What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-07-24 compared with 2024-04-26 · 446 added, 106 removed, 435 unchanged (56% of the section changed)

2 unchanged sentences

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.

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 34 towns and cities in the U.K.

As of March 31, 2024 , our retail network consisted of 147 dealerships in the U.S.

As of June 30, 2024, our retail network consisted of 147 dealerships in the U.S.

and 55 dealerships in the U.K.

Recent Events

On June 19, 2024, we were informed of a cybersecurity incident experienced by CDK Global LLC (“CDK”), which resulted in service outages on CDK’s dealers’ systems (the “CDK Incident”).

CDK provides clients in the automotive industry, including Group 1 dealerships in the U.S., with a software as a service platform (“SaaS platform”) used by dealerships in managing customer relationships, sales, financing, service, inventory and back-office operations.

The CDK Incident temporarily disrupted our business applications and processes in our U.S.

operations that rely on CDK’s dealers’ systems.

Despite the CDK Incident, all Group 1 U.S.

dealerships continued to conduct business using alternative processes until CDK’s dealers’ systems were available.

On June 26, 2024, CDK restored service to us for the core DMS, at which time, subject to certain modified procedures, we resumed processing transactions through the CDK DMS.

We do not expect the CDK Incident to have a material impact on our overall financial condition or on our ongoing results of operations.

On March 20, 2024, the Environmental Protection Agency (“EPA”) finalized new emissions standards for light and medium-duty vehicles, including passenger cars, vans, pickups, sedans and sport utility vehicles for model years 2027 through 2032 and beyond.

3 unchanged sentences

We will continue to monitor the impact of the final regulations on our manufacturers and dealership operations.

Our manufacturers’ production volume improved during the quarter ended March 31, 2024 (“Current Quarter”), although inventories have not yet normalized across all brands to pre-COVID-19 pandemic levels.

Production and related inventory constraints were primarily a result of OEMs maintaining lower than pre-COVID-19 pandemic inventory, sustained global semiconductor and other parts shortages, as well as armed conflicts impacting the global supply chain, including the ongoing conflicts in Ukraine and Israel.

Increased deliveries from all manufacturers in the Current Quarter drove a higher volume of new units sold and lack of new vehicle availability in prior quarters also helped maintain elevated new vehicle retail sales prices and margins relative to pre-COVID-19 pandemic levels.

The higher inventory levels resulting from improved production during the Current Quarter also generated increased floorplan interest expense.

Our new vehicle days’ supply of inventory was approximately 37 day s as of the Current Quarter, as compared to 25 days as of the quarter ended March 31, 2023 (“Prior Year Quarter”).

Additionally, on March 26, 2024, the Francis Scott Key Bridge in Baltimore, Maryland, collapsed after being struck by a container ship, closing indefinitely the Port of Baltimore, the largest port in the U.S.

for shipments of automobiles.

The closure of the port could cause shipping delays for some of our manufacturers.

The impact of the closure of the port on our vehicle inventory and operations cannot be predicted with certainty.

The global economy continues to experience inflation.

In response to higher than historical average inflationary pressures and challenging macroeconomic conditions, the U.S.

Federal Reserve, along with other central banks, including in the U.K., maintained interest rates at elevated levels throughout 2023 and during the Current Quarter.

Continued inflation reducing the disposable income of our customers, volatility in new vehicle availability and higher interest rates increasing the monthly cost of financing vehicles, contributed to used vehicle prices continuing to decline during the Current Quarter.

During the Current Quarter, the Federal Reserve signaled that possible cuts to interest rates in 2024 may be at risk due to continued elevated inflation levels, further contributing to economic uncertainty.

Federal Reserve (the “Federal Reserve”), along with other central banks, including in the U.K., maintained interest rates at elevated levels throughout 2023 and during the six months ended June 30, 2024 (“Current Year”).

During the Current Quarter, the Federal Reserve decided to keep the current interest rates unchanged.

Critical Accounting Policies and Accounting Estimates

6 unchanged sentences

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.

For these reasons, same store results allow management to accurately manage and monitor the underlying 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.

Our primary foreign currency exposure is to the GBP.

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.

15 unchanged sentences

(In millions, except unit data)

Three Months Ended March 31,

Three Months Ended June 30,

2024 2023 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change

9 unchanged sentences

Used vehicle retail sales 80.7 78.8 1.9 2.4 % 0.1 2.3 %

Used vehicle wholesale sales (1.1) 0.9 (2.0) NM — NM

Total used 79.5 79.6 (0.1) (0.1) % 0.1 (0.3) %

Parts and service sales 316.8 304.1 12.7 4.2 % 0.3 4.1 %

F&I, net 200.1 190.3 9.8 5.2 % 0.1 5.1 %

Total gross profit $ 766.5 $ 775.5 $ (9.0) (1.2) % $ 0.7 (1.3) %

Gross margin:

New vehicle retail sales 7.2 % 9.0 % (1.8) %

Used vehicle retail sales 5.6 % 5.4 % 0.1 %

Used vehicle wholesale sales (1.1) % 0.8 % (1.8) %

1 unchanged sentence

Parts and service sales 55.1 % 54.1 % 1.0 %

Total gross margin 16.3 % 17.0 % (0.7) %

Retail new vehicles sold 47,661 44,740 2,921 6.5 %

Retail used vehicles sold 49,260 46,764 2,496 5.3 %

Wholesale used vehicles sold 11,819 10,493 1,326 12.6 %

Total used 61,079 57,257 3,822 6.7 %

Average sales price per unit sold:

New vehicle retail $ 49,996 $ 50,504 $ (508) (1.0) % $ 56 (1.1) %

Used vehicle retail $ 29,501 $ 31,019 $ (1,518) (4.9) % $ 46 (5.0) %

Gross profit per unit sold:

New vehicle retail sales $ 3,568 $ 4,503 $ (935) (20.8) % $ 4 (20.9) %

Used vehicle retail sales $ 1,638 $ 1,684 $ (47) (2.8) % $ 2 (2.9) %

Used vehicle wholesale sales $ (96) $ 81 $ (177) NM $ — NM

Total used $ 1,302 $ 1,390 $ (88) (6.4) % $ 2 (6.5) %

F&I PRU $ 2,065 $ 2,080 $ (15) (0.7) % $ 1 (0.8) %

SG&A expenses $ 497.2 $ 479.9 $ 17.4 3.6 % $ 0.6 3.5 %

SG&A as % gross profit 64.9 % 61.9 % 3.0 %

Floorplan expense:

Floorplan interest expense $ 24.7 $ 15.6 $ 9.0 58.0 % $ — 57.8 %

floorplan assistance (1)

21.0 18.5 2.5 13.3 % — 13.3 %

Net floorplan expense $ 3.7 $ (2.9) $ 6.6 $ —

(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.

NM — Not Meaningful

Same Store Operating Data — Consolidated

(In millions, except unit data)

Three Months Ended June 30,

2024 2023 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change

New vehicle retail sales $ 2,126.2 $ 2,146.3 $ (20.1) (0.9) % $ 2.7 (1.1) %

Used vehicle retail sales 1,360.4 1,382.5 (22.1) (1.6) % 2.3 (1.8) %

Used vehicle wholesale sales 97.0 106.7 (9.8) (9.2) % 0.2 (9.3) %

Total used 1,457.4 1,489.3 (31.9) (2.1) % 2.5 (2.3) %

Parts and service sales 537.6 537.5 — — % 0.6 (0.1) %

F&I, net 183.5 181.5 2.0 1.1 % 0.1 1.0 %

Total revenues $ 4,304.5 $ 4,354.6 $ (50.0) (1.1) % $ 5.8 (1.3) %

Gross profit:

New vehicle retail sales $ 152.6 $ 193.8 $ (41.2) (21.3) % $ 0.2 (21.4) %

Used vehicle retail sales 75.3 75.1 0.2 0.2 % 0.1 0.1 %

Used vehicle wholesale sales (1.3) 0.9 (2.2) NM — NM

Total used 73.9 76.0 (2.0) (2.7) % 0.1 (2.8) %

Parts and service sales 293.2 290.1 3.0 1.0 % 0.3 0.9 %

F&I, net 183.5 181.5 2.0 1.1 % 0.1 1.0 %

Total gross profit $ 703.1 $ 741.4 $ (38.3) (5.2) % $ 0.7 (5.3) %

16 unchanged sentences

Used vehicle retail sales $ 1,630 $ 1,685 $ (55) (3.2) % $ 2 (3.4) %

Used vehicle wholesale sales $ (122) $ 90 $ (213) NM $ — NM

Total used $ 1,296 $ 1,393 $ (96) (6.9) % $ 2 (7.1) %

F&I PRU $ 2,063 $ 2,077 $ (14) (0.7) % $ 1 (0.7) %

SG&A expenses $ 479.4 $ 464.4 $ 15.1 3.2 % $ 0.6 3.1 %

SG&A as % gross profit 68.2 % 62.6 % 5.5 %

NM — Not Meaningful

Reported Operating Data — Consolidated

(In millions, except unit data)

Six Months Ended June 30,

2024 2023 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change

New vehicle retail sales $ 4,546.8 $ 4,198.9 $ 347.9 8.3 % $ 19.0 7.8 %

Used vehicle retail sales 2,870.0 2,799.5 70.5 2.5 % 15.7 2.0 %

Used vehicle wholesale sales 210.3 224.4 (14.1) (6.3) % 1.3 (6.8) %

Total used 3,080.3 3,023.9 56.4 1.9 % 16.9 1.3 %

Parts and service sales 1,150.8 1,110.3 40.4 3.6 % 4.0 3.3 %

F&I, net 389.0 355.4 33.6 9.4 % 0.9 9.2 %

Total revenues $ 9,166.9 $ 8,688.5 $ 478.4 5.5 % $ 40.8 5.0 %

Gross profit:

New vehicle retail sales $ 329.6 $ 388.2 $ (58.6) (15.1) % $ 1.4 (15.5) %

Used vehicle retail sales 162.7 155.5 7.2 4.7 % 0.8 4.2 %

Used vehicle wholesale sales (2.0) 2.9 (4.9) NM (0.1) NM

Total used 160.7 158.4 2.3 1.5 % 0.7 1.0 %

Parts and service sales 629.9 601.4 28.4 4.7 % 2.3 4.4 %

F&I, net 389.0 355.4 33.6 9.4 % 0.9 9.2 %

Total gross profit $ 1,509.1 $ 1,503.4 $ 5.7 0.4 % $ 5.2 — %

Gross margin:

New vehicle retail sales 7.2 % 9.2 % (2.0) %

Used vehicle retail sales 5.7 % 5.6 % 0.1 %

Used vehicle wholesale sales (1.0) % 1.3 % (2.2) %

Total used 5.2 % 5.2 % — %

Parts and service sales 54.7 % 54.2 % 0.6 %

Total gross margin 16.5 % 17.3 % (0.8) %

Retail new vehicles sold 91,963 84,389 7,574 9.0 %

Retail used vehicles sold 98,443 92,201 6,242 6.8 %

Wholesale used vehicles sold 23,647 20,867 2,780 13.3 %

Total used 122,090 113,068 9,022 8.0 %

Average sales price per unit sold:

New vehicle retail $ 49,858 $ 50,103 $ (245) (0.5) % $ 208 (0.9) %

Used vehicle retail $ 29,154 $ 30,363 $ (1,209) (4.0) % $ 159 (4.5) %

Gross profit per unit sold:

New vehicle retail sales $ 3,584 $ 4,600 $ (1,017) (22.1) % $ 15 (22.4) %

Used vehicle retail sales $ 1,653 $ 1,687 $ (33) (2.0) % $ 8 (2.4) %

Used vehicle wholesale sales $ (86) $ 137 $ (223) NM $ (2) NM

Total used $ 1,316 $ 1,401 $ (84) (6.0) % $ 6 (6.4) %

F&I PRU $ 2,043 $ 2,013 $ 30 1.5 % $ 5 1.3 %

7 unchanged sentences

(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.

NM — Not Meaningful

Same Store Operating Data — Consolidated

(In millions, except unit data)

Three Months Ended March 31,

Six Months Ended June 30,

2024 2023 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change

31 unchanged sentences

Used vehicle retail sales $ 1,643 $ 1,695 $ (52) (3.1) % $ 8 (3.5) %

Used vehicle wholesale sales $ (100) $ 201 $ (301) (149.7) % $ (7) (146.4) %

Used vehicle wholesale sales $ (111) $ 145 $ (256) NM $ (3) NM

Total used $ 1,308 $ 1,410 $ (102) (7.2) % $ 6 (7.7) %

5 unchanged sentences

(In millions, except unit data)

Three Months Ended March 31,

Three Months Ended June 30,

2024 2023 Increase/(Decrease) % Change

38 unchanged sentences

(In millions, except unit data)

Three Months Ended March 31,

Three Months Ended June 30,

2024 2023 Increase/(Decrease) % Change

36 unchanged sentences

SG&A as % gross profit 66.3 % 61.0 % 5.2 %

Region — Three Months Ended March 31, 2024 Compared to 2023

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, if any.

Region — Three Months Ended June 30, 2024 Compared to 2023

Total revenues in the U.S.

during the Current Quarter increased $303.3 million, or 9.1%, as compared to the Prior Year Quarter, driven by the acquisition of stores and higher same store revenues.

during the Current Quarter increased $121.6 million, or 3.2%, as compared to the three months ended June 30, 2023 (“Prior Year Quarter”), driven by the acquisition of stores, partially offset by lower same store revenues.

Total same store revenues in the U.S.

during the Current Quarter increased $145.1 million, or 4.5%, as compared to the Prior Year Quarter.

This increase was driven by higher revenues from new vehicle retail, used vehicle retail, parts and service and F&I.

New vehicle retail same store revenues outperformed the Prior Year Quarter, driven by more units sold, partially offset by lower new vehicle retail pricing.

Manufacturer vehicle deliveries were higher in the Current Quarter and as a result, our inventory levels were higher than the Prior Year Quarter, providing for the increase in units sold.

Higher new vehicle supply compared to the Prior Year Quarter created downward pressure on new vehicle retail pricing and margins.

during the Current Quarter decreased $66.2 million, or 1.8%, as compared to the Prior Year Quarter.

This decrease was driven by lower revenues from new vehicle retail, used vehicle retail and wholesale, and parts and service, partially offset by higher F&I.

The CDK Incident contributed to lower same store sales during the limited period of the CDK outage.

New vehicle retail same store revenues underperformed the Prior Year Quarter, driven by lower pricing, coupled with less units sold.

Manufacturer vehicle deliveries increased in the Current Quarter and as a result, our inventory levels were higher than the Prior Year Quarter.

Higher new vehicle supply compared to the Prior Year Quarter created downward pressure on pricing and margins.

We ended the Current Quarter with a U.S.

new vehicle inventory supply of 43 days, 16 days higher than the Prior Year Quarter, but below pre-COVID-19 pandemic levels.

Used vehicle retail same store revenues outperformed the Prior Year Quarter, driven by more units sold, partially offset by lower pricing.

new vehicle inventory supply of 62 days, 35 days higher than the Prior Year Quarter.

Used vehicle retail same store revenues underperformed the Prior Year Quarter, primarily driven by lower used vehicle retail pricing, partially offset by more units sold..

Improved new vehicle supply, impacts from inflation reducing the disposable income of our customers and higher interest rates increasing the monthly cost of financing vehicles continued to create downward pricing pressure.

Parts and service same store revenues outperformed the Prior Year Quarter, driven by increases in warranty and customer pay 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.

F&I same store revenues outperformed the Prior Year Quarter, primarily driven by higher same store new and used vehicle units sold, coupled with higher same store F&I gross profit per unit sold.

Vehicle service contract penetration and new vehicle finance penetration improved, contributing to the higher same store F&I gross profit per unit sold.

Parts and service same store revenues underperformed the Prior Year Quarter, driven by decreases in collision and wholesale revenues, partially offset by an increase in warranty revenues.

F&I same store revenues outperformed the Prior Year Quarter, primarily driven by higher same store used vehicle units sold, coupled with higher same store F&I gross profit per unit sold.

Penetration rates for vehicle service contracts, new vehicle finance and other F&I products improved, contributing to the higher same store F&I gross profit per unit sold.

OEM incentives have increased in the Current Quarter, leading to the improved new vehicle F&I penetration.

Total gross profit in the U.S.

during the Current Quarter increased $21.5 million, or 3.5%, as compared to the Prior Year Quarter, driven by the acquisition of stores.

during the Current Quarter decreased $1.9 million, or 0.3%, as compared to the Prior Year Quarter, driven by lower same store gross profit, partially offset by the acquisition of stores.

Total same store gross profit in the U.S.

during the Current Quarter decreased $31.3 million, or 4.9%, as compared to the Prior Year Quarter, primarily driven by downward pressures on new vehicle margins.

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

The decrease in new vehicle retail same store gross profit per unit is due to higher deliveries and increasing inventory levels of new vehicles as described above.

Used vehicle retail same store gross profit outperformed the Prior Year Quarter, primarily driven by higher same store used vehicle retail units sold.

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, partially offset by an increase in same store wholesale used vehicle units sold.

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

New vehicle retail same store gross profit underperformed the Prior Year Quarter, driven by a decrease in same store gross profit per unit sold, coupled with a decrease in same store units sold.

The decrease in same store gross profit per unit is due to higher deliveries from our OEMs and increasing inventory levels of new vehicles as described above.

Used vehicle retail same store gross profit outperformed the Prior Year Quarter, primarily driven by higher same store units sold.

Our used vehicle wholesale same store gross profit underperformed the Prior Year Quarter, driven by a decrease in same store gross profit per unit sold, partially offset by an increase in same store units sold.

Parts and service same store gross profit slightly increased compared to the Prior Year Quarter, due to the change in mix of business activities.

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

Total same store gross margin in the U.S.

decreased 82 basis points, primarily driven by underperformance in new vehicle retail and used vehicle wholesale margins, for the reasons described above for same store gross profit per unit sold for new vehicle retail and used vehicle wholesale.

This underperformance was partially offset by a slight improvement in parts and service margins for the reasons described above, used vehicle retail margins, largely due to lower used vehicle acquisition costs, and improved F&I performance.

decreased 55 basis points, primarily driven by an underperformance in new vehicle retail for the reasons described above for same store gross profit per unit sold for new vehicle retail.

This underperformance was partially offset by a slight improvement in parts and service gross margin due to the change in mix of business activities as described above in parts and service same store revenues.

SG&A Expenses

SG&A as a percentage of gross profit decreased 115 basis points and increased 412 basis points on an as reported and same store basis, respectively, compared to the Prior Year Quarter.

SG&A as a percentage of gross profit increased 226 basis points and increased 524 basis points on an as reported and same store basis, respectively, compared to the Prior Year Quarter.

Total SG&A expenses in the U.S.

during the Current Quarter increased $6.2 million, or 1.6%, as compared to the Prior Year Quarter, primarily driven by higher same store SG&A expenses, partially offset by lower SG&A expenses from store dispositions.

during the Current Quarter increased $13.9 million, or 3.4%, as compared to the Prior Year Quarter, primarily driven by higher same store SG&A expenses.

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

during the Current Quarter, increased $24.1 million, or 6.5%, as compared to the Prior Year Quarter, primarily driven by increased activity related to employee-related costs, outside services and professional fees, loaner car and related expenses and advertising expenses.

during the Current Quarter, increased $12.6 million, or 3.3%, as compared to the Prior Year Quarter, primarily driven by increased activity related to information technology equipment and services, advertising expenses, insurance expenses, loaner car and related expenses and legal fees.

SG&A expenses also included $5.9 million in pre-tax one-time compensation payments to retain our field employees during the CDK Incident.

Reported Operating Data — U.S.

(In millions, except unit data)

Six Months Ended June 30,

2024 2023 Increase/(Decrease) % Change

New vehicle retail sales $ 3,809.4 $ 3,524.1 $ 285.3 8.1 %

Used vehicle retail sales 2,251.4 2,170.0 81.4 3.8 %

Used vehicle wholesale sales 158.3 162.1 (3.8) (2.3) %

Total used 2,409.7 2,332.1 77.6 3.3 %

Parts and service sales 992.6 965.0 27.6 2.9 %

F&I, net 355.2 320.8 34.4 10.7 %

Total revenues $ 7,566.9 $ 7,142.0 $ 424.9 5.9 %

Gross profit:

New vehicle retail sales $ 276.2 $ 324.8 $ (48.6) (15.0) %

Used vehicle retail sales 132.4 121.8 10.7 8.8 %

Used vehicle wholesale sales 2.7 3.4 (0.8) (22.4) %

Total used 135.1 125.2 9.9 7.9 %

Parts and service sales 540.3 516.4 23.9 4.6 %

F&I, net 355.2 320.8 34.4 10.7 %

Total gross profit $ 1,306.8 $ 1,287.2 $ 19.6 1.5 %

Gross margin:

New vehicle retail sales 7.2 % 9.2 % (2.0) %

Used vehicle retail sales 5.9 % 5.6 % 0.3 %

Used vehicle wholesale sales 1.7 % 2.1 % (0.4) %

Total used 5.6 % 5.4 % 0.2 %

Parts and service sales 54.4 % 53.5 % 0.9 %

Total gross margin 17.3 % 18.0 % (0.8) %

Retail new vehicles sold 74,614 67,578 7,036 10.4 %

Retail used vehicles sold 76,496 70,746 5,750 8.1 %

Wholesale used vehicles sold 18,052 14,916 3,136 21.0 %

Total used 94,548 85,662 8,886 10.4 %

Average sales price per unit sold:

New vehicle retail $ 51,054 $ 52,148 $ (1,094) (2.1) %

Used vehicle retail $ 29,431 $ 30,672 $ (1,241) (4.0) %

Gross profit per unit sold:

New vehicle retail sales $ 3,701 $ 4,806 $ (1,105) (23.0) %

Used vehicle retail sales $ 1,731 $ 1,721 $ 10 0.6 %

Used vehicle wholesale sales $ 148 $ 231 $ (83) (35.9) %

Total used $ 1,429 $ 1,462 $ (33) (2.2) %

F&I PRU $ 2,351 $ 2,320 $ 31 1.4 %

SG&A expenses $ 812.5 $ 792.4 $ 20.1 2.5 %

SG&A as % gross profit 62.2 % 61.6 % 0.6 %

Same Store Operating Data — U.S.

(In millions, except unit data)

Six Months Ended June 30,

2024 2023 Increase/(Decrease) % Change

New vehicle retail sales $ 3,397.5 $ 3,368.1 $ 29.5 0.9 %

Used vehicle retail sales 2,082.5 2,056.6 25.9 1.3 %

Used vehicle wholesale sales 144.8 150.5 (5.7) (3.8) %

Total used 2,227.3 2,207.1 20.2 0.9 %

Parts and service sales 934.6 924.2 10.5 1.1 %

F&I, net 324.9 306.3 18.6 6.1 %

Total revenues $ 6,884.4 $ 6,805.6 $ 78.8 1.2 %

Gross profit:

New vehicle retail sales $ 245.7 $ 312.1 $ (66.3) (21.3) %

Used vehicle retail sales 122.4 115.9 6.5 5.6 %

Used vehicle wholesale sales 2.3 3.5 (1.2) (34.8) %

Total used 124.7 119.4 5.3 4.4 %

Parts and service sales 503.7 493.0 10.6 2.2 %

F&I, net 324.9 306.3 18.6 6.1 %

Total gross profit $ 1,199.0 $ 1,230.8 $ (31.8) (2.6) %

Gross margin:

New vehicle retail sales 7.2 % 9.3 % (2.0) %

Used vehicle retail sales 5.9 % 5.6 % 0.2 %

Used vehicle wholesale sales 1.6 % 2.3 % (0.7) %

Total used 5.6 % 5.4 % 0.2 %

Parts and service sales 53.9 % 53.3 % 0.5 %

Total gross margin 17.4 % 18.1 % (0.7) %

Retail new vehicles sold 66,283 64,430 1,853 2.9 %

Retail used vehicles sold 70,986 66,832 4,154 6.2 %

Wholesale used vehicles sold 16,391 13,981 2,410 17.2 %

Total used 87,377 80,813 6,564 8.1 %

Average sales price per unit sold:

New vehicle retail $ 51,258 $ 52,275 $ (1,017) (1.9) %

Used vehicle retail $ 29,336 $ 30,773 $ (1,436) (4.7) %

Gross profit per unit sold:

New vehicle retail sales $ 3,707 $ 4,844 $ (1,136) (23.5) %

Used vehicle retail sales $ 1,724 $ 1,735 $ (10) (0.6) %

Used vehicle wholesale sales $ 138 $ 249 $ (111) (44.4) %

Total used $ 1,427 $ 1,478 $ (51) (3.4) %

F&I PRU $ 2,367 $ 2,333 $ 34 1.4 %

SG&A expenses $ 798.8 $ 762.1 $ 36.8 4.8 %

SG&A as % gross profit 66.6 % 61.9 % 4.7 %

Region — Six Months Ended June 30, 2024 Compared to 2023

Total revenues in the U.S.

during the Current Year increased $424.9 million, or 5.9%, as compared to the same period in 2023 (“Prior Year”), driven by the acquisition of stores and higher same store revenues.

Total same store revenues in the U.S.

during the Current Year increased $78.8 million, or 1.2%, as compared to the Prior Year.

This increase was driven by higher revenues from new vehicle retail, used vehicle retail, parts and service and F&I.

The CDK Incident contributed to lower same store sales during the limited period of the CDK outage.

New vehicle retail same store revenues outperformed the Prior Year, driven by more units sold, partially offset by lower pricing.

Manufacturer vehicle deliveries were increased in the Current Year and as a result, our inventory levels were higher than the Prior Year, providing for the increase in units sold.

Higher new vehicle supply compared to the Prior Year created downward pressure on pricing and margins.

We ended the Current Year with a U.S.

new vehicle inventory supply of 62 days, 35 days higher than the Prior Year.

Used vehicle retail same store revenues outperformed the Prior Year, driven by more units sold, partially offset by lower pricing.

Parts and service same store revenues outperformed the Prior Year, driven by increases in warranty and customer pay revenues, partially offset by decreases in collision and wholesale revenues.

This outperformance reflects increased business activity and increased same store technician headcount through our technician recruiting and retention efforts, providing greater capacity to meet increased demand.

F&I same store revenues outperformed the Prior Year, primarily driven by higher same store new and used vehicle units sold, coupled with higher same store F&I gross profit per unit sold.

Penetration rates for vehicle service contracts, new vehicle finance and other F&I products improved, contributing to the higher same store F&I gross profit per unit sold.

OEM incentives have increased in the Current Year, leading to the improved new vehicle F&I penetration.

Total gross profit in the U.S.

during the Current Year increased $19.6 million, or 1.5%, as compared to the Prior Year, primarily driven by the acquisition of stores, partially offset by lower same store gross profit.

Total same store gross profit in the U.S.

during the Current Year decreased $31.8 million, or 2.6%, as compared to the Prior Year, primarily driven by downward pressures on new vehicle margins, partially offset by increases from used vehicle retail, F&I and parts and service.

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

The decrease in new vehicle retail same store gross profit per unit is due to higher deliveries from our OEMs, leading to increasing inventory levels of new vehicles as described above.

Used vehicle retail same store gross profit outperformed the Prior Year, primarily driven by higher same store used vehicle retail units sold.

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

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

Total same store gross margin in the U.S.

decreased 67 basis points, primarily driven by an underperformance in new vehicle retail, for the reasons described above for same store gross profit per unit sold for new vehicle retail.

This underperformance was partially offset by an improvement in parts and service gross margin as described above for parts and service same store revenues.

SG&A Expenses

SG&A as a percentage of gross profit increased 62 basis points and increased 471 basis points on an as reported and same store basis, respectively, compared to the Prior Year.

Total SG&A expenses in the U.S.

during the Current Year increased $20.1 million, or 2.5%, as compared to the Prior Year, primarily driven by higher same store SG&A expenses, partially offset by lower SG&A expenses from store dispositions.

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

during the Current Year increased $36.8 million, or 4.8%, as compared to the Prior Year, primarily driven by increased activity related to employee-related costs, outside services and professional fees, information technology equipment and related services, loaner car and related expenses, advertising expenses, insurance expenses and legal fees.

SG&A expenses also included $5.9 million in pre-tax one-time compensation payments to retain our field employees during the CDK Incident.

Reported Operating Data — U.K.

(In millions, except unit data)

Three Months Ended March 31,

Three Months Ended June 30,

2024 2023 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change

39 unchanged sentences

(In millions, except unit data)

Three Months Ended March 31,

Three Months Ended June 30,

2024 2023 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change

37 unchanged sentences

NM — Not Meaningful

Region — Three Months Ended March 31, 2024 Compared to 2023

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, if any.

Region — Three Months Ended June 30, 2024 Compared to 2023

Retail new vehicle units sold include new vehicle agency units.

1 unchanged sentence

The agency units and related net revenues are included in the calculation of gross profit per unit sold.

The GBP to USD foreign currency exchange rate has fluctuated from £1 to $1.24 at March 31, 2023, to £1 to $1.26 at March 31, 2024, or an increase in the value of the GBP of 2.1 %.

The GBP to USD foreign currency exchange rate has fluctuated from £1 to $1.266 at June 30, 2023 , to £1 to $1.265 at June 30, 2024 , or a decrease in the value of the GBP of 0.1 %.

Total revenues in the U.K.

during the Current Quarter increased $37.1 million, or 4.7%, as compared to the Prior Year Quarter, primarily driven by foreign currency exchange rates and outperformances in new vehicle retail sales and parts and service, partially offset by lower used vehicle sales.

On a constant currency basis, revenues increased 0.3%, primarily driven by an outperformance in new vehicle retail sales.

New vehicle retail same store revenues, on a constant currency basis, outperformed the Prior Year Quarter, driven by more units sold, coupled with higher new vehicle retail pricing.

during the Current Quarter increased $16.3 million, or 2.1%, as compared to the Prior Year Quarter.

Total same store revenues in the U.K.

during the Current Quarter increased $16.2 million, or 2.1%, as compared to the Prior Year Quarter, primarily driven by outperformances in new vehicle retail sales and parts and service, partially offset by lower used vehicle sales and F&I.

On a constant currency basis, revenues increased 1.4%, for the same reasons.

New vehicle retail same store revenues, on a constant currency basis, outperformed the Prior Year Quarter, driven by more units sold, coupled with higher pricing.

The shortage of new vehicle inventory, compared to pre-COVID-19 pandemic levels, despite recent manufacturers’ production improvements, drove strong pricing.

Vehicle demand was and continues to be pent-up from the COVID-19 pandemic.

We ended the Current Quarter with a U.K.

new vehicle inventory supply of 20 days, one day higher than the Prior Year Quarter , but below pre-COVID-19 pandemic levels .

Used vehicle retail same store revenues, on a constant currency basis, underperformed the Prior Year Quarter, primarily driven by lower used vehicle retail pricing on a constant currency basis, partially offset by more units sold.

new vehicle inventory supply of 35 days, six days higher than the Prior Year Quarter.

Used vehicle retail same store revenues, on a constant currency basis, underperformed the Prior Year Quarter, primarily driven by lower used vehicle retail pricing on a constant currency basis.

Used vehicle wholesale same store revenues, on a constant currency basis, underperformed the Prior Year Quarter, primarily driven by a decrease in wholesale used vehicle units sold.

Parts and service same store revenues, on a constant currency basis, outperformed the Prior Year Quarter, driven by i ncreases in customer pay, warranty and wholesale revenues reflecting increased business activity.

1 unchanged sentence

customer contact center, streamlining operations to make scheduling appointments easier for customers, resulting in an increase in parts and service activity driving an increase in revenues as compared to the Prior Year Quarter.

F&I same store revenues, on a constant currency basis, modestly underperformed the Prior Year Quarter, primarily driven by decreases in income per contract for retail finance fees and service contracts, partially offset by an increase in retail units sold.

F&I same store revenues, on a constant currency basis, underperformed the Prior Year Quarter, primarily driven by decreases in income per contract for retail finance fees and service contracts.

Total gross profit in the U.K.

3 unchanged sentences

On a constant currency basis, total same store gross profit decreased 7.4%, driven by downward pressures on margins for all lines of business.

New vehicle retail same store gross profit, on a constant currency basis, underperformed the Prior Year, primarily due to decrease in new vehicle retail gross profit per unit sold, partially offset by an increase in new vehicle retail units sold, as a result of the increase in vehicle inventory production as described above generating downward pressure on new vehicle margins.

Used vehicle retail same store gross profit, on a constant currency basis, underperformed the Prior Year Quarter, driven by a decrease in used vehicle retail same store gross profit per unit sold, partially offset by a slight increase in used vehicle retail units sold.

Parts and service same store gross profit, on a constant currency basis, slightly underperformed compared to the Prior Year Quarter.

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

New vehicle retail same store gross profit, on a constant currency basis, underperformed the Prior Year, primarily due to a decrease in new vehicle retail gross profit per unit sold, partially offset by an increase units sold, as a result of the increase in new vehicle production as described above generating downward pressure on new vehicle margins.

Parts and service same store gross profit, on a constant currency basis, outperformed the Prior Year Quarter, driven by increases in parts and service same store revenues, as discussed above.

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

Total same store gross margin in the U.K.

1 unchanged sentence

SG&A Expenses

SG&A as a percentage of gross profit increased by 1,130 and 1,127 basis points on an as reported and same store basis, respectively, compared to the Prior Year.

SG&A as a percentage of gross profit increased by 859 and 767 basis points on an as reported and same store basis, respectively, compared to the Prior Year Quarter.

Total SG&A expenses in the U.K.

3 unchanged sentences

On a constant currency basis, total same store SG&A expenses increased 2.4%.

These increases were primarily driven by increased employee-related expenses as a result of higher activity and legal fees associated with the pending acquisition of Inchcape plc, coupled with increased demonstration and loaner car expenses compared to the Prior Year Quarter.

Consolidated Selected Comparisons — Three Months Ended March 31, 2024 Compared to 2023

These increases were primarily driven by increased legal fees associated with the pending acquisition of Inchcape plc, coupled with increased advertising expenses and demonstration and loaner car and related expenses, offset by lower employee related costs compared to the Prior Year Quarter.

Reported Operating Data — U.K.

(In millions, except unit data)

Six Months Ended June 30,

2024 2023 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change

New vehicle retail sales $ 737.4 $ 674.8 $ 62.6 9.3 % $ 19.0 6.5 %

Used vehicle retail sales 618.6 629.5 (10.9) (1.7) % 15.7 (4.2) %

Used vehicle wholesale sales 52.0 62.3 (10.3) (16.5) % 1.3 (18.5) %

Total used 670.6 691.8 (21.2) (3.1) % 16.9 (5.5) %

Parts and service sales 158.2 145.3 12.9 8.9 % 4.0 6.1 %

F&I, net 33.8 34.6 (0.8) (2.4) % 0.9 (4.8) %

Total revenues $ 1,600.0 $ 1,546.5 $ 53.4 3.5 % $ 40.8 0.8 %

Gross profit:

New vehicle retail sales $ 53.4 $ 63.4 $ (10.0) (15.8) % $ 1.4 (18.0) %

Used vehicle retail sales 30.3 33.7 (3.4) (10.2) % 0.8 (12.4) %

Used vehicle wholesale sales (4.7) (0.6) (4.1) NM (0.1) NM

Total used 25.6 33.1 (7.6) (22.8) % 0.7 (24.9) %

Parts and service sales 89.6 85.1 4.5 5.3 % 2.3 2.6 %

F&I, net 33.8 34.6 (0.8) (2.4) % 0.9 (4.8) %

Total gross profit $ 202.3 $ 216.2 $ (13.9) (6.4) % $ 5.2 (8.8) %

Gross margin:

New vehicle retail sales 7.2 % 9.4 % (2.2) %

Used vehicle retail sales 4.9 % 5.4 % (0.5) %

Used vehicle wholesale sales (9.1) % (0.9) % (8.1) %

Total used 3.8 % 4.8 % (1.0) %

Parts and service sales 56.6 % 58.5 % (1.9) %

Total gross margin 12.6 % 14.0 % (1.3) %

Retail new vehicles sold 17,349 16,811 538 3.2 %

Retail used vehicles sold 21,947 21,455 492 2.3 %

Wholesale used vehicles sold 5,595 5,951 (356) (6.0) %

Total used 27,542 27,406 136 0.5 %

Average sales price per unit sold:

New vehicle retail $ 44,459 $ 41,566 $ 2,893 7.0 % $ 1,145 4.2 %

Used vehicle retail $ 28,185 $ 29,341 $ (1,155) (3.9) % $ 715 (6.4) %

Gross profit per unit sold:

New vehicle retail sales $ 3,078 $ 3,772 $ (694) (18.4) % $ 80 (20.5) %

Used vehicle retail sales $ 1,381 $ 1,572 $ (192) (12.2) % $ 35 (14.4) %

Used vehicle wholesale sales $ (842) $ (99) $ (743) NM $ (10) NM

Total used $ 929 $ 1,209 $ (280) (23.2) % $ 26 (25.3) %

F&I PRU $ 859 $ 904 $ (44) (4.9) % $ 22 (7.3) %

SG&A expenses $ 160.8 $ 150.3 $ 10.5 7.0 % $ 4.0 4.3 %

SG&A as % gross profit 79.5 % 69.5 % 10.0 %

NM — Not Meaningful

Same Store Operating Data — U.K.

(In millions, except unit data)

Six Months Ended June 30,

2024 2023 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change

New vehicle retail sales $ 737.4 $ 674.8 $ 62.6 9.3 % $ 19.0 6.5 %

Used vehicle retail sales 618.6 629.5 (10.9) (1.7) % 15.7 (4.2) %

Used vehicle wholesale sales 52.0 62.3 (10.3) (16.5) % 1.3 (18.5) %

Total used 670.6 691.8 (21.2) (3.1) % 16.9 (5.5) %

Parts and service sales 152.4 139.6 12.8 9.1 % 3.9 6.3 %

F&I, net 33.8 34.6 (0.8) (2.3) % 0.9 (4.8) %

Total revenues $ 1,594.1 $ 1,540.8 $ 53.3 3.5 % $ 40.7 0.8 %

Gross profit:

New vehicle retail sales $ 53.4 $ 63.4 $ (10.0) (15.8) % $ 1.4 (18.0) %

Used vehicle retail sales 30.3 33.7 (3.4) (10.1) % 0.8 (12.4) %

Used vehicle wholesale sales (4.7) (0.6) (4.1) NM (0.1) NM

Total used 25.6 33.1 (7.5) (22.8) % 0.7 (24.9) %

Parts and service sales 86.9 82.4 4.5 5.4 % 2.2 2.7 %

F&I, net 33.8 34.6 (0.8) (2.3) % 0.9 (4.8) %

Total gross profit $ 199.6 $ 213.5 $ (13.9) (6.5) % $ 5.1 (8.9) %

Gross margin:

New vehicle retail sales 7.2 % 9.4 % (2.2) %

Used vehicle retail sales 4.9 % 5.4 % (0.5) %

Used vehicle wholesale sales (9.1) % (0.9) % (8.1) %

Total used 3.8 % 4.8 % (1.0) %

Parts and service sales 57.0 % 59.0 % (2.0) %

Total gross margin 12.5 % 13.9 % (1.3) %

Retail new vehicles sold 17,349 16,811 538 3.2 %

Retail used vehicles sold 21,947 21,455 492 2.3 %

Wholesale used vehicles sold 5,595 5,951 (356) (6.0) %

Total used 27,542 27,406 136 0.5 %

Average sales price per unit sold:

New vehicle retail $ 44,459 $ 41,566 $ 2,893 7.0 % $ 1,145 4.2 %

Used vehicle retail $ 28,185 $ 29,341 $ (1,155) (3.9) % $ 715 (6.4) %

Gross profit per unit sold:

New vehicle retail sales $ 3,078 $ 3,772 $ (694) (18.4) % $ 80 (20.5) %

Used vehicle retail sales $ 1,381 $ 1,572 $ (191) (12.1) % $ 35 (14.4) %

Used vehicle wholesale sales $ (842) $ (99) $ (743) NM $ (10) NM

Total used $ 930 $ 1,209 $ (280) (23.1) % $ 26 (25.3) %

F&I PRU $ 859 $ 904 $ (44) (4.9) % $ 22 (7.3) %

SG&A expenses $ 158.0 $ 148.7 $ 9.3 6.2 % $ 4.0 3.6 %

SG&A as % gross profit 79.2 % 69.7 % 9.5 %

NM — Not Meaningful

Region — Six Months Ended June 30, 2024 Compared to 2023

Retail new vehicle units sold include new vehicle agency units.

The agency units and related revenues are excluded from the calculation of the average sales price per unit sold for new vehicles as only the sales commission is reported within revenues.

The agency units and related net revenues are included in the calculation of gross profit per unit sold.

The GBP to USD foreign currency exchange rate has fluctuated from £1 to $1.266 at June 30, 2023 , to £1 to $1.265 at June 30, 2024 , or a decrease in the value of the GBP of 0.1 %.

Total revenues in the U.K.

during the Current Year increased $53.4 million, or 3.5%, as compared to the Prior Year.

Total same store revenues in the U.K.

during the Current Year increased $53.3 million, or 3.5%, as compared to the Prior Year, primarily driven by outperformances in new vehicle retail sales and parts and service, partially offset by lower used vehicle sales and F&I.

On a constant currency basis, same store revenues increased 0.8%, primarily driven by an outperformance in new vehicle retail sales and parts and service.

New vehicle retail same store revenues, on a constant currency basis, outperformed the Prior Year, driven by more units sold, coupled with higher pricing.

The shortage of new vehicle inventory, compared to pre-COVID-19 pandemic levels, despite recent manufacturers’ production improvements, drove strong pricing.

We ended the Current Year with a U.K.

new vehicle inventory supply of 35 days, six days higher than the Prior Year.

Used vehicle retail same store revenues, on a constant currency basis, underperformed the Prior Year, primarily driven by lower used vehicle retail pricing on a constant currency basis, partially offset by more units sold.

Used vehicle wholesale same store revenues, on a constant currency basis, underperformed the Prior Year, primarily driven by a decrease in wholesale used vehicle units sold.

Parts and service same store revenues, on a constant currency basis, outperformed the Prior Year, driven by i ncreases in customer pay, warranty and wholesale revenues reflecting increased business activity.

W e have invested in improvements to our U.K.

F&I, net same store revenues, on a constant currency basis, underperformed the Prior Year, primarily driven by decreases in income per contract for retail finance fees and service contracts.

Total gross profit in the U.K.

during the Current Year decreased $13.9 million, or 6.4%, as compared to the Prior Year Quarter.

Total same store gross profit in the U.K.

during the Current Year decreased $13.9 million, or 6.5%, as compared to the Prior Year.

On a constant currency basis, total same store gross profit decreased 8.9%, driven by downward pressures on margins for all lines of business.

New vehicle retail same store gross profit, on a constant currency basis, underperformed the Prior Year, primarily due to decrease in new vehicle retail gross profit per unit sold, partially offset by an increase in units sold, as a result of the increase in vehicle inventory production as described above generating downward pressure on new vehicle margins.

Used vehicle retail same store gross profit, on a constant currency basis, underperformed the Prior Year, driven by a decrease in used vehicle retail same store gross profit per unit sold, partially offset by a slight increase in used vehicle retail units sold.

Parts and service same store gross profit, on a constant currency basis, outperformed the Prior Year, driven by increases in parts and service same store revenues, as discussed above.

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

Total same store gross margin in the U.K.

decreased 134 basis points, driven by margin declines for all lines of business caused by inflationary impacts.

SG&A Expenses

SG&A as a percentage of gross profit increased by 997 and 951 basis points on an as reported and same store basis, respectively, compared to the Prior Year.

Total SG&A expenses in the U.K.

during the Current Year increased $10.5 million, or 7.0%, as compared to the Prior Year.

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

during the Current Year increased $9.3 million, or 6.2%, as compared to the Prior Year.

On a constant currency basis, total same store SG&A expenses increased 3.6%.

These increases were primarily driven by increased legal fees associated with the pending acquisition of Inchcape plc, coupled with increased demonstration and loaner car and related expenses, advertising expenses and employee related costs compared to the Prior Year.

Consolidated Selected Comparisons — Six Months Ended June 30, 2024 Compared to 2023

The following table (in millions) and discussion of our results of operations are on a consolidated basis, unless otherwise noted.

Three Months Ended March 31,

Three Months Ended June 30,

2024 2023 Increase/ (Decrease) % Change

3 unchanged sentences

Provision for income taxes $ 45.2 $ 57.6 $ (12.4) (21.6) %

Six Months Ended June 30,

2024 2023 Increase/ (Decrease) % Change

Depreciation and amortization expense $ 52.0 $ 45.5 $ 6.5 14.2 %

Depreciation and amortization expense for the Current Quarter increased compared to the Prior Year Quarter, primarily driven by acquired property and equipment in our U.S.

Floorplan interest expense $ 45.2 $ 28.2 $ 17.0 60.0 %

Other interest expense, net $ 62.7 $ 45.6 $ 17.1 37.5 %

Provision for income taxes $ 91.0 $ 105.2 $ (14.2) (13.5) %

Depreciation and Amortization Expense

Depreciation and amortization expense for the Current Quarter and Current Year was higher compared to the Prior Year Quarter and Prior Year, primarily driven by acquired property and equipment in our U.S.

region, as we continue to strategically add dealership related real estate and facilities to our investment portfolio and make improvements to our existing facilities intended to enhance the profitability of our dealerships and improve the overall customer experience.

4 unchanged sentences

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 $7.9 million, or 62.6%, as compared to the Prior Year Qua rter, driven primarily by an increase in inventories added to our floorplan due to improvements in manufacturer production as well as acquisitions, partially offset by realized gains on our interest rate swap portfolio due to increases in corresponding interest rates.

Total floorplan interest expense during the Current Quarter, increased $9.0 million, or 58.0%, as compared to the Prior Year Qua rter.

For the Current Year, floorplan interest expense increased $17.0 million, or 60.0%, as compared to the Prior Year.

The increase in floorplan interest expense during the Current Quarter and Current Year was driven primarily by an increase in inventories added to our floorplan due to improvements in manufacturer production as well as acquisitions, partially offset by realized gains on our interest rate swap portfolio due to increases in corresponding interest rates.

Refer to Note 6.

3 unchanged sentences

Other interest expense, net during the Current Quarter, increased $7.4 million, or 28.7%, as compared to the Prior Year Quarter.

The increase in other interest expense, net during the Current Quarter was primarily attributable to increased borrowings on the Acquisition Line, additional real estate related debt in our U.S.

region, a decrease in the gain recognized on the de-designation of mortgage interest rate swaps of approximately $3.8 million, and higher interest on existing borrowings.

For the Current Year, other interest expense, net, increased $17.1 million, or 37.5%, as compared to the Prior Year.

The increase in other interest expense, net during the Current Quarter and Current Year was primarily attributable to increased borrowings on the Acquisition Line, additional real estate related debt in our U.S.

region and higher rates interest on existing borrowings.

Additionally, the difference in the Current Year was partly due to a decrease in the gain recognized on the de-designation of mortgage interest rate swaps as compared to the Prior Year of approximately $3.8 million.

Refer to Note 8.

4 unchanged sentences

Provision for income taxes of $45.2 million during the Current Quarter decreased by $12.4 million, or 21.6%, as compared to the Prior Year Quarter.

The tax expense decrease in the Current Quarter, as compared to the Prior Year Quarter, was primarily due to lower pre-tax book income.

Our Current Quarter effective tax rate of 23.7% was higher than the Prior Year Quarter’s effective tax rate of 23.1%.

The tax rate increase was primarily due to taxable gains from asset dispositions in the Current Quarter compared to the Prior Year Quarter.

For the Current Year, our provision for income taxes of $91.0 million decreased by $14.2 million or 13.5%, as compared to the Prior Year.

The tax expense decrease in the Current Quarter and Current Year, as compared to the Prior Year Quarter and Prior Year, was primarily due to lower pre-tax book income.

Our Current Quarter effective tax rate of 24.7% was lower than the Prior Year Quarter’s effective tax rate of 25.3%.

The tax rate decrease was primarily due to the mix of earnings in the Current Quarter compared to the Prior Year Quarter.

We believe that it is more-likely-than-not that our deferred tax assets, net of valuation allowances provided, will be realized, based primarily on assumptions of our future taxable income, considering future reversals of existing taxable temporary differences.

6 unchanged sentences

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

March 31, 2024

June 30, 2024

Cash and cash equivalents $ 64.4

15 unchanged sentences

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

Three Months Ended March 31,

Six Months Ended June 30,

2024 2023 % Change

12 unchanged sentences

CASH FLOWS FROM FINANCING ACTIVITIES:

Net cash provided by (used in) financing activities:

Net cash provided by financing activities:

$ 546.4 $ 103.0 430.6 %

1 unchanged sentence

Adjusted net cash provided by (used in) financing activities $ 349.4 $ (88.9) 493.1 %

Sources and Uses of Liquidity from Operating Activities — Three Months Ended March 31, 2024 Compared to 2023

For the Current Quarter, net cash provided by operating activities increased by $110.5 million, as compared to the Prior Year Quarter.

Sources and Uses of Liquidity from Operating Activities — Six Months Ended June 30, 2024 Compared to 2023

For the Current Year, net cash provided by operating activities decreased by $109.2 million, as compared to the Prior Year.

On an adjusted basis for the same period, adjusted net cash provided by operating activities decreased by $84.9 million.

The decrease on an adjusted basis was primarily driven by a $126.8 million decrease in floorplan notes payable — manufacturer affiliates, partially offset by a $97.8 million decrease in inventory levels.

Sources and Uses of Liquidity from Investing Activities — Three Months Ended March 31, 2024 Compared to 2023

For the Current Quarter, net cash used in investing activities increased by $513.7 million, as compared to the Prior Year Quarter.

On an adjusted basis for the same period, adjusted net cash used in investing activities increased by $492.9 million, primarily due to a $571.9 million increase in acquisition activity and a $27.4 million increase in purchases of property and equipment, including real estate, partially offset by a $95.8 million increase in proceeds from disposition of franchises and property and equipment.

The decrease on an adjusted basis was primarily driven by an $81.7 million decrease in accounts payable and accrued expenses, a $45.2 million increase in inventory levels and a $42.9 million decrease in net income, partially offset by a $111.8 million increase in floorplan notes payable — manufacturer affiliates.

Sources and Uses of Liquidity from Investing Activities — Six Months Ended June 30, 2024 Compared to 2023

For the Current Year, net cash used in investing activities increased by $299.8 million, as compared to the Prior Year.

On an adjusted basis for the same period, adjusted net cash used in investing activities increased by $319.1 million, primarily due to a $341.4 million increase in acquisition activity, an $86.4 million increase in escrow payments for acquisitions and a $16.2 million increase in purchases of property and equipment, including real estate, partially offset by a $115.7 million increase in proceeds from disposition of franchises and property and equipment.

Capital Expenditures

2 unchanged sentences

We critically evaluate all planned future capital spending, working closely with our manufacturer partners to maximize the return on our investments.

For the Current Quarter , $63.2 million was used to purchase property and equipment.

Sources and Uses of Liquidity from Financing Activities — Three Months Ended March 31, 2024 Compared to 2023

For the Current Quarter, net cash provided by financing activities increased by $416.4 million, as compared to the Prior Year Quarter.

For the Current Year , $102.9 million was used to purchase property and equipment.

Sources and Uses of Liquidity from Financing Activities — Six Months Ended June 30, 2024 Compared to 2023

For the Current Year, net cash provided by financing activities increased by $443.4 million, as compared to the Prior Year.

On an adjusted basis for the same period, adjusted net cash provided by financing activities increased by $438.3 million.

The increase in net cash provided by financing activities on an adjusted basis was primarily driven by a $275.2 million increase in net borrowings on the Acquisition Line, a $234.1 million increase in net borrowings of other debt, including real estate-related debt and increases in net borrowings on our U.S.

The increase in net cash provided by financing activities on an adjusted basis was primarily driven by a $355.2 million increase in net borrowings of other debt, including real estate-related debt and increases in net borrowings on our U.S.

Floorplan line of $295.1 million (representing the net cash activity in our floorplan offset account).

These increases were partially offset by a $19.0 million increase in cash paid for share repurchases.

These increases were partially offset by a $177.6 million increase in net repayments on the Acquisition Line and a $33.8 million increase in cash paid for share repurchases.

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 March 31, 2024 (in millions):

The following table summarizes the commitment of our credit facilities as of June 30, 2024 (in millions):

Commitment Outstanding Available

10 unchanged sentences

$ 3,148.1 $ 1,997.0 $ 943.5

(1) The available balance at March 31, 2024, includ es $180.4 million of immediately available funds.

(1) The available balance at June 30, 2024, includ es $79.4 million of immediately available funds.

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

(2) The outstanding balance of $559.2 million is related to outstanding letters of credit of $12.2 million and $547.0 million in USD borrowings.

The available borrowings may be limited from time to time, based on certain debt covenants.

(3) The available balance at March 31, 2024, includes no immediately available funds.

(2) The outstanding balance of $306.5 million is related to outstanding letters of credit of $12.2 million and $294.3 million in borrowings.

The borrowings outstanding under the Acquisition Line included $250.0 million USD borrowings and £35.0 million of GBP borrowings translated at the spot rate on the day borrowed, solely for purposes of calculating the outstanding and available borrowings under the Acquisition Line in accordance with the Revolving Credit Facility.

The available borrowings may be limited from time to time, based on certain debt covenant calculations, and as a result, the outstanding balance plus available borrowings may not equal the total commitment.

(3) The available balance at June 30, 2024, includes $14.8 million of immediately available funds.

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

(4) The remaining available balance as of March 31, 2024, can be used for General Motors new and rental vehicle inventory financing.

(4) The remaining available balance as of June 30, 2024, can be used for General Motors new and rental vehicle inventory financing.

(5) The outstanding balance excludes $409.5 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.

7 unchanged sentences

Certain of our mortgage agreements contain cross-default provisions that, in the event of a default of certain mortgage agreements and of our Revolving Credit Facility, could trigger an uncured default.

As of March 31, 2024, we were in compliance with the requirements of the financial covenants under our debt agreements.

As of June 30, 2024, 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 March 31, 2024

As of June 30, 2024

Required Actual

1 unchanged sentence

Fixed charge coverage ratio > 1.20 4.02

Based on our position as of March 31, 2024, and our outlook as discussed within Item 2.

Based on our position as of June 30, 2024, and our outlook as discussed within Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations, we believe we have sufficient liquidity and do not anticipate any material liquidity constraints or issues with our ability to remain in compliance with our debt covenants.

1 unchanged sentence

Debt and Note 9.

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 March 31, 2024.

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 2, 2023, our Board of Directors increased the share repurchase authorization to $250.0 million.

For the Current Quarter, 203,350 s hares were repurchased at an average price o f $264.41 per share, for a total of $53.8 million, excluding excise taxes o f $0.4 million .

As of March 31, 2024, we had $89.6 million available under our current stock repurchase authorization.

On May 9, 2024, our Board of Directors increased the share repurchase authorization to $250.0 million.

For the Current Year, 352,920 s hares were repurchased at an average price o f $282.81 per share, for a total of $99.8 million, excluding excise taxes o f $0.8 million .

As of June 30, 2024, we had $204.6 million available under our current stock repurchase authorization.

During the Current Quarter, our Board of Directors approved a quarterly cash dividend of $0.47 per share on all shares of our common stock, which resulted in $6.2 million paid to common shareholders and $0.1 million to unvested restricted stock award holders.

5 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis