What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-04-26 compared with 2023-10-27 · 115 added, 184 removed, 442 unchanged (40% of the section changed)

3 unchanged sentences

(In millions, except share data)

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

CURRENT ASSETS:

35 unchanged sentences

Retained earnings 3,791.3 3,649.8

Accumulated other comprehensive income 31.6 22.5

Accumulated other comprehensive income (loss)

Treasury stock, at cost;

7 unchanged sentences

(In millions, except per share data)

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

2023 2022 2023 2022

Three Months Ended March 31,

New vehicle retail sales $ 2,182.6 $ 1,955.7

21 unchanged sentences

Net income from continuing operations 147.4 158.8

Net loss from discontinued operations ( 0.2 ) ( 1.3 ) ( 0.3 ) ( 2.9 )

Net income (loss) from discontinued operations 0.5 ( 0.3 )

NET INCOME $ 147.9 $ 158.4

14 unchanged sentences

(In millions)

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

2023 2022 2023 2022

Three Months Ended March 31,

NET INCOME $ 147.9 $ 158.4

Other comprehensive income (loss), net of taxes:

Net foreign currency translation adjustments:

Unrealized foreign currency translation adjustments ( 17.5 ) ( 31.2 ) 3.5 ( 59.3 )

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

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

Foreign currency translation adjustments, net of reclassifications ( 17.5 ) 93.1 3.5 65.1

Foreign currency translation adjustments ( 4.5 ) 9.8

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

Unrealized gain arising during the period, net of tax provision of $( 4.7 ), $( 9.8 ), $( 8.5 ) and $( 26.1 ), respectively

15.1 31.9 27.3 84.8

Reclassification adjustment for (gain) loss included in interest expense, net of tax (provision) benefit of $( 2.1 ), $( 0.4 ), $( 5.8 ) and $ 0.5 , respectively

Unrealized gain (loss) arising during the period, net of tax (provision) benefit of $( 4.5 ) and $ 2.1 , respectively

Reclassification adjustment for gain included in interest expense, net of tax provision of $( 2.3 ) and $( 1.8 ), respectively

( 7.5 ) ( 5.7 )

1 unchanged sentence

( 0.2 ) ( 3.1 )

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

8.5 30.4 5.6 86.4

OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAX

( 9.0 ) 123.5 9.1 151.5

Unrealized gain (loss) on interest rate risk management activities, net of tax

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX

COMPREHENSIVE INCOME $ 150.0 $ 152.7

5 unchanged sentences

Paid-in Capital Retained Earnings Accumulated

Comprehensive Income (Loss) Treasury Stock Total

Shares Amount

BALANCE, JUNE 30, 2023 25,164,166 $ 0.3 $ 339.8 $ 3,389.7 $ 40.6 $ ( 1,251.5 ) $ 2,518.9

Net income — — — 163.9 — — 163.9

Other comprehensive loss, net of taxes — — — — ( 9.0 ) — ( 9.0 )

Purchases of treasury stock, including excise tax — — — — — ( 65.2 ) ( 65.2 )

Net issuance of treasury shares to stock compensation plans ( 14,300 ) — 1.0 — — 3.2 4.2

Stock-based compensation — — 5.0 — — — 5.0

Dividends declared ($ 0.45 per share)

— — — ( 6.4 ) — — ( 6.4 )

BALANCE, SEPTEMBER 30, 2023 25,149,866 $ 0.3 $ 345.8 $ 3,547.2 $ 31.6 $ ( 1,313.5 ) $ 2,611.4

Common Stock Additional

Paid-in Capital Retained Earnings Accumulated

Comprehensive Income (Loss) Treasury Stock Total

Comprehensive Income

Treasury Stock Total

Shares Amount

BALANCE, DECEMBER 31, 2023

25,131,460 $ 0.3 $ 349.1 $ 3,649.8 $ 28.1 $ ( 1,352.8 ) $ 2,674.4

Net income — — — 147.9 — — 147.9

5 unchanged sentences

— — — ( 6.4 ) — — ( 6.4 )

BALANCE, SEPTEMBER 30, 2023 25,149,866 $ 0.3 $ 345.8 $ 3,547.2 $ 31.6 $ ( 1,313.5 ) $ 2,611.4

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

GROUP 1 AUTOMOTIVE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In millions, except share data)

Common Stock Additional

Paid-in Capital Retained Earnings Accumulated

Comprehensive Income (Loss) Treasury Stock Total

Shares Amount

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

Net income — — — 195.7 — — 195.7

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

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

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

Stock-based compensation — — 6.2 — — — 6.2

Dividends declared ($ 0.38 per share)

BALANCE, MARCH 31, 2024

25,109,781 $ 0.3 $ 351.7 $ 3,791.3 $ 30.3 $ ( 1,401.1 ) $ 2,772.4

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

Common Stock Additional

4 unchanged sentences

Net income — — — 158.4 — — 158.4

Other comprehensive income, net of taxes — — — — 151.5 — 151.5

Other comprehensive loss, net of taxes — — — — ( 5.7 ) — ( 5.7 )

Purchases of treasury stock — — — — — ( 34.9 ) ( 34.9 )

3 unchanged sentences

— — — ( 6.5 ) — — ( 6.5 )

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

BALANCE, MARCH 31, 2023

25,150,165 $ 0.3 $ 333.6 $ 3,225.5 $ 16.7 $ ( 1,223.7 ) $ 2,352.5

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

2 unchanged sentences

(In millions)

Nine Months Ended September 30,

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

17 unchanged sentences

Floorplan notes payable — manufacturer affiliates

110.3 ( 23.9 )

Deferred revenues ( 0.3 ) ( 0.1 )

6 unchanged sentences

Purchases of property and equipment ( 63.2 ) ( 35.8 )

Proceeds from sale of discontinued operations, net — 59.4

Other 9.5 ( 1.2 )

15 unchanged sentences

Dividends paid ( 6.4 ) ( 6.4 )

Other — ( 1.2 )

Net cash used in financing activities ( 41.7 ) ( 198.4 )

Net cash provided by (used in) financing activities 349.4 ( 67.0 )

Effect of exchange rate changes on cash ( 0.3 ) 1.6

Net increase in cash and cash equivalents 5.1 1.9

Net decrease in cash and cash equivalents ( 15.3 ) ( 26.6 )

CASH AND CASH EQUIVALENTS, beginning of period 57.2 47.9

15 unchanged sentences

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

Refer to Note 4.

Discontinued Operations and Other Divestitures for additional information.

Therefore, the related assets, liabilities and operating results of the Brazil Disposal Group are reported as discontinued operations for all periods presented.

Results of operations, cash flows, assets and liabilities associated with the Brazil Disposal Group are immaterial for all periods presented.

Unless otherwise specified, disclosures in these Condensed Consolidated Financial Statements reflect continuing operations only.

8 unchanged sentences

however, actual results could differ materially from such estimates.

The significant estimates made by management in the accompanying Condensed Consolidated Financial Statements including, but not limited to, inventory valuation adjustments, reserves for future chargebacks on finance, insurance and vehicle service contract fees, self-insured property and casualty insurance exposure, the fair value of assets acquired and liabilities assumed in business combinations, the valuation of goodwill and intangible franchise rights and reserves for potential litigation.

Significant estimates were made by management in the accompanying Condensed Consolidated Financial Statements, related to, but not limited to, inventory valuation adjustments, reserves for future chargebacks on finance, insurance and vehicle service contract fees, self-insured property and casualty insurance exposure, the fair value of assets acquired and liabilities assumed in business combinations, the valuation of goodwill and intangible franchise rights and reserves for potential litigation.

Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 820):

Improvements to Reportable Segment Disclosures .

The amendments require the disclosure of significant segment expenses as well as expanded interim disclosures, along with other changes to segment disclosure requirements.

The standard will be effective for fiscal years beginning after December 15, 2023, and interim periods beginning on or after January 1, 2025.

The Company is currently evaluating the impact that the adoption of the provisions of the ASU will have on its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

The amendments require the disclosure of a reconciliation between income tax expense from continuing operations and the amount computed by multiplying income from continuing operations before income taxes by the applicable statutory rate as well as an annual disaggregation of the income tax rate reconciliation between certain specified categories by both percentage and reported amounts, along with other changes to income tax disclosure requirements.

The standard will be effective for fiscal years beginning after December 15, 2024, and interim periods for fiscal years beginning after December 15, 2025.

The Company is currently evaluating the impact that the adoption of the provisions of the ASU will have on its consolidated financial statements.

GROUP 1 AUTOMOTIVE, INC.

1 unchanged sentence

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

Three Months Ended September 30, 2023 Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

New vehicle retail sales $ 1,799.8 $ 382.8 $ 2,182.6

7 unchanged sentences

Total revenues $ 3,645.7 $ 824.8 $ 4,470.5

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

Three Months Ended March 31, 2023

New vehicle retail sales $ 1,608.6 $ 347.1 $ 1,955.7

8 unchanged sentences

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

(2) Includes variable consideration recognized of $ 7.2 million and $ 5.3 million during the three months ended September 30, 2023 and 2022, respectively, and $ 19.7 million and $ 22.2 million during the nine months ended September 30, 2023 and 2022, respectively, relating to performance obligations satisfied in previous periods on the Compa ny’s retrospective commission income contracts.

(2) Includes variable consideration recognized of $ 12.4 million and $ 4.9 million during the three months ended March 31, 2024 and 2023, respectively, relating to performance obligations satisfied in previous periods on the Compa ny’s retrospective commission income contracts.

Refer to Note 7.

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

ACQUISITIONS AND DISPOSITIONS

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

During the nine months ended September 30, 2023, the Company acquired one Chevrolet dealership, one Kia dealership and three Buick-GMC dealerships in the U.S.

Aggregate consideration paid for these dealerships, which were accounted for as business combinations, was $ 363.4 million.

During the three months ended March 31, 2024, the Company acquired nine dealerships in the U.S., including three Honda dealerships, two Lexus dealerships, one Toyota dealership, one Kia dealership, one Hyundai dealership and one Mercedes-Benz dealership.

The Company also acquired one Toyota Certified pre-owned center and three collision centers in the U.S.

Aggregate consideration paid for these dealerships, which were accounted for as business combinations, was $ 690.4 million, consisting of cash paid of $ 689.7 million and a payable of $ 0.7 million.

Goodwill associated with the acquisitions totaled $ 213.6 million.

The accounting for the acquisition of the three Buick-GMC dealerships and one Kia dealership is considered to be preliminary and subject to change as the Company’s fair value assessments are finalized.

The accounting for these acquisitions is considered to be preliminary and subject to change as the Company’s fair value assessments are finalized.

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

The Company will reflect any required fair value adjustments in subsequent periods.

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

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

Goodwill associated with these acquisitions totaled $ 194.0 million.

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

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

During the three months ended March 31, 2023 , the Company acquired one Chevrolet dealership in the U.S.

Consideration paid for the dealership, which was accounted for as a business combination, was $ 76.9 million.

Goodwill associated with the acquisition totaled $ 36.5 million.

The Company previously recorded a $ 33.4 million payment for the purchase of an additional dealership as part of the acquisition of the Prime Automotive Group in 2021.

As of September 30, 2023, the purchase of the additional dealership had not yet closed.

The amount previously paid has been classified as goodwill on the Condensed Consolidated Balance Sheets.

In October 2023, the Company closed on the acquisition of the dealership after settlement of legal action with the distributor which had opposed the acquisition.

The previously recorded goodwill of $ 33.4 million will be allocated to the identifiable assets and liabilities of the acquired dealership in the period of acquisition.

GROUP 1 AUTOMOTIVE, INC.

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

DISCONTINUED OPERATIONS AND OTHER DIVESTITURES

Brazil Discontinued Operations

On July 1, 2022, the Company closed on the disposition of the Brazil Disposal Group.

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

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

As of September 30, 2023, the Company had a remaining receivable balance of $ 19.8 million associated with the Brazil Disposal Escrow recorded in Other long-term assets on the Condensed Consolidated Balance Sheet, of which $ 3.9 million is expected to be paid to settle the Company’s portion of accrued liabilities retained subsequent to the date of disposal.

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

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

2023 2022 2023 2022

New vehicle retail sales $ — $ — $ — $ 109.0

Used vehicle retail sales — — — 44.0

Used vehicle wholesale sales — — — 10.1

Parts and service sales — — — 23.8

Finance, insurance and other, net — — — 3.3

Total revenues — — — 190.2

COST OF SALES:

New vehicle retail sales — — — 98.5

Used vehicle retail sales — — — 41.2

Used vehicle wholesale sales — — — 10.0

Parts and service sales — — — 14.5

Total cost of sales — — — 164.2

GROSS PROFIT — — — 26.1

Selling, general and administrative expenses 0.7 ( 4.6 ) 1.6 14.8

Depreciation and amortization expense — — — 0.9

Asset impairments — 0.1 — 6.3

(LOSS) INCOME FROM OPERATIONS — DISCONTINUED OPERATIONS ( 0.7 ) 4.5 ( 1.6 ) 4.0

Floorplan interest expense — — — 1.4

Other interest income, net ( 0.7 ) ( 0.7 ) ( 2.0 ) ( 1.1 )

Other expenses — 1.5 — 1.5

(LOSS) INCOME BEFORE INCOME TAXES — DISCONTINUED OPERATIONS — 3.7 0.4 2.2

Provision for income taxes 0.2 5.0 0.7 5.1

NET LOSS — DISCONTINUED OPERATIONS $ ( 0.2 ) $ ( 1.3 ) $ ( 0.3 ) $ ( 2.9 )

Cash flows from operating and investing activities for the Brazil Discontinued Operations were immaterial for the nine months ended September 30, 2023.

Cash flows from operating and investing activities for the Brazil Discontinued Operations in the prior period were as follows (in millions):

Nine Months Ended September 30, 2022

Net cash provided by operating activities — discontinued operations $ 26.6

Net cash provided by investing activities — discontinued operations

In April 2024, the Company announced it entered into a definitive agreement to acquire 54 dealerships in the U.K.

from a subsidiary of Inchcape plc for approximately $ 439 million in an all-cash transaction, inclusive of $ 279 million of real estate.

The transaction is expected to close in the third quarter of 2024.

GROUP 1 AUTOMOTIVE, INC.

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

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

September 30, 2023 December 31, 2022

Prepaid expenses $ 0.9 $ —

Other current assets — 1.3

Other long-term assets 19.8 22.8

Total assets of discontinued operations $ 20.7 $ 24.1

Accrued expenses and other current liabilities $ 3.9 $ 7.8

Total liabilities of discontinued operations $ 3.9 $ 7.8

Other Divestitures

The Company’s divestitures generally consist of dealership assets and related real estate.

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

During the nine months ended September 30, 2023, the Company recorded a net pre-tax gain totaling $ 18.1 million related to the disposition of nine dealerships in the U.S.

The dispositions reduced goodwill by $ 44.7 million.

The Company also terminated two franchises in the U.S.

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

During the three months ended March 31, 2024, the Company recorded a net pre-tax gain totaling $ 30.9 million related to the disposition of six dealerships in the U.S.

The dispositions reduced goodwill by $ 39.8 million.

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

Assets held for sale in the Condensed Consolidated Balance Sheets includes $ 8.3 million and $ 13.4 million of goodwill that has been reclassified to assets held for sale as of September 30, 2023 and December 31, 2022, respectively.

During the three months ended March 31, 2023, the Company recorded a net pre-tax gain totaling $ 1.9 million related to the disposition of one dealership in the U.S.

The disposition reduced goodwill by $ 2.1 million.

The Company also terminated one franchise in the U.S.

Assets held for sale in the Condensed Consolidated Balance Sheets includes $ 22.7 million and $ 39.8 million of goodwill that has been reclassified to assets held for sale as of March 31, 2024 and December 31, 2023, respectively.

SEGMENT INFORMATION

As of September 30, 2023, the Company had two reportable segments:

As of March 31, 2024, the Company had two reportable segments:

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

5 unchanged sentences

Selected reportable segment data is as follows (in millions):

Three Months Ended September 30, 2023 Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Total revenues $ 3,645.7 $ 824.8 $ 4,470.5

Income before income taxes $ 180.0 $ 13.3 $ 193.3

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

Three Months Ended March 31, 2023

Total revenues $ 3,342.4 $ 787.7 $ 4,130.0

3 unchanged sentences

The two-class method requires a portion of net income to be allocated to participating securities, which are unvested awards of share-based payments with non-forfeitable rights to receive dividends that are paid in cash.

The Company’s RSAs are participating securities.

The Company’s restricted stock awards are participating securities.

Income allocated to these participating securities is excluded from net earnings available to common shares, as shown in the table below.

4 unchanged sentences

The following table sets forth the calculation of EPS (in millions, except share and per share data):

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

2023 2022 2023 2022

Three Months Ended March 31,

Weighted average basic common shares outstanding 13,328,721 13,861,289

3 unchanged sentences

Earnings allocated to participating securities from continuing operations 3.3 4.1

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

Earnings (loss) allocated to participating securities from discontinued operations — —

Net income available to basic common shares $ 144.5 $ 154.4

2 unchanged sentences

Earnings allocated to participating securities from continuing operations 3.3 4.1

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

Earnings (loss) allocated to participating securities from discontinued operations — —

Net income available to diluted common shares $ 144.6 $ 154.4

14 unchanged sentences

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

GROUP 1 AUTOMOTIVE, INC.

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

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Carrying Value (1)

5 unchanged sentences

(1) Carrying value excludes unamortized debt issuance costs.

GROUP 1 AUTOMOTIVE, INC.

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

Derivative Financial Instruments

6 unchanged sentences

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Other current assets (1)

4 unchanged sentences

Total liabilities $ — $ —

(1) As of September 30, 2023, the balance included gross fair value of $ 4.9 million related to the de-designated swap as described below.

(1) As of March 31, 2024, the balance included gross fair value of $ 0.2 million related to the de-designated swap as described below.

(2) As of March 31, 2024 and December 31, 2023 , the balance included gross fair value of $ 4.0 million and $ 3.7 million, respectively, related to the de-designated swap as described below.

Interest Rate Swaps De-designated as Cash Flow Hedges

During the three months ended March 31, 2024 , the Company de-designated one mortgage interest rate swap due to the Company settling the underlying mortgages associated with the swap during the same period.

As of September 30, 2023 , the de-designated swap had an aggregate notional value of $ 30.3 million that fixed its underlying one-month SOFR at an annual interest rate of 0.60 % and will mature on March 1, 2030.

No interest rate swaps were de-designated by the Company during the three months ended September 30, 2023 .

The Company reclassified the entire previously deferred gain associated with the de-designated interest rate swap of $ 3.1 million , net of tax of $ 1.0 million , from AOCI into income as an adjustment to Other interest expense, net, as the remaining forecasted hedged transactions associated with the interest rate swap were probable of not occurring due to the settlement of the mortgages described above.

Additionally, the Company recorded unrealized mark-to-mark et gains of $ 0.4 million and $ 0.8 million and realized gains of $ 0.4 million and $ 0.7 million a ssociated with the interest rate swap within Other interest expense, net, for the three and nine months ended September 30, 2023, respectively.

As of March 31, 2024 , the de-designated swap had an aggregate notional value of $ 7.1 million that fixed its underlying one-month SOFR at an annual interest rate of 0.62 % and will mature o n January 4, 2025.

During the three months ended March 31, 2023 , the Company de-designated one mortgage interest rate swap due to the Company settling the underlying mortgages associated with the swap during the same period.

As of March 31, 2024 , the de-designated swap had an aggregate notional value of $ 29.1 million that fixed its underlying one-month SOFR at an annual interest rate of 0.60 % and will mature on March 1, 2030.

The Company reclassified the entire previously deferred gains associated with the de-designated interest rate swaps of $ 0.2 million and $ 3.1 million , net of tax of $ 0.1 million and $ 1.0 million , for the three months ended March 31, 2024 and 2023, respectively, from AOCI into income as an adjustment to Other interest expense, net, as the remaining forecasted hedged transactions associated with the interest rate swaps were probable of not occurring due to the settlement of the mortgages described above.

The Company recorded unrealized mark-to-mark et gains of $ 0.3 million and realized gains of $ 0.4 million a ssociated with the de-designated interest rate swaps within Other interest expense, net, for the three months ended March 31, 2024.

The Company had no unrealized mark-to-market gains or realized gains associated with the de-designated interest rate swaps for the three months ended March 31, 2023.

Interest Rate Swaps Designated as Cash Flow Hedges

5 unchanged sentences

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

As of September 30, 2023, the Company held 35 interest rate swaps designated as cash flow hedges with a total notional value of $ 866.2 million that fixed its underlying SOFR at a weighted average rate of 1.25 %.

The Company also held two additional interest rate swaps designated as cash flow hedges with forward start dates beginning in December 2023, that had an aggregate notional value of $ 100.0 million and a weighted average interest rate of 0.94 % as of September 30, 2023.

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

As of September 30, 2022, the Company held 41 interest rate swaps designated as cash flow hedges with a total notional value of $ 949.1 million that fixed its underlying SOFR at a weighted average rate of 1.23 % .

The Company completed the transition of interest rate swaps from LIBOR to SOFR during 2022.

As of March 31, 2024, the Company held 35 interest rate swaps designated as cash flow hedges with a total notional value of $ 941.9 million that fixed its underlying SOFR at a weighted average rate of 1.22 %.

As of March 31, 2023, the Company held 35 interest rate swaps designated as cash flow hedges with a total notional value of $ 879.2 million that fixed its underlying SOFR at a weighted average rate of 1.25 % .

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

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

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

Three Months Ended March 31,

Derivatives in Cash Flow Hedging Relationship 2024 2023

1 unchanged sentence

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

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

2023 2022 2023 2022

Statement of Operations Classification Three Months Ended March 31,

Floorplan interest expense $ 5.3 $ 3.3

3 unchanged sentences

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Contracts-in-transit and vehicle receivables, net:

15 unchanged sentences

$ 56.4 $ 55.0

(1) No allowance for doubtful accounts was recorded for contract assets as of September 30, 2023 or December 31, 2022.

(1) No allowance for doubtful accounts was recorded for contract assets as of March 31, 2024 or December 31, 2023.

GROUP 1 AUTOMOTIVE, INC.

1 unchanged sentence

Long-term debt consisted of the following (in millions):

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

4.00 % Senior Notes due August 15, 2028

12 unchanged sentences

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

As of September 30, 2023, borrowings under the Acquisition Line, a component of the Revolvin g Credit Facility (as defined in Note 10.

As of March 31, 2024, borrowings under the Acquisition Line, a component of the Revolvin g Credit Facility (as defined in Note 9.

Floorplan Notes Payable), totaled $ 547.0 million.

The average interest rate on this facility was 6.27 % during the three months ended September 30, 2023.

The average interest rate on this facility was 6.43 % during the three months ended March 31, 2024.

Real Estate Related

1 unchanged sentence

that are paid in installments.

As of September 30, 2023, borrowings outstanding under these facilities totaled $ 769.8 million, gross of debt issuance costs, comprised of $ 640.4 million in the U.S.

As of March 31, 2024, borrowings outstanding under these facilities totaled $ 919.0 million, gross of debt issuance costs, comprised of $ 793.6 million in the U.S.

and $ 125.4 million in the U.K., respectively.

In February 2024, the Company entered into a master credit agreement with Wells Fargo Bank, National Association (the “Wells Fargo Credit Agreement”), which provides for delayed draw term loans with a maximum borrowing capacity of $ 250.0 million.

The Wells Fargo Credit Agreement accrues interest at SOFR plus 175 basis points and matures on March 1, 2031.

As of March 31, 2024, borrowings outstanding under the Wells Fargo Credit Agreement totaled $ 154.2 million and are included in the total U.S.

mortgage loans described above.

GROUP 1 AUTOMOTIVE, INC.

2 unchanged sentences

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Revolving Credit Facility — floorplan notes payable $ 1,229.8 $ 1,358.2

6 unchanged sentences

FMCC Facility, net 106.8 118.1

GM Financial Facility 168.4 37.9

Other manufacturer affiliate facilities 310.3 256.4

12 unchanged sentences

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

The Company had $ 12.2 million in letters of credit outstanding as of September 30, 2023 and December 31, 2022.

The Company had $ 12.2 million in letters of credit outstanding as of March 31, 2024 and December 31, 2023.

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

The weighted average interest rate on the U.S.

Floorplan Line was 6.54 % as of September 30, 2023, excluding the impact of the Company’s interest rate swap derivative instruments.

Floorplan Line was 6.55 % as of March 31, 2024, excluding the impact of the Company’s interest rate swap derivative instruments.

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

3 unchanged sentences

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

In conjunction with the Revolving Credit Facility, the Company had $ 4.1 million and $ 5.0 million of unamortized debt issuance costs as of September 30, 2023 and December 31, 2022, respectively, which are included in Prepaid expenses and Other long-term assets in the Company’s Condensed Consolidated Balance Sheets and amortized over the term of the facility.

In conjunction with the Revolving Credit Facility, the Company had $ 3.5 million and $ 3.8 million of unamortized debt issuance costs as of March 31, 2024 and December 31, 2023, respectively, which are included in Prepaid expenses and Other long-term assets in the Company’s Condensed Consolidated Balance Sheets and amortized over the term of the facility.

Floorplan Notes Payable — Manufacturer Affiliates

3 unchanged sentences

The FMCC Facility bears interest at the U.S.

prime rate which was 8.50 % as of September 30, 2023.

prime rate which was 8.50 % as of March 31, 2024.

GROUP 1 AUTOMOTIVE, INC.

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

GM Financial Facility

During 2023, the Company entered into a master loan agreement with General Motors Financial (the “GM Financial Facility”).

During the three months ended March 31, 2024, additional subsidiaries of the Company entered into the GM Financial Facility as additional borrowers and the borrowing base thereunder was increased.

As of March 31, 2024 and December 31, 2023 , the GM Financial Facility had a total capacity of $ 348.1 million and $ 84.5 million, respectively.

The GM Financial Facility bears interest at the U.S.

prime rate less 100 basis points.

Other M anufacturer Facilities

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

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

As of September 30, 2023, borrowings outstanding under these facilities totaled $ 276.9 million, comprised of $ 162.2 million in the U.S., with annual interest rates ranging from less than 1 % to approximately 9 %, and $ 114.7 million in the U.K., with annual interest rates ranging from approximately 5 % to 9 %.

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

As of March 31, 2024, borrowings outstanding under these facilities totaled $ 310.3 million, comprised of $ 168.6 million in the U.S.

and $ 141.7 million in the U.K., with annual interest rates ranging from less than 1 % to approximately 9 %.

Interest rates on the Company’s manufacturer facilities vary across manufacturers.

Offset Accounts

4 unchanged sentences

Non-Cash Activities

The accrual for capital expenditures increased $ 0.3 million an d $ 0.4 million during the nine months ended September 30, 2023 and 2022, respectively.

The accrual for capital expenditures increased $ 1.1 million an d $ 4.6 million during the three months ended March 31, 2024 and 2023, respectively.

Interest and Income Taxes Paid

Cash paid for interest, including the monthly settlement of the Company’s interest rate swaps, was $ 120.0 million and $ 73.8 million for the nine months ended September 30, 2023 and 2022, respectively.

Cash paid for interest, including the monthly settlement of the Company’s interest rate swaps, was $ 52.5 million and $ 40.9 million for the three months ended March 31, 2024 and 2023, respectively.

Refer to Note 6.

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

Cash paid for income taxes, net of refunds, was $ 131.9 million and $ 155.9 million for the nine months ended September 30, 2023 and 2022, respectively.

Cash paid for income taxes, net of refunds, was $ 6.2 million and $ 5.7 million for the three months ended March 31, 2024 and 2023, respectively.

COMMITMENTS AND CONTINGENCIES

4 unchanged sentences

Legal Proceedings

As of September 30, 2023, the Company was not party to any legal proceedings that, individually or in the aggregate, are reasonably expected to have a material adverse effect on the Company’s results of operations, financial condition or cash flows.

As of March 31, 2024, the Company was not party to any legal proceedings that, individually or in the aggregate, are reasonably expected to have a material adverse effect on the Company’s results of operations, financial condition or cash flows.

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

2 unchanged sentences

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

Although the Company has no reason to believe that it will be called upon to perform under any such assigned leases, the Company estimates that lessee remaining rental obligations were $ 36.3 million as of September 30, 2023.

GROUP 1 AUTOMOTIVE, INC.

2 unchanged sentences

Changes in the balances of each component of AOCI were as follows (in millions):

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

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

8 unchanged sentences

Provision for income taxes — 2.4 2.4

Net current period other comprehensive income

Balance, September 30, 2023 $ ( 57.6 ) $ 89.3 $ 31.6

Nine Months Ended September 30, 2022

Net current period other comprehensive (loss) income

( 4.5 ) 6.6 2.1

Balance, March 31, 2024 $ ( 41.9 ) $ 72.2 $ 30.3

Three Months Ended March 31, 2023

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

6 unchanged sentences

Other interest expense (pre-tax) — ( 4.2 ) ( 4.2 )

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

Other cumulative foreign currency translation adjustments 1.5 — 1.5

Benefit for income taxes — ( 0.5 ) ( 0.5 )

Net current period other comprehensive income 65.1 86.4 151.5

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

Reclassification related to de-designated interest rate swaps (pre-tax) — ( 4.0 ) ( 4.0 )

Provision for income taxes — 2.7 2.7

Net current period other comprehensive income (loss) 9.8 ( 15.5 ) ( 5.7 )

Balance, March 31, 2023 $ ( 51.3 ) $ 68.1 $ 16.7

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

What changed 10-Q

Item 1. Financial Statements