GROUP 1 AUTOMOTIVE INC 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, should be read in conjunction with the accompanying unaudited Condensed Consolidated Financial Statements and the notes thereto, as well as our 2021 Form 10-K. Unless the context requires otherwise, references to “we,” “us” and “our” are intended to mean the business and operations of Group 1 Automotive, Inc. and its subsidiaries. Overview We are a leading operator in the automotive retail industry. Through our omni-channel platform, we sell new and used cars and light trucks; arrange related vehicle financing; sell service and insurance contracts; provide automotive maintenance and repair services; and sell vehicle parts. We operate in geographically diverse markets that extend across 17 states in the U.S. and 35 towns and cities in the U.K. As of September 30, 2022, our retail network consisted of 148 dealerships in the U.S. and 55 dealerships in the U.K. On November 12, 2021, we entered into a Share Purchase Agreement (the “Brazil Agreement”) with Original Holdings S.A. (“Buyer”). Pursuant to the terms and conditions set forth in the Brazil Agreement, Buyer agreed to acquire 100% of the issued and outstanding equity interests of our Brazilian operations (the “Brazil Disposal Group”) for approximately BRL 510 million in cash (the “Brazil Disposal”). The Brazil Disposal Group met the criteria to be reported as discontinued operations. Therefore, the related assets, liabilities and operating results of the Brazil Disposal Group are reported as discontinued operations (the “Brazil Discontinued Operations”) for all periods presented. On July 1, 2022, we completed the Brazil Disposal. Refer to Note 4. Discontinued Operations and Other Divestitures within our Notes to Condensed Consolidated Financial Statements, for additional information. Recent Events 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”). The ongoing Russia and Ukraine Conflict has provoked strong reactions from the U.S., the U.K., the European Union and various other countries around the world, including the imposition of broad financial and economic sanctions against Russia. While the length, impact and outcome of the ongoing military conflict and these sanctions on the Russian and global economies remain uncertain, they have already resulted in significant volatility in financial markets, an increase in energy and commodity prices globally and further disruption of the global supply chain for certain raw materials and manufactured goods, including vehicle parts. The Russia and Ukraine Conflict and other geopolitical conflicts, as well as related international responses, have exacerbated inflationary pressures, including causing increases in the prices for goods and services and global supply chain disruptions, which have resulted and may continue to result in shortages in materials and services. Such shortages have resulted and may continue to result in inflationary cost increases for labor, fuel, materials and services, and could continue to cause costs to increase as well as result in the scarcity of certain materials. 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, 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 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. 23 Table of Contents 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 For discussion of our critical accounting policies and accounting estimates, refer to Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2021 Form 10-K. There have been no material changes to our critical accounting policies or accounting estimates since December 31, 2021. Results of Operations The “same store” amounts presented below include the results of dealerships and corporate headquarters for the identical months in each comparative period, commencing with the first full month in which we owned the dealership. Amounts related to divestitures are excluded from each comparative period, ending with the last full month in which we owned the dealership. Same store results provide a measurement of our ability to grow revenues and profitability of our existing stores and also provide a metric for peer group comparisons. For these reasons, same store results allow management to manage and monitor the performance of the business and is also useful to investors. We evaluate our results of operations on both an as reported and a constant currency basis. The constant currency presentation, which is a non-GAAP measure, excludes the impact of fluctuations in foreign currency exchange rates. We believe providing constant currency information provides valuable supplemental information regarding our underlying business and results of operations, consistent with how we evaluate our performance. We calculate constant currency percentages by converting our current period reported results for entities reporting in currencies other than USD using comparative period exchange rates rather than the actual exchange rates in effect during the respective periods. The constant currency performance measures should not be considered a substitute for, or superior to, the measures of financial performance prepared in accordance with U.S. GAAP. Additionally, we caution investors not to place undue reliance on non-GAAP measures, but also to consider them with the most directly comparable U.S. GAAP measures. Our management also uses constant currency and adjusted cash flows from operating, investing and financing activities in conjunction with U.S. GAAP financial measures to assess our business, including communication with our Board of Directors, investors and industry analysts concerning financial performance. We disclose these non-GAAP measures and the related reconciliations because we believe investors use these metrics in evaluating longer-term period-over-period performance. These metrics also allow investors to better understand and evaluate the information used by management to assess operating performance. Certain amounts in the financial statements may not compute due to rounding. All computations have been calculated using unrounded amounts for all periods presented. 24 Table of Contents The following tables summarize our operating results on a reported basis and on a same store basis: Reported Operating Data — Consolidated (In millions, except unit data) Three Months Ended September 30, 2022 2021 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change Revenues: New vehicle retail sales $ 1,883.3 $ 1,513.9 $ 369.5 24.4 % $ (53.8) 28.0 % Used vehicle retail sales 1,488.6 1,230.4 258.3 21.0 % (47.3) 24.8 % Used vehicle wholesale sales 89.6 106.0 (16.5) (15.5) % (4.9) (11.0) % Total used 1,578.2 1,336.4 241.8 18.1 % (52.2) 22.0 % Parts and service sales 515.6 416.5 99.1 23.8 % (10.7) 26.4 % F&I, net 186.3 146.0 40.3 27.6 % (2.8) 29.5 % Total revenues $ 4,163.4 $ 3,412.8 $ 750.6 22.0 % $ (119.5) 25.5 % Gross profit: New vehicle retail sales $ 206.7 $ 161.5 $ 45.2 28.0 % $ (4.9) 31.0 % Used vehicle retail sales 76.1 97.0 (21.0) (21.6) % (2.7) (18.9) % Used vehicle wholesale sales (1.5) 7.4 (8.9) (120.8) % — (121.4) % Total used 74.5 104.4 (29.9) (28.6) % (2.6) (26.1) % Parts and service sales 285.1 226.8 58.4 25.7 % (6.3) 28.5 % F&I, net 186.3 146.0 40.3 27.6 % (2.8) 29.5 % Total gross profit $ 752.6 $ 638.7 $ 113.9 17.8 % $ (16.6) 20.4 % Gross margin: New vehicle retail sales 11.0 % 10.7 % 0.3 % Used vehicle retail sales 5.1 % 7.9 % (2.8) % Used vehicle wholesale sales (1.7) % 7.0 % (8.7) % Total used 4.7 % 7.8 % (3.1) % Parts and service sales 55.3 % 54.4 % 0.9 % Total gross margin 18.1 % 18.7 % (0.6) % Units sold: Retail new vehicles sold 39,237 33,365 5,872 17.6 % Retail used vehicles sold 48,427 42,514 5,913 13.9 % Wholesale used vehicles sold 9,456 10,960 (1,504) (13.7) % Total used 57,883 53,474 4,409 8.2 % Average sales price per unit sold: New vehicle retail $ 47,999 $ 45,373 $ 2,626 5.8 % $ (1,370) 8.8 % Used vehicle retail $ 30,740 $ 28,941 $ 1,799 6.2 % $ (977) 9.6 % Gross profit per unit sold: New vehicle retail sales $ 5,267 $ 4,840 $ 427 8.8 % $ (125) 11.4 % Used vehicle retail sales $ 1,571 $ 2,282 $ (712) (31.2) % $ (55) (28.8) % Used vehicle wholesale sales $ (162) $ 673 $ (835) (124.1) % $ 5 (124.8) % Total used $ 1,288 $ 1,953 $ (665) (34.1) % $ (45) (31.7) % F&I PRU $ 2,125 $ 1,925 $ 201 10.4 % $ (32) 12.1 % Other: SG&A expenses $ 450.9 $ 376.3 $ 74.7 19.8 % $ (11.3) 22.9 % SG&A as % gross profit 59.9 % 58.9 % 1.0 % Floorplan expense: Floorplan interest expense $ 6.5 $ 4.3 $ 2.2 50.1 % $ (0.2) 55.1 % Less: floorplan assistance (1) 13.9 12.2 1.8 14.4 % — 14.4 % Net floorplan expense $ (7.4) $ (7.8) $ 0.4 $ (0.2) (1) Floorplan assistance is included within Gross profit — New vehicle retail sales above and Cost of sales — New vehicle retail sales in our Condensed Consolidated Statements of Operations. 25 Table of Contents Same Store Operating Data — Consolidated (In millions, except unit data) Three Months Ended September 30, 2022 2021 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change Revenues: New vehicle retail sales $ 1,534.6 $ 1,487.1 $ 47.5 3.2 % $ (52.8) 6.7 % Used vehicle retail sales 1,271.4 1,213.6 57.8 4.8 % (46.8) 8.6 % Used vehicle wholesale sales 76.5 104.6 (28.2) (26.9) % (4.8) (22.3) % Total used 1,347.9 1,318.3 29.6 2.2 % (51.6) 6.2 % Parts and service sales 438.8 408.6 30.2 7.4 % (10.1) 9.9 % F&I, net 155.6 143.0 12.6 8.8 % (2.8) 10.8 % Total revenues $ 3,476.9 $ 3,357.0 $ 119.9 3.6 % $ (117.4) 7.1 % Gross profit: New vehicle retail sales $ 163.7 $ 158.1 $ 5.6 3.6 % $ (4.8) 6.6 % Used vehicle retail sales 64.0 96.3 (32.2) (33.5) % (2.6) (30.8) % Used vehicle wholesale sales (1.2) 7.3 (8.5) (115.9) % — (116.5) % Total used 62.9 103.6 (40.7) (39.3) % (2.6) (36.9) % Parts and service sales 239.0 222.1 16.8 7.6 % (6.0) 10.3 % F&I, net 155.6 143.0 12.6 8.8 % (2.8) 10.8 % Total gross profit $ 621.2 $ 626.9 $ (5.7) (0.9) % $ (16.2) 1.7 % Gross margin: New vehicle retail sales 10.7 % 10.6 % — % Used vehicle retail sales 5.0 % 7.9 % (2.9) % Used vehicle wholesale sales (1.5) % 7.0 % (8.5) % Total used 4.7 % 7.9 % (3.2) % Parts and service sales 54.5 % 54.4 % 0.1 % Total gross margin 17.9 % 18.7 % (0.8) % Units sold: Retail new vehicles sold 32,249 32,734 (485) (1.5) % Retail used vehicles sold 41,684 41,866 (182) (0.4) % Wholesale used vehicles sold 7,911 10,755 (2,844) (26.4) % Total used 49,595 52,621 (3,026) (5.8) % Average sales price per unit sold: New vehicle retail $ 47,586 $ 45,431 $ 2,155 4.7 % $ (1,638) 8.3 % Used vehicle retail $ 30,502 $ 28,988 $ 1,513 5.2 % $ (1,122) 9.1 % Gross profit per unit sold: New vehicle retail sales $ 5,078 $ 4,831 $ 247 5.1 % $ (149) 8.2 % Used vehicle retail sales $ 1,536 $ 2,299 $ (764) (33.2) % $ (62) (30.5) % Used vehicle wholesale sales $ (147) $ 682 $ (829) (121.6) % $ 6 (122.4) % Total used $ 1,267 $ 1,969 $ (702) (35.6) % $ (52) (33.0) % F&I PRU $ 2,105 $ 1,917 $ 188 9.8 % $ (38) 11.8 % Other: SG&A expenses $ 386.3 $ 368.4 $ 17.9 4.9 % $ (11.1) 7.9 % SG&A as % gross profit 62.2 % 58.8 % 3.4 % 26 Table of Contents Reported Operating Data — Consolidated (In millions, except unit data) Nine Months Ended September 30, 2022 2021 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change Revenues: New vehicle retail sales $ 5,479.8 $ 4,828.6 $ 651.1 13.5 % $ (97.6) 15.5 % Used vehicle retail sales 4,353.9 3,302.3 1,051.7 31.8 % (91.5) 34.6 % Used vehicle wholesale sales 278.9 278.0 0.9 0.3 % (10.0) 3.9 % Total used 4,632.8 3,580.3 1,052.5 29.4 % (101.4) 32.2 % Parts and service sales 1,491.1 1,152.2 338.9 29.4 % (19.0) 31.1 % F&I, net 549.5 431.3 118.2 27.4 % (5.4) 28.7 % Total revenues $ 12,153.1 $ 9,992.3 $ 2,160.8 21.6 % $ (223.4) 23.9 % Gross profit: New vehicle retail sales $ 618.2 $ 417.2 $ 201.0 48.2 % $ (9.0) 50.3 % Used vehicle retail sales 253.4 263.7 (10.3) (3.9) % (5.0) (2.0) % Used vehicle wholesale sales 2.1 20.1 (18.0) (89.7) % 0.2 (90.6) % Total used 255.5 283.7 (28.3) (10.0) % (4.8) (8.3) % Parts and service sales 822.6 637.2 185.4 29.1 % (11.3) 30.9 % F&I, net 549.5 431.3 118.2 27.4 % (5.4) 28.7 % Total gross profit $ 2,245.8 $ 1,769.5 $ 476.3 26.9 % $ (30.6) 28.6 % Gross margin: New vehicle retail sales 11.3 % 8.6 % 2.6 % Used vehicle retail sales 5.8 % 8.0 % (2.2) % Used vehicle wholesale sales 0.7 % 7.2 % (6.5) % Total used 5.5 % 7.9 % (2.4) % Parts and service sales 55.2 % 55.3 % (0.1) % Total gross margin 18.5 % 17.7 % 0.8 % Units sold: Retail new vehicles sold 114,792 110,499 4,293 3.9 % Retail used vehicles sold 141,140 124,559 16,581 13.3 % Wholesale used vehicles sold 28,069 31,268 (3,199) (10.2) % Total used 169,209 155,827 13,382 8.6 % Average sales price per unit sold: New vehicle retail $ 47,736 $ 43,698 $ 4,038 9.2 % $ (850) 11.2 % Used vehicle retail $ 30,848 $ 26,512 $ 4,337 16.4 % $ (648) 18.8 % Gross profit per unit sold: New vehicle retail sales $ 5,385 $ 3,776 $ 1,609 42.6 % $ (79) 44.7 % Used vehicle retail sales $ 1,795 $ 2,117 $ (322) (15.2) % $ (35) (13.5) % Used vehicle wholesale sales $ 73 $ 642 $ (568) (88.6) % $ 6 (89.5) % Total used $ 1,510 $ 1,821 $ (311) (17.1) % $ (29) (15.5) % F&I PRU $ 2,147 $ 1,835 $ 312 17.0 % $ (21) 18.2 % Other: SG&A expenses $ 1,329.6 $ 1,056.2 $ 273.3 25.9 % $ (20.6) 27.8 % SG&A as % gross profit 59.2 % 59.7 % (0.5) % Floorplan expense: Floorplan interest expense $ 17.7 $ 20.5 $ (2.8) (13.7) % $ (0.4) (11.7) % Less: floorplan assistance (1) 42.1 40.6 1.5 3.6 % — 3.6 % Net floorplan expense $ (24.4) $ (20.1) $ (4.3) $ (0.4) (1) Floorplan assistance is included within Gross Profit — New vehicle retail sales above and Cost of Sales — New vehicle retail sales in our Condensed Consolidated Statements of Operations. 27 Table of Contents Same Store Operating Data — Consolidated (In millions, except unit data) Nine Months Ended September 30, 2022 2021 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change Revenues: New vehicle retail sales $ 4,468.0 $ 4,759.1 $ (291.2) (6.1) % $ (93.3) (4.2) % Used vehicle retail sales 3,701.3 3,262.1 439.2 13.5 % (86.0) 16.1 % Used vehicle wholesale sales 234.9 275.0 (40.1) (14.6) % (9.5) (11.1) % Total used 3,936.2 3,537.1 399.1 11.3 % (95.5) 14.0 % Parts and service sales 1,271.6 1,132.4 139.2 12.3 % (17.5) 13.8 % F&I, net 462.2 424.3 37.8 8.9 % (5.2) 10.1 % Total revenues $ 10,137.8 $ 9,852.9 $ 284.9 2.9 % $ (211.5) 5.0 % Gross profit: New vehicle retail sales $ 493.9 $ 410.4 $ 83.6 20.4 % $ (8.6) 22.5 % Used vehicle retail sales 212.9 261.2 (48.3) (18.5) % (4.7) (16.7) % Used vehicle wholesale sales 1.0 19.9 (18.9) (94.9) % 0.2 (95.7) % Total used 213.9 281.1 (67.2) (23.9) % (4.5) (22.3) % Parts and service sales 688.9 625.8 63.1 10.1 % (10.6) 11.8 % F&I, net 462.2 424.3 37.8 8.9 % (5.2) 10.1 % Total gross profit $ 1,858.9 $ 1,741.6 $ 117.3 6.7 % $ (28.9) 8.4 % Gross margin: New vehicle retail sales 11.1 % 8.6 % 2.4 % Used vehicle retail sales 5.8 % 8.0 % (2.3) % Used vehicle wholesale sales 0.4 % 7.2 % (6.8) % Total used 5.4 % 7.9 % (2.5) % Parts and service sales 54.2 % 55.3 % (1.1) % Total gross margin 18.3 % 17.7 % 0.7 % Units sold: Retail new vehicles sold 93,713 108,897 (15,184) (13.9) % Retail used vehicles sold 120,077 122,933 (2,856) (2.3) % Wholesale used vehicles sold 22,885 30,827 (7,942) (25.8) % Total used 142,962 153,760 (10,798) (7.0) % Average sales price per unit sold: New vehicle retail $ 47,677 $ 43,703 $ 3,974 9.1 % $ (995) 11.4 % Used vehicle retail $ 30,824 $ 26,535 $ 4,289 16.2 % $ (716) 18.9 % Gross profit per unit sold: New vehicle retail sales $ 5,271 $ 3,769 $ 1,502 39.9 % $ (92) 42.3 % Used vehicle retail sales $ 1,773 $ 2,124 $ (352) (16.6) % $ (39) (14.7) % Used vehicle wholesale sales $ 44 $ 646 $ (601) (93.1) % $ 7 (94.2) % Total used $ 1,496 $ 1,828 $ (332) (18.2) % $ (32) (16.4) % F&I PRU $ 2,162 $ 1,830 $ 331 18.1 % $ (24) 19.4 % Other: SG&A expenses $ 1,133.4 $ 1,038.2 $ 95.2 9.2 % $ (19.5) 11.0 % SG&A as % gross profit 61.0 % 59.6 % 1.4 % 28 Table of Contents Reported Operating Data — U.S. (In millions, except unit data) Three Months Ended September 30, 2022 2021 Increase/(Decrease) % Change Revenues: New vehicle retail sales $ 1,586.9 $ 1,208.5 $ 378.4 31.3 % Used vehicle retail sales 1,212.1 902.3 309.8 34.3 % Used vehicle wholesale sales 61.3 68.0 (6.7) (9.8) % Total used 1,273.4 970.3 303.1 31.2 % Parts and service sales 453.8 353.1 100.7 28.5 % F&I, net 170.2 130.5 39.8 30.5 % Total revenues $ 3,484.3 $ 2,662.4 $ 821.9 30.9 % Gross profit: New vehicle retail sales $ 180.7 $ 140.0 $ 40.7 29.1 % Used vehicle retail sales 60.6 73.1 (12.5) (17.1) % Used vehicle wholesale sales (1.3) 3.2 (4.5) (139.3) % Total used 59.3 76.3 (17.0) (22.2) % Parts and service sales 249.0 188.2 60.7 32.3 % F&I, net 170.2 130.5 39.8 30.5 % Total gross profit $ 659.3 $ 535.0 $ 124.3 23.2 % Gross margin: New vehicle retail sales 11.4 % 11.6 % (0.2) % Used vehicle retail sales 5.0 % 8.1 % (3.1) % Used vehicle wholesale sales (2.1) % 4.8 % (6.8) % Total used 4.7 % 7.9 % (3.2) % Parts and service sales 54.9 % 53.3 % 1.6 % Total gross margin 18.9 % 20.1 % (1.2) % Units sold: Retail new vehicles sold 31,745 25,984 5,761 22.2 % Retail used vehicles sold 38,172 31,704 6,468 20.4 % Wholesale used vehicles sold 6,453 6,758 (305) (4.5) % Total used 44,625 38,462 6,163 16.0 % Average sales price per unit sold: New vehicle retail $ 49,990 $ 46,510 $ 3,480 7.5 % Used vehicle retail $ 31,754 $ 28,461 $ 3,293 11.6 % Gross profit per unit sold: New vehicle retail sales $ 5,693 $ 5,388 $ 304 5.7 % Used vehicle retail sales $ 1,588 $ 2,305 $ (717) (31.1) % Used vehicle wholesale sales $ (197) $ 478 $ (675) (141.2) % Total used $ 1,330 $ 1,984 $ (654) (33.0) % F&I PRU $ 2,435 $ 2,261 $ 174 7.7 % Other: SG&A expenses $ 385.8 $ 308.7 $ 77.1 25.0 % SG&A as % gross profit 58.5 % 57.7 % 0.8 % 29 Table of Contents Same Store Operating Data — U.S. (In millions, except unit data) Three Months Ended September 30, 2022 2021 Increase/(Decrease) % Change Revenues: New vehicle retail sales $ 1,242.6 $ 1,181.8 $ 60.8 5.1 % Used vehicle retail sales 997.2 885.6 111.6 12.6 % Used vehicle wholesale sales 48.4 66.6 (18.2) (27.3) % Total used 1,045.6 952.2 93.4 9.8 % Parts and service sales 380.2 348.0 32.1 9.2 % F&I, net 139.6 127.4 12.2 9.6 % Total revenues $ 2,808.0 $ 2,609.4 $ 198.6 7.6 % Gross profit: New vehicle retail sales $ 138.2 $ 136.7 $ 1.6 1.2 % Used vehicle retail sales 48.8 72.3 (23.5) (32.5) % Used vehicle wholesale sales (0.9) 3.2 (4.1) (128.4) % Total used 47.9 75.5 (27.6) (36.6) % Parts and service sales 204.1 184.9 19.2 10.4 % F&I, net 139.6 127.4 12.2 9.6 % Total gross profit $ 529.9 $ 524.5 $ 5.4 1.0 % Gross margin: New vehicle retail sales 11.1 % 11.6 % (0.4) % Used vehicle retail sales 4.9 % 8.2 % (3.3) % Used vehicle wholesale sales (1.9) % 4.8 % (6.7) % Total used 4.6 % 7.9 % (3.3) % Parts and service sales 53.7 % 53.1 % 0.6 % Total gross margin 18.9 % 20.1 % (1.2) % Units sold: Retail new vehicles sold 24,854 25,353 (499) (2.0) % Retail used vehicles sold 31,518 31,056 462 1.5 % Wholesale used vehicles sold 4,925 6,553 (1,628) (24.8) % Total used 36,443 37,609 (1,166) (3.1) % Average sales price per unit sold: New vehicle retail $ 49,996 $ 46,613 $ 3,383 7.3 % Used vehicle retail $ 31,640 $ 28,516 $ 3,124 11.0 % Gross profit per unit sold: New vehicle retail sales $ 5,562 $ 5,390 $ 172 3.2 % Used vehicle retail sales $ 1,549 $ 2,329 $ (780) (33.5) % Used vehicle wholesale sales $ (184) $ 486 $ (670) (137.8) % Total used $ 1,315 $ 2,008 $ (693) (34.5) % F&I PRU $ 2,477 $ 2,259 $ 218 9.7 % Other: SG&A expenses $ 322.7 $ 302.0 $ 20.7 6.9 % SG&A as % gross profit 60.9 % 57.6 % 3.3 % 30 Table of Contents U.S. Region — Three Months Ended September 30, 2022 Compared to 2021 The following discussion of our U.S. operating results is on an as reported and same store basis. The difference between as reported amounts and same store amounts is related to acquisition and disposition activity, as well as new add-point openings. Revenues Total revenues in the U.S. during the Current Quarter increased $821.9 million, or 30.9%, as compared to the Prior Year Quarter. 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 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 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. Gross Profit Total gross profit in the U.S. 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 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 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. 31 Table of Contents SG&A Expenses 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. during the Current Quarter increased $77.1 million, or 25.0%, as compared to the Prior Year Quarter, primarily driven by the acquisition of stores. Total same store SG&A expenses in the U.S. during the Current Quarter, increased $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. 32 Table of Contents Reported Operating Data — U.S. (In millions, except unit data) Nine Months Ended September 30, 2022 2021 Increase/(Decrease) % Change Revenues: New vehicle retail sales $ 4,581.8 $ 3,958.9 $ 622.9 15.7 % Used vehicle retail sales 3,447.6 2,481.7 965.9 38.9 % Used vehicle wholesale sales 177.6 179.6 (1.9) (1.1) % Total used 3,625.3 2,661.3 963.9 36.2 % Parts and service sales 1,307.7 982.0 325.7 33.2 % F&I, net 498.1 389.4 108.7 27.9 % Total revenues $ 10,012.8 $ 7,991.6 $ 2,021.2 25.3 % Gross profit: New vehicle retail sales $ 538.5 $ 362.6 $ 175.9 48.5 % Used vehicle retail sales 203.0 210.7 (7.8) (3.7) % Used vehicle wholesale sales 3.8 13.6 (9.7) (71.7) % Total used 206.8 224.3 (17.5) (7.8) % Parts and service sales 713.1 535.1 178.0 33.3 % F&I, net 498.1 389.4 108.7 27.9 % Total gross profit $ 1,956.5 $ 1,511.4 $ 445.1 29.5 % Gross margin: New vehicle retail sales 11.8 % 9.2 % 2.6 % Used vehicle retail sales 5.9 % 8.5 % (2.6) % Used vehicle wholesale sales 2.2 % 7.6 % (5.4) % Total used 5.7 % 8.4 % (2.7) % Parts and service sales 54.5 % 54.5 % — % Total gross margin 19.5 % 18.9 % 0.6 % Units sold: Retail new vehicles sold 92,870 89,183 3,687 4.1 % Retail used vehicles sold 110,635 96,143 14,492 15.1 % Wholesale used vehicles sold 18,513 19,804 (1,291) (6.5) % Total used 129,148 115,947 13,201 11.4 % Average sales price per unit sold: New vehicle retail $ 49,335 $ 44,391 $ 4,945 11.1 % Used vehicle retail $ 31,162 $ 25,813 $ 5,349 20.7 % Gross profit per unit sold: New vehicle retail sales $ 5,799 $ 4,066 $ 1,733 42.6 % Used vehicle retail sales $ 1,834 $ 2,192 $ (357) (16.3) % Used vehicle wholesale sales $ 207 $ 685 $ (478) (69.8) % Total used $ 1,601 $ 1,934 $ (333) (17.2) % F&I PRU $ 2,448 $ 2,101 $ 346 16.5 % Other: SG&A expenses $ 1,133.0 $ 883.0 $ 250.1 28.3 % SG&A as % gross profit 57.9 % 58.4 % (0.5) % 33 Table of Contents Same Store Operating Data — U.S. (In millions, except unit data) Nine Months Ended September 30, 2022 2021 Increase/(Decrease) % Change Revenues: New vehicle retail sales $ 3,623.5 $ 3,889.8 $ (266.3) (6.8) % Used vehicle retail sales 2,869.8 2,442.5 427.3 17.5 % Used vehicle wholesale sales 139.9 176.7 (36.8) (20.8) % Total used 3,009.7 2,619.2 390.5 14.9 % Parts and service sales 1,104.8 970.4 134.4 13.9 % F&I, net 413.6 382.5 31.1 8.1 % Total revenues $ 8,151.7 $ 7,861.9 $ 289.7 3.7 % Gross profit: New vehicle retail sales $ 419.5 $ 355.8 $ 63.7 17.9 % Used vehicle retail sales 166.9 208.3 (41.3) (19.9) % Used vehicle wholesale sales 2.6 13.3 (10.8) (80.7) % Total used 169.5 221.6 (52.1) (23.5) % Parts and service sales 589.0 527.5 61.4 11.6 % F&I, net 413.6 382.5 31.1 8.1 % Total gross profit $ 1,591.5 $ 1,487.4 $ 104.1 7.0 % Gross margin: New vehicle retail sales 11.6 % 9.1 % 2.4 % Used vehicle retail sales 5.8 % 8.5 % (2.7) % Used vehicle wholesale sales 1.8 % 7.6 % (5.7) % Total used 5.6 % 8.5 % (2.8) % Parts and service sales 53.3 % 54.4 % (1.1) % Total gross margin 19.5 % 18.9 % 0.6 % Units sold: Retail new vehicles sold 73,307 87,597 (14,290) (16.3) % Retail used vehicles sold 92,490 94,574 (2,084) (2.2) % Wholesale used vehicles sold 14,104 19,388 (5,284) (27.3) % Total used 106,594 113,962 (7,368) (6.5) % Average sales price per unit sold: New vehicle retail $ 49,429 $ 44,406 $ 5,024 11.3 % Used vehicle retail $ 31,029 $ 25,826 $ 5,202 20.1 % Gross profit per unit sold: New vehicle retail sales $ 5,722 $ 4,062 $ 1,660 40.9 % Used vehicle retail sales $ 1,805 $ 2,202 $ (397) (18.0) % Used vehicle wholesale sales $ 182 $ 688 $ (506) (73.5) % Total used $ 1,590 $ 1,945 $ (355) (18.2) % F&I PRU $ 2,495 $ 2,100 $ 395 18.8 % Other: SG&A expenses $ 949.8 $ 869.0 $ 80.8 9.3 % SG&A as % gross profit 59.7 % 58.4 % 1.3 % 34 Table of Contents U.S. Region — Nine Months Ended September 30, 2022 Compared to 2021 The following discussion of our U.S. operating results is on an as reported and same store basis. The difference between as reported amounts and same store amounts is related to acquisition and disposition activity, as well as new add-point openings. Revenues Total revenues in the U.S. during the Current Year increased $2.0 billion, or 25.3%, as compared to the same period in 2021 (“Prior Year”), primarily driven by the acquisition of stores. Total same store revenues in the U.S. during the Current Year increased $289.7 million, or 3.7%, as compared to the Prior Year. 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 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. 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 from fewer same store new and used vehicle unit sales. Gross Profit Total gross profit in the U.S. 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 $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. 35 Table of Contents Total same store gross margin increased 60 basis points, primarily driven by higher new vehicle retail sales prices outpacing new vehicle costs of sales. This increase was partially offset by a decrease in same store used vehicle gross margin, driven by inflationary impacts on our used vehicle customers and the ongoing new vehicle supply shortage increasing acquisition costs for used vehicles, as well as a decrease in same store parts and service gross margin primarily due to increased labor costs. SG&A Expenses SG&A as a percentage of gross profit declined 51 basis points and increased 126 basis points on an as reported and same store basis, respectively, compared to the Prior Year. The increase in SG&A as a percentage of gross profit on a same store basis was partially driven by the decline in used vehicle same store gross profit described above as well as the following factors impacting total SG&A. Total SG&A expenses in the U.S. during the Current Year increased $250.1 million, or 28.3%, as compared to the Prior Year, primarily driven by the acquisition of stores. Total same store SG&A expenses in the U.S. during the Current Year increased $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. 36 Table of Contents Reported Operating Data — U.K. (In millions, except unit data) Three Months Ended September 30, 2022 2021 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change Revenues: New vehicle retail sales $ 296.4 $ 305.4 $ (9.0) (2.9) % $ (53.8) 14.7 % Used vehicle retail sales 276.5 328.0 (51.5) (15.7) % (47.3) (1.3) % Used vehicle wholesale sales 28.3 38.1 (9.8) (25.7) % (4.9) (12.9) % Total used 304.8 366.1 (61.3) (16.7) % (52.2) (2.5) % Parts and service sales 61.8 63.4 (1.5) (2.4) % (10.7) 14.5 % F&I, net 16.1 15.6 0.5 3.1 % (2.8) 21.1 % Total revenues $ 679.1 $ 750.4 $ (71.3) (9.5) % $ (119.5) 6.4 % Gross profit: New vehicle retail sales $ 25.9 $ 21.5 $ 4.5 20.8 % $ (4.9) 43.7 % Used vehicle retail sales 15.5 23.9 (8.5) (35.5) % (2.7) (24.4) % Used vehicle wholesale sales (0.3) 4.1 (4.4) (106.3) % — (107.4) % Total used 15.2 28.1 (12.9) (45.9) % (2.6) (36.6) % Parts and service sales 36.1 38.5 (2.4) (6.2) % (6.3) 10.1 % F&I, net 16.1 15.6 0.5 3.1 % (2.8) 21.1 % Total gross profit $ 93.3 $ 103.7 $ (10.3) (10.0) % $ (16.6) 6.0 % Gross margin: New vehicle retail sales 8.8 % 7.0 % 1.7 % Used vehicle retail sales 5.6 % 7.3 % (1.7) % Used vehicle wholesale sales (0.9) % 10.9 % (11.8) % Total used 5.0 % 7.7 % (2.7) % Parts and service sales 58.4 % 60.8 % (2.4) % Total gross margin 13.7 % 13.8 % (0.1) % Units sold: Retail new vehicles sold 7,492 7,381 111 1.5 % Retail used vehicles sold 10,255 10,810 (555) (5.1) % Wholesale used vehicles sold 3,003 4,202 (1,199) (28.5) % Total used 13,258 15,012 (1,754) (11.7) % Average sales price per unit sold: New vehicle retail $ 39,563 $ 41,370 $ (1,808) (4.4) % $ (7,177) 13.0 % Used vehicle retail $ 26,967 $ 30,346 $ (3,380) (11.1) % $ (4,611) 4.1 % Gross profit per unit sold: New vehicle retail sales $ 3,464 $ 2,910 $ 554 19.0 % $ (655) 41.6 % Used vehicle retail sales $ 1,507 $ 2,215 $ (709) (32.0) % $ (259) (20.3) % 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) % F&I PRU $ 905 $ 857 $ 49 5.7 % $ (158) 24.1 % Other: SG&A expenses $ 65.1 $ 67.6 $ (2.5) (3.6) % $ (11.3) 13.1 % SG&A as % gross profit 69.8 % 65.2 % 4.6 % 37 Table of Contents Same Store Operating Data — U.K. (In millions, except unit data) Three Months Ended September 30, 2022 2021 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change Revenues: New vehicle retail sales $ 292.0 $ 305.4 $ (13.4) (4.4) % $ (52.8) 12.9 % Used vehicle retail sales 274.2 328.0 (53.8) (16.4) % (46.8) (2.2) % Used vehicle wholesale sales 28.1 38.1 (10.0) (26.2) % (4.8) (13.5) % Total used 302.3 366.1 (63.8) (17.4) % (51.6) (3.3) % Parts and service sales 58.7 60.5 (1.9) (3.1) % (10.1) 13.6 % F&I, net 16.0 15.6 0.4 2.5 % (2.8) 20.4 % Total revenues $ 668.9 $ 747.6 $ (78.7) (10.5) % $ (117.4) 5.2 % Gross profit: New vehicle retail sales $ 25.5 $ 21.5 $ 4.0 18.7 % $ (4.8) 41.1 % Used vehicle retail sales 15.2 23.9 (8.7) (36.5) % (2.6) (25.6) % Used vehicle wholesale sales (0.3) 4.1 (4.4) (106.3) % — (107.3) % Total used 14.9 28.1 (13.1) (46.8) % (2.6) (37.7) % Parts and service sales 34.8 37.2 (2.4) (6.4) % (6.0) 9.8 % F&I, net 16.0 15.6 0.4 2.5 % (2.8) 20.4 % Total gross profit $ 91.2 $ 102.4 $ (11.1) (10.9) % $ (16.2) 5.0 % Gross margin: New vehicle retail sales 8.7 % 7.0 % 1.7 % Used vehicle retail sales 5.5 % 7.3 % (1.8) % Used vehicle wholesale sales (0.9) % 10.9 % (11.8) % Total used 4.9 % 7.7 % (2.7) % Parts and service sales 59.4 % 61.5 % (2.1) % Total gross margin 13.6 % 13.7 % (0.1) % Units sold: Retail new vehicles sold 7,395 7,381 14 0.2 % Retail used vehicles sold 10,166 10,810 (644) (6.0) % Wholesale used vehicles sold 2,986 4,202 (1,216) (28.9) % Total used 13,152 15,012 (1,860) (12.4) % Average sales price per unit sold: New vehicle retail $ 39,485 $ 41,370 $ (1,886) (4.6) % $ (7,141) 12.7 % Used vehicle retail $ 26,972 $ 30,346 $ (3,374) (11.1) % $ (4,602) 4.0 % Gross profit per unit sold: New vehicle retail sales $ 3,448 $ 2,910 $ 539 18.5 % $ (650) 40.9 % Used vehicle retail sales $ 1,496 $ 2,215 $ (719) (32.5) % $ (256) (20.9) % 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) % F&I PRU $ 909 $ 857 $ 53 6.1 % $ (159) 24.7 % Other: SG&A expenses $ 63.6 $ 66.4 $ (2.8) (4.2) % $ (11.1) 12.4 % SG&A as % gross profit 69.7 % 64.9 % 4.8 % 38 Table of Contents U.K. 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. Revenues 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. Gross Profit 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. 39 Table of Contents 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. 40 Table of Contents Reported Operating Data — U.K. (In millions, except unit data) Nine Months Ended September 30, 2022 2021 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change Revenues: New vehicle retail sales $ 898.0 $ 869.7 $ 28.3 3.3 % $ (97.6) 14.5 % Used vehicle retail sales 906.3 820.5 85.8 10.5 % (91.5) 21.6 % Used vehicle wholesale sales 101.2 98.4 2.8 2.8 % (10.0) 12.9 % Total used 1,007.5 919.0 88.6 9.6 % (101.4) 20.7 % Parts and service sales 183.4 170.2 13.2 7.7 % (19.0) 18.9 % F&I, net 51.4 41.9 9.6 22.8 % (5.4) 35.7 % Total revenues $ 2,140.3 $ 2,000.7 $ 139.6 7.0 % $ (223.4) 18.1 % Gross profit: New vehicle retail sales $ 79.6 $ 54.6 $ 25.0 45.8 % $ (9.0) 62.3 % Used vehicle retail sales 50.4 52.9 (2.5) (4.7) % (5.0) 4.7 % 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) % Parts and service sales 109.5 102.1 7.4 7.2 % (11.3) 18.3 % F&I, net 51.4 41.9 9.6 22.8 % (5.4) 35.7 % Total gross profit $ 289.2 $ 258.1 $ 31.2 12.1 % $ (30.6) 23.9 % Gross margin: New vehicle retail sales 8.9 % 6.3 % 2.6 % Used vehicle retail sales 5.6 % 6.5 % (0.9) % Used vehicle wholesale sales (1.7) % 6.6 % (8.4) % Total used 4.8 % 6.5 % (1.6) % Parts and service sales 59.7 % 60.0 % (0.3) % Total gross margin 13.5 % 12.9 % 0.6 % Units sold: Retail new vehicles sold 21,922 21,316 606 2.8 % Retail used vehicles sold 30,505 28,416 2,089 7.4 % Wholesale used vehicles sold 9,556 11,464 (1,908) (16.6) % Total used 40,061 39,880 181 0.5 % Average sales price per unit sold: New vehicle retail $ 40,962 $ 40,800 $ 162 0.4 % $ (4,452) 11.3 % Used vehicle retail $ 29,711 $ 28,876 $ 835 2.9 % $ (2,999) 13.3 % Gross profit per unit sold: New vehicle retail sales $ 3,633 $ 2,563 $ 1,070 41.8 % $ (412) 57.8 % Used vehicle retail sales $ 1,653 $ 1,863 $ (210) (11.3) % $ (164) (2.5) % Used vehicle wholesale sales $ (185) $ 568 $ (753) (132.6) % $ 19 (135.9) % Total used $ 1,215 $ 1,491 $ (276) (18.5) % $ (121) (10.4) % F&I PRU $ 981 $ 842 $ 139 16.5 % $ (103) 28.7 % Other: SG&A expenses $ 196.6 $ 173.3 $ 23.3 13.4 % $ (20.6) 25.3 % SG&A as % gross profit 68.0 % 67.1 % 0.8 % 41 Table of Contents Same Store Operating Data — U.K. (In millions, except unit data) Nine Months Ended September 30, 2022 2021 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change Revenues: New vehicle retail sales $ 844.5 $ 869.3 $ (24.9) (2.9) % $ (93.3) 7.9 % Used vehicle retail sales 831.4 819.6 11.8 1.4 % (86.0) 11.9 % Used vehicle wholesale sales 95.0 98.3 (3.3) (3.3) % (9.5) 6.3 % Total used 926.4 917.9 8.6 0.9 % (95.5) 11.3 % Parts and service sales 166.7 161.9 4.8 3.0 % (17.5) 13.8 % F&I, net 48.5 41.8 6.7 16.0 % (5.2) 28.4 % Total revenues $ 1,986.2 $ 1,991.0 $ (4.8) (0.2) % $ (211.5) 10.4 % Gross profit: New vehicle retail sales $ 74.5 $ 54.6 $ 19.9 36.4 % $ (8.6) 52.2 % Used vehicle retail sales 46.0 52.9 (6.9) (13.1) % (4.7) (4.3) % 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) % Parts and service sales 99.9 98.3 1.6 1.6 % (10.6) 12.4 % F&I, net 48.5 41.8 6.7 16.0 % (5.2) 28.4 % Total gross profit $ 267.4 $ 254.2 $ 13.2 5.2 % $ (28.9) 16.5 % Gross margin: New vehicle retail sales 8.8 % 6.3 % 2.5 % Used vehicle retail sales 5.5 % 6.5 % (0.9) % Used vehicle wholesale sales (1.6) % 6.7 % (8.3) % Total used 4.8 % 6.5 % (1.7) % Parts and service sales 59.9 % 60.7 % (0.8) % Total gross margin 13.5 % 12.8 % 0.7 % Units sold: Retail new vehicles sold 20,406 21,300 (894) (4.2) % Retail used vehicles sold 27,587 28,359 (772) (2.7) % Wholesale used vehicles sold 8,781 11,439 (2,658) (23.2) % Total used 36,368 39,798 (3,430) (8.6) % Average sales price per unit sold: New vehicle retail $ 41,383 $ 40,813 $ 569 1.4 % $ (4,571) 12.6 % Used vehicle retail $ 30,138 $ 28,900 $ 1,238 4.3 % $ (3,118) 15.1 % Gross profit per unit sold: New vehicle retail sales $ 3,650 $ 2,563 $ 1,087 42.4 % $ (422) 58.9 % Used vehicle retail sales $ 1,666 $ 1,865 $ (199) (10.7) % $ (169) (1.6) % Used vehicle wholesale sales $ (177) $ 573 $ (750) (130.9) % $ 18 (133.9) % Total used $ 1,221 $ 1,494 $ (273) (18.3) % $ (124) (9.9) % F&I PRU $ 1,011 $ 842 $ 169 20.1 % $ (108) 32.9 % Other: SG&A expenses $ 183.6 $ 169.2 $ 14.4 8.5 % $ (19.5) 20.0 % SG&A as % gross profit 68.7 % 66.6 % 2.1 % 42 Table of Contents U.K. Region — Nine 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. At the end of 2020, the U.K. experienced a surge in COVID-19 cases, which led to a government-mandated closure of all non-essential businesses beginning January 4, 2021 through April 12, 2021. In mid-April 2021, the COVID-19 restrictions affecting our U.K. dealership showrooms were lifted, and our dealerships were able to reopen. Revenues Total revenues in the U.K. during the Current Year increased $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 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, 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. Gross Profit Total gross profit in the U.K. 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 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. K. 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 increased 82 and 211 basis points on an as reported and same store basis, respectively, compared to the Prior Year. 43 Table of Contents Total SG&A expenses in the U.K. during the Current Year increased $23.3 million, or 13.4%, as compared to the Prior Year, primarily driven by increases in same store SG&A and the acquisition of stores. Total same store SG&A expenses in the U.K. during the Current Year increased $14.4 million, or 8.5%, as compared to the Prior Year. On a constant currency basis, total same store SG&A expenses increased 20.0%. 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 September 30, 2022 2021 Increase/ (Decrease) % Change Depreciation and amortization expense $ 21.8 $ 19.2 $ 2.6 13.5 % Floorplan interest expense $ 6.5 $ 4.3 $ 2.2 50.1 % Other interest expense, net $ 19.6 $ 13.1 $ 6.5 49.9 % Provision for income taxes $ 60.2 $ 51.6 $ 8.6 16.6 % Nine Months Ended September 30, 2022 2021 Increase/ (Decrease) % Change Depreciation and amortization expense $ 65.9 $ 56.8 $ 9.1 16.1 % Floorplan interest expense $ 17.7 $ 20.5 $ (2.8) (13.7) % Other interest expense, net $ 55.5 $ 39.8 $ 15.7 39.5 % Provision for income taxes $ 182.1 $ 132.2 $ 50.0 37.8 % Depreciation and Amortization Expense Total depreciation and amortization expense for both the Current Quarter and Current Year, was higher compared to the Prior Year Quarter and Prior Year, primarily attributable to acquired property and equipment in our U.S. region, as we continue to strategically add dealership related real estate to our investment portfolio and make improvements to our existing facilities intended to enhance the profitability of our dealerships and the overall customer experience. Floorplan Interest Expense 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. 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. 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. 44 Table of Contents Other Interest Expense, Net 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. 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. Debt within our Notes to Condensed Consolidated Financial Statements for additional discussion of our debt. Provision for Income Taxes 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 $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 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. Liquidity and Capital Resources Our liquidity and capital resources are primarily derived from cash on hand, cash temporarily invested as a pay down of our U.S. Floorplan Line and FMCC Facility levels (refer to Note 10. Floorplan Notes Payable in our Notes to Condensed Consolidated Financial Statements for additional information), cash from operations, borrowings under our credit facilities, working capital, dealership and real estate acquisition financing and proceeds from debt and equity offerings. We anticipate we will generate sufficient cash flows from operations, coupled with cash on hand and available borrowing capacity under our credit facilities, to fund our working capital requirements, service our debt and meet any other recurring operating expenditures. Available Liquidity Resources We had the following sources of liquidity available (in millions): September 30, 2022 Cash and cash equivalents $ 20.5 Floorplan offset accounts 218.5 Available capacity under Acquisition Line 551.2 Total liquidity $ 790.3 Cash Flows We arrange our new and used vehicle inventory floorplan financing through lenders affiliated with our vehicle manufacturers and our Revolving Credit Facility (as defined in Note 10. Floorplan Notes Payable in the Notes to Condensed Consolidated Financial Statements). In accordance with U.S. GAAP, we report floorplan financed with lenders affiliated with our vehicle manufacturers (excluding the cash flows from or to manufacturer-affiliated lenders participating in our syndicated lending group) within Cash Flows from Operating Activities in the Condensed Consolidated Statements of Cash Flows. We report floorplan financed with the Revolving Credit Facility (including the cash flows from or to manufacturer-affiliated lenders participating in the facility) and other credit facilities in the U.K. unaffiliated with our manufacturer partners, within Cash Flows from Financing Activities in the Condensed Consolidated Statements of Cash Flows. Refer to Note 10. Floorplan Notes Payable within our Notes to Condensed Consolidated Financial Statements for additional discussion of our Revolving Credit Facility. However, we believe that all floorplan financing of inventory purchases in the normal course of business should correspond with the related inventory activity and be classified as an operating activity. As a result, we use the non-GAAP measure “Adjusted net cash provided by/used in operating activities” and “Adjusted net cash provided by/used in financing activities” to further evaluate our cash flows. We believe that this classification eliminates excess volatility in our operating cash flows prepared in accordance with U.S. GAAP. In addition, floorplan financing associated with dealership acquisitions and dispositions are classified as investing activities on an adjusted basis to eliminate excess volatility in our operating cash flows prepared in accordance with U.S. GAAP. 45 Table of Contents The following table reconciles cash flows on a U.S. GAAP basis to the corresponding adjusted amounts (in millions): Nine Months Ended September 30, 2022 2021 % Change CASH FLOWS FROM OPERATING ACTIVITIES: Net cash provided by operating activities: $ 533.4 $ 1,117.5 (52.3) % Change in Floorplan notes payable — credit facilities and other, excluding floorplan offset and net acquisitions and dispositions 187.8 (511.2) Change in Floorplan notes payable — manufacturer affiliates associated with net acquisitions and dispositions and floorplan offset activity 9.1 (12.5) Adjusted net cash provided by operating activities $ 730.3 $ 593.8 23.0 % CASH FLOWS FROM INVESTING ACTIVITIES: Net cash used in investing activities: $ (325.9) $ (163.5) (99.3) % Change in cash paid for acquisitions, associated with Floorplan notes payable 7.7 5.3 Change in proceeds from disposition of franchises, property and equipment, associated with Floorplan notes payable (3.9) (6.4) Adjusted net cash used in investing activities $ (322.1) $ (164.6) (95.7) % CASH FLOWS FROM FINANCING ACTIVITIES: Net cash used in financing activities: $ (198.4) $ (742.2) 73.3 % Change in Floorplan notes payable, excluding floorplan offset (200.7) 524.8 Adjusted net cash used in financing activities $ (399.1) $ (217.4) (83.5) % 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 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 Our capital expenditures include costs to extend the useful lives of current dealership facilities, as well as to start or expand operations. In general, expenditures relating to the construction or expansion of dealership facilities are driven by dealership acquisition activity, new franchises being granted to us by a manufacturer, significant growth in sales at an existing facility, relocation opportunities or manufacturer imaging programs. We critically evaluate all planned future capital spending, working closely with our manufacturer partners to maximize the return on our investments. We forecast our capital expenditures for the full year of 2022 will be approximately $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 — 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). 46 Table of Contents Credit Facilities, Debt Instruments and Other Financing Arrangements Our various credit facilities, debt instruments and other financing arrangements are used to finance the purchase of inventory and real estate, provide acquisition funding and provide working capital for general corporate purposes. The following table summarizes the commitment of our credit facilities as of September 30, 2022 (in millions): Total Commitment Outstanding Available U.S. Floorplan Line (1) $ 1,200.0 $ 496.2 $ 703.8 Acquisition Line (2) 763.4 212.2 551.2 Total revolving credit facility 1,963.4 708.4 1,255.0 FMCC Facility (3) 300.0 19.0 281.0 Total U.S. credit facilities (4) $ 2,263.4 $ 727.4 $ 1,536.0 (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 $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 September 30, 2022, includes $12.4 million of immediately available funds. The remaining available balance can be used for Ford new vehicle inventory financing. (4) The outstanding balance excludes $230.7 million of borrowings with manufacturer-affiliates and third-party financial institutions for foreign and rental vehicle financing not associated with any of our U.S. credit facilities. We have other credit facilities in the U.S. and the U.K. with third-party financial institutions, most of which are affiliated with the automobile manufacturers that provide financing for portions of our new, used and rental vehicle inventories. In addition, we have outstanding debt instruments, including our 4.00% Senior Notes, as well as real estate related and other debt instruments. Refer to Note 9. Debt in our Notes to Condensed Consolidated Financial Statements for further information. Covenants Our Revolving Credit Facility, indentures governing our senior notes and certain mortgage term loans contain customary financial and operating covenants that place restrictions on us, including our ability to incur additional indebtedness, create liens or to sell or otherwise dispose of assets and to merge or consolidate with other entities. Certain of our mortgage agreements contain cross-default provisions that, in the event of a default of certain mortgage agreements and of our Revolving Credit Facility, could trigger an uncured default. As of 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 September 30, 2022 Required Actual Total adjusted leverage ratio < 5.75 1.77 Fixed charge coverage ratio > 1.20 5.77 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. Refer to Note 9. Debt and Note 10. Floorplan Notes Payable in our Notes to Condensed Consolidated Financial Statements for further discussion of our debt instruments, credit facilities and other financing arrangements existing as of September 30, 2022. 47 Table of Contents Share Repurchases and Dividends From time to time, our Board of Directors authorizes the repurchase of shares of our common stock up to a certain monetary limit. 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. Future share repurchases and the payment of any future dividends are subject to the business judgment of our Board of Directors, taking into consideration our historical and projected results of operations, financial condition, cash flows, capital requirements, covenant compliance, current economic environment and other factors considered relevant.