FOR IMMEDIATE RELEASE
Group 1 Automotive Announces All-Time Record Quarterly Earnings Per Share
More Than Triples Earnings Per Share from 3Q19’s $2.04 to 3Q20’s $6.83;
Strong Cost Leverage; U.K. Performance Rebounds
HOUSTON, October 29, 2020 - Group 1 Automotive, Inc. (NYSE: GPI), (“Group 1” or the “Company”), an international, Fortune 500 automotive retailer, today reported 2020 third quarter net income of $126.4 million, diluted earnings per common share of $6.83, adjusted net income (a non-GAAP measure) of $129.0 million, and adjusted diluted earnings per common share (a non-GAAP measure) of $6.97. This compares to diluted earnings per common share of $2.04 and adjusted diluted earnings per common share (a non-GAAP measure) of $3.02 in 2019. The Company’s 2020 third quarter total revenue was $3.0 billion.
Third quarter 2020 adjusted net income and diluted earnings per share excluded a net after-tax adjustment related to a loss on debt redemption of $3.3 million, or $0.14 per share. Third quarter 2019 adjusted net income and diluted earnings per share excluded approximately $18.4 million net after-tax adjustments, or $0.98 per common share. These adjustments consist primarily of $9.0 million related to catastrophic weather events, or $0.48 per common share; non-cash asset impairments of $8.3 million, or $0.44 per common share; and $1.1 million related to dealership and real estate transactions, or $0.06 per common share. Reconciliations of non-GAAP financial measures are included in the attached financial tables. Certain disclosures may not compute due to rounding.
“Our record earnings are a function of our hard working, resilient teammates and a responsive and creative management team that quickly reacted to the realities of the pandemic. As we rebuilt our U.S. and U.K. businesses from the extreme furlough levels in April, we targeted a 20% efficiency improvement in our sales and service processes, which drove our key cost metric, SG&A as a percent of gross profit, below 60% for the first time in our history. Lower U.S. vehicle sales were offset by improved F&I performance and higher margins supported by lower inventory levels. Additionally, our U.K. business turned in a record performance with year-over-year growth in service and vehicle sales,” said Earl J. Hesterberg, Group 1’s President and Chief Executive Officer.
Liquidity & Capital Resources Update
As of September 30, 2020, the Company’s total cash liquidity was $193 million. There was also $273 million of borrowing capacity on the Company’s U.S. syndicated acquisition line, bringing total immediate liquidity to $466 million at the end of the third quarter 2020.
As previously announced, the Company redeemed all $550 million of its outstanding 5.00% notes due 2022 during the third quarter of 2020. This redemption was funded with $550 million of newly issued 4.00% notes due 2028. Along with the April 2020 redemption of the 5.25% notes due 2023, the Company now has no material debt maturities before its U.S. Credit Facility matures in June of 2024. The debt restructuring undertaken this year will save the Company over $15 million in annual interest expense.
During the third quarter of 2020, the Company generated $25 million of operating cash flow ($121 million of adjusted operating cash flow), which brings the year-to-date operating cash flow to $713 million ($358 million of adjusted operating cash flow). This cash generation has been partially used to reduce non-floorplan debt by $159 million since the end of 2019. Additionally, the Company’s U.S. credit facility rent-adjusted leverage ratio was reduced to 2.5 times at the end of September 2020, or down from 3.3 times at the end of 2019.