Group 1 Automotive Inc. reported an all-time record third quarter 2021 net income per diluted share of $9.33, a 36.5 percent increase from $6.83 per diluted share as reported for third quarter 2020.
Current quarter adjusted net income per diluted share (a non-GAAP measure) was an all-time quarterly record of $9.62, a 38.0 percent increase from $6.97 adjusted net income per diluted share for the prior year quarter, and an increase of 219.1 percent over the pre-pandemic third quarter of 2019. Current quarter net income was $172.1 million, a 36.1 percent increase compared to net income of $126.4 million in the prior year quarter. Current quarter adjusted net income (a non-GAAP measure) was $177.5 million, a 37.6 percent increase compared to adjusted net income of $129.0 million for the prior year quarter. The Company’s current quarter total revenues were $3.5 billion, a 15.4 percent increase compared to total revenues of $3.0 billion in the prior year quarter.
“Continued strong vehicle margins, further improvement in our service volume, and diligent cost control delivered this quarter’s impressive results,” says Group 1 President and CEO Earl J. Hesterberg. “We continue to sell most new vehicles almost immediately upon manufacturer delivery. Assuming no material change in consumer demand, this dynamic should continue throughout the fourth quarter and into 2022. In addition to the recently announced dealership acquisition in the Dallas and Sacramento markets, we remain on track to close the purchase of the Prime Auto Group in November.”
Current quarter adjusted net income and diluted earnings per share excluded net after-tax adjustments of $5.4 million, or $0.29 per common share, related to a loss on debt extinguishment of $3.8 million, or $0.21 per common share; acquisition costs of $3.4 million, or $0.18 per common share; an asset impairment charge of $1.3 million, or $0.07 per common share; and hurricane related losses of $0.4 million or $0.02 per common share. These adjustments were partially offset by favorable legal settlements of $2.9 million, or $0.16 per common share; and a non-cash gain associated with certain interest rate swaps of $0.7 million, or $0.04 per common share. Prior year quarter adjusted net income and diluted earnings per share excluded a net after-tax adjustment related to a loss on debt redemption of $2.6 million, or $0.14 per common share. Reconciliations of non-GAAP financial measures are included in the attached financial tables. Certain disclosures may not compute due to rounding.
Consolidated operating highlights for current quarter (year-over-year comparable basis)
Reported:
- Total revenues increased 15.4 percent, to $3.5 billion.
- Total gross profit increased 27.6 percent, to $653.2 million.
- New vehicle revenues only decreased 0.3%, despite an 11.9 percent decline in units sold, driven by an increase in gross profit per retail unit (PRU) of 91.8 percent, to $4,773.
- Used vehicle retail revenues increased 44.0 percent, driven by a 12.8 percent increase in units sold, and an increase in used vehicle retail gross profit PRU of 23.0 percent, to $2,279.
- Parts and service gross profit increased 12.3 percent, on a 13.8 percent increase in revenue.
- Finance and Insurance (F&I) gross profit PRU increased 13.9 percent, to $1,885.
- Selling, General and Administrative (SG&A) expenses as a percentage of gross profit decreased 77 basis points, to 59.0 percent. Adjusted SG&A expenses (a non-GAAP measure) as a percentage of gross profit decreased 96 basis points, to 58.8 percent.
Same store on a constant currency basis (a non-GAAP measure):
- Total revenues increased 11.5 percent.
- Total gross profit increased 24.6 percent.
- New vehicle gross profit increased 65.1 percent, despite a 14.3 percent decrease in units sold, driven by an increase in new vehicle gross profit PRU of 92.7 percent.
- Used vehicle retail gross profit increased 32.2%, as units sold increased 9.0 percent, and used vehicle retail gross profit PRU increased 21.3 percent.
- Parts and service gross profit increased 10.1 percent.
- F&I gross profit PRU increased 15.9 percent.
- SG&A expenses as a percentage of gross profit decreased 98 basis points. Adjusted SG&A expenses as a percentage of gross profit decreased 116 basis points.
Corporate development
As previously announced in September 2021, the company entered into a definitive agreement to purchase substantially all the assets, including real estate, of Prime Automotive Group, which includes 30 dealerships and three collision centers in the Northeastern U.S. In 2020, the corresponding Prime dealerships generated $1.8 billion in annual revenues. As previously announced in October 2021, the company acquired two dealerships in Texas and one in California, which are expected to generate approximately $235 million in annualized revenues.
Year-to-date, Group 1 has completed transactions representing $655.0 million of acquired annual revenues, growing the company’s portfolio by 17 franchises. With the Company’s previously announced pending acquisition of Prime Automotive Group expected to close in November 2021, the company’s total acquired revenues are expected to be approximately $2.5 billion at the anticipated closing date, and Group 1’s total dealership count would increase to 221 locations globally, which would include 150 U.S. locations.
Year-to-date, the company has disposed of four franchises, which generated approximately $70 million in trailing-12-month revenues.
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