Operating Data — U.K.

(In millions, except unit data)

Six Months Ended June 30,

Nine Months Ended September 30,

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

9 unchanged sentences

Used vehicle retail sales 46.0 52.9 (6.9) (13.1) % (4.7) (4.3) %

Used vehicle wholesale sales (1.3) 2.4 (3.7) NM 0.1 NM

Used vehicle wholesale sales (1.6) 6.6 (8.1) (123.7) % 0.2 (126.1) %

Total used 44.4 59.5 (15.0) (25.3) % (4.5) (17.7) %

19 unchanged sentences

Used vehicle retail sales $ 1,666 $ 1,865 $ (199) (10.7) % $ (169) (1.6) %

Used vehicle wholesale sales $ (223) $ 333 $ (556) NM $ 22 NM

Used vehicle wholesale sales $ (177) $ 573 $ (750) (130.9) % $ 18 (133.9) %

Total used $ 1,221 $ 1,494 $ (273) (18.3) % $ (124) (9.9) %

2 unchanged sentences

SG&A as % gross profit 68.7 % 66.6 % 2.1 %

NM — Not Meaningful

Region — Six Months Ended June 30, 2022 Compared to 2021

Region — Nine Months Ended September 30, 2022 Compared to 2021

The following discussion of our U.K.

6 unchanged sentences

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.

during the Current Year increased $139.6 million, or 7.0%, as compared to the Prior Year, primarily driven by the acquisition of stores, partially offset by the negative impact of foreign currency exchange rates.

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.

during the Current Year decreased $4.8 million, or 0.2%, as compared to the Prior Year, driven by the negative impact of foreign currency exchange rates.

On a constant currency basis, total same store revenues increased 10.4%, 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.

New vehicle retail same store revenues, on a constant currency basis, outperformed the Prior Year, driven by increased sales prices, partially offset by a modest decrease in same store retail new vehicle unit sales.

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

The increase in the new vehicle retail same store average sales price per unit sold 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 modest decline in retail used vehicle unit sales, as increased demand drove higher prices.

Parts and service same store revenues, on a constant currency basis, outperformed the Prior Year, driven by increased business activity across all of our parts and service business lines 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 all finance and other products and higher income per contract for finance and VSCs, partially offset by a decline in same store new and used vehicle retail unit sales.

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.

during the Current Year increased $31.2 million, or 12.1%, as compared to the Prior Year, primarily driven by the acquisition of stores and higher same store results.

Total same store gross profit in the U.K.

during the Current Year increased $13.2 million, or 5.2%, 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.

On a constant currency basis, total same store gross profit increased 16.5%, driven by improvements in new vehicle 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 sold, resulting from increased prices as discussed above, partially offset by a modest decline in same store retail new vehicle unit sales.

Used vehicle retail same store gross profit, on a constant currency basis, underperformed the Prior Year, due to a decrease in used vehicle retail same store gross profit per unit sold, coupled with a decrease in same store retail used vehicle unit sales.

These decreases were 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, driven by the increases in parts and service same store revenues.

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

Total same store gross margin in the U.

increased 69 basis points, driven by improvements in new vehicle retail gross margin due to higher prices from increased customer demand and vehicle supply constraints.

The increase was partially offset by a decrease in same store total used vehicle retail 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.

SG&A as a percentage of gross profit increased 82 and 211 basis points on an as reported and same store basis, respectively, compared to the Prior Year.

Total SG&A expenses in the U.K.

3 unchanged sentences

On a constant currency basis, total same store SG&A expenses increased 20.0%.

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

These increases were primarily driven by higher business activity and acquisition costs 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 Nine Months Ended September 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,

Three Months Ended September 30,

2022 2021 Increase/ (Decrease) % Change

3 unchanged sentences

Provision for income taxes $ 60.2 $ 51.6 $ 8.6 16.6 %

Six Months Ended June 30,

Nine Months Ended September 30,

2022 2021 Increase/ (Decrease) % Change

7 unchanged sentences

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.

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

prime rate or a benchmark rate.

Outstanding borrowings largely fluctuate based on our levels of new and used vehicle inventory.

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.

Total floorplan interest expense during the Current Quarter, increased $2.2 million, or 50.1%, as compared to the Prior Year Quarter, driven primarily by higher new and used vehicle inventories in the Current Quarter, resulting in additional floorplan interest expense, and an unrealized gain on interest rate swaps of $0.9 million in the Prior Year Quarter which did not recur in the Current Quarter.

For the Current Year, floorplan interest expense decreased $2.8 million, or 13.7%, as compared to the Prior Year, driven primarily by lower realized losses on our interest rate swap portfolio in the current year, due to increases in corresponding interest rates and an unrealized loss on interest rate swaps of $1.4 million in the Prior Year which did not recur in the Current Year.

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.

Refer 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.

Other interest expense, net during the Current Quarter, increased $6.5 million, or 49.9%, as compared to the Prior Year Quarter.

For the Current Year, other interest expense, net, increased $15.7 million, or 39.5%, as compared to the Prior Year.

The increase in other interest expense, net 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, primarily related to the Prime Acquisition.

Refer to Note 9.

2 unchanged sentences

Provision for income taxes of $60.2 million during the Current Quarter increased by $8.6 million, or 16.6%, 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.

For the Current Year, our provision for income taxes of $182.1 million increased by $50.0 million, or 37.8%, 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 23.0%, 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%.

The tax rate increase was primarily due to the increase of state income tax expense due to the mix of domestic earnings following the Prime Acquisition, partially offset by tax benefits from an increase in foreign earnings taxed at lower rates in the Current Quarter as compared to the Prior Year Quarter.

We expect our effective tax rate for the remainder of 2022 to 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.

6 unchanged sentences

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

June 30, 2022

September 30, 2022

Cash and cash equivalents $ 20.5

16 unchanged sentences

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

Six Months Ended June 30,

Nine Months Ended September 30,

2022 2021 % Change

16 unchanged sentences

Adjusted net cash used in financing activities $ (399.1) $ (217.4) (83.5) %

Sources and Uses of Liquidity from Operating Activities — Six Months Ended June 30, 2022 Compared to 2021

Sources and Uses of Liquidity from Operating Activities — Nine Months Ended September 30, 2022 Compared to 2021

For the Current Year, net cash provided by operating activities decreased by $584.1 million, as compared to the Prior Year.

On an adjusted basis for the same period, adjusted net cash provided by operating activities increased by $136.4 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.

The increase on an adjusted basis was primarily driven by an $809.3 million increase in adjusted net floorplan borrowings and a $129.6 million increase in net income, partially offset by a $799.6 million increase in inventory levels.

Sources and Uses of Liquidity from Investing Activities — Nine Months Ended September 30, 2022 Compared to 2021

For the Current Year, net cash used in in vesting activities increased by $162.3 million, as compared to the Prior Year.

On an adjusted basis for the same period, adjusted net cash used in investing activities increased by $157.5 million, primarily driven by a $347.2 million increase in acquisition activity, partially offset by a $115.3 million increase in proceeds from disposition of franchises and property and equipment and a $59.4 million increase in net proceeds from the sale of discontinued operations.

Capital Expenditures

2 unchanged sentences

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.

We forecast our capital expenditures for the full year of 2022 will be approximately $105.0 million as compared to $99.6 million for the full year in 2021, excluding expenditures related to real estate purchases and future acquisitions, which could generally be funded from excess cash.

For the Current Year , $93.3 million was used to purchase property and equipment, primarily consisting of $83.7 million in capital expenditures and $10.0 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.

Sources and Uses of Liquidity from Financing Activities — Nine Months Ended September 30, 2022 Compared to 2021

For the Current Year, net cash used i n financing activities decreased by $543.8 million, as compared to the Prior Year.

On an adjusted basis for the same period, adjusted net cash used in financing activities increased by $181.7 million.

The increase in net cash used in financing activities on an adjusted basis was primarily driven by Current Year increases in share repurchases of $340.9 million and net repayment of debt of $49.6 million, partially offset by increases in net borrowings on our Floorplan lines of $211.6 million (representing the net cash activity in our floorplan offset account).

Credit Facilities, Debt Instruments and Other Financing Arrangements

Our various credit facilities, debt instruments and other financing arrangements are used to finance the purchase of inventory and real estate, provide acquisition funding and provide working capital for general corporate purposes.

The following table summarizes the commitment of our credit facilities as of June 30, 2022 (in millions):

The following table summarizes the commitment of our credit facilities as of September 30, 2022 (in millions):

Commitment Outstanding Available

8 unchanged sentences

$ 2,263.4 $ 727.4 $ 1,536.0

(1) The available balance at June 30, 2022, includes $77.9 million of immediately available funds.

(1) The available balance at September 30, 2022, includ es $206.1 million of immediately available funds.

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

(2) The outstanding balance of $212.2 million is related to outstanding letters of credit of $12.2 million and $200.0 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 borrowings outstanding under the Acquisition Line included $200.0 million USD borrowings.

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.

(3) The available balance at September 30, 2022, includes $12.4 million of immediately available funds.

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

8 unchanged sentences

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.

As of September 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

As of September 30, 2022

Required Actual

1 unchanged sentence

Fixed charge coverage ratio > 1.20 5.77

Based on our position as of June 30, 2022, and our outlook as discussed within Item 2.

Based on our position as of September 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.

1 unchanged sentence

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.

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.

On August 16, 2022, our Board of Directors increased the share repurchase authorization by $130.5 million to $250.0 million.

During the nine months ended September 30, 2022, 2,047,658 shares were repurchased at an average price of $175.58 per share, for a total of $359.5 million.

As of September 30, 2022, we had $164.0 million available under our current stock repurchase authorization.

During the Current Quarter, we adopted a Rule 10b5-1 trading plan that was effective from October 3, 2022 to October 19, 2022.

Under the plan, we repurchased an additional 638,072 shares subsequent to September 30, 2022, at an average price of $156.70 per share, for a total cost of $100.0 million.

During the Current Quarter, our Board of Directors approved a quarterly cash dividend of $0.38 per share on all shares of our common stock, which resulted in $5.8 million paid to common shareholders and $0.2 million to unvested RSA holders.

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis