GROUP 1 AUTOMOTIVE INC Q1 FY2025 earnings call

• UK Business: The UK market was up, Group 1 delivered record results, integration of acquisitions grew market presence. Aligning business processes across UK platform, same-store SG&A leverage trended down.
• US Business: US team managed business well, F&I and aftersales strong. Converting collision footprint to service, rebranding effort in progress. Cautious on future due to market uncertainties like new administration policies.
• Capital Allocation: Balancing acquisitions, dispositions, and share repurchases. Acquired $100 million of revenues and bought back 2% of the company for $122.8 million in Q1 2025.

UK Business

• Record first quarter results, achieving internal profit and cost targets. SG&A as a percentage of gross profit is back to pre-acquisition levels, with a plan to reduce 10% of headcount and save north of £30 million this year, mostly in the first half. New and used vehicle volumes were record, offsetting moderating GPUs. Used vehicle management improved with better aging and lower wholesale losses. Added 3 Toyota and 1 Lexus dealerships, closed 8 standalone used vehicle sites and 3 less accretive franchise sites.

US Business

• New and used vehicle revenue and units sold were up on as-reported and same-store basis. F&I performance was well, with aftersales revenue increasing 7.7% on a reported basis and 5.6% same-store. Customer pay was up over 6% and warranty revenue nearly 30% higher. Technician headcount was nearly 8% higher year over year. Deferred some capital expenditure projects and reevaluated discretionary spending due to market uncertainties.

• Expect new and used vehicle GPUs to remain elevated as inventories tighten from tariffs. Deferred some capital expenditure projects and reevaluated discretionary spending. Continue to balance acquisitions and dispositions with share repurchases.

• Risks associated with pricing, volume, inventory supply, market conditions, successful integration of acquisitions, and adverse global economy impacts on vehicle demand.

Q: On pre-buy comment, estimate volume in late March and early April, traffic trend.

A: Daryl mentioned a 5% improvement in traffic counts in the last ten days of March, and inventories were tight at the end of March.

Q: Efficiency of cluster marketing initiative.

A: Early stages, reconditioning pilot in Boston, leveraging local customer data to manage business proactively on a local basis.

Q: Capital allocation strategy in current environment.

A: Deferred discretionary capital projects, have a contingency plan in place should there be a dramatic change in the competitive environment.