Company Quick10K Filing
Group 1 Automotive
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 18 $1,375
10-Q 2019-10-30 Quarter: 2019-09-30
10-Q 2019-08-02 Quarter: 2019-06-30
10-Q 2019-05-08 Quarter: 2019-03-31
10-K 2019-02-19 Annual: 2018-12-31
10-Q 2018-11-01 Quarter: 2018-09-30
10-Q 2018-08-03 Quarter: 2018-06-30
10-Q 2018-05-04 Quarter: 2018-03-31
10-K 2018-02-20 Annual: 2017-12-31
10-Q 2017-11-02 Quarter: 2017-09-30
10-Q 2017-08-02 Quarter: 2017-06-30
10-Q 2017-05-04 Quarter: 2017-03-31
10-K 2017-02-17 Annual: 2016-12-31
10-Q 2016-11-03 Quarter: 2016-09-30
10-Q 2016-08-03 Quarter: 2016-06-30
10-Q 2016-05-03 Quarter: 2016-03-31
10-K 2016-02-17 Annual: 2015-12-31
10-Q 2015-10-30 Quarter: 2015-09-30
10-Q 2015-07-30 Quarter: 2015-06-30
10-Q 2015-05-11 Quarter: 2015-03-31
10-K 2015-02-24 Annual: 2014-12-31
10-Q 2014-11-07 Quarter: 2014-09-30
10-Q 2014-08-04 Quarter: 2014-06-30
10-Q 2014-04-29 Quarter: 2014-03-31
10-K 2014-03-03 Annual: 2013-12-31
10-Q 2013-10-31 Quarter: 2013-09-30
10-Q 2013-08-01 Quarter: 2013-06-30
10-Q 2013-05-10 Quarter: 2013-03-31
10-K 2013-02-20 Annual: 2012-12-31
10-Q 2012-10-26 Quarter: 2012-09-30
10-Q 2012-07-27 Quarter: 2012-06-30
10-Q 2012-04-27 Quarter: 2012-03-31
10-Q 2011-10-26 Quarter: 2011-09-30
10-Q 2011-07-27 Quarter: 2011-06-30
10-Q 2011-04-27 Quarter: 2011-03-31
10-K 2011-02-11 Annual: 2010-12-31
10-Q 2010-10-28 Quarter: 2010-09-30
10-Q 2010-07-28 Quarter: 2010-06-30
10-Q 2010-04-28 Quarter: 2010-03-31
10-K 2010-02-12 Annual: 2009-12-31
8-K 2020-01-13 Regulation FD, Exhibits
8-K 2019-12-09 Other Events, Exhibits
8-K 2019-12-02 Regulation FD, Exhibits
8-K 2019-11-20 Other Events, Exhibits
8-K 2019-11-12 Regulation FD, Exhibits
8-K 2019-10-31 Exhibits
8-K 2019-10-24 Earnings, Exhibits
8-K 2019-10-08 Regulation FD, Exhibits
8-K 2019-09-23 Other Events, Exhibits
8-K 2019-09-10 Regulation FD, Exhibits
8-K 2019-08-14 Regulation FD, Other Events, Exhibits
8-K 2019-07-25 Earnings, Exhibits
8-K 2019-07-22 Other Events, Exhibits
8-K 2019-07-10 Regulation FD, Exhibits
8-K 2019-07-08 Other Events, Exhibits
8-K 2019-06-27 Enter Agreement, Off-BS Arrangement, Other Events, Exhibits
8-K 2019-06-04 Other Events, Exhibits
8-K 2019-05-16 Shareholder Vote, Other Events, Exhibits
8-K 2019-04-25 Earnings, Exhibits
8-K 2019-04-04 Regulation FD, Exhibits
8-K 2019-04-02 Regulation FD, Exhibits
8-K 2019-02-21 Other Events, Exhibits
8-K 2019-02-14 Other Events, Exhibits
8-K 2019-02-05 Earnings, Exhibits
8-K 2019-01-17 Regulation FD, Exhibits
8-K 2018-11-28 Other Events, Exhibits
8-K 2018-11-15 Other Events, Exhibits
8-K 2018-11-05 Regulation FD, Exhibits
8-K 2018-10-25 Earnings, Exhibits
8-K 2018-10-10 Regulation FD, Exhibits
8-K 2018-09-25 Other Events, Exhibits
8-K 2018-09-05 Officers, Regulation FD, Exhibits
8-K 2018-08-30 Regulation FD, Exhibits
8-K 2018-08-16 Other Events, Exhibits
8-K 2018-08-07 Other Events, Exhibits
8-K 2018-08-06 Regulation FD, Exhibits
8-K 2018-07-26 Earnings, Exhibits
8-K 2018-07-10 Regulation FD, Exhibits
8-K 2018-05-16 Officers, Shareholder Vote, Other Events, Exhibits
8-K 2018-04-26 Earnings, Exhibits
8-K 2018-04-16 Other Events, Exhibits
8-K 2018-04-03 Regulation FD, Exhibits
8-K 2018-03-26 Regulation FD, Exhibits
8-K 2018-03-19 Earnings, Exhibits
8-K 2018-02-28 Officers, Other Events, Exhibits
8-K 2018-02-20 Officers, Exhibits
8-K 2018-02-15 Other Events, Exhibits
8-K 2018-02-08 Earnings, Exhibits
8-K 2018-02-08 Earnings, Exhibits
8-K 2018-01-29 Other Events, Exhibits
8-K 2018-01-17 Regulation FD, Exhibits
8-K 2018-01-12 Other Events, Exhibits
8-K 2018-01-08 Other Events, Exhibits
GPI 2019-09-30
Part I. Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 6. Exhibits
EX-31.1 a2019q3exhibit311.htm
EX-31.2 a2019q3exhibit312.htm
EX-32.1 a2019q3exhibit321.htm
EX-32.2 a2019q3exhibit322.htm

Group 1 Automotive Earnings 2019-09-30

GPI 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Comparables ($MM TTM)
Ticker M Cap Assets Liab Rev G Profit Net Inc EBITDA EV G Margin EV/EBITDA ROA
MUSA 2,719 2,571 1,755 14,206 0 160 388 3,374 0% 8.7 6%
ABG 1,620 2,814 2,258 7,016 1,134 180 352 2,538 16% 7.2 6%
CTB 1,560 2,704 1,512 2,806 452 72 292 1,741 16% 6.0 3%
GPI 1,375 5,226 4,062 11,612 1,753 153 268 2,630 15% 9.8 3%
RUSHA 1,356 3,531 2,417 5,809 1,034 167 327 1,702 18% 5.2 5%
CWH 1,096 3,673 3,647 4,834 1,360 51 114 995 28% 8.7 1%
SAH 1,001 4,119 3,244 10,048 1,472 106 347 1,923 15% 5.5 3%
CRMT 662 549 275 677 308 52 80 819 45% 10.3 10%
CMSS 208 214 209 0 0 3 3 208 69.8 1%
LAZY 45 358 221 0 0 1 1 36 36.9 0%

Document
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gpi:international_region xbrli:pure iso4217:USD gpi:state gpi:dealership gpi:segment gpi:lease

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2019
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                     to                     
Commission File Number: 1-13461
Group 1 Automotive, Inc.
(Exact name of registrant as specified in its charter) 
Delaware
 
76-0506313
(State of other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
  800 Gessner,
Suite 500
 
77024
     Houston,
TX
 
(Zip code)
(Address of principal executive offices)
 
 
(713) 647-5700
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Ticker symbol(s)
 
Name of exchange on which registered
Common stock, par value $0.01 per share
 
GPI
 
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    Yes  þ    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this Chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  þ    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
þ
 
¨
Accelerated filer
 
 
 
Non-accelerated filer
¨
 
Smaller reporting company
 
 
 
 
 
 
 
 
Emerging growth company
If an emerging growth company, indicate by check mark if that registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes      No  þ
As of October 28, 2019, the registrant had 18,619,112 shares of common stock outstanding.




Table of Contents

TABLE OF CONTENTS
 
 
 
 
 
Item 1.
 
Item 2.
Item 3.
Item 4.
 
 
 
 
Item 1.
Item 1A.
Item 2.
Item 6.

2

Table of Contents

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
GROUP 1 AUTOMOTIVE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS 
(In millions, except share data)
 
 
September 30, 2019
 
December 31, 2018
 
 
(Unaudited)
 
 
ASSETS
CURRENT ASSETS:
 
 
 
 
Cash and cash equivalents
 
$
41.0

 
$
15.9

Contracts-in-transit and vehicle receivables, net
 
256.2

 
265.7

Accounts and notes receivable, net
 
222.2

 
194.0

Inventories, net
 
1,792.7

 
1,844.1

Prepaid expenses and other current assets
 
74.4

 
82.7

TOTAL CURRENT ASSETS
 
2,386.5

 
2,402.4

Property and equipment, net of accumulated depreciation of $380.5 and $347.3, respectively
 
1,484.8

 
1,347.8

Operating lease assets
 
204.7

 

Goodwill
 
979.0

 
963.9

Intangible franchise rights
 
252.9

 
259.6

Other assets
 
21.1

 
27.4

TOTAL ASSETS
 
$
5,329.0

 
$
5,001.1

 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
 
 
 
 
Floorplan notes payable — credit facility and other, net of offset account of $25.0 and $33.6, respectively
 
$
1,199.8

 
$
1,258.9

Floorplan notes payable — manufacturer affiliates, net of offset account of $0.2 and $0.1, respectively
 
410.5

 
417.8

Current maturities of long-term debt
 
66.0

 
93.0

Current operating lease liabilities
 
23.9

 

Accounts payable
 
483.3

 
419.4

Accrued expenses and other current liabilities
 
213.8

 
197.6

TOTAL CURRENT LIABILITIES
 
2,397.3

 
2,386.7

Long-term debt, net of current maturities
 
1,308.0

 
1,281.4

Operating lease liabilities, net of current portion
 
195.5

 

Deferred income taxes
 
131.4

 
134.7

Other liabilities
 
110.5

 
102.6

Commitments and Contingencies (Note 10)
 

 

STOCKHOLDERS’ EQUITY:
 
 
 
 
Common stock, $0.01 par value, 50,000,000 shares authorized; 25,504,131 and 25,494,328 shares issued, respectively
 
0.3

 
0.3

Additional paid-in capital
 
291.9

 
292.8

Retained earnings
 
1,499.8

 
1,394.8

Accumulated other comprehensive income (loss)
 
(169.5
)
 
(137.8
)
Treasury stock, at cost; 6,885,019 and 7,171,661 shares, respectively
 
(436.2
)
 
(454.4
)
TOTAL STOCKHOLDERS’ EQUITY
 
1,186.3

 
1,095.7

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
 
$
5,329.0

 
$
5,001.1


The accompanying notes are an integral part of these condensed consolidated financial statements.
3

Table of Contents

GROUP 1 AUTOMOTIVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In millions, except per share data)
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2019
 
2018
 
2019
 
2018
REVENUES:
 
 
 
 
 
 
 
 
New vehicle retail sales
 
$
1,652.2

 
$
1,539.5

 
$
4,632.2

 
$
4,608.7

Used vehicle retail sales
 
869.7

 
792.4

 
2,527.8

 
2,394.8

Used vehicle wholesale sales
 
85.3

 
86.6

 
273.4

 
283.4

Parts and service sales
 
383.5

 
354.5

 
1,130.8

 
1,062.1

Finance, insurance and other, net
 
127.6

 
116.1

 
368.2

 
343.5

Total revenues
 
3,118.3

 
2,889.1

 
8,932.4

 
8,692.5

COST OF SALES:
 
 
 
 
 
 
 
 
New vehicle retail sales
 
1,577.0

 
1,461.9

 
4,415.7

 
4,379.1

Used vehicle retail sales
 
815.5

 
742.3

 
2,372.5

 
2,250.0

Used vehicle wholesale sales
 
84.9

 
86.9

 
272.7

 
281.8

Parts and service sales
 
175.3

 
162.9

 
520.1

 
488.6

Total cost of sales
 
2,652.7

 
2,454.0

 
7,581.0

 
7,399.5

GROSS PROFIT:
 
465.6

 
435.1

 
1,351.4

 
1,293.0

Selling, general and administrative expenses
 
354.0

 
316.8

 
1,020.4

 
949.2

Depreciation and amortization expense
 
18.0

 
16.9

 
53.0

 
50.0

Asset impairments
 
10.3

 
23.2

 
10.8

 
27.4

INCOME (LOSS) FROM OPERATIONS
 
83.3

 
78.2

 
267.2

 
266.4

INTEREST EXPENSE:
 
 
 
 
 
 
 
 
Floorplan interest expense
 
15.4

 
14.7

 
47.0

 
43.3

Other interest expense, net
 
18.9

 
19.1

 
55.8

 
57.4

INCOME (LOSS) BEFORE INCOME TAXES
 
49.0

 
44.4

 
164.4

 
165.7

(Benefit) provision for income taxes
 
11.0

 
9.6

 
38.5

 
38.6

NET INCOME (LOSS)
 
$
38.0

 
$
34.8

 
$
125.9

 
$
127.1

BASIC EARNINGS (LOSS) PER SHARE
 
$
2.04

 
$
1.74

 
$
6.78

 
$
6.18

Weighted average common shares outstanding
 
18.0

 
19.3

 
17.9

 
19.9

DILUTED EARNINGS (LOSS) PER SHARE
 
$
2.04

 
$
1.74

 
$
6.77

 
$
6.18

Weighted average dilutive common shares outstanding
 
18.0

 
19.3

 
17.9

 
19.9



The accompanying notes are an integral part of these condensed consolidated financial statements.
4

Table of Contents

GROUP 1 AUTOMOTIVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(In millions)
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2019
 
2018
 
2019
 
2018
NET INCOME (LOSS)
 
$
38.0

 
$
34.8

 
$
125.9

 
$
127.1

Other comprehensive income (loss):
 
 
 
 
 
 
 
 
Foreign currency translation adjustment
 
(11.6
)
 
(5.9
)
 
(12.0
)
 
(22.2
)
Net unrealized gain (loss) on interest rate risk management activities, net of tax:
 
 
 
 
 
 
 
 
Unrealized gain (loss) arising during the period, net of tax benefit (provision) of $1.7, ($0.8), $6.0 and ($4.4), respectively
 
(5.6
)
 
2.7

 
(19.2
)
 
14.0

Reclassification adjustment for realized (gain) loss on interest rate swap termination included in SG&A, net of tax benefit (provision) of $0.0, $-, $0.0 and ($0.2), respectively
 
0.1

 

 
0.1

 
(0.7
)
Reclassification adjustment for (gain) loss included in interest expense, net of tax benefit (provision) of $0.0, $0.3, ($0.2) and $1.1, respectively
 
0.1

 
0.8

 
(0.6
)
 
3.4

Unrealized gain (loss) on interest rate risk management activities, net of tax
 
(5.4
)
 
3.5

 
(19.7
)
 
16.7

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXES
 
(17.0
)
 
(2.4
)
 
(31.7
)
 
(5.5
)
COMPREHENSIVE INCOME (LOSS)
 
$
21.0

 
$
32.4

 
$
94.2

 
$
121.6



The accompanying notes are an integral part of these condensed consolidated financial statements.
5

Table of Contents

GROUP 1 AUTOMOTIVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY 
(Unaudited)
(In millions, except share data)

 
 
Common Stock
 
Additional
Paid-in Capital
 
Retained Earnings
 
Accumulated
Other
Comprehensive Income (Loss)
 
Treasury Stock
 
Total
 
 
Shares
 
Amount
 
 
 
 
 
BALANCE, June 30, 2019
 
25,510,280

 
$
0.3

 
$
288.2

 
$
1,467.0

 
$
(152.5
)
 
$
(438.8
)
 
$
1,164.2

Net income (loss)
 

 

 

 
38.0

 

 

 
38.0

Other comprehensive income (loss), net of taxes
 

 

 

 

 
(17.0
)
 

 
(17.0
)
Net issuance of treasury shares to employee stock compensation plans
 
(6,149
)
 

 
(0.7
)
 

 

 
2.6

 
1.9

Stock-based compensation
 

 

 
4.4

 

 

 

 
4.4

Dividends paid, net of estimated forfeitures relative to participating securities ($0.28 per share)
 

 

 

 
(5.2
)
 

 

 
(5.2
)
BALANCE, September 30, 2019
 
25,504,131

 
$
0.3

 
$
291.9

 
$
1,499.8

 
$
(169.5
)
 
$
(436.2
)
 
$
1,186.3



 
 
Common Stock
 
Additional
Paid-in Capital
 
Retained Earnings
 
Accumulated
Other
Comprehensive Income (Loss)
 
Treasury Stock
 
Total
 
 
Shares
 
Amount
 
 
 
 
 
BALANCE, December 31, 2018
 
25,494,328

 
$
0.3

 
$
292.8

 
$
1,394.8

 
$
(137.8
)
 
$
(454.4
)
 
$
1,095.7

Net income (loss)
 

 

 

 
125.9

 

 

 
125.9

Other comprehensive income (loss), net of taxes
 

 

 

 

 
(31.7
)
 

 
(31.7
)
Net issuance of treasury shares to employee stock compensation plans
 
9,803

 

 
(15.3
)
 

 

 
18.2

 
2.9

Stock-based compensation
 

 

 
14.4

 

 

 

 
14.4

Dividends paid, net of estimated forfeitures relative to participating securities ($0.80 per share)
 

 

 

 
(14.8
)
 

 

 
(14.8
)
ASC 842 cumulative adjustment
 

 

 

 
(6.1
)
 

 

 
(6.1
)
BALANCE, September 30, 2019
 
25,504,131

 
$
0.3

 
$
291.9

 
$
1,499.8

 
$
(169.5
)
 
$
(436.2
)
 
$
1,186.3


The accompanying notes are an integral part of these condensed consolidated financial statements.
6

Table of Contents

GROUP 1 AUTOMOTIVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY 
(Unaudited)
(In millions, except share data)

 
 
Common Stock
 
Additional
Paid-in Capital
 
Retained Earnings
 
Accumulated
Other
Comprehensive Income (Loss)
 
Treasury Stock
 
Total
 
 
Shares
 
Amount
 
 
 
 
 
BALANCE, June 30, 2018
 
25,511,536

 
$
0.3

 
$
288.5

 
$
1,339.2

 
$
(126.4
)
 
$
(328.9
)
 
$
1,172.7

Net income (loss)
 

 

 

 
34.8

 

 

 
34.8

Other comprehensive income (loss), net of taxes
 

 

 

 

 
(2.3
)
 

 
(2.3
)
Tax effects reclassified from accumulated other comprehensive income (loss)
 

 

 

 
0.1

 
(0.1
)
 

 

Purchases of treasury stock
 

 

 

 

 

 
(57.3
)
 
(57.3
)
Net issuance of treasury shares to employee stock compensation plans
 
(17,100
)
 

 
(2.2
)
 

 

 
3.6

 
1.4

Stock-based compensation
 

 

 
4.3

 

 

 

 
4.3

Dividends paid, net of estimated forfeitures relative to participating securities ($0.26 per share)
 

 

 

 
(5.2
)
 

 

 
(5.2
)
BALANCE, September 30, 2018
 
25,494,436

 
$
0.3

 
$
290.6

 
$
1,368.9

 
$
(128.8
)
 
$
(382.6
)
 
$
1,148.4


 
 
Common Stock
 
Additional
Paid-in Capital
 
Retained Earnings
 
Accumulated
Other
Comprehensive Income (Loss)
 
Treasury Stock
 
Total
 
 
Shares
 
Amount
 
 
 
 
 
BALANCE, December 31, 2017
 
25,515,374

 
$
0.3

 
$
291.4

 
$
1,246.3

 
$
(123.2
)
 
$
(290.5
)
 
$
1,124.3

Net income (loss)
 

 

 

 
127.1

 

 

 
127.1

Other comprehensive income (loss), net of taxes
 

 

 

 

 
(5.5
)
 

 
(5.5
)
Tax effects reclassified from accumulated other comprehensive income (loss)
 

 

 

 
0.1

 
(0.1
)
 

 

Purchases of treasury stock
 

 

 

 

 

 
(108.6
)
 
(108.6
)
Net issuance of treasury shares to employee stock compensation plans
 
(20,938
)
 

 
(15.0
)
 

 

 
16.5

 
1.5

Stock-based compensation
 

 

 
14.2

 

 

 

 
14.2

Dividends paid, net of estimated forfeitures relative to participating securities ($0.78 per share)
 

 

 

 
(16.0
)
 

 

 
(16.0
)
ASC 606 cumulative adjustment
 

 

 

 
11.4

 

 

 
11.4

BALANCE, September 30, 2018
 
25,494,436

 
$
0.3

 
$
290.6

 
$
1,368.9

 
$
(128.8
)
 
$
(382.6
)
 
$
1,148.4



The accompanying notes are an integral part of these condensed consolidated financial statements.
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Table of Contents

GROUP 1 AUTOMOTIVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions)
 
 
Nine Months Ended September 30,
 
 
2019
 
2018
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
 
Net income (loss)
 
$
125.9

 
$
127.1

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
 
 
 
 
Depreciation and amortization
 
53.0

 
50.0

Change in operating lease assets
 
21.2

 

Deferred income taxes
 
3.6

 
4.1

Asset impairments
 
10.8

 
27.4

Stock-based compensation
 
14.4

 
14.2

Amortization of debt discount and issue costs
 
3.1

 
2.5

(Gain) loss on disposition of assets
 
(5.9
)
 
(27.0
)
Other
 
0.7

 
0.6

Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
 
 
 
 
Accounts payable and accrued expenses
 
99.1

 
35.5

Accounts and notes receivable
 
(31.6
)
 
28.4

Inventories
 
41.7

 
33.7

Contracts-in-transit and vehicle receivables
 
8.1

 
70.2

Prepaid expenses and other assets
 
(10.5
)
 
(22.4
)
Floorplan notes payable - manufacturer affiliates
 
(1.1
)
 
13.9

Deferred revenues
 
(0.4
)
 
(0.8
)
Operating lease liabilities
 
(21.3
)
 

Net cash provided by (used in) operating activities
 
310.8

 
357.4

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
 
Cash paid for acquisitions, net of cash received
 
(97.0
)
 
(135.3
)
Proceeds from disposition of franchises, property and equipment
 
43.1

 
107.7

Purchases of property and equipment, including real estate
 
(139.5
)
 
(118.3
)
Other
 
(0.1
)
 
0.4

Net cash provided by (used in) investing activities
 
(193.5
)
 
(145.5
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
 
Borrowings on credit facility - floorplan line and other
 
5,311.2

 
5,106.8

Repayments on credit facility - floorplan line and other
 
(5,364.3
)
 
(5,185.2
)
Borrowings on credit facility - acquisition line
 
230.5

 
98.6

Repayments on credit facility - acquisition line
 
(211.4
)
 
(91.4
)
Debt issue costs
 
(3.2
)
 

Borrowings on other debt
 
130.8

 
123.3

Principal payments on other debt
 
(133.7
)
 
(105.6
)
Borrowings on debt related to real estate, net of debt issue costs
 
74.8

 
54.7

Principal payments on debt related to real estate
 
(112.8
)
 
(83.2
)
Employee stock purchase plan purchases, net of employee tax withholdings
 
2.8

 
1.5

Proceeds from termination of mortgage swap
 

 
0.9

Repurchases of common stock, amounts based on settlement date
 

 
(108.6
)
Dividends paid
 
(14.8
)
 
(16.0
)
Net cash provided by (used in) financing activities
 
(90.1
)
 
(204.2
)
Effect of exchange rate changes on cash
 
(1.3
)
 
(2.9
)
Net increase (decrease) in cash, cash equivalents and restricted cash
 
25.9

 
4.8

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period
 
18.7

 
29.6

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period
 
$
44.6

 
$
34.4


The accompanying notes are an integral part of these condensed consolidated financial statements.
8

Table of Contents
GROUP 1 AUTOMOTIVE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


1INTERIM FINANCIAL INFORMATION
Business
Group 1 Automotive, Inc., a Delaware corporation, (“Group 1” and together with its subsidiaries, the “Company”) is a leading operator in the automotive retailing industry with business activities in 15 states in the United States of America (“U.S.”), 33 towns in the United Kingdom (“U.K.”) and three states in Brazil. The Company, through its three regions, sells new and used vehicles, arranges related vehicle financing, sells service and insurance contracts, provides automotive maintenance and repair services and sells vehicle parts.
As of September 30, 2019, the Company’s U.S. retail network consisted of 117 dealerships within the following states: Alabama, California, Florida, Georgia, Kansas, Louisiana, Maryland, Massachusetts, Mississippi, New Hampshire, New Jersey, New Mexico, Oklahoma, South Carolina and Texas. The President of U.S. Operations reports directly to the Company’s Chief Executive Officer and is responsible for the overall performance of the U.S. region, as well as overseeing the market directors and dealership general managers. In addition, as of September 30, 2019, the Company had two international regions: (i) the U.K., which consisted of 49 dealerships and (ii) Brazil, which consisted of 17 dealerships. The operations of the Company’s international regions are structured similarly to the U.S. region.
The Company’s operating results are generally subject to seasonal variations, as well as changes in the economic environment. In the U.S., we generally experience higher volumes of vehicle sales and service in the second and third calendar quarters of each year. In addition, in some regions of the U.S., vehicle purchases decline during the winter months due to inclement weather. As a result, our U.S. revenues and operating income are typically lower in the first and fourth quarters and higher in the second and third quarters. In the U.K., the first and third quarters tend to be stronger, driven by the vehicle license plate change months of March and September. In Brazil, the first quarter is generally the weakest, driven by more consumer vacations and activities associated with Carnival, while the third and fourth quarters tend to be stronger. Other factors unrelated to seasonality, such as changes in economic conditions, manufacturer incentive programs, supply issues, seasonal weather events and/or changes in currency exchange rates may exaggerate seasonal or cause counter-seasonal fluctuations in the Company’s revenues and operating income. Due to seasonality and other factors, the results of operations for the interim period are not necessarily indicative of the results that will be realized for any other interim period or for the entire fiscal year.
Basis of Presentation
The accompanying Condensed Consolidated Financial Statements and notes thereto, have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. Results for interim periods are not necessarily indicative of the results that can be expected for a full year and therefore should be read in conjunction with the Company’s audited Financial Statements and notes thereto included within the Company’s most recent Annual Report on Form 10-K. Certain reclassifications have been made to prior periods to conform with current period presentation with no effect on the Company’s previously reported consolidated financial position, results of operations or cash flows. Certain disclosures are reported as zero balances, or may not compute, due to rounding. These Condensed Consolidated Financial Statements reflect, in the opinion of management, all normal recurring adjustments necessary to fairly state, in all material respects, the Company’s financial position and results of operations for the periods presented.
Use of Estimates
The preparation of the Company’s financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from these estimates. Significant estimates made in the accompanying Condensed Consolidated Financial Statements include, but are not limited to, inventory market adjustments, reserves for chargebacks against revenue recognized from the sale of finance and insurance products, reserves for self-insurance programs, certain assumptions related to goodwill and intangible franchise rights and reserves for potential legal or similar proceedings related to the Company’s business.

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Table of Contents

Recent Accounting Pronouncements
Accounting for Leases
In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (“Topic 842”), that amends the accounting guidance on leases. The standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. The Company adopted this ASU and all subsequent amendments on January 1, 2019, using the optional transition method applied to leases existing at January 1, 2019, with no restatement of comparative periods. Results for reporting periods beginning after January 1, 2019 are presented under Topic 842, while prior period amounts have not been adjusted and continue to be reported in accordance with the Company’s historical accounting policies under Accounting Standards Codification (“ASC”) Topic 840, Leases (“ASC 840”).
The Company elected the package of practical expedients available under the transition guidance within Topic 842, which among other things, permits the Company to carry forward its historical lease classification. The Company also elected other practical expedients under the transition guidance to (i) not record leases with an initial term of 12 months or less on the balance sheet for all asset classes; (ii) not apply hindsight when determining its lease terms or assessing impairment of its ROU assets during transition; and (iii) combine and account for both lease and non-lease components as a single component for all asset classes, except dealership operating assets. For our dealership operating leases, the Company elected to separate lease and non-lease components and have allocated the consideration between the lease and non-lease components based on the estimated fair value of the leased component.
Upon adoption of Topic 842, the Company recognized ROU assets and lease liabilities based on the present value of its remaining minimum rental payments for existing operating leases as of the adoption date, utilizing the Company’s applicable incremental borrowing rate also as of the adoption date. The adoption of Topic 842 resulted in the Company recognizing $222.6 million of operating ROU assets and $236.7 million of operating lease liabilities as of January 1, 2019. The difference between ROU assets and lease liabilities is primarily the result of prepaid rent, favorable lease assets and net unfavorable lease liabilities. Additionally, the Company recognized a $6.1 million cumulative-effect adjustment, net of deferred tax impact, to retained earnings as of January 1, 2019 resulting from the impairment of certain operating ROU assets upon the adoption of Topic 842. The Company’s accounting for its finance leases, previously termed as capital leases under ASC 840, remained substantially unchanged. The adoption of Topic 842 had no material impact on the Company’s Condensed Consolidated Statements of Operations or Condensed Consolidated Statements of Cash Flows. For further details, see Note 11, “Leases”.
Credit Losses
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The amendment in this update replaces the current incurred loss impairment methodology of recognizing credit losses when a loss is probable, with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to assess credit loss estimates. The standard will be effective for fiscal years beginning after December 15, 2019, with early adoption permitted for periods after December 15, 2018. The Company is currently evaluating the impact that the adoption of the provisions of the ASU will have on its consolidated financial statements, but does not expect the impact of the amendment of this ASU to be significant.
2. REVENUE
The following tables present the Company’s revenues disaggregated by revenue source and geographical segments (in millions):
 
 
Three Months Ended September 30, 2019
 
Nine Months Ended September 30, 2019
 
 
U.S.
 
U.K.
 
Brazil
 
Total
 
U.S.
 
U.K.
 
Brazil
 
Total
REVENUES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New vehicle retail sales
 
$
1,291.7

 
$
290.7

 
$
69.8

 
$
1,652.2

 
$
3,512.1

 
$
911.6

 
$
208.5

 
$
4,632.2

Used vehicle retail sales
 
657.6

 
189.3

 
22.8

 
869.7

 
1,877.6

 
586.8

 
63.4

 
2,527.8

Used vehicle wholesale sales
 
45.9

 
35.0

 
4.4

 
85.3

 
133.0

 
127.1

 
13.3

 
273.4

Total new and used vehicle sales
 
1,995.2

 
515.0

 
97.0

 
2,607.2

 
5,522.7

 
1,625.5

 
285.2

 
7,433.4

Parts and service sales (1)
 
314.9

 
56.6

 
12.0

 
383.5

 
922.2

 
172.5

 
36.1

 
1,130.8

Finance, insurance and other, net (2)
 
112.7

 
13.0

 
1.9

 
127.6

 
319.4

 
43.2

 
5.6

 
368.2

Total revenues
 
$
2,422.8

 
$
584.6

 
$
110.9

 
$
3,118.3

 
$
6,764.3

 
$
1,841.2

 
$
326.9

 
$
8,932.4


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Table of Contents

 
 
Three Months Ended September 30, 2018
 
Nine Months Ended September 30, 2018
 
 
U.S.
 
U.K.
 
Brazil
 
Total
 
U.S.
 
U.K.
 
Brazil
 
Total
REVENUES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New vehicle retail sales
 
$
1,196.6

 
$
278.0

 
$
64.9

 
$
1,539.5

 
$
3,433.4

 
$
971.1

 
$
204.2

 
$
4,608.7

Used vehicle retail sales