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, ~~2021~~2022


☐			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

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 ~~29, 2021,~~24, 2022, the registrant had ~~18,100,651~~14,580,748 shares of common stock outstanding.

Table of Contents

TABLE OF CONTENTS

Table of Contents

GLOSSARY OF DEFINITIONS

The following are abbreviations and definitions of terms used within this report:


Terms						Definitions

~~ASU~~						~~Accounting Standards Update~~
Brexit						Withdrawal of the U.K. from the European Union
BRL						Brazilian Real (R$)
COVID-19 pandemic						Coronavirus disease first emerging in December 2019 and resulting in the ongoing global pandemic in 2020, 2021 and ~~2021~~2022
EPS						Earnings per share

F&I						Finance, insurance and other
~~FASB~~						~~Financial Accounting Standards Board~~
FMCC						Ford Motor Credit Company
GBP						British Pound Sterling (£)
LIBOR						London Interbank Offered Rate
OEM						Original equipment manufacturer
PRU						Per retail unit

RSA						Restricted stock award
SEC						Securities and Exchange Commission
SG&A						Selling, general and administrative
SOFR						Secured Overnight Financing Rate
USD						United States Dollar ($)
U.K.						United Kingdom
U.S.						United States of America
U.S. GAAP						Accounting principles generally accepted in the U.S.
VSC						Vehicle service contract

Table of Contents

Forward-Looking Statements

This Quarterly Report on Form 10-Q (this “Form 10-Q”) includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (“Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). These forward-looking statements include, but are not limited to, statements concerning the Company’s strategy, future operation performance, future liquidity and availability of financing, capital allocation, the completion of future acquisitions and divestitures, business trends in the retail automotive industry and changes in regulations. When used in this Form 10-Q, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may” and similar expressions are intended to identify forward-looking statements.

These forward-looking statements are based on the Company’s expectations and beliefs as of the date of this Form 10-Q concerning future developments and their potential effect on the Company. While management believes that these forward-looking statements are reasonable when and as made, there can be no assurance that future developments affecting the Company will be those that are anticipated. The Company’s forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, including, but not limited to, the risks set forth in Item 1A. Risk Factors of this Form 10-Q.

For additional information regarding known material factors that could cause actual results to differ from projected results, refer to Item 1A. Risk Factors in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Form 10-K”), as well as Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures About Market Risk of this Form 10-Q.

Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. The Company undertake no responsibility and expressly disclaim any duty, to update any such statements, whether as a result of new information, new developments or otherwise, or to publicly release the result of any revision of the forward-looking statements after the date they are made, except to the extent required by law.

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

GROUP 1 AUTOMOTIVE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In millions, except share data)

September 30, 2021 December 31, 2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 296.9 $ 87.3
Contracts-in-transit and vehicle receivables, net 171.8 211.2
Accounts and notes receivable, net 180.6 200.0
Inventories 850.8 1,468.0
Prepaid expenses 24.5 19.4
Other current assets 46.2 18.4
TOTAL CURRENT ASSETS 1,570.8 2,004.2
Property and equipment, net of accumulated depreciation of $503.6 and $460.2, respectively 1,644.5 1,608.2
Operating lease assets 218.0 209.9
Goodwill 1,034.5 997.1
Intangible franchise rights 237.1 232.8
Other long-term assets 52.7 37.2
TOTAL ASSETS $ 4,757.6 $ 5,089.4
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Floorplan notes payable — credit facility and other, net of offset account of $331.2 and $160.4, respectively $ 83.8 $ 767.6
Floorplan notes payable — manufacturer affiliates, net of offset account of $3.5 and $16.0, respectively 234.2 327.5
Current maturities of long-term debt 57.6 56.7
Current operating lease liabilities 22.0 21.5
Accounts payable 381.7 442.6
Accrued expenses and other current liabilities 266.9 226.9
TOTAL CURRENT LIABILITIES 1,046.1 1,842.7
Long-term debt 1,276.3 1,294.7
Long-term operating lease liabilities 213.1 207.6
Deferred income taxes 159.2 141.0
Other long-term liabilities 144.4 153.8
Commitments and Contingencies (Note 11) 0 0
STOCKHOLDERS’ EQUITY:
Common stock, $0.01 par value, 50,000,000 shares authorized; 25,343,056 and 25,433,048 shares issued, respectively 0.3 0.3
Additional paid-in capital 320.2 308.3
Retained earnings 2,265.0 1,817.9
Accumulated other comprehensive income (loss) (166.1) (184.0)
Treasury stock, at cost; 7,242,405 and 7,342,546 shares, respectively (500.8) (492.8)
TOTAL STOCKHOLDERS’ EQUITY 1,918.6 1,449.6
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 4,757.6 $ 5,089.4


	September 30, 2022		December 31, 2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	20.5	$	14.9
Contracts-in-transit and vehicle receivables, net	222.2		218.9
Accounts and notes receivable, net	184.4		177.9
Inventories	1,185.6		1,073.1

Prepaid expenses	24.8		30.6
Other current assets	18.9		50.4
Current assets classified as held for sale	38.6		100.3
TOTAL CURRENT ASSETS	1,695.1		1,666.2
Property and equipment, net of accumulated depreciation of $534.4 and $513.5, respectively	2,037.6		1,957.8
Operating lease assets	246.9		267.8
Goodwill	1,612.2		1,420.2
Intangible franchise rights	482.1		392.3
Other long-term assets	177.6		45.0

TOTAL ASSETS	$	6,251.5	$	5,749.4

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Floorplan notes payable — credit facility and other, net of offset account of $206.1 and $268.6, respectively	$	542.0	$	295.0
Floorplan notes payable — manufacturer affiliates, net of offset account of $12.4 and $3.3, respectively	203.9		236.0
Current maturities of long-term debt	141.5		220.4
Current operating lease liabilities	22.8		25.9

Accounts payable	468.0		457.8
Accrued expenses and other current liabilities	263.7		258.6
Current liabilities classified as held for sale	5.2		49.9
TOTAL CURRENT LIABILITIES	1,647.1		1,543.6
Long-term debt	1,800.9		1,815.3
Long-term operating lease liabilities	236.5		256.6
Deferred income taxes	227.7		180.9
Other long-term liabilities	125.2		127.7
Commitments and Contingencies (Note 12)
STOCKHOLDERS’ EQUITY:

Common stock, $0.01 par value, 50,000,000 shares authorized; 25,239,507 and 25,336,054 shares issued, respectively	0.3		0.3
Additional paid-in capital	336.8		325.8
Retained earnings	2,922.3		2,345.9
Accumulated other comprehensive income (loss)	(4.7)		(156.2)
Treasury stock, at cost; 10,020,687 and 8,160,228 shares, respectively	(1,040.5)		(690.4)
TOTAL STOCKHOLDERS’ EQUITY	2,214.1		1,825.2
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	6,251.5	$	5,749.4

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

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,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
REVENUES:	REVENUES:									REVENUES:
New vehicle retail sales	New vehicle retail sales	$	1,576.2	$	1,580.7	$	4,974.9	$	3,985.5	New vehicle retail sales	$	1,883.3	$	1,513.9	$	5,479.8	$	4,828.6
Used vehicle retail sales	Used vehicle retail sales	1,248.3		867.2		3,342.7		2,287.4		Used vehicle retail sales	1,488.6		1,230.4		4,353.9		3,302.3
Used vehicle wholesale sales	Used vehicle wholesale sales	109.4		86.7		286.0		221.9		Used vehicle wholesale sales	89.6		106.0		278.9		278.0
Parts and service sales	Parts and service sales	427.6		375.6		1,180.4		1,028.2		Parts and service sales	515.6		416.5		1,491.1		1,152.2
Finance, insurance and other, net	Finance, insurance and other, net	147.7		129.5		435.7		338.7		Finance, insurance and other, net	186.3		146.0		549.5		431.3
Total revenues	Total revenues	3,509.2		3,039.6		10,219.7		7,861.7		Total revenues	4,163.4		3,412.8		12,153.1		9,992.3
COST OF SALES:	COST OF SALES:									COST OF SALES:
New vehicle retail sales	New vehicle retail sales	1,408.5		1,481.5		4,542.9		3,759.7		New vehicle retail sales	1,676.7		1,352.4		4,861.6		4,411.4
Used vehicle retail sales	Used vehicle retail sales	1,149.8		796.1		3,075.5		2,127.9		Used vehicle retail sales	1,412.6		1,133.3		4,100.6		3,038.6
Used vehicle wholesale sales	Used vehicle wholesale sales	101.8		80.7		265.3		212.9		Used vehicle wholesale sales	91.1		98.7		276.8		257.9
Parts and service sales	Parts and service sales	195.9		169.4		530.9		473.9		Parts and service sales	230.5		189.7		668.5		515.0
Total cost of sales	Total cost of sales	2,856.0		2,527.7		8,414.5		6,574.4		Total cost of sales	3,410.8		2,774.1		9,907.4		8,222.9
GROSS PROFIT	GROSS PROFIT	653.2		512.0		1,805.1		1,287.2		GROSS PROFIT	752.6		638.7		2,245.8		1,769.5
Selling, general and administrative expenses	Selling, general and administrative expenses	385.1		305.8		1,080.3		870.9		Selling, general and administrative expenses	450.9		376.3		1,329.6		1,056.2
Depreciation and amortization expense	Depreciation and amortization expense	19.6		19.1		57.9		56.5		Depreciation and amortization expense	21.8		19.2		65.9		56.8
Asset impairments	Asset impairments	1.7		—		1.7		23.8		Asset impairments	—		1.7		0.8		1.7
INCOME FROM OPERATIONS	INCOME FROM OPERATIONS	246.8		187.1		665.3		336.0		INCOME FROM OPERATIONS	279.9		241.5		849.4		654.7
Floorplan interest expense	Floorplan interest expense	4.8		8.1		21.2		31.1		Floorplan interest expense	6.5		4.3		17.7		20.5
Other interest expense, net	Other interest expense, net	13.2		14.6		40.7		49.0		Other interest expense, net	19.6		13.1		55.5		39.8
Other income										Other income	(3.4)		—		(3.4)		—

Loss on extinguishment of debt		3.8		3.3		3.8		13.7
INCOME BEFORE INCOME TAXES	INCOME BEFORE INCOME TAXES	225.0		161.0		599.6		242.2		INCOME BEFORE INCOME TAXES	257.2		224.1		779.6		594.4
Provision for income taxes	Provision for income taxes	52.9		34.6		134.6		55.8		Provision for income taxes	60.2		51.6		182.1		132.2
Net income from continuing operations										Net income from continuing operations	197.1		172.5		597.5		462.2
Net (loss) income from discontinued operations										Net (loss) income from discontinued operations	(1.3)		(0.4)		(2.9)		2.8
NET INCOME	NET INCOME	$	172.1	$	126.4	$	465.0	$	186.4	NET INCOME	$	195.7	$	172.1	$	594.6	$	465.0
BASIC EARNINGS PER SHARE		$	9.37	$	6.86	$	25.31	$	10.11
Weighted average common shares outstanding		17.8		17.8		17.8		17.8
DILUTED EARNINGS PER SHARE		$	9.33	$	6.83	$	25.21	$	10.08
Weighted average dilutive common shares outstanding		17.8		17.8		17.8		17.8
BASIC EARNINGS PER SHARE:										BASIC EARNINGS PER SHARE:
Continuing operations										Continuing operations	$	12.61	$	9.40	$	36.55	$	25.16
Discontinued operations										Discontinued operations	(0.09)		(0.02)		(0.18)		0.15
Total										Total	$	12.53	$	9.37	$	36.38	$	25.31
DILUTED EARNINGS PER SHARE:										DILUTED EARNINGS PER SHARE:
Continuing operations										Continuing operations	$	12.57	$	9.35	$	36.43	$	25.05
Discontinued operations										Discontinued operations	(0.09)		(0.02)		(0.18)		0.15
Total										Total	$	12.48	$	9.33	$	36.25	$	25.21
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:										WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic										Basic	15.2		17.8		15.9		17.8
Diluted										Diluted	15.2		17.8		15.9		17.8

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

Table of Contents

GROUP 1 AUTOMOTIVE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In millions)

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
NET INCOME $ 172.1 $ 126.4 $ 465.0 $ 186.4
Other comprehensive income (loss), net of taxes:
Foreign currency translation adjustment (11.5) 6.0 (6.7) (24.4)
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 $0.2, $0.6, $(4.9) and $12.6, respectively (0.6) (1.8) 16.1 (40.4)
Reclassification adjustment for realized (gain) loss on interest rate swap termination included in SG&A, net of tax benefit (provision) of $— for all periods presented — 0.1 — 0.1
Reclassification adjustment for loss included in interest expense, net of tax benefit of $0.6, $0.8, $1.9 and $1.7, respectively 1.8 2.7 6.1 5.4
Reclassification related to de-designated interest rate swaps, net of tax benefit of $—, $—, $0.7 and $—, respectively — — 2.4 —
Unrealized gain (loss) on interest rate risk management activities, net of tax 1.3 1.0 24.5 (35.0)
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX (10.2) 7.0 17.9 (59.3)
COMPREHENSIVE INCOME $ 161.9 $ 133.4 $ 482.9 $ 127.0


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
NET INCOME	$	195.7	$	172.1	$	594.6	$	465.0
Other comprehensive income (loss), net of taxes:
Net foreign currency translation adjustments:
Unrealized foreign currency translation adjustments	(31.2)		(11.5)		(59.3)		(6.7)
Reclassification of cumulative foreign currency translation adjustments associated with the Brazil Disposal	122.8		—		122.8		—
Reclassification of other cumulative foreign currency translation adjustments	1.5		—		1.5		—
Foreign currency translation adjustments, net of reclassifications	93.1		(11.5)		65.1		(6.7)
Net unrealized gain (loss) on interest rate risk management activities, net of tax:
Unrealized gain (loss) arising during the period, net of tax (provision) benefit of $(9.8), $0.2, $(26.1) and $(4.9), respectively	31.9		(0.6)		84.8		16.1

Reclassification adjustment for (gain) loss included in interest expense, net of tax (provision) benefit of $(0.4), $0.6, $0.5 and $1.9, respectively	(1.4)		1.8		1.6		6.1
Reclassification related to de-designated interest rate swaps, net of tax benefit of $—, $—, $— and $0.7, respectively	—		—		—		2.4
Unrealized gain on interest rate risk management activities, net of tax	30.4		1.3		86.4		24.5
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX	123.5		(10.2)		151.5		17.9
COMPREHENSIVE INCOME	$	319.3	$	161.9	$	746.1	$	482.9

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

Table of Contents

GROUP 1 AUTOMOTIVE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(In millions, except share and per share data)

Common Stock Additional
Paid-in Capital Retained Earnings Accumulated
Other
Comprehensive Income (Loss) Treasury Stock Total
Shares Amount
BALANCE, JUNE 30, 2021 25,357,677 $ 0.3 $ 313.6 $ 2,099.1 $ (155.9) $ (503.1) $ 1,754.0
Net income — — — 172.1 — — 172.1
Other comprehensive loss, net of taxes — — — — (10.2) — (10.2)
Net issuance of treasury shares to stock compensation plans (14,621) — 0.8 — — 2.3 3.2
Stock-based compensation — — 5.7 — — — 5.7
Dividends declared ($0.34 per share) — — — (6.3) — — (6.3)
BALANCE, SEPTEMBER 30, 2021 25,343,056 $ 0.3 $ 320.2 $ 2,265.0 $ (166.1) $ (500.8) $ 1,918.6


	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Total
	Shares	Amount
BALANCE, JUNE 30, 2022	25,258,744	$	0.3	$	331.8	$	2,732.5	$	(128.3)	$	(931.8)	$	2,004.5
Net income	—	—		—		195.7		—		—		195.7
Other comprehensive income, net of taxes	—	—		—		—		123.5		—		123.5

Purchases of treasury stock	—	—		—		—		—		(105.4)		(105.4)
Net issuance of treasury shares to stock compensation plans and other	(19,237)	—		(1.2)		—		—		(3.3)		(4.5)
Stock-based compensation	—	—		6.2		—		—		—		6.2
Dividends declared ($0.38 per share)	—	—		—		(6.0)		—		—		(6.0)
BALANCE, SEPTEMBER 30, 2022	25,239,507	$	0.3	$	336.8	$	2,922.3	$	(4.7)	$	(1,040.5)	$	2,214.1


		Common Stock			Additional Paid-in Capital				Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock				Total									Common Stock			Additional Paid-in Capital		Retained Earnings				Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Total
		Shares	Amount																		Shares			Amount
BALANCE, DECEMBER 31, 2020		25,433,048	$	0.3			$	308.3			$	1,817.9			$	(184.0)			$	(492.8)		$	1,449.6
BALANCE, DECEMBER 31, 2021																									BALANCE, DECEMBER 31, 2021	25,336,054	$	0.3	$	325.8			$	2,345.9			$	(156.2)	$	(690.4)	$	1,825.2
Net income	Net income	—	—		—				465.0		—		—				465.0								Net income	—	—		—		594.6				—		—		594.6
Other comprehensive income, net of taxes	Other comprehensive income, net of taxes	—	—		—				—		17.9		—				17.9								Other comprehensive income, net of taxes	—	—		—		—��				151.5		—		151.5

Purchases of treasury stock	Purchases of treasury stock	—	—		—				—		—		(18.6)				(18.6)								Purchases of treasury stock	—	—		—		—				—		(359.5)		(359.5)
Net issuance of treasury shares to stock compensation plans		(89,992)	—		(7.1)				—		—		10.7				3.6
Net issuance of treasury shares to stock compensation plans and other																									Net issuance of treasury shares to stock compensation plans and other	(96,547)	—		(10.2)		—				—		9.4		(0.8)
Stock-based compensation	Stock-based compensation	—	—		19.0				—		—		—				19.0								Stock-based compensation	—	—		21.2		—				—		—		21.2
Dividends declared ($0.98 per share)		—	—		—				(17.9)		—		—				(17.9)
BALANCE, SEPTEMBER 30, 2021		25,343,056	$	0.3	$	320.2			$	2,265.0	$	(166.1)	$	(500.8)			$	1,918.6

Dividends declared ($1.11 per share)																									Dividends declared ($1.11 per share)	—	—		—		(18.2)				—		—		(18.2)
BALANCE, SEPTEMBER 30, 2022																									BALANCE, SEPTEMBER 30, 2022	25,239,507	$	0.3	$	336.8	$	2,922.3			$	(4.7)	$	(1,040.5)	$	2,214.1

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

Table of Contents

GROUP 1 AUTOMOTIVE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(In millions, except share and per share data)


		Common Stock			Additional Paid-in Capital				Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock				Total					Common Stock				Additional Paid-in Capital				Retained Earnings				Accumulated Other Comprehensive Income (Loss)				Treasury Stock				Total
		Shares	Amount													Shares					Amount
BALANCE, JUNE 30, 2020		25,439,581	$	0.3			$	300.0			$	1,596.9			$	(213.3)			$	(467.9)		$	1,215.9
BALANCE, JUNE 30, 2021																				BALANCE, JUNE 30, 2021		25,357,677		$	0.3			$	313.6			$	2,099.1			$	(155.9)			$	(503.1)			$	1,754.0
Net income	Net income	—	—		—				126.4		—		—				126.4			Net income		—		—		—				172.1				—				—				172.1
Other comprehensive income, net of taxes		—	—		—				—		7.0		—				7.0
Other comprehensive loss, net of taxes																				Other comprehensive loss, net of taxes		—		—		—				—				(10.2)				—				(10.2)

Net issuance of treasury shares to stock compensation plans	Net issuance of treasury shares to stock compensation plans	165	—		(1.4)				—		—		3.6				2.2			Net issuance of treasury shares to stock compensation plans		(14,621)		—		0.8				—				—				2.3				3.2
Stock-based compensation	Stock-based compensation	—	—		5.3				—		—		—				5.3			Stock-based compensation		—		—		5.7				—				—				—				5.7
Dividends declared ($0.34 per share)																				Dividends declared ($0.34 per share)		—		—		—				(6.3)				—				—				(6.3)

BALANCE, SEPTEMBER 30, 2020		25,439,746	$	0.3	$	304.0			$	1,723.3	$	(206.3)	$	(464.3)			$	1,356.9
BALANCE, SEPTEMBER 30, 2021																				BALANCE, SEPTEMBER 30, 2021		25,343,056		$	0.3	$	320.2			$	2,265.0			$	(166.1)			$	(500.8)			$	1,918.6


		Common Stock			Additional Paid-in Capital				Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock				Total					Common Stock				Additional Paid-in Capital				Retained Earnings				Accumulated Other Comprehensive Income (Loss)				Treasury Stock				Total
		Shares	Amount													Shares					Amount
BALANCE, DECEMBER 31, 2019		25,486,711	$	0.3			$	295.3			$	1,542.4			$	(147.0)			$	(435.3)		$	1,255.7
BALANCE, DECEMBER 31, 2020																				BALANCE, DECEMBER 31, 2020		25,433,048		$	0.3			$	308.3			$	1,817.9			$	(184.0)			$	(492.8)			$	1,449.6
Net income	Net income	—	—		—				186.4		—		—				186.4			Net income		—		—		—				465.0				—				—				465.0
Other comprehensive loss, net of taxes		—	—		—				—		(59.3)		—				(59.3)
Other comprehensive income, net of taxes																				Other comprehensive income, net of taxes		—		—		—				—				17.9				—				17.9

Purchases of treasury stock	Purchases of treasury stock	—	—		—				—		—		(48.9)				(48.9)			Purchases of treasury stock		—		—		—				—				—				(18.6)				(18.6)
Net issuance of treasury shares to stock compensation plans	Net issuance of treasury shares to stock compensation plans	(46,964)	—		(18.4)				—		—		20.0				1.6			Net issuance of treasury shares to stock compensation plans		(89,992)		—		(7.1)				—				—				10.7				3.6
Stock-based compensation	Stock-based compensation	—	—		27.0				—		—		—				27.0			Stock-based compensation		—		—		19.0				—				—				—				19.0
Dividends declared ($0.30 per share)		—	—		—				(5.5)		—		—				(5.5)
Dividends declared ($0.98 per share)																				Dividends declared ($0.98 per share)		—		—		—				(17.9)				—				—				(17.9)

BALANCE, SEPTEMBER 30, 2020		25,439,746	$	0.3	$	304.0			$	1,723.3	$	(206.3)	$	(464.3)			$	1,356.9
BALANCE, SEPTEMBER 30, 2021																				BALANCE, SEPTEMBER 30, 2021		25,343,056		$	0.3	$	320.2			$	2,265.0			$	(166.1)			$	(500.8)			$	1,918.6

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

Table of Contents

GROUP 1 AUTOMOTIVE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In millions)


		Nine Months Ended September 30,					Nine Months Ended September 30,
		2021		2020			2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES:	CASH FLOWS FROM OPERATING ACTIVITIES:					CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	Net income	$	465.0	$	186.4	Net income	$	594.6	$	465.0
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	57.9		56.5		Depreciation and amortization	66.9		57.9
Change in operating lease assets	Change in operating lease assets	18.1		18.1		Change in operating lease assets	22.6		18.1
Deferred income taxes	Deferred income taxes	7.7		(2.8)		Deferred income taxes	17.4		7.7
Asset impairments	Asset impairments	1.7		23.8		Asset impairments	7.1		1.7
Stock-based compensation	Stock-based compensation	19.0		27.0		Stock-based compensation	21.2		19.0
Amortization of debt discount and issuance costs	Amortization of debt discount and issuance costs	1.8		2.6		Amortization of debt discount and issuance costs	2.3		1.8
Gain on disposition of assets	Gain on disposition of assets	(2.1)		—		Gain on disposition of assets	(40.8)		(2.1)
Loss on extinguishment of debt	Loss on extinguishment of debt	3.8		13.7		Loss on extinguishment of debt	—		3.8
Unrealized loss on derivative instruments	Unrealized loss on derivative instruments	1.4		—		Unrealized loss on derivative instruments	—		1.4
Other	Other	2.0		1.9		Other	1.3		2.0
Changes in assets and liabilities, net of acquisitions and dispositions:	Changes in assets and liabilities, net of acquisitions and dispositions:					Changes in assets and liabilities, net of acquisitions and dispositions:
Accounts payable and accrued expenses	Accounts payable and accrued expenses	(21.6)		(58.8)		Accounts payable and accrued expenses	51.0		(21.6)
Accounts and notes receivable	Accounts and notes receivable	19.2		25.2		Accounts and notes receivable	(7.3)		19.2
Inventories	Inventories	643.0		499.6		Inventories	(156.6)		643.0
Contracts-in-transit and vehicle receivables	Contracts-in-transit and vehicle receivables	43.1		33.0		Contracts-in-transit and vehicle receivables	(6.6)		43.1
Prepaid expenses and other assets	Prepaid expenses and other assets	(10.0)		41.1		Prepaid expenses and other assets	6.4		(10.0)
Floorplan notes payable — manufacturer affiliates	Floorplan notes payable — manufacturer affiliates	(112.5)		(137.9)		Floorplan notes payable — manufacturer affiliates	(23.9)		(112.5)
Deferred revenues	Deferred revenues	(1.1)		(0.4)		Deferred revenues	(0.3)		(1.1)
Operating lease liabilities	Operating lease liabilities	(18.9)		(16.3)		Operating lease liabilities	(21.9)		(18.9)
Net cash provided by operating activities	Net cash provided by operating activities	1,117.5		712.7		Net cash provided by operating activities	533.4		1,117.5
CASH FLOWS FROM INVESTING ACTIVITIES:	CASH FLOWS FROM INVESTING ACTIVITIES:					CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for acquisitions, net, including repayment of sellers’ floorplan notes payable of $5.3 and $—, respectively		(74.6)		(1.3)
Cash paid for acquisitions, net, including repayment of sellers’ floorplan notes payable of $7.7 and $5.3, respectively						Cash paid for acquisitions, net, including repayment of sellers’ floorplan notes payable of $7.7 and $5.3, respectively	(424.2)		(74.6)
Proceeds from disposition of franchises, property and equipment	Proceeds from disposition of franchises, property and equipment	19.8		1.3		Proceeds from disposition of franchises, property and equipment	132.6		19.8
Purchases of property and equipment	Purchases of property and equipment	(88.4)		(78.8)		Purchases of property and equipment	(93.3)		(88.4)

Proceeds from sale of discontinued operations, net						Proceeds from sale of discontinued operations, net	59.4		—
Other	Other	(20.4)		—		Other	(0.5)		(20.4)
Net cash used in investing activities	Net cash used in investing activities	(163.5)		(78.8)		Net cash used in investing activities	(325.9)		(163.5)
CASH FLOWS FROM FINANCING ACTIVITIES:	CASH FLOWS FROM FINANCING ACTIVITIES:					CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on credit facility — floorplan line and other	Borrowings on credit facility — floorplan line and other	5,796.1		7,590.5		Borrowings on credit facility — floorplan line and other	7,548.3		5,796.1
Repayments on credit facility — floorplan line and other	Repayments on credit facility — floorplan line and other	(6,479.2)		(7,960.7)		Repayments on credit facility — floorplan line and other	(7,294.2)		(6,479.2)
Borrowings on credit facility — acquisition line	Borrowings on credit facility — acquisition line	67.3		284.0		Borrowings on credit facility — acquisition line	286.0		67.3
Repayments on credit facility — acquisition line	Repayments on credit facility — acquisition line	(59.9)		(296.5)		Repayments on credit facility — acquisition line	(411.3)		(59.9)
Debt issuance costs	Debt issuance costs	—		(9.0)		Debt issuance costs	(4.6)		—
Borrowings of senior notes		—		550.0
Repayments of senior notes		—		(857.9)

Borrowings on other debt	Borrowings on other debt	110.0		252.9		Borrowings on other debt	296.0		110.0
Principal payments on other debt	Principal payments on other debt	(143.7)		(90.8)		Principal payments on other debt	(246.5)		(143.7)
Proceeds from employee stock purchase plan	Proceeds from employee stock purchase plan	11.9		7.0		Proceeds from employee stock purchase plan	15.9		11.9
Payments of tax withholding for stock-based compensation	Payments of tax withholding for stock-based compensation	(8.3)		(5.5)		Payments of tax withholding for stock-based compensation	(9.1)		(8.3)

Repurchases of common stock, amounts based on settlement date	Repurchases of common stock, amounts based on settlement date	(18.6)		(48.9)		Repurchases of common stock, amounts based on settlement date	(359.5)		(18.6)

Dividends paid	Dividends paid	(17.9)		(5.5)		Dividends paid	(18.1)		(17.9)

Other						Other	(1.2)		—
Net cash used in financing activities	Net cash used in financing activities	(742.2)		(590.4)		Net cash used in financing activities	(198.4)		(742.2)
Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	(2.1)		(5.4)		Effect of exchange rate changes on cash	(7.2)		(2.1)
Net increase in cash and cash equivalents	Net increase in cash and cash equivalents	209.7		38.1		Net increase in cash and cash equivalents	1.9		209.7
CASH AND CASH EQUIVALENTS, beginning of period	CASH AND CASH EQUIVALENTS, beginning of period	87.3		28.1		CASH AND CASH EQUIVALENTS, beginning of period	18.7		87.3
CASH AND CASH EQUIVALENTS, end of period	CASH AND CASH EQUIVALENTS, end of period	$	296.9	$	66.2	CASH AND CASH EQUIVALENTS, end of period	$	20.5	$	296.9

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

Table of Contents

GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. ~~INTERIM FINANCIAL INFORMATION~~

~~Business~~

~~Group 1 Automotive, Inc., a Delaware corporation, is a leading operator in the automotive retailing industry with business activities in~~ 15 ~~states in the U.S.,~~ 35 ~~towns in the U.K. and~~ 3 states in Brazil. Group 1 Automotive, Inc. and its subsidiaries are collectively referred to as the “Company” in these Notes to Condensed Consolidated Financial Statements. Through its dealerships, the Company sells new and used cars and light trucks; arranges related vehicle financing; sells service and insurance contracts; provides automotive maintenance and repair services; and sells vehicle parts.

~~As of September 30, 2021, the Company’s retail network consisted of~~ ~~117~~ ~~dealerships in the U.S., 55 dealerships in the U.K. and~~ 16 dealerships in Brazil. The U.S. and Brazil are led by the President, U.S. and Brazilian Operations, and the U.K. is led by an Operations Director, each reporting directly to the Company's Chief Executive Officer. The President, U.S. and Brazilian Operations, and the U.K. Operations Director are responsible for the overall performance of their respective regions, as well as for overseeing field level management.

The Company’s operating results are generally subject to seasonal variations, as well as changes in the economic environment. In the U.S., the Company generally experiences higher volumes of vehicle sales and service in the second and third quarters of each year. In addition, in some regions of the U.S., vehicle purchases decline during the winter months due to inclement weather. 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 the COVID-19 pandemic, changes in economic conditions, manufacturer incentive programs, supply issues, seasonal weather events and changes in foreign currency exchange rates may exaggerate seasonal or cause counter-seasonal fluctuations in the Company’s revenues and operating income. BASIS OF PRESENTATION AND CONSOLIDATION AND ACCOUNTING POLICIES

Basis of Presentation and Consolidation

The accompanying Condensed Consolidated Financial Statements and notes thereto, have been prepared in accordance with U.S. GAAP for interim financial information and in accordance with the rules and regulations of the 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 ~~Annual Report on~~2021 Form ~~10-K for the year ended December 31, 2020 (the “2020 Form 10-K”).~~

10-K. All intercompany balances and transactions have been eliminated in consolidation. The accompanying Condensed Consolidated Financial Statements reflect the consolidated accounts of the parent company, Group 1 Automotive, Inc. (the “Company”), and its subsidiaries, all of which are wholly owned. ~~All intercompany balances~~

On November 12, 2021, the Company entered into a Share Purchase Agreement (the “Brazil Agreement”) with Original Holdings S.A. (“Buyer”). Pursuant to the terms and ~~transactions have been eliminated~~conditions set forth in ~~consolidation.~~the Brazil Agreement, Buyer agreed to acquire 100% of the issued and outstanding equity interests of the Company’s Brazilian operations (the “Brazil Disposal Group”) for approximately BRL 510.0 million in cash (the “Brazil Disposal”). On July 1, 2022, the Company completed the Brazil Disposal. The Brazil Disposal Group met the criteria to be reported as held for sale and discontinued operations. Therefore, the related assets, liabilities and operating results of the Brazil Disposal Group are reported as discontinued operations (the “Brazil Discontinued Operations”) for all periods presented. The Brazil Disposal Group was previously included in the Brazil segment. Effective as of the fourth quarter of 2021, the Company is aligned into two reportable segments: U.S. and U.K.Refer to Note 5.Segment Information for additional information on the Company’s segments.

Unless otherwise specified, disclosures in these Condensed Consolidated Financial Statements reflect continuing operations only. Certain prior-period amounts, primarily related to the Brazil Discontinued Operations, have been reclassified in the Condensed Consolidated Financial Statements and accompanying notes to conform to current-period presentation. ~~Specifically, the long-term liabilities associated with the Company’s interest rate swaps have been combined into the caption~~ ~~Other long-term liabilities~~ ~~in the Condensed Consolidated Balance Sheets. The reclassification within the Condensed Consolidated Balance Sheets had no effect on any subtotal in the statements.~~Refer to Note 4. Discontinued Operations and Other Divestitures for additional information.

Certain amounts in the Condensed Consolidated Financial Statements and the accompanying notes may not compute due to rounding. All computations have been calculated using unrounded amounts for all periods presented. 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.

~~During the three months ended June 30, 2020, the Company recorded an out-of-period adjustment of $10.6 million, resulting in an increase to~~ ~~Selling, general and administrative expenses~~ ~~and~~ ~~Additional paid-in capital,~~ to correct stock-based compensation for awards granted in prior years to retirement eligible employees not recognized timely due to the incorrect treatment of a non-substantive service condition. The impact to the three months ended June 30, 2020, was a decrease to net income of $9.7 million and a decrease to diluted earnings per common share of $0.53. The effect of this adjustment on any previously reported periods was not material based on a quantitative and qualitative evaluation.

~~Table of Contents~~

~~GROUP 1 AUTOMOTIVE, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)~~

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. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the balance sheet date and the amounts of revenues and expenses recognized during the reporting period. Management analyzes the Company’s estimates based on historical experience and other assumptions that are believed to be reasonable under the circumstances; however, actual results could differ materially from such estimates. The significant estimates made by management in the accompanying Condensed Consolidated Financial Statements include, but ~~are~~ not limited to, inventory valuation adjustments, reserves for future chargebacks on finance, insurance and ~~vehicle service contract~~VSC fees, self-insured property and casualty insurance exposure, the fair value of assets acquired and liabilities assumed in business combinations, the valuation of goodwill and intangible franchise rights and reserves for potential litigation.

~~Recent Accounting Pronouncements~~

~~Reference Rate Reform~~

~~In March 2020, the FASB issued ASU 2020-04,~~ ~~Reference Rate Reform (Topic 848): Facilitation~~Table of ~~the Effects of~~Contents ~~Reference Rate Reform on Financial Reporting~~. The ASU provides optional expedients and exceptions for companies that have contracts, hedging relationships and other transactions that reference LIBOR or other reference rates expected to be discontinued because of reference rate reform. The optional expedients and exceptions are intended to ease the financial reporting burdens mainly related to contract modification accounting, hedge accounting and lease accounting. In January 2021, the FASB issued ASU 2021-01 which clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. The guidance is effective for all entities as of March 12, 2020 and will apply through December 31, 2022. LIBOR is used as an interest rate “benchmark” in the majority of the Company’s floorplan notes payable, as well as its mortgages, other debt and lease contracts. Additionally, the Company’s derivative instruments are benchmarked to LIBOR. The Company will apply the relief described as its arrangements are modified and does not expect the adoption will have a material impact on the Company’s consolidated financial statements.

GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

2. REVENUES

The following tables present the Company’s revenues disaggregated by its geographical segments (in millions):

Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021
U.S. U.K. Brazil Total U.S. U.K. Brazil Total
New vehicle retail sales $ 1,208.5 $ 305.4 $ 62.3 $ 1,576.2 $ 3,958.9 $ 869.7 $ 146.3 $ 4,974.9
Used vehicle retail sales 902.3 328.0 18.0 1,248.3 2,481.7 820.5 40.5 3,342.7
Used vehicle wholesale sales 68.0 38.1 3.3 109.4 179.6 98.4 8.0 286.0
Total new and used vehicle sales 2,178.8 671.5 83.6 2,933.9 6,620.2 1,788.7 194.7 8,603.6
Parts and service sales (1)
353.1 63.4 11.1 427.6 982.0 170.2 28.2 1,180.4
Finance, insurance and other, net (2)
130.5 15.6 1.7 147.7 389.4 41.9 4.4 435.7
Total revenues $ 2,662.4 $ 750.4 $ 96.4 $ 3,509.2 $ 7,991.6 $ 2,000.7 $ 227.3 $ 10,219.7
Three Months Ended September 30, 2020 Nine Months Ended September 30, 2020
U.S. U.K. Brazil Total U.S. U.K. Brazil Total
New vehicle retail sales $ 1,172.2 $ 376.6 $ 31.9 $ 1,580.7 $ 3,076.3 $ 800.1 $ 109.1 $ 3,985.5
Used vehicle retail sales 608.2 248.1 10.9 867.2 1,719.4 529.7 38.3 2,287.4
Used vehicle wholesale sales 44.8 39.5 2.4 86.7 122.1 90.6 9.2 221.9
Total new and used vehicle sales 1,825.2 664.2 45.2 2,534.6 4,917.8 1,420.4 156.6 6,494.8
Parts and service sales (1)
306.4 61.3 8.0 375.6 865.2 139.5 23.4 1,028.2
Finance, insurance and other, net (2)
113.0 15.4 1.1 129.5 300.2 35.1 3.4 338.7
Total revenues $ 2,244.6 $ 740.8 $ 54.3 $ 3,039.6 $ 6,083.3 $ 1,595.0 $ 183.4 $ 7,861.7


	Three Months Ended September 30, 2022						Nine Months Ended September 30, 2022
	U.S.		U.K.		Total		U.S.		U.K.		Total
New vehicle retail sales	$	1,586.9	$	296.4	$	1,883.3	$	4,581.8	$	898.0	$	5,479.8
Used vehicle retail sales	1,212.1		276.5		1,488.6		3,447.6		906.3		4,353.9
Used vehicle wholesale sales	61.3		28.3		89.6		177.6		101.2		278.9
Total new and used vehicle sales	2,860.3		601.2		3,461.5		8,207.0		1,905.5		10,112.5


Parts and service sales (1)	453.8		61.8		515.6		1,307.7		183.4		1,491.1
Finance, insurance and other, net (2)	170.2		16.1		186.3		498.1		51.4		549.5
Total revenues	$	3,484.3	$	679.1	$	4,163.4	$	10,012.8	$	2,140.3	$	12,153.1


	Three Months Ended September 30, 2021						Nine Months Ended September 30, 2021
	U.S.		U.K.		Total		U.S.		U.K.		Total
New vehicle retail sales	$	1,208.5	$	305.4	$	1,513.9	$	3,958.9	$	869.7	$	4,828.6
Used vehicle retail sales	902.3		328.0		1,230.4		2,481.7		820.5		3,302.3
Used vehicle wholesale sales	68.0		38.1		106.0		179.6		98.4		278.0
Total new and used vehicle sales	2,178.8		671.5		2,850.3		6,620.2		1,788.7		8,408.9


Parts and service sales (1)	353.1		63.4		416.5		982.0		170.2		1,152.2
Finance, insurance and other, net (2)	130.5		15.6		146.0		389.4		41.9		431.3
Total revenues	$	2,662.4	$	750.4	$	3,412.8	$	7,991.6	$	2,000.7	$	9,992.3

(1) The Company has elected not to disclose revenues related to remaining performance obligations on its maintenance and repair services as the duration of these contracts is less than one year.

(2) Includes variable consideration recognized of ~~$5.1~~$5.3 million and ~~$7.6~~$5.1 million during the three months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$18.7~~$22.2 million and ~~$16.9~~$18.7 million during the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively, relating to performance obligations satisfied in previous periods on the Company’s retrospective commission income contracts. Refer to Note 7.8. Receivables, Net and Contract Assets for the balance of the Company’s contract assets associated with revenues from the arrangement of financing and sale of service and insurance contracts.

3. ACQUISITIONS

The Company accounts for business combinations under the acquisition method of accounting, under which the Company allocates the purchase price to the assets acquired and liabilities assumed based on an estimate of fair value.

Prime Acquisition

In November 2021, the Company completed the acquisition of the Prime Automotive Group (“Prime”), including 28 dealerships, certain real estate and three collision centers in the Northeastern U.S. (collectively referred to as the “Prime Acquisition”), for aggregate consideration of $934.2 million.

The Company analyzed and assessed all available information related to property and equipment and property lease contracts, determining the preliminary fair values established in 2021,were appropriate and no material adjustments were recorded to these fair values in the nine months ended September 30, 2022. The Company previously recorded a $33.4 million deposit for the purchase of an additional dealership as part of the Prime Acquisition, which had not closed as of December 31, 2021. As of September 30, 2022, the Company is still waiting for distributor approval to obtain ownership of the additional dealership. Pursuant to the purchase agreement with the seller, the seller initiated legal action against the distributor to compel the approval of the sale of the dealership. In March 2022, upon the contractual release of funds from escrow to the seller related to the dealership, the deposit was recognized as additional consideration paid and reflected as additional goodwill, resulting in total consideration associated with the Prime Acquisition of $967.6 million. If such legal action is resolved within the 12-month measurement period following the acquisition date, the Company will make an adjustment to reflect the fair value of the acquisition of this dealership. The results of the Prime Acquisition are included in the U.S. segment. The goodwill is deductible for income tax purposes.

Table of Contents

GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

The following table summarizes the consideration paid and aggregate amounts of assets acquired and liabilities assumed (in millions):


Total consideration	$	967.6
Identifiable assets acquired and liabilities assumed
Inventories	136.7
Property and equipment	266.8
Intangible franchise rights	135.3
Operating lease assets	58.3
Other assets (1)	62.2
Total assets acquired	659.3
Operating lease liabilities	56.6
Other liabilities (2)	38.3
Total liabilities assumed	94.9
Total identifiable net assets	564.4

Goodwill	$	403.2

(1) Other assets acquired in connection with the Prime Acquisition include $55.3 million of assets classified as held for sale as of the acquisition date. See the table below for additional details.

(2) Other liabilities assumed in connection with the Prime Acquisition include $1.7 million of liabilities classified as held for sale as of the acquisition date. See the table below for additional details.


Prime assets classified as held for sale as of the acquisition date (in millions)
Inventories	$	10.4
Property and equipment	28.1
Operating lease assets	1.7
Goodwill	15.1
Total other assets classified as held for sale	$	55.3
Prime liabilities classified as held for sale as of the acquisition date (in millions)
Operating lease liabilities	$	1.7

The Company’s Condensed Consolidated Statement of Operations included revenues attributable to Prime for the three and nine months ended September 30, 2022, of $448.0 million and $1.3 billion, respectively, and net income attributable to Prime for the three and nine months ended September 30, 2022 of $34.2 million and $89.0 million, respectively. These revenue and net income amounts attributable to Prime include amounts up to the date of disposal, from certain stores which have been disposed of since the date of the Prime Acquisition.

Other Acquisitions

During the nine months ended September 30, 2022, the Company acquired five dealerships and a collision center in the U.S. Aggregate consideration paid for these dealerships, which were accounted for as business combinations, was $393.0 million, net of cash acquired. Goodwill and franchise rights intangibles associated with these acquisitions totaled $194.0 million and $93.4 million, respectively.

During the nine months ended September 30, 2022, the Company acquired a dealership and related collision center in the U.K. Consideration paid, which was accounted for as a business combination, was $32.8 million, net of cash acquired. Goodwill associated with the acquisition totaled $9.2 million. The accounting for the U.K. acquisition is considered to be preliminary, as the acquisition was announced on September 6, 2022. The Company is continuing to analyze and assess relevant information related to the valuation of property, equipment and intangible assets. Due to the recent timing of the U.K. acquisition, the related amounts are provisional and subject to change as the Company’s fair value assessments are finalized. The Company will reflect any such adjustments in subsequent filings with the SEC.

During the nine months ended September 30, 2021, the Company acquired two dealerships in the U.S. and seven dealerships in the U.K. Aggregate consideration paid for these dealerships, which were accounted for as business combinations, was $74.6 million, net of cash acquired. Goodwill associated with these acquisitions totaled $41.4 million.

Table of Contents

GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

4. DISCONTINUED OPERATIONS AND OTHER DIVESTITURES

Brazil Discontinued Operations

On November 12, 2021, the Company entered into an agreement to effect the Brazil Disposal. The sale price of approximately BRL 510.0 million included a holdback amount as of the Brazil Disposition Date (as defined herein), for general representations and warranties, of BRL 115.0 million, to be held in escrow for a period of five years from the close of the transaction (the “Brazil Disposal Escrow”).At the conclusion of the five-year period, the remaining funds held in the Brazil Disposal Escrow will be released to the Company.This amount has been included in the proceeds received.

On July 1, 2022 (“Brazil Disposition Date”), the Company closed on the Brazil Disposal. During the fourth quarter of 2021, the Company recognized a net loss of $77.5 million on the Brazil Disposal. During the three and nine months ended September 30, 2022, the Company recognized additional net losses of $3.7 million and $10.0 million on the disposal of the Brazil Disposal Group.

Upon sale of a foreign entity, amounts recorded within Accumulated Other Comprehensive Income (loss) (“AOCI”) on the Condensed Consolidated Balance Sheets, are required to be reclassified into earnings on the date of disposition.For purposes of determining the net gain or loss on the Brazil Disposal, the Company included the currency translation adjustments recorded in AOCI as a loss of $122.8 million attributable to the Brazil Disposal Group. The loss on sale indicated an impairment of assets, however, the loss was entirely the result of the reclassification of the translation adjustment from AOCI. Prior to the Brazil Disposition Date, the Company recorded a valuation allowance against the assets held for sale for the Brazil Disposal to reflect the expected loss not attributable to a particular asset within the Brazil Disposal Group. On and following the Brazil Disposition Date, the Company reclassified into earnings the currency translation loss attributable to the Brazil Disposal Group. The currency translation loss was offset by the reversal of the previously recorded valuation allowance.

In addition, the purchase price of the Brazil Disposal is denominated in BRL, which is subject to foreign currency exchange risk. In order to partially mitigate this risk, the Company entered into a foreign currency derivative for the conversion of BRL to USD in the form of a costless collar which protects the Company from significant downside exposure on $70.0 million of the expected purchase consideration. Losses associated with the foreign currency derivative are presented as estimated incremental costs to sell in the table above and are fully offset by corresponding foreign currency impacts to the estimated fair value of proceeds from the disposition. On June 30, 2022, the Company settled the foreign currency derivative for a loss of $8.4 million.

During the three months ended September 30, 2022, the Company received additional proceeds for final working capital adjustments related to the Brazil Disposal of $4.1 million. The resulting gain was recognized within Discontinued Operations and included within the net loss recorded during the three months ended September 30, 2022, as described above.

Additionally, during the three months ended September 30, 2022, the Buyer, with approval by the Company, entered into a tax settlement associated with the Brazil Disposal with the Brazilian tax authority for BRL 23.0 million or approximately $4.5 million. The settlement was accrued within Accrued expenses and other current liabilities on the Condensed Consolidated Balance Sheet and recorded as Provision for income taxes within Discontinued Operations and included within the net loss recorded during the three months ended September 30, 2022, as described above. The settlement will be paid out of the existing Brazil Disposal Escrow balance within one year.

As of September 30, 2022, the Company had a remaining receivable balance of $21.8 million associated with the Brazil Disposal Escrow recorded in Other long-term assets on the Condensed Consolidated Balance Sheet, of which $7.5 million is expected to be paid to settle the Company’s portion of accrued liabilities retained subsequent to the Brazil Disposition Date, including the tax settlement described above.

The following table summarizes the fair value of the proceeds received from the disposition and net carrying value of the assets disposed as of September 30, 2022 (in millions):


Fair value of proceeds from disposition	$	92.5
Net assets disposed	48.8
Gain before currency translation adjustments	43.7
Amount of currency translation loss recorded in AOCI	(122.8)
Incremental costs to sell	8.4
Net loss on the Brazil Disposal	$	(87.5)

Table of Contents

GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

Results of the Brazil Discontinued Operations were as follows (in millions):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
REVENUES:
New vehicle retail sales	$	—	$	62.3	$	109.0	$	146.3
Used vehicle retail sales	—		18.0		44.0		40.5
Used vehicle wholesale sales	—		3.3		10.1		8.0
Parts and service sales	—		11.1		23.8		28.2
Finance, insurance and other, net	—		1.7		3.3		4.4
Total revenues	—		96.4		190.2		227.3
COST OF SALES:
New vehicle retail sales	—		56.1		98.5		131.5
Used vehicle retail sales	—		16.4		41.2		36.9
Used vehicle wholesale sales	—		3.1		10.0		7.4
Parts and service sales	—		6.2		14.5		15.9
Total cost of sales	—		81.9		164.2		191.6
GROSS PROFIT	—		14.5		26.1		35.7
Selling, general and administrative expenses	(4.6)		8.8		14.8		24.0
Depreciation and amortization expense	—		0.4		0.9		1.1
Asset impairments	0.1		—		6.3		—
INCOME FROM OPERATIONS — DISCONTINUED OPERATIONS	4.5		5.3		4.0		10.6
Floorplan interest expense	—		0.4		1.4		0.7
Other interest (income) expense, net	(0.7)		0.1		(1.1)		0.8
Loss on extinguishment of debt	—		3.8		—		3.8
Other expenses	1.5		—		1.5		—
INCOME BEFORE INCOME TAXES — DISCONTINUED OPERATIONS	3.7		0.9		2.2		5.2
Provision for income taxes	5.0		1.3		5.1		2.4
NET (LOSS) INCOME — DISCONTINUED OPERATIONS	$	(1.3)	$	(0.4)	$	(2.9)	$	2.8

The following table presents cash flows from operating and investing activities for the Brazil Discontinued Operations (in millions):


	Nine Months Ended September 30,
	2022		2021
Net cash provided by operating activities — discontinued operations	$	26.6	$	8.1
Net cash provided by (used in) investing activities — discontinued operations	$	59.1	$	(1.4)

Table of Contents

GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

~~3. ACQUISITIONS AND DISPOSITIONS~~Assets and liabilities of the Brazil Discontinued Operations were as follows (in millions):

~~Acquisitions~~


	September 30, 2022		December 31, 2021
Cash and cash equivalents	$	—	$	3.7
Contracts-in-transit and vehicle receivables, net	—		2.3
Accounts and notes receivable, net	—		11.8
Inventories	—		37.2
Prepaid expenses	—		1.9
Other current assets	1.3		—
Current assets of discontinued operations	1.3		56.9
Property and equipment, net	—		22.3
Operating lease assets	—		2.4


Other long-term assets	21.8		7.8
Non-current assets of discontinued operations	21.8		32.5
Total assets, before valuation allowance	23.2		89.5
Valuation allowance	—		(76.4)
Total assets, net of valuation allowance	$	23.2	$	13.0

Floorplan notes payable — credit facility and other	$	—	$	3.3
Floorplan notes payable — manufacturer affiliates	—		20.1

Current operating lease liabilities	—		2.5
Accounts payable	—		13.7
Accrued expenses and other current liabilities	7.5		8.7
Current liabilities of discontinued operations	$	7.5	$	48.3

~~The Company accounts~~

Assets and Liabilities Held for ~~business combinations under~~Sale

Assets and liabilities classified as held for sale consisted of the ~~acquisition method of accounting, under which the Company allocates the purchase price to the~~following (in millions):


	September 30, 2022		December 31, 2021
Current assets classified as held for sale
Brazil Discontinued Operations	$	—	$	13.0
Prime Acquisition (1)	7.4		52.3
Other (2)	31.2		34.9
Total current assets classified as held for sale	$	38.6	$	100.3



Current liabilities classified as held for sale
Brazil Discontinued Operations	$	—	$	48.3
Prime Acquisition (1)	1.2		1.6
Other	4.0		—
Total current liabilities classified as held for sale	$	5.2	$	49.9

(1) For additional details on current assets and current liabilities ~~assumed based on an estimate of fair value.~~

~~During the nine months ended September 30, 2021, the Company acquired 2 dealerships, representing 2 franchises,~~classified as held for sale in the U.S. and 7 dealerships, representing 9 franchises, in the U.K. Aggregate consideration paid for these dealerships, which were accounted for as business combinations, totaled $74.6 million, net of cash acquired. Goodwill associated with these acquisitions totaled $41.4 million.

During the nine months ended September 30, 2020, the Company acquired a collision center in the U.S., which was integrated into an existing dealership. Aggregate consideration paid was $1.3 million. Goodwill associated with this acquisition was not material.

On September 13, 2021, the Company entered into a Purchase Agreement (the “Purchase Agreement”) to purchase substantially all the assets, including real estate, of Prime Automotive Group (the “Seller”), headquartered in Westwood, Massachusetts (the “Prime Acquisition”). The Company expects to pay a purchase price of approximately $880 million, excluding repayment of sellers’ floorplan notes payable, subject to customary adjustments described in the Purchase Agreement (the “Purchase Price”) and appropriate reductions for any exercise of customary manufacturer rights of first refusal. The Purchase Price is expected to be financed through a combination of cash, available lines of credit and debt financing. The operating assets expected to be acquired include 30 dealerships, representing 43 franchises, and 3 collision centers in the Northeastern U.S. In connection with the ~~execution~~Prime Acquisition as of the ~~Purchase Agreement, the Company made a deposit~~acquisition date, refer to Note 3. Acquisitions.

(2) Includes $11.3 million and $9.9 million of ~~$20.0 million into an escrow account. The deposit is recorded in~~ ~~Other Current Assets~~ ~~on the Condensed Consolidated Balance Sheets~~goodwill reclassified to assets held for sale as of September 30, 2022 and ~~reflected in~~ ~~Other within~~ ~~Cash Flows from Investing Activities~~ ~~on the Condensed Consolidated Statements of Cash Flows. The Prime Acquisition is expected to close in November 2021.~~December 31, 2021, respectively.

~~In October 2021, the Company acquired 3 dealerships representing 6 franchises in the U.S. for approximately $66.8 million, excluding repayment of sellers’ floorplan notes payable.~~

~~Dispositions~~Other Divestitures

The Company’s dispositions generally consist of dealership assets and related real estate. Gains and losses on dispositions are recorded in Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

During the nine months ended September 30, 2022, the Company recorded a net pre-tax gain totaling $31.3 million related to the disposition of five dealerships representing five franchises in the U.S. The dispositions reduced goodwill by $36.9 million. The Company also terminated one franchise representing one dealership in the U.K.

Table of Contents

GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

During the nine months ended September 30, 2021, the Company recorded a net pre-tax gain totaling $1.8 million related to the disposition of 2two dealerships representing 2two franchises and 1one franchise within an existing dealership in the U.S. The dispositions reduced goodwill by $2.2 million. The Company also terminated 1one franchise representing 1one dealership in the U.K.

~~During the nine months ended~~

5. SEGMENT INFORMATION

As of September 30, ~~2020,~~2022, the Company had ~~no activity related to dispositions.~~

~~4. SEGMENT INFORMATION~~

~~The Company conducts business in 3~~two reportable segments: the U.S., and the U.K. ~~and Brazil.~~ The Company defines its segments as those operations whose results the Company’s Chief Executive Officer, who is the chief operating decision maker, regularly reviews to analyze performance and allocate resources. Each segment is comprised of retail automotive franchises that 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.

~~Table of Contents~~

~~GROUP 1 AUTOMOTIVE, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)~~

Selected reportable segment data is as follows for the three and nine months ended September 30, ~~2021~~2022 and ~~2020~~2021 (in millions):


		Three Months Ended September 30, 2021								Nine Months Ended September 30, 2021									Three Months Ended September 30, 2022						Nine Months Ended September 30, 2022
		U.S.		U.K.		Brazil		Total		U.S.		U.K.		Brazil		Total			U.S.		U.K.		Total		U.S.		U.K.		Total
Total revenues	Total revenues	$	2,662.4	$	750.4	$	96.4	$	3,509.2	$	7,991.6	$	2,000.7	$	227.3	$	10,219.7	Total revenues	$	3,484.3	$	679.1	$	4,163.4	$	10,012.8	$	2,140.3	$	12,153.1
Income before income taxes ~~(1)~~	Income before income taxes ~~(1)~~	$	195.5	$	28.7	$	0.9	$	225.0	$	532.1	$	62.3	$	5.2	$	599.6	Income before income taxes ~~(1)~~	$	231.5	$	25.7	$	257.2	$	703.8	$	75.9	$	779.6

Three Months Ended September 30, 2020 Nine Months Ended September 30, 2020
U.S. U.K. Brazil Total U.S. U.K. Brazil Total
Total revenues $ 2,244.6 $ 740.8 $ 54.3 $ 3,039.6 $ 6,083.3 $ 1,595.0 $ 183.4 $ 7,861.7
Income (loss) before income taxes (2)
$ 132.9 $ 27.1 $ 1.0 $ 161.0 $ 249.8 $ 4.7 $ (12.4) $ 242.2

~~(1)~~ For the three months ended September 30, 2021, income before income taxes includes the following: in the U.S. segment, $3.8 million in acquisition costs, a $3.7 million gain from favorable legal settlements, $1.7 million in asset impairments, a $0.9 million non-cash gain associated with certain interest rate swaps and $0.6 million in expenses related to Hurricane Ida; in the U.K. segment, $0.6 million in acquisition costs; and in the Brazil segment, a $3.8 million loss on debt extinguishment. For the nine months ended September 30, 2021, income before income taxes includes the following: in the U.S. segment, a $4.7 million gain from favorable legal settlements, $3.8 million in acquisition costs, $2.8 million in expenses related to a winter storm and Hurricane Ida, $1.7 million in asset impairments, a $1.7 million net gain on dealership and real estate transactions and a $1.4 million non-cash loss associated with certain interest rate swaps; in the U.K. segment, a $0.6 million net loss on dealership and real estate transactions and $0.6 million in acquisitions costs; and in the Brazil segment, a $3.8 million loss on debt extinguishment.

~~(2)~~ ~~For the three months ended September 30, 2020, income (loss) before income taxes includes a~~ ~~$3.3 million~~ ~~loss on debt extinguishment in the U.S. segment. For the nine months ended September 30, 2020, income (loss) before income taxes includes the following: in the U.S. segment,~~ ~~a $13.7 million loss on debt extinguishment and $10.6 million in stock-based compensation expense related to an out-of-period adjustment; in the U.K. segment,~~ ~~$12.8 million~~ ~~in asset impairments and~~ ~~$1.2 million~~ ~~in severance expense; and in the Brazil segment,~~ ~~$11.1 million~~ ~~in asset impairments and~~ ~~$0.9 million~~ ~~in severance expense.~~


	Three Months Ended September 30, 2021						Nine Months Ended September 30, 2021
	U.S.		U.K.		Total		U.S.		U.K.		Total
Total revenues	$	2,662.4	$	750.4	$	3,412.8	$	7,991.6	$	2,000.7	$	9,992.3
Income before income taxes	$	195.5	$	28.7	$	224.1	$	532.1	$	62.3	$	594.4

5.6. EARNINGS PER SHARE

The two-class method is utilized for the computation of the Company’s EPS. The two-class method requires a portion of net income to be allocated to participating securities, which are unvested awards of share-based payments with non-forfeitable rights to receive dividends that are paid in cash. The Company’s RSAs are participating securities. Income allocated to these participating securities is excluded from net earnings available to common shares, as shown in the table below. Basic EPS is computed by dividing net income available to basic common shares by the weighted average number of basic common shares outstanding during the period. Diluted EPS is computed by dividing net income available to diluted common shares by the weighted average number of dilutive common shares outstanding during the period.

~~The following table sets forth the calculation of EPS for the three and nine months ended September 30, 2021 and 2020 (in millions, except share and per share data):~~
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Weighted average basic common shares outstanding 17,753,957 17,776,888 17,753,042 17,770,619
Dilutive effect of stock-based compensation and employee stock purchases 82,298�� 58,661 76,940 47,919
Weighted average dilutive common shares outstanding 17,836,255 17,835,549 17,829,982 17,818,538
Basic:
Net income $ 172.1 $ 126.4 $ 465.0 $ 186.4
Less: Earnings allocated to participating securities 5.7 4.6 15.7 6.7
Net income available to basic common shares $ 166.4 $ 121.9 $ 449.4 $ 179.7
Basic earnings per common share $ 9.37 $ 6.86 $ 25.31 $ 10.11
Diluted:
Net income $ 172.1 $ 126.4 $ 465.0 $ 186.4
Less: Earnings allocated to participating securities 5.7 4.5 15.6 6.7
Net income available to diluted common shares $ 166.4 $ 121.9 $ 449.4 $ 179.7
Diluted earnings per common share $ 9.33 $ 6.83 $ 25.21 $ 10.08

1115

Table of Contents

GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

6.The following table sets forth the calculation of EPS on total net income for the three and nine months ended September 30, 2022 and 2021 (in millions, except share and per share data):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Weighted average basic common shares outstanding	15,189,333		17,753,957		15,886,739		17,753,042
Dilutive effect of stock-based awards and employee stock purchases	59,115		82,298		57,145		76,940
Weighted average dilutive common shares outstanding	15,248,448		17,836,255		15,943,883		17,829,982
Basic:
Net income	$	195.7	$	172.1	$	594.6	$	465.0
Less: Earnings allocated to participating securities from continued operations	5.5		5.7		16.8		15.6
Less: (Loss) earnings allocated to participating securities from discontinued operations	—		—		(0.1)		0.1
Net income available to basic common shares	$	190.3	$	166.4	$	577.9	$	449.4
Basic earnings per common share	$	12.53	$	9.37	$	36.38	$	25.31
Diluted:
Net income	$	195.7	$	172.1	$	594.6	$	465.0
Less: Earnings allocated to participating securities from continued operations	5.4		5.7		16.7		15.5
Less: (Loss) earnings allocated to participating securities from discontinued operations	—		—		(0.1)		0.1
Net income available to diluted common shares	$	190.3	$	166.4	$	578.0	$	449.4
Diluted earnings per common share	$	12.48	$	9.33	$	36.25	$	25.21

7. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Accounting standards define fair value as the price that would be received from selling an asset or paid to transfer a liability in the most advantageous market in an orderly transaction between market participants at the measurement date. Accounting standards establish a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value and also establishes the following three levels of inputs that may be used to measure fair value:

•Level 1 — Quoted prices for identical assets or liabilities in active markets.

•Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets and liabilities; quoted prices in markets that are not active; or model-derived valuations or other inputs that are observable or that can be corroborated by observable market data for substantially the full term of the assets or liabilities.

•Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Cash and Cash Equivalents, Contracts-In-Transit and Vehicle Receivables, Accounts and Notes Receivable, Accounts Payable, Variable Rate Long-Term Debt and Floorplan Notes Payable

The fair values of these financial instruments approximate their carrying values due to the short-term nature of the instruments and/or the existence of variable interest rates.

The Company periodically invests in demand notes with manufacturer-affiliated finance companies that bear interest at variable rates determined by the manufacturers and represent unsecured, unsubordinated and unguaranteed debt obligations of the manufacturers. The instruments are redeemable on demand by the Company and therefore the Company has classified these instruments as ~~Cash and cash equivalents~~ in the accompanying Condensed Consolidated Balance Sheets. As of September 30, 2021 and December 31, 2020, the carrying value of these instruments was $271.6 million and $60.0 million, respectively. The Company determined that the valuation measurement inputs of these instruments include inputs other than quoted market prices, that are observable or that can be corroborated by observable data by correlation. Accordingly, the Company has classified these instruments within Level 2 of the hierarchy framework.

Fixed Rate Long-Term Debt

The Company estimates the fair value of its ~~$550.0~~$750.0 million 4.00% Senior Notes due August 2028 (“4.00% Senior Notes”) using quoted prices for the identical liability (Level 1) and estimates the fair value of its fixed-rate mortgage facilities using a present value technique based on current market interest rates for similar types of financial instruments (Level 2). Refer to Note 8.9. Debt for further discussion of the Company’s long-term debt arrangements.

~~The carrying value and fair value of the Company’s 4.00% Senior Notes and fixed rate mortgages were as follows (in millions):~~

September 30, 2021 December 31, 2020
Carrying Value (1)
Fair Value
Carrying Value (1)
Fair Value
4.00% Senior Notes $ 550.0 $ 563.0 $ 550.0 $ 567.0
Real estate related 79.3 72.0 84.3 77.0
Total $ 629.3 $ 635.0 $ 634.3 $ 644.0

~~(1)~~ ~~Carrying value excludes unamortized debt issuance costs.~~

1216

Table of Contents

GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

The carrying value and fair value of the Company’s 4.00% Senior Notes and fixed rate mortgages were as follows (in millions):


	September 30, 2022				December 31, 2021
	Carrying Value (1)		Fair Value		Carrying Value (1)		Fair Value
4.00% Senior Notes	$	750.0	$	603.5	$	750.0	$	748.4
Real estate related	101.2		90.8		81.3		78.7
Total	$	851.2	$	694.3	$	831.3	$	827.1

(1) Carrying value excludes unamortized debt issuance costs.

Derivative Financial Instruments

The Company holds interest rate swaps to hedge against variability of interest payments indexed to ~~LIBOR.~~SOFR. The Company’s interest rate swaps are measured at fair value utilizing a ~~one-month LIBOR~~SOFR forward yield curve matched to the identical maturity term of the instrument being measured. Observable inputs utilized in the income approach valuation technique incorporate identical contractual notional amounts, fixed coupon rates, periodic terms for interest payments and contract maturity. The fair value of the interest rate swaps also considers the credit risk of the Company for instruments in a liability position or the counterparty for instruments in an asset position. The credit risk is calculated using the spread between the ~~one-month LIBOR~~SOFR yield curve and the relevant interest rate according to rating agencies. The inputs to the fair value measurements reflect Level 2 of the hierarchy framework.

Assets and liabilities associated with the Company’s interest rate swaps, as reflected gross in the Condensed Consolidated Balance Sheets, were as follows (in millions):
September 30, 2021 December 31, 2020
Assets:
Other current assets $ — $ 1.9
Other long-term assets 11.5 0.3
Total assets $ 11.5 $ 2.3
Liabilities:
Accrued expenses and other current liabilities (1)
$ 1.1 $ 4.2
Other long-term liabilities 22.1 40.6
Total liabilities $ 23.2 $ 44.8

~~(1)~~ ~~As of September 30, 2021, the entire balance consisted of the gross fair value of the de-designated swaps as described below.~~

~~Interest Rate Swaps De-designated as Cash Flow Hedges~~

All interest rate swaps had previously been designated as cash flow hedges. During the three months ended June 30, 2021, the Company de-designated 5 interest rate swaps, with aggregate notional value of $250.0 million and a weighted average interest rate of 1.76% that will mature on December 31, 2021, due to the continued decline in the net floorplan liability balance as a result of decreased vehicle inventory levels. The realized and unrealized gains or losses on the de-designated swaps for each period after de-designation are recognized within income as ~~Floorplan interest expense~~ ~~in the Company’s Condensed Consolidated Statements of Operations. No interest rate swaps were de-designated by the Company during the three months ended September 30, 2021.~~

~~The Company reclassified the entire previously deferred loss associated with the de-designated interest rate swaps of $2.4 million, net of tax of $0.7 million, from~~ ~~Accumulated other comprehensive income (loss)~~ ~~into income as an adjustment to~~ ~~Floorplan interest expense,~~ as the remaining forecasted hedged transactions associated with these interest rate swaps were probable of not occurring due to the reduced inventory levels described above. Additionally, the Company recorded unrealized mark-to-market gains of $1.0 million and $2.0 million and realized losses of $1.1 million and $2.1 million associated with these interest rate swaps within ~~Floorplaninterest expense~~ ~~for the three months and nine months ended September 30, 2021, respectively.~~

~~Table of Contents~~

~~GROUP 1 AUTOMOTIVE, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)~~

~~Interest Rate Swaps Designated as Cash Flow Hedges~~


	September 30, 2022		December 31, 2021
Assets:
Other current assets	$	0.2	$	—
Other long-term assets	115.4		13.8
Total assets	$	115.6	$	13.8
Liabilities:
Accrued expenses and other current liabilities	$	—	$	0.1
Other long-term liabilities	—		11.1
Total liabilities	$	—	$	11.2

Interest rate swaps designated as cash flow hedges and the related gains or losses are deferred in stockholders’ equity as a component of ~~Accumulated other comprehensive income (loss)~~AOCI in the Company’s Condensed Consolidated Balance Sheets. The deferred gains or losses are recognized in income in the period in which the related items being hedged are recognized in expense. Monthly contractual settlements of the positions are recognized as Floorplan interest expense or Other interest expense, net, in the Company’s Condensed Consolidated Statements of Operations. Gains or losses for periods where future forecasted hedged transactions are deemed probable of not occurring are reclassified from ~~Accumulated other comprehensive income (loss)~~AOCI into income as Floorplan interest expense. ~~Amounts reclassified related to the portion of forecasted transactions deemed probable of not occurring were immaterial for the three and nine months ended September 30, 2021.~~

As of September 30, ~~2021,~~2022, the Company held 3341 interest rate swaps designated as cash flow hedges with a total notional value of ~~$686.1~~$949.1 million that fixed ~~the~~its underlying ~~one-month LIBOR~~SOFR at a weighted average rate of ~~1.37%~~1.23%. The Company also held 82 additional interest rate swaps designated as cash flow hedges with forward start dates beginning in December ~~2021,~~2023, that had an aggregate notional value of ~~$425.0~~$100.0 million and a weighted average interest rate of ~~1.20%~~0.94% as of September 30, ~~2021.~~2022. The maturity dates of the Company’s designated interest rate swaps with forward start dates range between ~~January 2025~~December 2027 and December ~~2031.~~2028. As of September 30, 2021, the Company held 33 interest rate swaps designated as cash flow hedges with a total notional value of $686.1 million that fixed the underlying one-month LIBOR at a weighted average rate of 1.37%. The Company transitioned from the use of LIBOR to SOFR subsequent to September 30, 2021.

Table of Contents

GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

The following tables present the impact of the Company’s interest rate swaps designated as cash flow hedges (in millions):


		Amount of Unrealized Income (Loss), Net of Tax, Recognized in Other Comprehensive Income (Loss)									Amount of Unrealized Income (Loss), Net of Tax, Recognized in Other Comprehensive Income (Loss)
		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
Derivatives in Cash Flow Hedging Relationship	Derivatives in Cash Flow Hedging Relationship	2021		2020		2021		2020		Derivatives in Cash Flow Hedging Relationship	2022		2021		2022		2021
Interest rate swaps	Interest rate swaps	$	(0.6)	$	(1.8)	$	16.1	$	(40.4)	Interest rate swaps	$	31.9	$	(0.6)	$	84.8	$	16.1

		Amount of Loss Reclassified from Other Comprehensive Income (Loss) into Statements of Operations									Amount Reclassified from Other Comprehensive Income (Loss) into Statements of Operations
Statement of Operations Classification	Statement of Operations Classification	Three Months Ended September 30,				Nine Months Ended September 30,				Statement of Operations Classification	Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Floorplan interest expense	Floorplan interest expense	$	(1.4)	$	(2.6)	$	(5.0)	$	(5.3)	Floorplan interest expense	$	0.7	$	(1.4)	$	(1.4)	$	(5.0)
Other interest expense, net	Other interest expense, net	$	(1.0)	$	(1.0)	$	(2.9)	$	(1.8)	Other interest expense, net	$	1.2	$	(1.0)	$	(0.7)	$	(2.9)

The amount of ~~loss~~gain expected to be reclassified out of ~~Accumulated other comprehensive income (loss)~~AOCI into earnings as an offset to Floorplan interest expense or Other interest expense, net in the next twelve months is ~~$10.6 million.~~$24.0 million.

8. RECEIVABLES, NET AND CONTRACT ASSETS

The Company’s receivables, net and contract assets consisted of the following (in millions):


	September 30, 2022		December 31, 2021
Contracts-in-transit and vehicle receivables, net:
Contracts-in-transit	$	132.7	$	143.8
Vehicle receivables	90.2		75.6
Total contracts-in-transit and vehicle receivables	222.9		219.4
Less: allowance for doubtful accounts	0.7		0.5
Total contracts-in-transit and vehicle receivables, net	$	222.2	$	218.9

Accounts and notes receivable, net:
Manufacturer receivables	$	86.4	$	76.9
Parts and service receivables	65.8		58.6
F&I receivables	27.6		29.8
Other	10.6		17.0
Total accounts and notes receivable	190.3		182.2
Less: allowance for doubtful accounts	5.9		4.3
Total accounts and notes receivable, net	$	184.4	$	177.9

Within Other current assets and Other long-term assets:
Total contract assets (1)	$	44.7	$	37.5

(1) No allowance for doubtful accounts was recorded for contract assets as of September 30, 2022 or December 31, 2021.

1418

Table of Contents

GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

~~7. RECEIVABLES, NET AND CONTRACT ASSETS~~

~~The Company’s receivables, net and contract assets consisted of the following (in millions):~~
September 30, 2021 December 31, 2020
Contracts-in-transit and vehicle receivables, net:
Contracts-in-transit $ 100.4 $ 147.1
Vehicle receivables 72.0 64.5
Total contracts-in-transit and vehicle receivables 172.4 211.5
Less: allowance for doubtful accounts 0.6 0.3
Total contracts-in-transit and vehicle receivables, net $ 171.8 $ 211.2
Accounts and notes receivable, net:
Manufacturer receivables $ 81.3 $ 108.7
Parts and service receivables 64.4 53.2
F&I receivables 23.9 27.4
Other 15.0 13.8
Total accounts and notes receivable 184.5 203.1
Less: allowance for doubtful accounts 3.9 3.2
Total accounts and notes receivable, net $ 180.6 $ 200.0
Within Other current assets and Other long-term assets:
Total contract assets (1)
$ 40.0 $ 35.3

~~(1)~~ ~~No allowance for doubtful accounts was recorded for contract assets as of September 30, 2021 or December 31, 2020.~~

8.9. DEBT

Debt consisted of the following (in millions):


		September 30, 2021		December 31, 2020			September 30, 2022		December 31, 2021
4.00% Senior Notes due August 15, 2028	4.00% Senior Notes due August 15, 2028	$	550.0	$	550.0	4.00% Senior Notes due August 15, 2028	$	750.0	$	750.0

Acquisition Line	Acquisition Line	53.8		47.8		Acquisition Line	200.0		329.3
Other Debt:	Other Debt:					Other Debt:
Real estate related	Real estate related	598.1		619.8		Real estate related	807.7		627.7
Finance leases	Finance leases	126.6		124.8		Finance leases	174.5		172.7
Other	Other	13.9		20.0		Other	20.9		166.9
Total other debt	Total other debt	738.6		764.6		Total other debt	1,003.0		967.4
Total debt	Total debt	1,342.4		1,362.4		Total debt	1,953.0		2,046.7

Less: unamortized debt issuance costs	Less: unamortized debt issuance costs	8.5		11.0		Less: unamortized debt issuance costs	10.7		11.0
Less: current maturities	Less: current maturities	57.6		56.7		Less: current maturities	141.5		220.4
Total long-term debt	Total long-term debt	$	1,276.3	$	1,294.7	Total long-term debt	$	1,800.9	$	1,815.3

Acquisition Line

The proceeds of the Acquisition Line (as defined in Note 9.10. Floorplan Notes Payable) are used for working capital, general corporate and acquisition purposes. As of September 30, ~~2021,~~2022, borrowings under the Acquisition Line, a component of the ~~Revolving~~Revolving Credit Facility (as defined in Note 9.10. Floorplan Notes Payable), totaled ~~$53.8~~$200.0 million. The average interest rate on this facility was ~~1.05%~~2.90% during the three months ended September 30, ~~2021.~~2022.

Real Estate Related

The Company has mortgage loans in the U.S. and the U.K. that are paid in installments. As of September 30, ~~2021,~~2022, borrowings outstanding under these facilities totaled ~~$598.1~~$807.7 million, gross of debt issuance costs, comprised of ~~$505.2~~$718.7 million in the U.S. and ~~$92.8~~$89.0 million in the U.K.

Bridge Facility

In connection with the Prime Acquisition, the Company entered into a commitment letter with Wells Fargo Bank (“Bridge Facility”) to provide a portion of the debt financing. As of December 31, 2021, borrowings outstanding under the Bridge Facility totaled $140.0 million, and is reflected within Other, under Other Debt in the table above, and reflected within current maturities. During the three months ended March 31, 2022, the Company paid off the total outstanding borrowings under the Bridge Facility of $140.0 million.

Table of Contents

GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

~~New 4.00% Senior Notes~~

On October 21, 2021, the Company issued an additional $200.0 million aggregate principal amount of its 4.00% Senior Notes due 2028 (the “New Notes”) for net proceeds of approximately $199.7 million. The New Notes will have identical terms as the initial 4.00% Senior Notes issued on August 17, 2020, and will be treated as a single class of securities.

~~Bridge Facility~~

In connection with entering into the Purchase Agreement, the Company entered into a commitment letter, dated September 12, 2021 (the “Commitment Letter”), with Wells Fargo Bank, National Association (“Wells Fargo”), pursuant to which, among other things, Wells Fargo has committed to provide a portion of the debt financing for the Prime Acquisition, consisting of a $250.0 million unsecured bridge loan (the “Bridge Facility”), on the terms and subject to the conditions set forth in the Commitment Letter. Although Wells Fargo has committed to fund up to $250.0 million under the Bridge Facility, the Company anticipates utilizing only a portion of such commitment to finance the Prime Acquisition. The Bridge Facility is subject to mandatory prepayment at 100% of the outstanding principal amount thereof with the net proceeds from the issuance of any debt securities of the Company and upon other specified events. The obligation of Wells Fargo to provide this debt financing is subject to a number of customary conditions, including, without limitation, execution and delivery of certain definitive documentation.

9.10. FLOORPLAN NOTES PAYABLE

The Company’s floorplan notes payable consisted of the following (in millions):


		September 30, 2021		December 31, 2020			September 30, 2022		December 31, 2021
Revolving Credit Facility — floorplan notes payable	Revolving Credit Facility — floorplan notes payable	$	372.0	$	901.6	Revolving Credit Facility — floorplan notes payable	$	702.3	$	511.7
Revolving Credit Facility — floorplan notes payable offset account	Revolving Credit Facility — floorplan notes payable offset account	(331.2)		(160.4)		Revolving Credit Facility — floorplan notes payable offset account	(206.1)		(268.6)
Revolving Credit Facility — floorplan notes payable, net	Revolving Credit Facility — floorplan notes payable, net	40.9		741.2		Revolving Credit Facility — floorplan notes payable, net	496.2		243.1
Other non-manufacturer facilities	Other non-manufacturer facilities	42.9		26.4		Other non-manufacturer facilities	45.8		51.9
Floorplan notes payable — credit facility and other, net	Floorplan notes payable — credit facility and other, net	$	83.8	$	767.6	Floorplan notes payable — credit facility and other, net	$	542.0	$	295.0

FMCC Facility	FMCC Facility	$	29.6	$	111.2	FMCC Facility	$	31.4	$	22.8
FMCC Facility offset account	FMCC Facility offset account	(3.5)		(16.0)		FMCC Facility offset account	(12.4)		(3.3)
FMCC Facility, net	FMCC Facility, net	26.1		95.2		FMCC Facility, net	19.0		19.5
Other manufacturer affiliate facilities	Other manufacturer affiliate facilities	208.1		232.3		Other manufacturer affiliate facilities	184.9		216.5
Floorplan notes payable — manufacturer affiliates, net	Floorplan notes payable — manufacturer affiliates, net	$	234.2	$	327.5	Floorplan notes payable — manufacturer affiliates, net	$	203.9	$	236.0

Floorplan Notes Payable — Credit Facility

Revolving Credit Facility

InOn March 9, 2022, in the U.S., the Company ~~has a $1.75 billion~~entered into an amended revolving syndicated credit arrangement with 2221 participating financial institutions that matures on ~~June 27, 2024~~March 9, 2027 (“Revolving Credit Facility”). On August 18, 2022, the company entered into a first amendment on the twelfth amended Revolving Credit Facility. In addition to extending the term, the amendment increases the availability to $2.0 billion, with the ability to increase to $2.4 billion, as further described below. The Revolving Credit Facility currently consists of 2two tranches: ~~(i)~~(i) a ~~$1.70~~$1.2 billion maximum capacity tranche for U.S. vehicle inventory floorplan financing (“U.S. Floorplan Line”) which the outstanding balance, net of offset account discussed below, is reported in Floorplan notes payable — credit facility and other, net; and (ii) aan $~~349.0~~800.0 million maximum ~~capacity and $50.0 million minimum capacity~~capacity tranche (“(“Acquisition Line”), which is not due until maturity of the Revolving Credit Facility and is therefore classified in Long-term debt on the Condensed Consolidated Balance Sheets — refer to Note 8. 9. Debt for additional discussion. The capacity under these 2two tranches can be re-designated within the overall ~~$1.75~~$2.0 billion ~~commitment, subject to the aforementioned limits. The~~ commitment. The Acquisition Line includes a $100.0 million sub-limit for letters of ~~credit. As~~credit and $50.0 million minimum capacity tranche. The Company had $12.2 million in letters of credit outstanding as of both September 30, ~~2021~~2022 and December 31, ~~2020, the Company had $12.6 million and $17.8 million, respectively, in outstanding letters of credit.~~2021.

~~Table of Contents~~

~~GROUP 1 AUTOMOTIVE, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)~~

The U.S. Floorplan Line bears interest at rates equal to ~~LIBOR~~SOFR plus ~~110~~120 basis points for new vehicle inventory and ~~LIBOR~~SOFR plus ~~140~~150 basis points for used vehicle inventory. The weighted average interest rate on the U.S. Floorplan Line was ~~1.17%~~4.25% as of September 30, ~~2021,~~2022, excluding the impact of the Company’s interest rate swap derivative instruments. The Acquisition Line bears interest at ~~LIBOR~~SOFR or a ~~LIBOR~~SOFR equivalent plus ~~100~~110 to ~~200~~210 basis points, depending on the Company’s total adjusted leverage ratio, on borrowings in USD, Euros or GBP. The U.S. Floorplan Line requires a commitment fee of 0.15% per annum on the unused portion. Amounts borrowed by the Company under the U.S. Floorplan Line for specific vehicle inventory are to be repaid upon the sale of the vehicle financed and in no case is a borrowing for a vehicle to remain outstanding for greater than one year. The Acquisition Line requires a commitment fee ranging ~~from~~from 0.15% to 0.40% per annum, depending on the Company’s total adjusted leverage ratio, based on a minimum commitment of $50.0 million less outstanding borrowings.

In conjunction ~~with~~with the amendment to the Revolving Credit Facility described above, the Company incurred $3.7 million in additional debt issuance costs. The Company had ~~$2.8~~$5.3 million and ~~$3.6~~$2.6 million of related unamortized debt issuance costs as of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively, which are included in Prepaid expenses and Other long-term assets in the Company’s Condensed Consolidated Balance Sheets and amortized over the term of the facility.

Floorplan Notes Payable — Manufacturer Affiliates

FMCC Facility

The Company has a ~~$300.0~~$300.0 million floorplan arrangement with FMCC for financing of new Ford vehicles in the U.S. (the “FMCC Facility”). This facility bears interest at the ~~higher of the actual~~ U.S. ~~Prime~~prime rate ~~or a Prime floor of 4.00%, plus 150 basis points minus certain incentives. The interest rate on the FMCC Facility~~which was ~~5.50% before considering the applicable incentives~~6.25% as of September 30, ~~2021.~~2022.

Table of Contents

GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

Other ~~Manufacturer~~Manufacturer Facilities

The Company has other credit facilities in the U.S., and the U.K. ~~and Brazil~~ with financial institutions affiliated with manufacturers for financing of new, used and rental vehicle inventories. As of September 30, ~~2021,~~2022, borrowings outstanding under these facilities totaled ~~$208.1~~$184.9 million, comprised of ~~$77.6~~$104.4 million in the U.S., with annual interest rates ranging from less than 1% to approximately 5%7%, ~~$114.5~~and $80.5 million in the U.K., with annual interest rates ranging from approximately 1%2% to ~~4%, and $16.0 million in Brazil, with annual interest rates ranging from approximately~~ 6% ~~to 12%~~.

Offset Accounts

Offset accounts consist of immediately available cash used to pay down the U.S. Floorplan Line and FMCC Facility, and therefore offset the respective outstanding balances in the Company’s Condensed Consolidated Balance Sheets. The offset accounts are the Company’s primary options for the short-term investment of excess cash.

~~10.~~11. CASH FLOW INFORMATION

Non-Cash Activities

The accrual for capital expenditures increased $0.4 million and $2.1 million an~~d decreased $1.0 million~~ during the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

Interest and Income Taxes Paid

Cash paid for interest, including the monthly settlement of the Company’s interest rate swaps, was $~~61.5~~73.8 million and ~~$77.7~~$59.9 million for the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively. Refer to Note 6.7. Financial Instruments and Fair Value Measurements for further discussion of the Company’s interest rate swaps.

Cash paid for income taxes, net of refunds, was ~~$102.6~~$155.9 million and ~~$26.2~~$100.7 million for the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

~~11.~~12. COMMITMENTS AND CONTINGENCIES

From time to time, the Company’s dealerships are named in various types of litigation involving customer claims, employment matters, class action claims, purported class action claims, claims involving the manufacturers of automobiles, contractual disputes, vehicle related incidents and other matters arising in the ordinary course of business. The Company may be involved in legal proceedings or suffer losses that could have a material adverse effect on the Company’s results of operations, financial condition or cash flows. In the normal course of business, the Company is required to respond to customer, employee and other third-party complaints. In addition, the manufacturers of the vehicles that the Company sells and services have audit rights allowing them to review the validity of amounts claimed for incentive, rebate or warranty-related items and charge the Company back for amounts determined to be invalid payments under the manufacturers’ programs, subject to the Company’s right to appeal any such decision.

~~Table of Contents~~

~~GROUP 1 AUTOMOTIVE, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)~~

Legal Proceedings

As of September 30, ~~2021,~~2022, the Company was not party to any legal proceedings that, individually or in the aggregate, are reasonably expected to have a material adverse effect on the Company’s results of operations, financial condition or cash flows. However, the results of current or future matters cannot be predicted with certainty; an unfavorable resolution of one or more of such matters could have a material adverse effect on the Company’s results of operations, financial condition or cash flows.

Other Matters

~~From time to time, the Company sells its dealerships to third parties.~~ In ~~those instances~~connection with dealership dispositions where the Company did not own the real estate and was a tenant, it assigned the lease to the purchaser but remained liable as a guarantor for the remaining lease payments in the event of non-payment by the purchaser. Although the Company has no reason to believe that it will be called upon to perform under any such assigned leases, the Company estimates that lessee remaining rental obligations were ~~$25.4~~$38.0 million as of September 30, ~~2021.~~2022. In certain instances, the Company obtains collateral support for the rental obligations that the Company remains obligated for upon sale of a dealership to a lessee. Total associated letters of credit issued on behalf of the lessee where the Company is the beneficiary was ~~$4.3~~$2.9 million as of September 30, ~~2021.~~2022.

1821

Table of Contents

GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

~~12.~~13. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Changes in the balances of each component of Accumulated other comprehensive income (loss) were as follows (in millions):


		Nine Months Ended September 30, 2021							Nine Months Ended September 30, 2022
		Accumulated Income (Loss) On Foreign Currency Translation		Accumulated Income (Loss) On Interest Rate Swaps		Total			Accumulated Income (Loss) On Foreign Currency Translation		Accumulated Income (Loss) On Interest Rate Swaps		Total
Balance, December 31, 2020		$	(151.6)	$	(32.5)	$	(184.0)
Balance, December 31, 2021								Balance, December 31, 2021	$	(158.2)	$	2.0	$	(156.2)
Other comprehensive income (loss) before reclassifications:	Other comprehensive income (loss) before reclassifications:							Other comprehensive income (loss) before reclassifications:
Pre-tax	Pre-tax	(6.7)		21.0		14.4		Pre-tax	(59.3)		110.9		51.6
Tax effect	Tax effect	—		(4.9)		(4.9)		Tax effect	—		(26.1)		(26.1)
Amount reclassified from accumulated other comprehensive income (loss):	Amount reclassified from accumulated other comprehensive income (loss):							Amount reclassified from accumulated other comprehensive income (loss):
Floorplan interest expense (pre-tax)	Floorplan interest expense (pre-tax)	—		5.0		5.0		Floorplan interest expense (pre-tax)	—		1.4		1.4
Other interest expense, net (pre-tax)	Other interest expense, net (pre-tax)	—		2.9		2.9		Other interest expense, net (pre-tax)	—		0.7		0.7
Reclassification related to de-designated interest rate swaps (pre-tax)		—		3.1		3.1

Cumulative foreign currency translation adjustments associated with the Brazil Disposal								Cumulative foreign currency translation adjustments associated with the Brazil Disposal	122.8		—		122.8
Other cumulative foreign currency translation adjustments								Other cumulative foreign currency translation adjustments	1.5		—		1.5
Benefit for income taxes	Benefit for income taxes	—		(2.6)		(2.6)		Benefit for income taxes	—		(0.5)		(0.5)
Net current period other comprehensive income (loss)		(6.7)		24.5		17.9
Balance, September 30, 2021		$	(158.2)	$	(7.9)	$	(166.1)
Net current period other comprehensive income								Net current period other comprehensive income	65.1		86.4		151.5
Balance, September 30, 2022								Balance, September 30, 2022	$	(93.1)	$	88.4	$	(4.7)


		Nine Months Ended September 30, 2020							Nine Months Ended September 30, 2021
		Accumulated Income (Loss) On Foreign Currency Translation		Accumulated Income (Loss) On Interest Rate Swaps		Total			Accumulated Income (Loss) On Foreign Currency Translation		Accumulated Income (Loss) On Interest Rate Swaps		Total
Balance, December 31, 2019		$	(142.9)	$	(4.1)	$	(147.0)
Balance, December 31, 2020								Balance, December 31, 2020	$	(151.6)	$	(32.5)	$	(184.0)
Other comprehensive income (loss) before reclassifications:	Other comprehensive income (loss) before reclassifications:							Other comprehensive income (loss) before reclassifications:
Pre-tax	Pre-tax	(24.4)		(51.3)		(75.6)		Pre-tax	(6.7)		21.0		14.4
Tax effect	Tax effect	—		10.9		10.9		Tax effect	—		(4.9)		(4.9)
Amount reclassified from accumulated other comprehensive income (loss):	Amount reclassified from accumulated other comprehensive income (loss):							Amount reclassified from accumulated other comprehensive income (loss):
Floorplan interest expense (pre-tax)	Floorplan interest expense (pre-tax)	—		5.3		5.3		Floorplan interest expense (pre-tax)	—		5.0		5.0
Other interest expense (pre-tax)	Other interest expense (pre-tax)	—		1.7		1.7		Other interest expense (pre-tax)	—		2.9		2.9
Realized loss on interest rate swap termination (pre-tax)		—		0.1		0.1
Reclassification related to de-designated interest rate swaps (pre-tax)								Reclassification related to de-designated interest rate swaps (pre-tax)	—		3.1		3.1
Benefit for income taxes	Benefit for income taxes	—		(1.7)		(1.7)		Benefit for income taxes	—		(2.6)		(2.6)
Net current period other comprehensive loss		(24.4)		(35.0)		(59.3)
Balance, September 30, 2020		$	(167.2)	$	(39.1)	$	(206.3)
Net current period other comprehensive (loss) income								Net current period other comprehensive (loss) income	(6.7)		24.5		17.9
Balance, September 30, 2021								Balance, September 30, 2021	$	(158.2)	$	(7.9)	$	(166.1)

1922

Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, should be read in conjunction with the accompanying unaudited Condensed Consolidated Financial Statements and the notes thereto, as well as our ~~Annual Report on~~2021 Form ~~10-K for the year ended December 31, 2020, filed with the SEC on February 24, 2021 (the “2020 Form 10-K”).~~10-K.

Unless the context requires otherwise, references to “we,” “us” and “our” are intended to mean the business and operations of Group 1 Automotive, Inc. and its subsidiaries.

~~Forward-Looking Statements~~

•~~our future operating performance;~~

•~~our ability to maintain or improve our margins;~~

•~~our ability to accomplish and sustain SG&A expense decreases;~~

•~~operating cash flows and availability of capital;~~

•~~the completion of future acquisitions and divestitures;~~

•~~the future revenues of acquired dealerships;~~

•~~future stock repurchases, refinancing of debt and dividends;~~

•~~future capital expenditures;~~

•~~changes in sales volumes and availability of credit for customer financing in new and used vehicles and sales volumes in the parts and service markets;~~

•business trends in the retail automotive industry, including the level of manufacturer incentives, new and used vehicle retail sales volume, pricing and margins, online vehicle purchases, acceptance of electric and autonomous vehicles, customer demand, interest rates and changes in industry-wide or manufacturer specific inventory levels;

•~~manufacturer quality issues, including the recall of vehicles and any related negative impact on vehicle sales and brand reputation;~~

•~~availability of financing for inventory, working capital, real estate and capital expenditures;~~

•~~changes in regulatory practices, tariffs and taxes, including Brexit;~~

•~~the impacts of any potential global recession;~~

•~~our ability to meet our financial covenants in our debt obligations and to maintain sufficient liquidity to operate; and~~

•~~the impacts of the COVID-19 pandemic on our business.~~

Although we believe that the expectations reflected in these forward-looking statements are reasonable when and as made, we cannot assure you that these expectations will prove to be correct. When used in this Form 10-Q, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may” and similar expressions are intended to identify forward-looking statements. These forward-looking statements are based on our expectations and beliefs as of the date of this Form 10-Q concerning future developments and their potential effect on us. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. All comments concerning our expectations for future revenues and operating results are based on our forecasts for our existing operations and do not include the potential impact of any future acquisitions. Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections. Known material factors that could cause actual results to differ from those in the forward-looking statements include:

•adverse developments in the global economy as well as the public health crisis related to the COVID-19 pandemic and the resulting impact on the demand for and supply of new and used vehicles and related parts and services;

~~Table of Contents~~

•uncertainty regarding the length of time it will take for the U.S. and the rest of the world to slow the spread of the COVID-19 virus, the actions to be taken by governments to contain and combat the pandemic and the timing, pace and extent of an economic recovery in the U.S. and elsewhere, which in turn will likely affect demand and availability for our vehicles, parts and services;

•future deterioration in the economic environment, including consumer confidence, consumer preferences, interest rates, inflation, the prices of oil and gasoline, the level of manufacturer incentives, the implementation of international and domestic trade tariffs and the availability of consumer credit may affect the demand and availability for new and used vehicles, replacement parts, maintenance and repair services and F&I products;

•adverse domestic and international developments such as war, terrorism, political conflicts, social protests or other hostilities may adversely affect the demand and availability for our products and services;

• uncertainty of the potential impact of Brexit on the overall U.K. economy and, more specifically, the potential adverse effect on retail automotive industry sales could have a material adverse effect on our revenues and business operations;

•the existing and future regulatory environment, climate control legislation, changes to U.S. federal, U.S. state, U.K. or Brazil tax laws, rates and regulations and unexpected litigation or adverse legislation, including changes in U.S. state franchise laws, may impose additional costs on us or otherwise adversely affect us;

•a concentration of risk associated with our principal automobile manufacturers, especially Toyota, Nissan, Honda, BMW, Ford, Daimler, General Motors, Chrysler, Hyundai, Volkswagen and Jaguar-Land Rover, because of financial distress, bankruptcy, natural disasters or pandemics, such as the COVID-19 pandemic, that disrupt production, or other reasons, may not continue to produce or make available to us vehicles that are in high demand by our customers or provide financing, insurance, advertising or other assistance to us;

•restructuring by one or more of our principal manufacturers, up to and including bankruptcy, may cause us to suffer financial loss in the form of uncollectible receivables, devalued inventory or loss of franchises;

•~~requirements imposed on us by our manufacturers may require dispositions, limit our acquisitions or require increases in the level of capital expenditures related to our dealership facilities;~~

•~~our existing and/or new dealership operations may not perform at our or manufacturer expected levels or achieve expected improvements;~~

•~~our ability to realize attractive margins or volumes for our vehicle sales or services;~~

•~~our failure to achieve expected future cost savings or future costs may be higher than we expect;~~

•~~manufacturer quality issues, including the recall of vehicles, may negatively impact vehicle sales and brand reputation;~~

•available capital resources, increases in cost of financing (such as higher interest rates) and our various debt agreements may limit our ability to complete acquisitions, complete construction of new or expanded facilities, repurchase shares, or pay dividends;

•~~our ability to refinance or obtain financing in the future may be limited and the cost of financing could increase significantly;~~

•~~our ability to facilitate credit for consumers;~~

•~~foreign currency exchange controls and currency fluctuations;~~

•~~new accounting standards could materially impact our reported EPS;~~

•~~our ability to acquire new dealerships and successfully integrate those dealerships into our business;~~

•~~the impairment of our goodwill, our indefinite-lived intangibles and our other long-lived assets;~~

•~~natural disasters, adverse weather events and other catastrophic events;~~

•a cybersecurity event of our systems or a third party partners’ systems, including a breach of personally identifiable information about our customers or employees or a shutdown of our operating systems;

•~~our foreign operations and sales in the U.K. and Brazil, which pose additional risks;~~

•~~the inability to adjust our cost structure and inventory levels to offset any reduction in the demand for our products and services;~~

•~~availability of trained workforce;~~

~~Table of Contents~~

•~~our losses may not be fully covered by insurance or may only be fully covered with a significant increase to our insurance costs;~~

•~~our inability to obtain inventory of new and used vehicles and parts, including imported inventory, at the cost, or in the volume, we expect;~~

•~~failure to consummate proposed transactions in a timely manner;~~

•~~failure of the closing conditions in the Purchase Agreement, as defined therein, to be satisfied in a timely manner; and~~

•~~advancements in vehicle technology and changes in vehicle ownership models/consumer preferences.~~

For additional information regarding known material factors that could cause our actual results to differ from our projected results, refer to Item 1A. Risk Factors in our 2020 Form 10-K and this Form 10-Q, as well as Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures About Market Risk of the Form 10-Q.

Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We undertake no responsibility and expressly disclaim any duty, to update any such statements, whether as a result of new information, new developments or otherwise, or to publicly release the result of any revision of our forward-looking statements after the date they are made, except to the extent required by law.

Overview

We are a leading operator in the automotive retail industry. Through our ~~dealerships,~~omni-channel platform, we sell new and used cars and light trucks; arrange related vehicle financing; sell service and ~~other~~ insurance contracts; provide automotive maintenance and repair services; and sell vehicle parts. ~~Our operations are aligned into three regions, which comprise our reportable segments:~~We operate in geographically diverse markets that extend across 17 states in the U.S., and 35 towns and cities in the U.K. and Brazil. The U.S. and Brazil segments are led by the President, U.S. and Brazilian Operations, and the U.K. segment is led by an Operations Director, each reporting directly to our Chief Executive Officer. The President, U.S. and Brazilian Operations and the U.K. Operations Director are responsible for the overall performance of their respective regions, as well as for overseeing field level ~~management.~~

As of September 30, ~~2021,~~2022, our retail network consisted of ~~117~~148 dealerships in the U.S., and 55 dealerships in the U.K. ~~and 16 dealerships in Brazil. Our operations are primarily located in major metropolitan areas in 15 states in the U.S., 35 towns in the U.K. and three states in Brazil.~~

~~Long-Term Strategy~~

Our business strategy focuses on improving the performance of our existing dealerships and enhancing our dealership portfolio through strategic acquisitions and dispositions to achieve growth, capture market share and maximize the investment return to our stockholders. We constantly evaluate opportunities to improve the overall profitability of our dealerships. We believe that as of ~~September 30, 2021~~, we have sufficient financial resources to support additional acquisitions. Further, we intend to continue to critically evaluate our return on invested capital in our current dealership portfolio for disposition opportunities.

~~For 2021, our priorities include:~~

•~~growing our company through acquisitions;~~

•~~improving and growing sales penetration in our digital retailing platform, AcceleRide®;~~

•~~continuing to grow our parts and service gross profit through numerous initiatives;~~

•~~increasing our market share in the highly fragmented used vehicle business;~~

•~~continuing to leverage our SG&A as a percentage of gross profit;~~

•~~focusing on the retention and training of our talented dealership employees; and~~

•~~securing additional vehicle inventory.~~

~~Strategic Acquisitions and Dispositions~~

We will continue to focus on opportunities to enhance our current dealership portfolio through strategic acquisitions and improving or disposing of underperforming dealerships. We believe that substantial opportunities for growth through acquisitions remain in our industry. Acquisitions in our existing markets capitalize on economies of scale and cost savings opportunities in areas such as used vehicle sourcing, advertising, purchasing, data processing and personnel utilization, thereby increasing operating efficiency.

~~Table of Contents~~

We evaluate all brands and geographies to expand our brand, product and service offerings in our existing markets or expand into growing geographic areas we currently do not serve. We seek to acquire dealerships where we have strategic opportunities that represent growing brands in growth markets.

During the first quarter of 2021, we acquired two Toyota dealerships in the U.S. In July 2021, we acquired seven dealerships in the U.K. The expected aggregate annualized revenues, estimated at the time of acquisition, for both the U.S. and U.K. acquisitions, were $420.0 million. On ~~September 13,~~November 12, 2021, we entered into a Share Purchase Agreement (the ~~“Purchase~~“Brazil Agreement”) ~~to purchase substantially all the assets, including real estate, of Prime Automotive Group (the “Seller”), headquartered in Westwood, Massachusetts (the “Prime Acquisition”~~with Original Holdings S.A. (“Buyer”). We expect to pay a purchase price of approximately $880 million, excluding repayment of sellers’ floorplan notes payable, subject to customary adjustments described in the Purchase Agreement (the “Purchase Price”) and appropriate reduction for any exercise of customary manufacturer rights of first refusal. The Purchase Price is expected to be financed through a combination of cash, available lines of credit and debt financing. The operating assets expected to be acquired include 30 dealerships representing 43 additional franchises and three collision centers in the Northeastern U.S. In 2020, the corresponding Prime dealerships generated $1.8 billion in annual revenues.

At the closing of the Prime Acquisition, $45.0 million of the Purchase Price will be deposited into escrow as a contingent reserve to be used, if necessary, to compensate us for any post-closing indemnifiable losses pursuantPursuant to the terms and conditions set forth in the Brazil Agreement, Buyer agreed to acquire 100% of the ~~Purchase Agreement, with 50%~~issued and outstanding equity interests of our Brazilian operations (the “Brazil Disposal Group”) for approximately BRL 510 million in cash (the “Brazil Disposal”). The Brazil Disposal Group met the criteria to be reported as discontinued operations. Therefore, the related assets, liabilities and operating results of the ~~escrowed amount to be released to~~Brazil Disposal Group are reported as discontinued operations (the “Brazil Discontinued Operations”) for all periods presented. On July 1, 2022, we completed the Prime Sellers 12 months after the closing of the Prime Acquisition and the remainder to be released to the Prime Sellers 24 months after the closing of the Prime Acquisition, subject to pending and realized claims, if any.

The Prime Acquisition is expected to close in November 2021(such day, the “Closing Date”), provided that the closing conditions are satisfied or waived. During such time, we will pay the entire Purchase Price; however, any dealerships and assets related to dealerships with respect to which manufacturer approvals have not been obtained (collectively, the “Delayed Dealerships”) will not be transferred to us until such time as such approvals have been received from the relevant manufacturers and such Delayed Dealerships will be operated for the benefit of us by the Seller Parties during the interim period. From the 105th day after the Closing Date (such day, the “Exclusion Date”) until up to (i) 180 days following the Exclusion Date or (ii) 24 months following the Closing Date, if Group 1 has requested that the relevant Selling Party take action against a manufacturer to obtain approval, such Selling Party will cooperate in the sale of any Delayed Dealerships to third parties. Any net proceeds from any such sale would be for the benefit of us. The relevant Selling Party will be under no obligation to refund us for any difference between the purchase price paid by us and such net proceeds, and we will not be required to turn over any gain realized as a result of such third party sale. Any Delayed Dealerships not sold to a third party are conveyed to us and, to the extent any assets cannot be acquired by us without manufacturer approval, such assets will be sold by us at our sole expense.

~~In October 2021, we acquired three dealerships in the U.S, which we expect to generate approximately $235.0 million in annualized revenues.~~Brazil Disposal. Refer to Note ~~3. Acquisitions~~4. Discontinued Operations and ~~Dispositions~~Other Divestitures within our Notes to Condensed Consolidated Financial Statements, for ~~further discussion.~~additional information.

~~Digital Initiatives to Enhance the Customer Experience~~Recent Events

Our ~~omnichannel platforms focus on ensuring that~~manufacturers’ production continues at reduced levels as a result of global semiconductor and other parts shortages, which is impacting new vehicle unit sales in all our markets. Conversely, the shortage of new vehicles has led to sharply higher new vehicle sales prices and gross margins. Our new vehicle days’ supply of inventory was approximately 16 days as of the quarter ended September 30, 2022 (“Current Quarter”), as compared to 13 days as of the quarter ended September 30, 2021 (“Prior Year Quarter”).

In August 2022, we ~~can do business with our customers where and when they want to do business. Our online retail platform, AcceleRide®, which was deployed to all~~announced certain upcoming management changes, including the retirement of our Chief Executive Officer Earl J. Hesterberg, effective as of December 31, 2022, and the promotion of Daryl Kenningham to succeed Mr. Hesterberg, effective January 1, 2023. Please see our Current Report on Form 8-K, filed with the SEC on August 24, 2022, for additional information.

On February 24, 2022, Russia launched a military invasion of Ukraine (the “Russia and Ukraine Conflict”). The ongoing Russia and Ukraine Conflict has provoked strong reactions from the U.S. ~~dealerships~~, the U.K., the European Union and various other countries around the world, including the imposition of broad financial and economic sanctions against Russia. While the length, impact and outcome of the ongoing military conflict and these sanctions on the Russian and global economies remain uncertain, they have already resulted in ~~2019, allows a customer~~significant volatility in financial markets, an increase in energy and commodity prices globally and further disruption of the global supply chain for certain raw materials and manufactured goods, including vehicle parts.

The Russia and Ukraine Conflict and other geopolitical conflicts, as well as related international responses, have exacerbated inflationary pressures, including causing increases in the prices for goods and services and global supply chain disruptions, which have resulted and may continue to ~~complete a vehicle transaction entirely online or start~~result in shortages in materials and services. Such shortages have resulted and may continue to result in inflationary cost increases for labor, fuel, materials and services, and could continue to cause costs to increase as well as result in the ~~sales process online~~scarcity of certain materials. In particular, the Russia and ~~complete the transaction at one of our dealerships. The customer also~~Ukraine Conflict has further impacted the ability of certain OEMs to ~~apply for financing~~produce new vehicles and ~~review~~new vehicle parts, which may result in continued disruptions to the supply of new and ~~select F&I products as part of the online process.~~ used vehicles.

During the ~~three~~nine months ended September 30, ~~2021,~~2022 (“Current Year”), the global economy experienced rising inflation and an increase in gasoline and energy prices. In response to inflationary pressures and macroeconomic conditions, the U.S. ~~total online retail unit sales~~ ~~increased 67.8% compared to the same period in 2020. We also completed the roll out of AcceleRide® to our U.K. dealerships~~Federal Reserve, along with other central banks, including in the ~~first~~U.K., continued to increase interest rates throughout 2022. Additionally, U.S. Gross Domestic Product (“GDP”) shrank for the second consecutive quarter as of ~~2021. Our parts and service digital efforts focus~~the quarter ended June 30,2022, indicating that the U.S. economy may be entering a recession. The impact of these macroeconomic developments on our online customer scheduling appointment system. We have seen continued growth in the percentage of appointments scheduled online over the past few years as we have continued to enhance this tool. We have also focused on improved interactionoperations cannot be predicted with our parts and service customers by offering preferred communication options via dealership apps, phone, text or email and online payment options. We are capitalizing on technology advances in robotic process automation and artificial intelligence to improve our marketing, call center and back office efficiency.certainty.

Table of Contents

~~Parts and Service Growth~~

We remain focused on sustained growth in our higher margin parts and service operations which continue to hinge on the retention and hiring of skilled service technicians and advisors. Our U.S. service operations utilize a four-day work week for service technicians and advisors which allows us to expand our hours of operations during the week. This change has resulted in increased service technician and advisor retention, thereby expanding our service capacity without investing additional capital in facilities. Our online service appointment platform and centralized call centers have improved the customer experience. We seek to increase the retention of our customers through more convenient service hours, training of our service advisors, selling service contracts with vehicles sales and customer relationship management software that allows us to provide targeted marketing to our customers. The increasing complexity of vehicles, especially in the area of electronics and technological advancements, is making it increasingly difficult for independent repair shops to maintain the expertise and technology to work on these vehicles and provides us the opportunity to increase our market share well into the future.

~~Used Vehicle Retail Growth~~

Used vehicle gross profit depends primarily on a dealership’s ability to obtain a high-quality supply of used vehicles at reasonable prices. Our new vehicle operations generally provide our used vehicle operations with a large supply of high-quality trade-ins and off-lease vehicles, which are our best source of used vehicle inventory. In October 2020, we introduced “Sell A Ride” to our AcceleRide® platform to increase our ability to purchase used vehicle inventory directly from customers with a cash offer within 30 minutes during business hours, home pickup and immediate payment through Zelle. Our dealerships supplement their used vehicle inventory with purchases at auctions, including manufacturer-sponsored auctions available only to franchised dealers.

Our data driven pricing strategies ensure that our used vehicles are priced at market to generate more traffic to our websites. We review our market pricing on a constant basis and work to limit discounting from our advertised prices.

~~Cost Management~~

We continue our efforts to fully leverage our scale and cost structure. As our business evolves, we will manage our costs carefully and look for additional opportunities to improve our processes and disseminate best practices. We believe that our management structure supports rapid decision making and facilitates an efficient and effective roll-out of new processes. As part of the digital efforts discussed above, we have improved our productivity for our sales and service departments.

~~Employee Training and Retention~~

~~A key~~addition to the ~~execution of our business strategy is~~macroeconomic issues described above, the ~~leverage of what we believe to be one of our key strengths — the talent of our people. We are focused on the retention~~U.K. faces additional political and training of our talented dealership employees. We believe that we have developed a distinguished management team with substantial industry expertise. With our management structure and level of executive talent, we plan to continue empowering the operators of our dealerships to make appropriate decisions to grow their respective dealership operations and to control fixed and variable costs. We believe this approach allows us to provide the best possible service to our customers, as well as attract and retain talented employees.

~~Diversity, Equity and Inclusion (“DEI”)~~

In 2021, we established a DEI council that is chaired by our Chief Diversity Officer. The council’s mission is to foster a diverse and inclusive culture where employees of all backgrounds are respected, valued and developed. We enhance employee engagement in the areas of diversity, equity and inclusion by offering innovative training, recruitment and career path development where a sense of belonging is apparent throughout the organization. The council has four primary areas of focus: Workforce, Workplace, Community Involvement and Women’s Initiative. The council consists of a diverse group of employees providing representation across the organization. Each area has an employee chairperson as well as an executive sponsor. In addition, employees participate in on-going diversity and inclusion training programs which were developed for us.

~~COVID-19 Pandemic and New Vehicle Inventory Levels~~

Our operations have recovered significantly from the COVID-19 pandemic. In the U.K., our dealership showrooms reopened in the second quarter of 2021 and in Brazil, our dealerships were fully open in the second quarter of 2021 after both markets were closed for all or part of prior quarters due to government mandated closures related to the COVID-19 pandemic. Our dealerships adhere to health and safety policies and practices to allow employees to return to work safely. We cannot predict the future impact of COVID-19 pandemic on our business.

~~Table of Contents~~

~~Additionally, our manufacturers’ production is currently at reduced levels~~economic uncertainty as a result of ~~global semiconductor chip shortages, which is impacting our new vehicle sales and inventory levels~~recent leadership changes in ~~all our markets. The~~the country’s government. This uncertainty has led to increased ~~demand for new vehicles and reduced production levels have significantly reduced our new vehicle inventory levels. Our new vehicle days’ supply of inventory was approximately~~ 14 ~~days~~foreign currency exchange rate volatility for the ~~quarter ended~~country’s currency. During the Current Quarter, the GBP to USD foreign currency exchange rate has declined 8.3% from £1 to $1.21 at June 30, 2022, to £1 to $1.11 at September 30, 2022, and as compared to the Prior Year Quarter, the GBP to USD foreign currency exchange rate has declined 17.3%, from £1 to $1.35 at September 30, 2021, ~~as compared~~ to 52 ~~days for the quarter ended December 31, 2020, and~~ 41 ~~days for the quarter ended~~£1 to $1.11 at September 30, ~~2020. Refer to Item 1A. Risk Factors of this Form 10-Q for additional discussion regarding the impact of the decrease in inventory.~~2022.

Critical Accounting Policies and Accounting Estimates

~~The preparation of our Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions.~~ For ~~additional~~ discussion of our critical accounting policies and accounting estimates, ~~please see~~refer to Item 2.7. Management’s Discussion and Analysis of Financial Condition and Results of Operations inof our ~~2020~~2021 Form 10-K. There have been no material changes to our critical accounting policies or accounting estimates since December 31, 2021.

Results of Operations

The “same store” amounts presented below include the results of dealerships and corporate headquarters for the identical months in each comparative period, ~~presented in comparison,~~ commencing with the first full month in which we owned the ~~dealership was owned by us and, in the case of dispositions,~~dealership. Amounts related to divestitures are excluded from each comparative period, ending with the last full month ~~it was~~in which we owned ~~by us. For example,~~ the results for a dealership acquired on August 15, 2020, will appear in our same store comparison beginning in 2021 for the period September 2021 through December 2021, when comparing to September 2020 through December 2020 results. If we disposed of a store on August 15, 2020, the results from this store would be excluded from same store results beginning in August 2020 as July 2020 was the last full month the dealership was owned by us.dealership. 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 ~~allows~~allow management to manage and monitor the 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. 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. We calculate constant currency percentages by converting our current period reported results for entities reporting in currencies other than USD using comparative period exchange rates rather than the actual exchange rates in effect during the respective periods. The constant currency performance measures should not be considered a substitute for, or superior to, the measures of financial performance prepared in accordance with U.S. GAAP. Additionally, we caution investors not to place undue reliance on non-GAAP measures, but also to consider them with the most directly comparable U.S. GAAP measures. Our management also uses constant currency and adjusted cash flows from operating, investing and financing activities in conjunction with U.S. GAAP financial measures to assess our business, including communication with our Board of Directors, investors and industry analysts concerning financial performance. We disclose these non-GAAP measures and the related reconciliations because we believe investors use these metrics in evaluating longer-term period-over-period performance. These metrics also allow investors to better understand and evaluate the information used by management to assess operating performance.

Certain amounts in the financial statements may not compute due to rounding. All computations have been calculated using unrounded amounts for all periods presented.

2524

Table of Contents

The following tables summarize our operating results on a reported basis and on a same store basis:

Reported Operating Data — Consolidated

(In millions, except unit data)


		Three Months Ended September 30,																Three Months Ended September 30,
		2021			2020			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results		Constant Currency % Change			2022			2021			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results		Constant Currency % Change
Revenues:	Revenues:																Revenues:
New vehicle retail sales	New vehicle retail sales	$	1,576.2		$	1,580.7		$	(4.5)		(0.3)	%	$	21.4	(1.6)	%	New vehicle retail sales	$	1,883.3		$	1,513.9		$	369.5		24.4	%	$	(53.8)	28.0	%
Used vehicle retail sales	Used vehicle retail sales	1,248.3			867.2			381.1			44.0	%	21.4		41.5	%	Used vehicle retail sales	1,488.6			1,230.4			258.3			21.0	%	(47.3)		24.8	%
Used vehicle wholesale sales	Used vehicle wholesale sales	109.4			86.7			22.7			26.2	%	2.5		23.3	%	Used vehicle wholesale sales	89.6			106.0			(16.5)			(15.5)	%	(4.9)		(11.0)	%
Total used	Total used	1,357.7			953.9			403.8			42.3	%	23.9		39.8	%	Total used	1,578.2			1,336.4			241.8			18.1	%	(52.2)		22.0	%
Parts and service sales	Parts and service sales	427.6			375.6			52.0			13.8	%	4.3		12.7	%	Parts and service sales	515.6			416.5			99.1			23.8	%	(10.7)		26.4	%
F&I, net	F&I, net	147.7			129.5			18.2			14.1	%	1.0		13.3	%	F&I, net	186.3			146.0			40.3			27.6	%	(2.8)		29.5	%
Total revenues	Total revenues	$	3,509.2		$	3,039.6		$	469.6		15.4	%	$	50.8	13.8	%	Total revenues	$	4,163.4		$	3,412.8		$	750.6		22.0	%	$	(119.5)	25.5	%
Gross profit:	Gross profit:																Gross profit:
New vehicle retail sales	New vehicle retail sales	$	167.7		$	99.2		$	68.4		69.0	%	$	1.5	67.4	%	New vehicle retail sales	$	206.7		$	161.5		$	45.2		28.0	%	$	(4.9)	31.0	%
Used vehicle retail sales	Used vehicle retail sales	98.6			71.1			27.5			38.6	%	1.5		36.5	%	Used vehicle retail sales	76.1			97.0			(21.0)			(21.6)	%	(2.7)		(18.9)	%
Used vehicle wholesale sales	Used vehicle wholesale sales	7.6			5.9			1.7			28.1	%	0.3		23.4	%	Used vehicle wholesale sales	(1.5)			7.4			(8.9)			(120.8)	%	—		(121.4)	%
Total used	Total used	106.2			77.0			29.1			37.8	%	1.8		35.5	%	Total used	74.5			104.4			(29.9)			(28.6)	%	(2.6)		(26.1)	%
Parts and service sales	Parts and service sales	231.7			206.2			25.5			12.3	%	2.6		11.1	%	Parts and service sales	285.1			226.8			58.4			25.7	%	(6.3)		28.5	%
F&I, net	F&I, net	147.7			129.5			18.2			14.1	%	1.0		13.3	%	F&I, net	186.3			146.0			40.3			27.6	%	(2.8)		29.5	%
Total gross profit	Total gross profit	$	653.2		$	512.0		$	141.3		27.6	%	$	7.0	26.2	%	Total gross profit	$	752.6		$	638.7		$	113.9		17.8	%	$	(16.6)	20.4	%
Gross margin:	Gross margin:																Gross margin:
New vehicle retail sales	New vehicle retail sales	10.6		%	6.3		%	4.4		%							New vehicle retail sales	11.0		%	10.7		%	0.3		%
Used vehicle retail sales	Used vehicle retail sales	7.9		%	8.2		%	(0.3)		%							Used vehicle retail sales	5.1		%	7.9		%	(2.8)		%
Used vehicle wholesale sales	Used vehicle wholesale sales	7.0		%	6.9		%	0.1		%							Used vehicle wholesale sales	(1.7)		%	7.0		%	(8.7)		%
Total used	Total used	7.8		%	8.1		%	(0.3)		%							Total used	4.7		%	7.8		%	(3.1)		%
Parts and service sales	Parts and service sales	54.2		%	54.9		%	(0.7)		%							Parts and service sales	55.3		%	54.4		%	0.9		%

Total gross margin	Total gross margin	18.6		%	16.8		%	1.8		%							Total gross margin	18.1		%	18.7		%	(0.6)		%
Units sold:	Units sold:																Units sold:
Retail new vehicles sold	Retail new vehicles sold	35,126			39,869			(4,743)			(11.9)	%					Retail new vehicles sold	39,237			33,365			5,872			17.6	%
Retail used vehicles sold	Retail used vehicles sold	43,240			38,347			4,893			12.8	%					Retail used vehicles sold	48,427			42,514			5,913			13.9	%
Wholesale used vehicles sold	Wholesale used vehicles sold	11,261			11,581			(320)			(2.8)	%					Wholesale used vehicles sold	9,456			10,960			(1,504)			(13.7)	%
Total used	Total used	54,501			49,928			4,573			9.2	%					Total used	57,883			53,474			4,409			8.2	%
Average sales price per unit sold:	Average sales price per unit sold:																Average sales price per unit sold:
New vehicle retail	New vehicle retail	$	44,872		$	39,647		$	5,226		13.2	%	$	609	11.6	%	New vehicle retail	$	47,999		$	45,373		$	2,626		5.8	%	$	(1,370)	8.8	%
Used vehicle retail	Used vehicle retail	$	28,870		$	22,614		$	6,256		27.7	%	$	494	25.5	%	Used vehicle retail	$	30,740		$	28,941		$	1,799		6.2	%	$	(977)	9.6	%
Gross profit per unit sold:	Gross profit per unit sold:																Gross profit per unit sold:
New vehicle retail sales	New vehicle retail sales	$	4,773		$	2,489		$	2,285		91.8	%	$	43	90.1	%	New vehicle retail sales	$	5,267		$	4,840		$	427		8.8	%	$	(125)	11.4	%
Used vehicle retail sales	Used vehicle retail sales	$	2,279		$	1,854		$	425		23.0	%	$	36	21.0	%	Used vehicle retail sales	$	1,571		$	2,282		$	(712)		(31.2)	%	$	(55)	(28.8)	%
Used vehicle wholesale sales	Used vehicle wholesale sales	$	676		$	513		$	163		31.7	%	$	25	26.9	%	Used vehicle wholesale sales	$	(162)		$	673		$	(835)		(124.1)	%	$	5	(124.8)	%
Total used	Total used	$	1,948		$	1,543		$	405		26.3	%	$	33	24.1	%	Total used	$	1,288		$	1,953		$	(665)		(34.1)	%	$	(45)	(31.7)	%
F&I PRU	F&I PRU	$	1,885		$	1,655		$	229		13.9	%	$	13	13.1	%	F&I PRU	$	2,125		$	1,925		$	201		10.4	%	$	(32)	12.1	%
Other:	Other:																Other:
SG&A expenses	SG&A expenses	$	385.1		$	305.8		$	79.3		25.9	%	$	4.5	24.5	%	SG&A expenses	$	450.9		$	376.3		$	74.7		19.8	%	$	(11.3)	22.9	%
SG&A as % gross profit	SG&A as % gross profit	59.0		%	59.7		%	(0.8)		%							SG&A as % gross profit	59.9		%	58.9		%	1.0		%
Floorplan expense:	Floorplan expense:																Floorplan expense:
Floorplan interest expense	Floorplan interest expense	$	4.8		$	8.1		$	(3.3)		(40.9)	%	$	0.1	(42.4)	%	Floorplan interest expense	$	6.5		$	4.3		$	2.2		50.1	%	$	(0.2)	55.1	%
Less: floorplan assistance (1)	Less: floorplan assistance (1)	12.2			12.7			(0.5)			(4.0)	%	—		(4.0)	%	Less: floorplan assistance (1)	13.9			12.2			1.8			14.4	%	—		14.4	%
Net floorplan expense	Net floorplan expense	$	(7.4)		$	(4.6)		$	(2.8)				$	0.1			Net floorplan expense	$	(7.4)		$	(7.8)		$	0.4				$	(0.2)

(1) Floorplan assistance is included within Gross profit — New vehicle retail sales ~~Gross profit~~ above and Cost of sales — New vehicle retail ~~sales Cost of~~ sales in our Condensed Consolidated Statements of Operations.

2625

Table of Contents

Same Store Operating Data — Consolidated

(In millions, except unit data)


		Three Months Ended September 30,																Three Months Ended September 30,
		2021			2020			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results		Constant Currency % Change			2022			2021			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results		Constant Currency % Change
Revenues:	Revenues:																Revenues:
New vehicle retail sales	New vehicle retail sales	$	1,530.1		$	1,565.4		$	(35.3)		(2.3)	%	$	19.5	(3.5)	%	New vehicle retail sales	$	1,534.6		$	1,487.1		$	47.5		3.2	%	$	(52.8)	6.7	%
Used vehicle retail sales	Used vehicle retail sales	1,199.9			857.6			342.3			39.9	%	18.8		37.7	%	Used vehicle retail sales	1,271.4			1,213.6			57.8			4.8	%	(46.8)		8.6	%
Used vehicle wholesale sales	Used vehicle wholesale sales	105.0			85.5			19.5			22.8	%	2.3		20.1	%	Used vehicle wholesale sales	76.5			104.6			(28.2)			(26.9)	%	(4.8)		(22.3)	%
Total used	Total used	1,304.9			943.1			361.8			38.4	%	21.1		36.1	%	Total used	1,347.9			1,318.3			29.6			2.2	%	(51.6)		6.2	%
Parts and service sales	Parts and service sales	416.6			368.8			47.8			13.0	%	3.9		11.9	%	Parts and service sales	438.8			408.6			30.2			7.4	%	(10.1)		9.9	%
F&I, net	F&I, net	145.1			128.1			17.0			13.3	%	1.0		12.5	%	F&I, net	155.6			143.0			12.6			8.8	%	(2.8)		10.8	%
Total revenues	Total revenues	$	3,396.7		$	3,005.4		$	391.2		13.0	%	$	45.5	11.5	%	Total revenues	$	3,476.9		$	3,357.0		$	119.9		3.6	%	$	(117.4)	7.1	%
Gross profit:	Gross profit:																Gross profit:
New vehicle retail sales	New vehicle retail sales	$	163.8		$	98.3		$	65.4		66.6	%	$	1.4	65.1	%	New vehicle retail sales	$	163.7		$	158.1		$	5.6		3.6	%	$	(4.8)	6.6	%
Used vehicle retail sales	Used vehicle retail sales	94.6			70.5			24.1			34.2	%	1.4		32.2	%	Used vehicle retail sales	64.0			96.3			(32.2)			(33.5)	%	(2.6)		(30.8)	%
Used vehicle wholesale sales	Used vehicle wholesale sales	7.3			5.9			1.4			23.3	%	0.3		18.8	%	Used vehicle wholesale sales	(1.2)			7.3			(8.5)			(115.9)	%	—		(116.5)	%
Total used	Total used	101.8			76.4			25.5			33.3	%	1.7		31.2	%	Total used	62.9			103.6			(40.7)			(39.3)	%	(2.6)		(36.9)	%
Parts and service sales	Parts and service sales	225.1			202.3			22.7			11.2	%	2.3		10.1	%	Parts and service sales	239.0			222.1			16.8			7.6	%	(6.0)		10.3	%
F&I, net	F&I, net	145.1			128.1			17.0			13.3	%	1.0		12.5	%	F&I, net	155.6			143.0			12.6			8.8	%	(2.8)		10.8	%
Total gross profit	Total gross profit	$	635.8		$	505.1		$	130.6		25.9	%	$	6.3	24.6	%	Total gross profit	$	621.2		$	626.9		$	(5.7)		(0.9)	%	$	(16.2)	1.7	%
Gross margin:	Gross margin:																Gross margin:
New vehicle retail sales	New vehicle retail sales	10.7		%	6.3		%	4.4		%							New vehicle retail sales	10.7		%	10.6		%	—		%
Used vehicle retail sales	Used vehicle retail sales	7.9		%	8.2		%	(0.3)		%							Used vehicle retail sales	5.0		%	7.9		%	(2.9)		%
Used vehicle wholesale sales	Used vehicle wholesale sales	6.9		%	6.9		%	—		%							Used vehicle wholesale sales	(1.5)		%	7.0		%	(8.5)		%
Total used	Total used	7.8		%	8.1		%	(0.3)		%							Total used	4.7		%	7.9		%	(3.2)		%
Parts and service sales	Parts and service sales	54.0		%	54.9		%	(0.8)		%							Parts and service sales	54.5		%	54.4		%	0.1		%

Total gross margin	Total gross margin	18.7		%	16.8		%	1.9		%							Total gross margin	17.9		%	18.7		%	(0.8)		%
Units sold:	Units sold:																Units sold:
Retail new vehicles sold	Retail new vehicles sold	33,795			39,431			(5,636)			(14.3)	%					Retail new vehicles sold	32,249			32,734			(485)			(1.5)	%
Retail used vehicles sold	Retail used vehicles sold	41,219			37,819			3,400			9.0	%					Retail used vehicles sold	41,684			41,866			(182)			(0.4)	%
Wholesale used vehicles sold	Wholesale used vehicles sold	10,581			11,415			(834)			(7.3)	%					Wholesale used vehicles sold	7,911			10,755			(2,844)			(26.4)	%
Total used	Total used	51,800			49,234			2,566			5.2	%					Total used	49,595			52,621			(3,026)			(5.8)	%
Average sales price per unit sold:	Average sales price per unit sold:																Average sales price per unit sold:
New vehicle retail	New vehicle retail	$	45,275		$	39,700		$	5,575		14.0	%	$	578	12.6	%	New vehicle retail	$	47,586		$	45,431		$	2,155		4.7	%	$	(1,638)	8.3	%
Used vehicle retail	Used vehicle retail	$	29,110		$	22,676		$	6,433		28.4	%	$	455	26.4	%	Used vehicle retail	$	30,502		$	28,988		$	1,513		5.2	%	$	(1,122)	9.1	%
Gross profit per unit sold:	Gross profit per unit sold:																Gross profit per unit sold:
New vehicle retail sales	New vehicle retail sales	$	4,846		$	2,493		$	2,352		94.3	%	$	41	92.7	%	New vehicle retail sales	$	5,078		$	4,831		$	247		5.1	%	$	(149)	8.2	%
Used vehicle retail sales	Used vehicle retail sales	$	2,294		$	1,863		$	431		23.1	%	$	34	21.3	%	Used vehicle retail sales	$	1,536		$	2,299		$	(764)		(33.2)	%	$	(62)	(30.5)	%
Used vehicle wholesale sales	Used vehicle wholesale sales	$	687		$	516		$	171		33.1	%	$	25	28.1	%	Used vehicle wholesale sales	$	(147)		$	682		$	(829)		(121.6)	%	$	6	(122.4)	%
Total used	Total used	$	1,966		$	1,551		$	415		26.7	%	$	32	24.7	%	Total used	$	1,267		$	1,969		$	(702)		(35.6)	%	$	(52)	(33.0)	%
F&I PRU	F&I PRU	$	1,934		$	1,658		$	276		16.6	%	$	13	15.9	%	F&I PRU	$	2,105		$	1,917		$	188		9.8	%	$	(38)	11.8	%
Other:	Other:																Other:
SG&A expenses	SG&A expenses	$	372.2		$	300.7		$	71.5		23.8	%	$	3.9	22.5	%	SG&A expenses	$	386.3		$	368.4		$	17.9		4.9	%	$	(11.1)	7.9	%
SG&A as % gross profit	SG&A as % gross profit	58.5		%	59.5		%	(1.0)		%							SG&A as % gross profit	62.2		%	58.8		%	3.4		%

2726

Table of Contents

Reported Operating Data — Consolidated

(In millions, except unit data)


		Nine Months Ended September 30,																Nine Months Ended September 30,
		2021			2020			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results		Constant Currency % Change			2022			2021			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results		Constant Currency % Change
Revenues:	Revenues:																Revenues:
New vehicle retail sales	New vehicle retail sales	$	4,974.9		$	3,985.5		$	989.3		24.8	%	$	57.2	23.4	%	New vehicle retail sales	$	5,479.8		$	4,828.6		$	651.1		13.5	%	$	(97.6)	15.5	%
Used vehicle retail sales	Used vehicle retail sales	3,342.7			2,287.4			1,055.3			46.1	%	58.3		43.6	%	Used vehicle retail sales	4,353.9			3,302.3			1,051.7			31.8	%	(91.5)		34.6	%
Used vehicle wholesale sales	Used vehicle wholesale sales	286.0			221.9			64.1			28.9	%	6.9		25.8	%	Used vehicle wholesale sales	278.9			278.0			0.9			0.3	%	(10.0)		3.9	%
Total used	Total used	3,628.7			2,509.3			1,119.4			44.6	%	65.2		42.0	%	Total used	4,632.8			3,580.3			1,052.5			29.4	%	(101.4)		32.2	%
Parts and service sales	Parts and service sales	1,180.4			1,028.2			152.2			14.8	%	10.8		13.7	%	Parts and service sales	1,491.1			1,152.2			338.9			29.4	%	(19.0)		31.1	%
F&I, net	F&I, net	435.7			338.7			97.1			28.7	%	2.9		27.8	%	F&I, net	549.5			431.3			118.2			27.4	%	(5.4)		28.7	%
Total revenues	Total revenues	$	10,219.7		$	7,861.7		$	2,358.0		30.0	%	$	136.9	28.3	%	Total revenues	$	12,153.1		$	9,992.3		$	2,160.8		21.6	%	$	(223.4)	23.9	%
Gross profit:	Gross profit:																Gross profit:
New vehicle retail sales	New vehicle retail sales	$	432.0		$	225.8		$	206.2		91.3	%	$	3.4	89.8	%	New vehicle retail sales	$	618.2		$	417.2		$	201.0		48.2	%	$	(9.0)	50.3	%
Used vehicle retail sales	Used vehicle retail sales	267.3			159.5			107.8			67.6	%	3.7		65.2	%	Used vehicle retail sales	253.4			263.7			(10.3)			(3.9)	%	(5.0)		(2.0)	%
Used vehicle wholesale sales	Used vehicle wholesale sales	20.7			9.0			11.7			130.3	%	0.4		125.4	%	Used vehicle wholesale sales	2.1			20.1			(18.0)			(89.7)	%	0.2		(90.6)	%
Total used	Total used	287.9			168.5			119.5			70.9	%	4.2		68.4	%	Total used	255.5			283.7			(28.3)			(10.0)	%	(4.8)		(8.3)	%
Parts and service sales	Parts and service sales	649.5			554.2			95.2			17.2	%	6.8		15.9	%	Parts and service sales	822.6			637.2			185.4			29.1	%	(11.3)		30.9	%
F&I, net	F&I, net	435.7			338.7			97.1			28.7	%	2.9		27.8	%	F&I, net	549.5			431.3			118.2			27.4	%	(5.4)		28.7	%
Total gross profit	Total gross profit	$	1,805.1		$	1,287.2		$	517.9		40.2	%	$	17.3	38.9	%	Total gross profit	$	2,245.8		$	1,769.5		$	476.3		26.9	%	$	(30.6)	28.6	%
Gross margin:	Gross margin:																Gross margin:
New vehicle retail sales	New vehicle retail sales	8.7		%	5.7		%	3.0		%							New vehicle retail sales	11.3		%	8.6		%	2.6		%
Used vehicle retail sales	Used vehicle retail sales	8.0		%	7.0		%	1.0		%							Used vehicle retail sales	5.8		%	8.0		%	(2.2)		%
Used vehicle wholesale sales	Used vehicle wholesale sales	7.2		%	4.0		%	3.2		%							Used vehicle wholesale sales	0.7		%	7.2		%	(6.5)		%
Total used	Total used	7.9		%	6.7		%	1.2		%							Total used	5.5		%	7.9		%	(2.4)		%
Parts and service sales	Parts and service sales	55.0		%	53.9		%	1.1		%							Parts and service sales	55.2		%	55.3		%	(0.1)		%

Total gross margin	Total gross margin	17.7		%	16.4		%	1.3		%							Total gross margin	18.5		%	17.7		%	0.8		%
Units sold:	Units sold:																Units sold:
Retail new vehicles sold	Retail new vehicles sold	114,882			101,701			13,181			13.0	%					Retail new vehicles sold	114,792			110,499			4,293			3.9	%
Retail used vehicles sold	Retail used vehicles sold	126,301			105,665			20,636			19.5	%					Retail used vehicles sold	141,140			124,559			16,581			13.3	%
Wholesale used vehicles sold	Wholesale used vehicles sold	32,038			30,970			1,068			3.4	%					Wholesale used vehicles sold	28,069			31,268			(3,199)			(10.2)	%
Total used	Total used	158,339			136,635			21,704			15.9	%					Total used	169,209			155,827			13,382			8.6	%
Average sales price per unit sold:	Average sales price per unit sold:																Average sales price per unit sold:
New vehicle retail	New vehicle retail	$	43,304		$	39,189		$	4,115		10.5	%	$	498	9.2	%	New vehicle retail	$	47,736		$	43,698		$	4,038		9.2	%	$	(850)	11.2	%
Used vehicle retail	Used vehicle retail	$	26,466		$	21,648		$	4,818		22.3	%	$	462	20.1	%	Used vehicle retail	$	30,848		$	26,512		$	4,337		16.4	%	$	(648)	18.8	%
Gross profit per unit sold:	Gross profit per unit sold:																Gross profit per unit sold:
New vehicle retail sales	New vehicle retail sales	$	3,760		$	2,220		$	1,540		69.3	%	$	29	68.0	%	New vehicle retail sales	$	5,385		$	3,776		$	1,609		42.6	%	$	(79)	44.7	%
Used vehicle retail sales	Used vehicle retail sales	$	2,116		$	1,510		$	607		40.2	%	$	29	38.2	%	Used vehicle retail sales	$	1,795		$	2,117		$	(322)		(15.2)	%	$	(35)	(13.5)	%
Used vehicle wholesale sales	Used vehicle wholesale sales	$	645		$	290		$	355		122.6	%	$	14	117.9	%	Used vehicle wholesale sales	$	73		$	642		$	(568)		(88.6)	%	$	6	(89.5)	%
Total used	Total used	$	1,819		$	1,233		$	585		47.5	%	$	26	45.3	%	Total used	$	1,510		$	1,821		$	(311)		(17.1)	%	$	(29)	(15.5)	%
F&I PRU	F&I PRU	$	1,807		$	1,633		$	174		10.6	%	$	12	9.9	%	F&I PRU	$	2,147		$	1,835		$	312		17.0	%	$	(21)	18.2	%
Other:	Other:																Other:

SG&A expenses	SG&A expenses	$	1,080.3		$	870.9		$	209.3		24.0	%	$	11.7	22.7	%	SG&A expenses	$	1,329.6		$	1,056.2		$	273.3		25.9	%	$	(20.6)	27.8	%

SG&A as % gross profit	SG&A as % gross profit	59.8		%	67.7		%	(7.8)		%							SG&A as % gross profit	59.2		%	59.7		%	(0.5)		%

Floorplan expense:	Floorplan expense:																Floorplan expense:
Floorplan interest expense	Floorplan interest expense	$	21.2		$	31.1		$	(9.9)		(32.0)	%	$	0.3	(33.1)	%	Floorplan interest expense	$	17.7		$	20.5		$	(2.8)		(13.7)	%	$	(0.4)	(11.7)	%
Less: floorplan assistance (1)	Less: floorplan assistance (1)	40.6			33.0			7.6			22.9	%	—		22.9	%	Less: floorplan assistance (1)	42.1			40.6			1.5			3.6	%	—		3.6	%
Net floorplan expense	Net floorplan expense	$	(19.5)		$	(1.9)		$	(17.5)				$	0.3			Net floorplan expense	$	(24.4)		$	(20.1)		$	(4.3)				$	(0.4)

(1) Floorplan assistance is included within Gross Profit — New vehicle retail sales ~~Gross profit~~ above and Cost of Sales — New vehicle retail ~~sales Cost of~~ sales in our Condensed Consolidated Statements of Operations.

2827

Table of Contents

Same Store Operating Data — Consolidated

(In millions, except unit data)


		Nine Months Ended September 30,																Nine Months Ended September 30,
		2021			2020			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results		Constant Currency % Change			2022			2021			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results		Constant Currency % Change
Revenues:	Revenues:																Revenues:
New vehicle retail sales	New vehicle retail sales	$	4,910.5		$	3,947.3		$	963.2		24.4	%	$	55.0	23.0	%	New vehicle retail sales	$	4,468.0		$	4,759.1		$	(291.2)		(6.1)	%	$	(93.3)	(4.2)	%
Used vehicle retail sales	Used vehicle retail sales	3,286.3			2,260.6			1,025.7			45.4	%	55.4		42.9	%	Used vehicle retail sales	3,701.3			3,262.1			439.2			13.5	%	(86.0)		16.1	%
Used vehicle wholesale sales	Used vehicle wholesale sales	281.0			219.3			61.7			28.1	%	6.6		25.1	%	Used vehicle wholesale sales	234.9			275.0			(40.1)			(14.6)	%	(9.5)		(11.1)	%
Total used	Total used	3,567.3			2,479.9			1,087.4			43.8	%	62.0		41.3	%	Total used	3,936.2			3,537.1			399.1			11.3	%	(95.5)		14.0	%
Parts and service sales	Parts and service sales	1,160.2			1,011.4			148.8			14.7	%	9.9		13.7	%	Parts and service sales	1,271.6			1,132.4			139.2			12.3	%	(17.5)		13.8	%
F&I, net	F&I, net	432.0			335.1			96.9			28.9	%	2.8		28.1	%	F&I, net	462.2			424.3			37.8			8.9	%	(5.2)		10.1	%
Total revenues	Total revenues	$	10,070.0		$	7,773.7		$	2,296.3		29.5	%	$	130.5	27.9	%	Total revenues	$	10,137.8		$	9,852.9		$	284.9		2.9	%	$	(211.5)	5.0	%
Gross profit:	Gross profit:																Gross profit:
New vehicle retail sales	New vehicle retail sales	$	426.5		$	223.5		$	202.9		90.8	%	$	3.2	89.3	%	New vehicle retail sales	$	493.9		$	410.4		$	83.6		20.4	%	$	(8.6)	22.5	%
Used vehicle retail sales	Used vehicle retail sales	262.0			158.1			103.9			65.7	%	3.6		63.4	%	Used vehicle retail sales	212.9			261.2			(48.3)			(18.5)	%	(4.7)		(16.7)	%
Used vehicle wholesale sales	Used vehicle wholesale sales	20.2			8.9			11.3			126.8	%	0.4		122.0	%	Used vehicle wholesale sales	1.0			19.9			(18.9)			(94.9)	%	0.2		(95.7)	%
Total used	Total used	282.2			167.0			115.2			68.9	%	4.0		66.6	%	Total used	213.9			281.1			(67.2)			(23.9)	%	(4.5)		(22.3)	%
Parts and service sales	Parts and service sales	638.0			545.1			92.9			17.0	%	6.4		15.9	%	Parts and service sales	688.9			625.8			63.1			10.1	%	(10.6)		11.8	%
F&I, net	F&I, net	432.0			335.1			96.9			28.9	%	2.8		28.1	%	F&I, net	462.2			424.3			37.8			8.9	%	(5.2)		10.1	%
Total gross profit	Total gross profit	$	1,778.7		$	1,270.8		$	507.9		40.0	%	$	16.4	38.7	%	Total gross profit	$	1,858.9		$	1,741.6		$	117.3		6.7	%	$	(28.9)	8.4	%
Gross margin:	Gross margin:																Gross margin:
New vehicle retail sales	New vehicle retail sales	8.7		%	5.7		%	3.0		%							New vehicle retail sales	11.1		%	8.6		%	2.4		%
Used vehicle retail sales	Used vehicle retail sales	8.0		%	7.0		%	1.0		%							Used vehicle retail sales	5.8		%	8.0		%	(2.3)		%
Used vehicle wholesale sales	Used vehicle wholesale sales	7.2		%	4.1		%	3.1		%							Used vehicle wholesale sales	0.4		%	7.2		%	(6.8)		%
Total used	Total used	7.9		%	6.7		%	1.2		%							Total used	5.4		%	7.9		%	(2.5)		%
Parts and service sales	Parts and service sales	55.0		%	53.9		%	1.1		%							Parts and service sales	54.2		%	55.3		%	(1.1)		%

Total gross margin	Total gross margin	17.7		%	16.3		%	1.3		%							Total gross margin	18.3		%	17.7		%	0.7		%
Units sold:	Units sold:																Units sold:
Retail new vehicles sold	Retail new vehicles sold	113,055			100,629			12,426			12.3	%					Retail new vehicles sold	93,713			108,897			(15,184)			(13.9)	%
Retail used vehicles sold	Retail used vehicles sold	123,905			104,166			19,739			18.9	%					Retail used vehicles sold	120,077			122,933			(2,856)			(2.3)	%
Wholesale used vehicles sold	Wholesale used vehicles sold	31,226			30,553			673			2.2	%					Wholesale used vehicles sold	22,885			30,827			(7,942)			(25.8)	%
Total used	Total used	155,131			134,719			20,412			15.2	%					Total used	142,962			153,760			(10,798)			(7.0)	%
Average sales price per unit sold:	Average sales price per unit sold:																Average sales price per unit sold:
New vehicle retail	New vehicle retail	$	43,434		$	39,226		$	4,208		10.7	%	$	486	9.5	%	New vehicle retail	$	47,677		$	43,703		$	3,974		9.1	%	$	(995)	11.4	%
Used vehicle retail	Used vehicle retail	$	26,523		$	21,702		$	4,821		22.2	%	$	447	20.2	%	Used vehicle retail	$	30,824		$	26,535		$	4,289		16.2	%	$	(716)	18.9	%
Gross profit per unit sold:	Gross profit per unit sold:																Gross profit per unit sold:
New vehicle retail sales	New vehicle retail sales	$	3,772		$	2,221		$	1,551		69.8	%	$	28	68.5	%	New vehicle retail sales	$	5,271		$	3,769		$	1,502		39.9	%	$	(92)	42.3	%
Used vehicle retail sales	Used vehicle retail sales	$	2,115		$	1,518		$	596		39.3	%	$	29	37.4	%	Used vehicle retail sales	$	1,773		$	2,124		$	(352)		(16.6)	%	$	(39)	(14.7)	%
Used vehicle wholesale sales	Used vehicle wholesale sales	$	647		$	291		$	355		121.9	%	$	14	117.2	%	Used vehicle wholesale sales	$	44		$	646		$	(601)		(93.1)	%	$	7	(94.2)	%
Total used	Total used	$	1,819		$	1,240		$	579		46.7	%	$	26	44.6	%	Total used	$	1,496		$	1,828		$	(332)		(18.2)	%	$	(32)	(16.4)	%
F&I PRU	F&I PRU	$	1,823		$	1,636		$	187		11.4	%	$	12	10.7	%	F&I PRU	$	2,162		$	1,830		$	331		18.1	%	$	(24)	19.4	%
Other:	Other:																Other:

SG&A expenses	SG&A expenses	$	1,061.8		$	856.1		$	205.7		24.0	%	$	10.9	22.8	%	SG&A expenses	$	1,133.4		$	1,038.2		$	95.2		9.2	%	$	(19.5)	11.0	%

SG&A as % gross profit	SG&A as % gross profit	59.7		%	67.4		%	(7.7)		%							SG&A as % gross profit	61.0		%	59.6		%	1.4		%

2928

Table of Contents

Reported Operating Data — U.S.

(In millions, except unit data)


		Three Months Ended September 30,												Three Months Ended September 30,
		2021			2020			Increase/(Decrease)			% Change			2022			2021			Increase/(Decrease)			% Change
Revenues:	Revenues:												Revenues:
New vehicle retail sales	New vehicle retail sales	$	1,208.5		$	1,172.2		$	36.3		3.1	%	New vehicle retail sales	$	1,586.9		$	1,208.5		$	378.4		31.3	%
Used vehicle retail sales	Used vehicle retail sales	902.3			608.2			294.1			48.4	%	Used vehicle retail sales	1,212.1			902.3			309.8			34.3	%
Used vehicle wholesale sales	Used vehicle wholesale sales	68.0			44.8			23.2			51.8	%	Used vehicle wholesale sales	61.3			68.0			(6.7)			(9.8)	%
Total used	Total used	970.3			653.0			317.4			48.6	%	Total used	1,273.4			970.3			303.1			31.2	%
Parts and service sales	Parts and service sales	353.1			306.4			46.7			15.3	%	Parts and service sales	453.8			353.1			100.7			28.5	%
F&I, net	F&I, net	130.5			113.0			17.4			15.4	%	F&I, net	170.2			130.5			39.8			30.5	%
Total revenues	Total revenues	$	2,662.4		$	2,244.6		$	417.8		18.6	%	Total revenues	$	3,484.3		$	2,662.4		$	821.9		30.9	%
Gross profit:	Gross profit:												Gross profit:
New vehicle retail sales	New vehicle retail sales	$	140.0		$	79.8		$	60.2		75.5	%	New vehicle retail sales	$	180.7		$	140.0		$	40.7		29.1	%
Used vehicle retail sales	Used vehicle retail sales	73.1			52.8			20.2			38.3	%	Used vehicle retail sales	60.6			73.1			(12.5)			(17.1)	%
Used vehicle wholesale sales	Used vehicle wholesale sales	3.2			3.7			(0.5)			(13.6)	%	Used vehicle wholesale sales	(1.3)			3.2			(4.5)			(139.3)	%
Total used	Total used	76.3			56.6			19.7			34.9	%	Total used	59.3			76.3			(17.0)			(22.2)	%
Parts and service sales	Parts and service sales	188.2			166.3			21.9			13.2	%	Parts and service sales	249.0			188.2			60.7			32.3	%
F&I, net	F&I, net	130.5			113.0			17.4			15.4	%	F&I, net	170.2			130.5			39.8			30.5	%
Total gross profit	Total gross profit	$	535.0		$	415.7		$	119.3		28.7	%	Total gross profit	$	659.3		$	535.0		$	124.3		23.2	%
Gross margin:	Gross margin:												Gross margin:
New vehicle retail sales	New vehicle retail sales	11.6		%	6.8		%	4.8		%			New vehicle retail sales	11.4		%	11.6		%	(0.2)		%
Used vehicle retail sales	Used vehicle retail sales	8.1		%	8.7		%	(0.6)		%			Used vehicle retail sales	5.0		%	8.1		%	(3.1)		%
Used vehicle wholesale sales	Used vehicle wholesale sales	4.8		%	8.3		%	(3.6)		%			Used vehicle wholesale sales	(2.1)		%	4.8		%	(6.8)		%
Total used	Total used	7.9		%	8.7		%	(0.8)		%			Total used	4.7		%	7.9		%	(3.2)		%
Parts and service sales	Parts and service sales	53.3		%	54.3		%	(1.0)		%			Parts and service sales	54.9		%	53.3		%	1.6		%

Total gross margin	Total gross margin	20.1		%	18.5		%	1.6		%			Total gross margin	18.9		%	20.1		%	(1.2)		%
Units sold:	Units sold:												Units sold:
Retail new vehicles sold	Retail new vehicles sold	25,984			27,980			(1,996)			(7.1)	%	Retail new vehicles sold	31,745			25,984			5,761			22.2	%
Retail used vehicles sold	Retail used vehicles sold	31,704			27,694			4,010			14.5	%	Retail used vehicles sold	38,172			31,704			6,468			20.4	%
Wholesale used vehicles sold	Wholesale used vehicles sold	6,758			6,195			563			9.1	%	Wholesale used vehicles sold	6,453			6,758			(305)			(4.5)	%
Total used	Total used	38,462			33,889			4,573			13.5	%	Total used	44,625			38,462			6,163			16.0	%
Average sales price per unit sold:	Average sales price per unit sold:												Average sales price per unit sold:
New vehicle retail	New vehicle retail	$	46,510		$	41,895		$	4,614		11.0	%	New vehicle retail	$	49,990		$	46,510		$	3,480		7.5	%
Used vehicle retail	Used vehicle retail	$	28,461		$	21,961		$	6,500		29.6	%	Used vehicle retail	$	31,754		$	28,461		$	3,293		11.6	%
Gross profit per unit sold:	Gross profit per unit sold:												Gross profit per unit sold:
New vehicle retail sales	New vehicle retail sales	$	5,388		$	2,852		$	2,536		88.9	%	New vehicle retail sales	$	5,693		$	5,388		$	304		5.7	%
Used vehicle retail sales	Used vehicle retail sales	$	2,305		$	1,908		$	397		20.8	%	Used vehicle retail sales	$	1,588		$	2,305		$	(717)		(31.1)	%
Used vehicle wholesale sales	Used vehicle wholesale sales	$	478		$	603		$	(125)		(20.8)	%	Used vehicle wholesale sales	$	(197)		$	478		$	(675)		(141.2)	%
Total used	Total used	$	1,984		$	1,669		$	315		18.9	%	Total used	$	1,330		$	1,984		$	(654)		(33.0)	%
F&I PRU	F&I PRU	$	2,261		$	2,030		$	231		11.4	%	F&I PRU	$	2,435		$	2,261		$	174		7.7	%
Other:	Other:												Other:
SG&A expenses	SG&A expenses	$	308.7		$	245.2		$	63.5		25.9	%	SG&A expenses	$	385.8		$	308.7		$	77.1		25.0	%
SG&A as % gross profit	SG&A as % gross profit	57.7		%	59.0		%	(1.3)		%			SG&A as % gross profit	58.5		%	57.7		%	0.8		%

3029

Table of Contents

Same Store Operating Data — U.S.

(In millions, except unit data)


		Three Months Ended September 30,												Three Months Ended September 30,
		2021			2020			Increase/(Decrease)			% Change			2022			2021			Increase/(Decrease)			% Change
Revenues:	Revenues:												Revenues:
New vehicle retail sales	New vehicle retail sales	$	1,191.1		$	1,158.8		$	32.3		2.8	%	New vehicle retail sales	$	1,242.6		$	1,181.8		$	60.8		5.1	%
Used vehicle retail sales	Used vehicle retail sales	894.3			600.7			293.6			48.9	%	Used vehicle retail sales	997.2			885.6			111.6			12.6	%
Used vehicle wholesale sales	Used vehicle wholesale sales	67.2			43.8			23.5			53.7	%	Used vehicle wholesale sales	48.4			66.6			(18.2)			(27.3)	%
Total used	Total used	961.5			644.4			317.1			49.2	%	Total used	1,045.6			952.2			93.4			9.8	%
Parts and service sales	Parts and service sales	349.6			302.8			46.8			15.5	%	Parts and service sales	380.2			348.0			32.1			9.2	%
F&I, net	F&I, net	129.0			111.8			17.3			15.5	%	F&I, net	139.6			127.4			12.2			9.6	%
Total revenues	Total revenues	$	2,631.3		$	2,217.8		$	413.5		18.6	%	Total revenues	$	2,808.0		$	2,609.4		$	198.6		7.6	%
Gross profit:	Gross profit:												Gross profit:
New vehicle retail sales	New vehicle retail sales	$	138.0		$	79.0		$	59.1		74.8	%	New vehicle retail sales	$	138.2		$	136.7		$	1.6		1.2	%
Used vehicle retail sales	Used vehicle retail sales	71.5			52.4			19.2			36.6	%	Used vehicle retail sales	48.8			72.3			(23.5)			(32.5)	%
Used vehicle wholesale sales	Used vehicle wholesale sales	3.0			3.7			(0.7)			(18.8)	%	Used vehicle wholesale sales	(0.9)			3.2			(4.1)			(128.4)	%
Total used	Total used	74.5			56.1			18.5			33.0	%	Total used	47.9			75.5			(27.6)			(36.6)	%
Parts and service sales	Parts and service sales	186.0			164.0			21.9			13.4	%	Parts and service sales	204.1			184.9			19.2			10.4	%
F&I, net	F&I, net	129.0			111.8			17.3			15.5	%	F&I, net	139.6			127.4			12.2			9.6	%
Total gross profit	Total gross profit	$	527.6		$	410.8		$	116.7		28.4	%	Total gross profit	$	529.9		$	524.5		$	5.4		1.0	%
Gross margin:	Gross margin:												Gross margin:
New vehicle retail sales	New vehicle retail sales	11.6		%	6.8		%	4.8		%			New vehicle retail sales	11.1		%	11.6		%	(0.4)		%
Used vehicle retail sales	Used vehicle retail sales	8.0		%	8.7		%	(0.7)		%			Used vehicle retail sales	4.9		%	8.2		%	(3.3)		%
Used vehicle wholesale sales	Used vehicle wholesale sales	4.5		%	8.4		%	(4.0)		%			Used vehicle wholesale sales	(1.9)		%	4.8		%	(6.7)		%
Total used	Total used	7.8		%	8.7		%	(0.9)		%			Total used	4.6		%	7.9		%	(3.3)		%
Parts and service sales	Parts and service sales	53.2		%	54.2		%	(1.0)		%			Parts and service sales	53.7		%	53.1		%	0.6		%

Total gross margin	Total gross margin	20.0		%	18.5		%	1.5		%			Total gross margin	18.9		%	20.1		%	(1.2)		%
Units sold:	Units sold:												Units sold:
Retail new vehicles sold	Retail new vehicles sold	25,522			27,626			(2,104)			(7.6)	%	Retail new vehicles sold	24,854			25,353			(499)			(2.0)	%
Retail used vehicles sold	Retail used vehicles sold	31,366			27,299			4,067			14.9	%	Retail used vehicles sold	31,518			31,056			462			1.5	%
Wholesale used vehicles sold	Wholesale used vehicles sold	6,611			6,076			535			8.8	%	Wholesale used vehicles sold	4,925			6,553			(1,628)			(24.8)	%
Total used	Total used	37,977			33,375			4,602			13.8	%	Total used	36,443			37,609			(1,166)			(3.1)	%
Average sales price per unit sold:	Average sales price per unit sold:												Average sales price per unit sold:
New vehicle retail	New vehicle retail	$	46,670		$	41,947		$	4,723		11.3	%	New vehicle retail	$	49,996		$	46,613		$	3,383		7.3	%
Used vehicle retail	Used vehicle retail	$	28,512		$	22,003		$	6,509		29.6	%	Used vehicle retail	$	31,640		$	28,516		$	3,124		11.0	%
Gross profit per unit sold:	Gross profit per unit sold:												Gross profit per unit sold:
New vehicle retail sales	New vehicle retail sales	$	5,409		$	2,858		$	2,551		89.2	%	New vehicle retail sales	$	5,562		$	5,390		$	172		3.2	%
Used vehicle retail sales	Used vehicle retail sales	$	2,280		$	1,918		$	362		18.9	%	Used vehicle retail sales	$	1,549		$	2,329		$	(780)		(33.5)	%
Used vehicle wholesale sales	Used vehicle wholesale sales	$	454		$	608		$	(154)		(25.4)	%	Used vehicle wholesale sales	$	(184)		$	486		$	(670)		(137.8)	%
Total used	Total used	$	1,962		$	1,679		$	283		16.8	%	Total used	$	1,315		$	2,008		$	(693)		(34.5)	%
F&I PRU	F&I PRU	$	2,268		$	2,035		$	234		11.5	%	F&I PRU	$	2,477		$	2,259		$	218		9.7	%
Other:	Other:												Other:
SG&A expenses	SG&A expenses	$	304.5		$	241.6		$	62.9		26.0	%	SG&A expenses	$	322.7		$	302.0		$	20.7		6.9	%
SG&A as % gross profit	SG&A as % gross profit	57.7		%	58.8		%	(1.1)		%			SG&A as % gross profit	60.9		%	57.6		%	3.3		%

3130

Table of Contents

U.S. Region — Three Months Ended September 30, 2022 Compared to 2021

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. ~~During 2020, our U.S. dealership operations were impacted by reduced demand caused by the COVID-19 pandemic and the restrictions put in place by local governments to contain the virus.~~

Revenues

Total revenues in the U.S. during the ~~three months ended September 30, 2021,~~Current Quarter increased ~~$417.8~~$821.9 million, or ~~18.6%~~30.9%, as compared to the Prior Year Quarter. This increase was driven by the acquisition of stores and higher same ~~period in 2020.~~ store revenues.

Total same store revenues in the U.S. during the ~~three months ended September 30, 2021,~~Current Quarter increased ~~$413.5~~$198.6 million, or ~~18.6%~~7.6%, as compared to Prior Year Quarter. This increase was primarily driven by ~~increases in all of our revenue streams. The increase of 2.8% in~~higher same store revenues from new and used vehicle retail ~~same store~~ sales, ~~was driven by an 11.3% increase in the average new vehicle retail same store~~parts and service sales ~~price,~~and F&I, net, partially offset by ~~a 7.6% decrease in new vehicle retail~~lower same store unit sales reflecting increased demand at our dealerships and lower vehicle inventory supply as a result of the OEMs producing and delivering fewer vehicles to dealerships due to a global semiconductor chip shortage. At September 30, 2021, our U.S. new vehicle inventory supply was 11 days’ which was 41 days lower than the same period in 2020 and 37 days lower than December 31, 2020 days’ supply of 48. Used vehicle retail same store sales increased 48.9%, driven by a 29.6% increase in averagerevenues from used vehicle ~~same store sales price, coupled with a 14.9% increase in used vehicle retail same store unit~~wholesale sales. The increase reflects strong consumer demand coupled with our ability to hold used vehicle days’ supply relatively constant by sourcing more inventory through direct purchases from vehicle owners rather than through public auctions.

New and used vehicle retail ~~same store~~ revenues ~~also~~ benefited from ~~a 67.8% increase in sales~~the sale of approximately 7,700 units from our online digital platform, AcceleRide®, during the ~~three months ended September 30, 2021~~Current Quarter, representing a 47.0% increase as compared to the Prior Year Quarter.

New vehicle retail same ~~period~~store revenues outperformed the Prior Year Quarter. A shortage in ~~2020.~~new vehicle supply continued to drive strong pricing in the Current Quarter, mitigating the modestly lower new vehicle retail unit sales. Supply chain issues, including an ongoing semiconductor and vehicle parts shortage, and other logistics challenges, continued into the Current Quarter for OEMs, leading to sustained lower vehicle production and deliveries of fewer vehicles to dealerships. We ended the Current Quarter with a U.S. new vehicle inventory supply of 15 days, 4 days higher than the Prior Year Quarter.

Used vehicle retail same store revenues outperformed the Prior Year Quarter, driven by strong used vehicle retail pricing due to increased demand, coupled with a modest increase in retail used vehicle unit sales. Used vehicle wholesale same store ~~sales increased 53.7%, driven by~~revenues underperformed due to a ~~41.2% increase~~decline in ~~average~~wholesale used vehicle unit sales. We have increased our efforts to sell more used vehicles through retail sales channels rather than the wholesale ~~same store sales price, coupled with an 8.8% increase in~~market as a result of the increased demand and pricing of used vehicle ~~wholesale same store units. The increase in our same store average used vehicle wholesale~~retail sales ~~price was the result of a 23.1% increase in average used vehicle market prices in 2021, as compared to the same period in 2020, as reflected in the Manheim Index.~~ described above.

Parts and service same store revenues ~~increased 15.5%, for~~outperformed the ~~quarter ended September 30, 2021, as compared to the same period in 2020,~~Prior Year Quarter, driven by increases across all business lines, reflecting increased business activity and increased same store technician headcount as a ~~19.4% increase in customer pay revenues, a 25.7% increase in wholesale revenues~~result of our technician recruiting and ~~a 30.4% increase in collision revenues; partially offset by a 12.9% decline in warranty revenues.~~ retention efforts providing greater capacity to meet increased demand.

F&I, net same store revenues ~~increased 15.5%~~outperformed the Prior Year Quarter, primarily driven ~~primarily~~ by ~~improved penetration rates on VSCs and many of our other insurance product offerings,~~ higher income per contract on finance, VSCs and other product offerings, as well as improved penetration rates on our ~~retail finance fees and an increase in our total retail same store unit sales. These increases were partially offset by an increase in our overall chargeback experience.~~other product offerings.

Gross Profit

Total gross profit in the U.S. during the ~~three months ended September 30, 2021,~~Current Quarter increased ~~$119.3~~$124.3 million, or ~~28.7%~~23.2%, as compared to the ~~same period in 2020.~~ Prior Year Quarter, primarily driven by the acquisition of stores.

Total same store gross profit in the U.S. during the ~~three months ended September 30, 2021,~~Current Quarter increased ~~$116.7~~$5.4 million, or ~~28.4%~~1.0%, as compared to the ~~same period in 2020,~~Prior Year Quarter. This increase was primarily driven by ~~increases in all of our operations with the exception of used vehicle wholesale~~higher same store gross ~~profit.~~ profit from parts and service sales, F&I, net and new vehicle retail sales, partially offset by lower same store gross profit from used vehicle retail and wholesale sales.

New vehicle retail same store gross profit ~~increased 74.8%, reflecting~~outperformed the Prior Year Quarter, driven by an ~~89.2%~~ increase in new vehicle retail same store gross profit per unit sold, partially offset by a ~~7.6%~~modest decrease in same store retail new vehicle ~~retail same store~~ unit sales. The increase in new vehicle retail same store gross profit per unit sold reflects the strong ~~consumer~~ demand ~~coupled with~~resulting from the shortage of new vehicle inventory ~~supply constraints.~~ discussed above. The inventory shortage also drove the decrease in same store retail new vehicle unit sales.

Used vehicle retail same store gross profit ~~increased 36.6%,~~underperformed the Prior Year Quarter, driven by ~~an increase of 18.9%~~a decrease in used vehicle retail same store gross profit per unit sold, ~~coupled with a 14.9% increase~~partially offset by modestly higher same store retail used vehicle unit sales. The decrease in same store used vehicle retail ~~same store unit sales over the same period in 2020. The increase in~~gross profit was driven by inflationary impacts on our used vehicle ~~retail same store gross profit per unit sold reflects a combination of~~customers and higher ~~market prices and strong demand.~~ used vehicle acquisition prices.

Our used vehicle wholesale same store gross profit ~~decreased 18.8%~~underperformed the Prior Year Quarter, driven by a ~~25.4%~~ decrease in used vehicle wholesale same store gross profit per unit sold, ~~partially offset by an increase~~coupled with a decrease in used vehicle same store wholesale ~~units.~~unit sales. The ~~decrease~~decreases in ~~our used vehicle~~ wholesale ~~same store~~ gross profit per unit sold ~~stems from fluctuations~~and in wholesale ~~prices from month~~units were driven by efforts to ~~month,~~sell more used vehicles through retail sales rather than the wholesale market as ~~reflected in the Manheim Index, and the timing of when we acquire inventory and sell the vehicles at auction.~~ described above.

Parts and service same store gross profit ~~increased 13.4%~~outperformed the Prior Year Quarter, as described above for ~~the quarter ended September 30, 2021, as compared to the~~parts and service same ~~period in 2020, driven primarily by a 19.3% increase in our customer-pay gross profit.~~ store revenues.

F&I, net same store gross profit increased ~~15.5%~~9.6%, ~~driven by increases in revenue discussed above.~~ as described above for F&I, net same store revenues.

Total same store gross ~~margin increased 150~~margin decreased 123 basis points, primarily driven by lower same store used vehicle retail gross margin caused by inflationary impacts on our used vehicle customers and higher ~~new~~used vehicle ~~margins due to supply constraints.~~acquisition prices.

3231

Table of Contents

SG&A Expenses

~~Our~~ SG&A ~~expenses consist~~as a percentage of gross profit increased 83 and 332 basis points on an as reported and same store basis, respectively, compared to the Prior Year Quarter, primarily of personnel costs, including salaries, commissions and incentive-based compensation, as well as rent and facility costs, advertising and other expenses (which includes legal, professional fees and general corporate expenses). driven by increases in SG&A expenses.

Total SG&A expenses in the U.S. during the ~~three months ended September 30, 2021,~~Current Quarter increased ~~$63.5~~$77.1 million, or ~~25.9%~~25.0%, as compared to the ~~same period in 2020.~~Prior Year Quarter, primarily driven by the acquisition of stores. Total same store SG&A expenses in the U.S. during the ~~three months ended September 30, 2021,~~Current Quarter, increased ~~$62.9~~$20.7 million, or ~~26.0%~~6.9%, as compared to the ~~same period in 2020,~~Prior Year Quarter, primarily driven by increased ~~variable commission payments as a result of improvements~~labor costs, favorable non-recurring legal settlements in ~~used vehicle sales volume and new vehicle margins~~the Prior Year Quarter, and an increase in other variable expenses associated with the rise in certain business activity. Total same store SG&A expenses in the U.S. for the three months ended September 30, 2021, included $3.8 million in acquisition costs and $0.6 million of net costs associated with Hurricane Ida, partially offset by $3.7 million in gains related to favorable legal settlements. Total same store SG&A as a percent of gross profit decreased from 58.8% in the third quarter of 2020, to 57.7% for the same period of 2021, driven by productivity gains and higher new vehicle margins.activities described above.

3332

Table of Contents

Reported Operating Data — U.S.

(In millions, except unit data)


		Nine Months Ended September 30,												Nine Months Ended September 30,
		2021			2020			Increase/(Decrease)			% Change			2022			2021			Increase/(Decrease)			% Change
Revenues:	Revenues:												Revenues:
New vehicle retail sales	New vehicle retail sales	$	3,958.9		$	3,076.3		$	882.6		28.7	%	New vehicle retail sales	$	4,581.8		$	3,958.9		$	622.9		15.7	%
Used vehicle retail sales	Used vehicle retail sales	2,481.7			1,719.4			762.3			44.3	%	Used vehicle retail sales	3,447.6			2,481.7			965.9			38.9	%
Used vehicle wholesale sales	Used vehicle wholesale sales	179.6			122.1			57.5			47.0	%	Used vehicle wholesale sales	177.6			179.6			(1.9)			(1.1)	%
Total used	Total used	2,661.3			1,841.5			819.8			44.5	%	Total used	3,625.3			2,661.3			963.9			36.2	%
Parts and service sales	Parts and service sales	982.0			865.2			116.8			13.5	%	Parts and service sales	1,307.7			982.0			325.7			33.2	%
F&I, net	F&I, net	389.4			300.2			89.2			29.7	%	F&I, net	498.1			389.4			108.7			27.9	%
Total revenues	Total revenues	$	7,991.6		$	6,083.3		$	1,908.4		31.4	%	Total revenues	$	10,012.8		$	7,991.6		$	2,021.2		25.3	%
Gross profit:	Gross profit:												Gross profit:
New vehicle retail sales	New vehicle retail sales	$	362.6		$	183.6		$	179.0		97.5	%	New vehicle retail sales	$	538.5		$	362.6		$	175.9		48.5	%
Used vehicle retail sales	Used vehicle retail sales	210.7			125.7			85.0			67.6	%	Used vehicle retail sales	203.0			210.7			(7.8)			(3.7)	%
Used vehicle wholesale sales	Used vehicle wholesale sales	13.6			6.2			7.4			119.9	%	Used vehicle wholesale sales	3.8			13.6			(9.7)			(71.7)	%
Total used	Total used	224.3			131.9			92.4			70.0	%	Total used	206.8			224.3			(17.5)			(7.8)	%
Parts and service sales	Parts and service sales	535.1			465.4			69.7			15.0	%	Parts and service sales	713.1			535.1			178.0			33.3	%
F&I, net	F&I, net	389.4			300.2			89.2			29.7	%	F&I, net	498.1			389.4			108.7			27.9	%
Total gross profit	Total gross profit	$	1,511.4		$	1,081.1		$	430.3		39.8	%	Total gross profit	$	1,956.5		$	1,511.4		$	445.1		29.5	%
Gross margin:	Gross margin:												Gross margin:
New vehicle retail sales	New vehicle retail sales	9.2		%	6.0		%	3.2		%			New vehicle retail sales	11.8		%	9.2		%	2.6		%
Used vehicle retail sales	Used vehicle retail sales	8.5		%	7.3		%	1.2		%			Used vehicle retail sales	5.9		%	8.5		%	(2.6)		%
Used vehicle wholesale sales	Used vehicle wholesale sales	7.6		%	5.0		%	2.5		%			Used vehicle wholesale sales	2.2		%	7.6		%	(5.4)		%
Total used	Total used	8.4		%	7.2		%	1.3		%			Total used	5.7		%	8.4		%	(2.7)		%
Parts and service sales	Parts and service sales	54.5		%	53.8		%	0.7		%			Parts and service sales	54.5		%	54.5		%	—		%

Total gross margin	Total gross margin	18.9		%	17.8		%	1.1		%			Total gross margin	19.5		%	18.9		%	0.6		%
Units sold:	Units sold:												Units sold:
Retail new vehicles sold	Retail new vehicles sold	89,183			74,412			14,771			19.9	%	Retail new vehicles sold	92,870			89,183			3,687			4.1	%
Retail used vehicles sold	Retail used vehicles sold	96,143			81,494			14,649			18.0	%	Retail used vehicles sold	110,635			96,143			14,492			15.1	%
Wholesale used vehicles sold	Wholesale used vehicles sold	19,804			18,372			1,432			7.8	%	Wholesale used vehicles sold	18,513			19,804			(1,291)			(6.5)	%
Total used	Total used	115,947			99,866			16,081			16.1	%	Total used	129,148			115,947			13,201			11.4	%
Average sales price per unit sold:	Average sales price per unit sold:												Average sales price per unit sold:
New vehicle retail	New vehicle retail	$	44,391		$	41,342		$	3,049		7.4	%	New vehicle retail	$	49,335		$	44,391		$	4,945		11.1	%
Used vehicle retail	Used vehicle retail	$	25,813		$	21,099		$	4,714		22.3	%	Used vehicle retail	$	31,162		$	25,813		$	5,349		20.7	%
Gross profit per unit sold:	Gross profit per unit sold:												Gross profit per unit sold:
New vehicle retail sales	New vehicle retail sales	$	4,066		$	2,467		$	1,599		64.8	%	New vehicle retail sales	$	5,799		$	4,066		$	1,733		42.6	%
Used vehicle retail sales	Used vehicle retail sales	$	2,192		$	1,543		$	649		42.1	%	Used vehicle retail sales	$	1,834		$	2,192		$	(357)		(16.3)	%
Used vehicle wholesale sales	Used vehicle wholesale sales	$	685		$	336		$	349		104.0	%	Used vehicle wholesale sales	$	207		$	685		$	(478)		(69.8)	%
Total used	Total used	$	1,934		$	1,321		$	614		46.5	%	Total used	$	1,601		$	1,934		$	(333)		(17.2)	%
F&I PRU	F&I PRU	$	2,101		$	1,926		$	176		9.1	%	F&I PRU	$	2,448		$	2,101		$	346		16.5	%
Other:	Other:												Other:

SG&A expenses	SG&A expenses	$	883.0		$	706.0		$	177.0		25.1	%	SG&A expenses	$	1,133.0		$	883.0		$	250.1		28.3	%

SG&A as % gross profit	SG&A as % gross profit	58.4		%	65.3		%	(6.9)		%			SG&A as % gross profit	57.9		%	58.4		%	(0.5)		%

3433

Table of Contents

Same Store Operating Data — U.S.

(In millions, except unit data)


		Nine Months Ended September 30,												Nine Months Ended September 30,
		2021			2020			Increase/(Decrease)			% Change			2022			2021			Increase/(Decrease)			% Change
Revenues:	Revenues:												Revenues:
New vehicle retail sales	New vehicle retail sales	$	3,923.4		$	3,042.0		$	881.4		29.0	%	New vehicle retail sales	$	3,623.5		$	3,889.8		$	(266.3)		(6.8)	%
Used vehicle retail sales	Used vehicle retail sales	2,466.2			1,696.7			769.5			45.4	%	Used vehicle retail sales	2,869.8			2,442.5			427.3			17.5	%
Used vehicle wholesale sales	Used vehicle wholesale sales	178.2			119.8			58.4			48.8	%	Used vehicle wholesale sales	139.9			176.7			(36.8)			(20.8)	%
Total used	Total used	2,644.4			1,816.5			827.9			45.6	%	Total used	3,009.7			2,619.2			390.5			14.9	%
Parts and service sales	Parts and service sales	974.3			855.8			118.5			13.8	%	Parts and service sales	1,104.8			970.4			134.4			13.9	%
F&I, net	F&I, net	386.9			297.0			89.9			30.3	%	F&I, net	413.6			382.5			31.1			8.1	%
Total revenues	Total revenues	$	7,929.1		$	6,011.4		$	1,917.7		31.9	%	Total revenues	$	8,151.7		$	7,861.9		$	289.7		3.7	%
Gross profit:	Gross profit:												Gross profit:
New vehicle retail sales	New vehicle retail sales	$	359.0		$	181.5		$	177.6		97.8	%	New vehicle retail sales	$	419.5		$	355.8		$	63.7		17.9	%
Used vehicle retail sales	Used vehicle retail sales	207.9			124.6			83.3			66.8	%	Used vehicle retail sales	166.9			208.3			(41.3)			(19.9)	%
Used vehicle wholesale sales	Used vehicle wholesale sales	13.1			6.1			7.0			115.2	%	Used vehicle wholesale sales	2.6			13.3			(10.8)			(80.7)	%
Total used	Total used	221.1			130.7			90.3			69.1	%	Total used	169.5			221.6			(52.1)			(23.5)	%
Parts and service sales	Parts and service sales	530.3			459.7			70.6			15.4	%	Parts and service sales	589.0			527.5			61.4			11.6	%
F&I, net	F&I, net	386.9			297.0			89.9			30.3	%	F&I, net	413.6			382.5			31.1			8.1	%
Total gross profit	Total gross profit	$	1,497.3		$	1,068.9		$	428.4		40.1	%	Total gross profit	$	1,591.5		$	1,487.4		$	104.1		7.0	%
Gross margin:	Gross margin:												Gross margin:
New vehicle retail sales	New vehicle retail sales	9.2		%	6.0		%	3.2		%			New vehicle retail sales	11.6		%	9.1		%	2.4		%
Used vehicle retail sales	Used vehicle retail sales	8.4		%	7.3		%	1.1		%			Used vehicle retail sales	5.8		%	8.5		%	(2.7)		%
Used vehicle wholesale sales	Used vehicle wholesale sales	7.4		%	5.1		%	2.3		%			Used vehicle wholesale sales	1.8		%	7.6		%	(5.7)		%
Total used	Total used	8.4		%	7.2		%	1.2		%			Total used	5.6		%	8.5		%	(2.8)		%
Parts and service sales	Parts and service sales	54.4		%	53.7		%	0.7		%			Parts and service sales	53.3		%	54.4		%	(1.1)		%

Total gross margin	Total gross margin	18.9		%	17.8		%	1.1		%			Total gross margin	19.5		%	18.9		%	0.6		%
Units sold:	Units sold:												Units sold:
Retail new vehicles sold	Retail new vehicles sold	88,233			73,528			14,705			20.0	%	Retail new vehicles sold	73,307			87,597			(14,290)			(16.3)	%
Retail used vehicles sold	Retail used vehicles sold	95,456			80,270			15,186			18.9	%	Retail used vehicles sold	92,490			94,574			(2,084)			(2.2)	%
Wholesale used vehicles sold	Wholesale used vehicles sold	19,538			18,057			1,481			8.2	%	Wholesale used vehicles sold	14,104			19,388			(5,284)			(27.3)	%
Total used	Total used	114,994			98,327			16,667			17.0	%	Total used	106,594			113,962			(7,368)			(6.5)	%
Average sales price per unit sold:	Average sales price per unit sold:												Average sales price per unit sold:
New vehicle retail	New vehicle retail	$	44,467		$	41,372		$	3,094		7.5	%	New vehicle retail	$	49,429		$	44,406		$	5,024		11.3	%
Used vehicle retail	Used vehicle retail	$	25,836		$	21,138		$	4,698		22.2	%	Used vehicle retail	$	31,029		$	25,826		$	5,202		20.1	%
Gross profit per unit sold:	Gross profit per unit sold:												Gross profit per unit sold:
New vehicle retail sales	New vehicle retail sales	$	4,069		$	2,468		$	1,601		64.9	%	New vehicle retail sales	$	5,722		$	4,062		$	1,660		40.9	%
Used vehicle retail sales	Used vehicle retail sales	$	2,178		$	1,553		$	625		40.3	%	Used vehicle retail sales	$	1,805		$	2,202		$	(397)		(18.0)	%
Used vehicle wholesale sales	Used vehicle wholesale sales	$	673		$	338		$	334		98.9	%	Used vehicle wholesale sales	$	182		$	688		$	(506)		(73.5)	%
Total used	Total used	$	1,922		$	1,330		$	593		44.6	%	Total used	$	1,590		$	1,945		$	(355)		(18.2)	%
F&I PRU	F&I PRU	$	2,106		$	1,931		$	175		9.1	%	F&I PRU	$	2,495		$	2,100		$	395		18.8	%
Other:	Other:												Other:

SG&A expenses	SG&A expenses	$	875.9		$	695.8		$	180.2		25.9	%	SG&A expenses	$	949.8		$	869.0		$	80.8		9.3	%

SG&A as % gross profit	SG&A as % gross profit	58.5		%	65.1		%	(6.6)		%			SG&A as % gross profit	59.7		%	58.4		%	1.3		%

3534

Table of Contents

U.S. Region — Nine Months Ended September 30, 2022 Compared to 2021

Revenues

Total revenues in the U.S. during the ~~nine months ended September 30, 2021,~~Current Year increased ~~$1,908.4 million,~~$2.0 billion, or ~~31.4%~~25.3%, as compared to the same period in ~~2020.~~ 2021 (“Prior Year”), primarily driven by the acquisition of stores.

Total same store revenues in the U.S. during the ~~nine months ended September 30, 2021,~~Current Year increased ~~$1,917.7~~$289.7 million, or ~~31.9%~~3.7%, as compared to the ~~same period in 2020,~~Prior Year. This increase was primarily driven by ~~increases in all of our revenue streams. The 29.0% increase in~~higher same store revenues from used vehicle retail sales, parts and service sales and F&I, net, partially offset by lower same store revenues from new vehicle retail same store sales was driven by a 20.0% increase in new vehicle retail same store unit sales, coupled with a 7.5% increase in average new vehicle retail same store sales price reflecting increased demand at our dealerships and lower vehicle inventory supply as a result of the OEMs producing and delivering fewer vehicles to dealerships due to a global semiconductor chip shortage. Used vehicle retail same store sales increased 45.4%, driven by a 22.2% increase in average used vehicle retail same store sales price coupled with an 18.9% increase in used vehicle retail same store unit sales, reflecting increased demand and our ability to maintain used vehicle inventory levels through sourcing more inventory from direct purchases from vehicle owners. wholesale sales.

New and used vehicle retail ~~same store~~ revenues ~~also~~ benefited from ~~a 96.5% increase in sales~~the sale of approximately 20,300 units from our online digital platform, AcceleRide®, during the ~~nine months ended September 30, 2021~~Current Year, representing approximately a 36.8% increase as compared to the Prior Year.

New vehicle retail same ~~period~~store revenues underperformed the Prior Year, driven by a shortage in ~~2020.~~new vehicle supply, leading to fewer unit sales. The shortage of new vehicle inventory continues to drive strong pricing, which partially mitigated the revenue impact of lower new vehicle unit sales. Supply chain issues, including an ongoing semiconductor and vehicle parts shortage, and other logistics challenges, continued into the Current Year for OEMs, leading to sustained lower vehicle production and deliveries of fewer vehicles to dealerships.

Used vehicle retail same store revenues outperformed the Prior Year, despite a modest decline in unit sales, as increased demand drove prices higher. Used vehicle wholesale same store ~~sales increased 48.8%,~~revenues declined primarily driven by a ~~35.7% increase~~decline in ~~average~~unit sales driven by efforts to sell more used vehicles through retail sales rather than the wholesale market as a result of the increased demand and pricing of used vehicle ~~same store~~retail sales price coupled with an 8.2% increase in used vehicle wholesale same store units. The increase in our average used vehicle wholesale same store sales price was the result of a 28.4% increase in the average used vehicle market prices for the nine months ended September 30, 2021, as compared to the same period last year, as reflected in the Manheim Index. described above.

Parts and service same store revenues ~~increased 13.8% for~~outperformed the ~~nine months ended September 30, 2021, as compared to the same period in 2020,~~Prior Year, primarily driven by ~~a 17.2% increase~~increases in ~~our~~ customer pay, wholesale and collision revenues ~~a 21.1% increase in~~reflecting increased business activity and increased same store technician headcount through our ~~wholesale revenue~~technician recruiting and ~~an 18.6% increase in our collision revenues;~~retention efforts providing greater capacity to meet increased demand. These increases were partially offset by a ~~5.2% decline~~decrease in ~~our~~ warranty ~~revenues.~~ revenues, due to fewer new vehicles sold as a result of new vehicle shortages described above.

F&I, net same store revenues ~~increased 30.3%~~outperformed the Prior Year, primarily driven ~~primarily~~ by ~~a 19.4% increase in same store total retail unit sales, coupled with~~ higher income per contract on finance, VSCs and ~~many of our~~ other ~~insurance~~ product offerings and ~~higher~~improved penetration ~~rates. These increases were~~rates, partially offset by ~~an increase in our overall chargeback experience.~~a decrease from fewer same store new and used vehicle unit sales.

Gross Profit

Total gross profit in the U.S. during the ~~nine months ended September 30, 2021,~~Current Year increased ~~$430.3~~$445.1 million, or ~~39.8%~~29.5%, as compared to the Prior Year, primarily driven by the acquisition of stores and higher same ~~period in 2020.~~ store results.

Total same store gross profit in the U.S. during the ~~nine months ended September 30, 2021,~~Current Year increased ~~$428.4~~$104.1 million, or ~~40.1%~~7.0%, as compared to the ~~same period in 2020,~~Prior Year, primarily driven by ~~increases in all of our operations.~~higher same store gross profit from new vehicle retail sales, parts and service sales and F&I, net.

New vehicle retail same store gross profit ~~increased 97.8%,~~outperformed the Prior Year, driven by ~~a 64.9%~~an increase in new vehicle retail same store gross profit per unit sold, ~~coupled with~~partially offset by a ~~20.0% increase~~decrease in same store retail new vehicle ~~retail same store~~ unit sales. The increase in new vehicle retail same store gross profit per unit sold reflects ~~higher demand and~~the strong pricing resulting from the shortage of new vehicle inventory ~~supply constraints as a result of the global semiconductor chip shortage.~~ discussed above.

Used vehicle retail same store gross profit ~~increased 66.8%,~~underperformed the Prior Year, driven by a ~~40.3% increase~~decrease in used vehicle retail same store gross profit per unit sold, coupled with ~~an 18.9% increase~~a decrease in same store retail used vehicle unit sales. The decrease in same store used vehicle retail gross profit and retail used vehicle unit sales was driven by inflationary impacts on used vehicle customers coupled with higher used vehicle acquisition costs.

Our used vehicle wholesale same store gross profit underperformed the Prior Year, driven by a decrease in used vehicle ~~retail same store unit sales. The increase in used vehicle retail~~wholesale same store gross profit per unit sold, ~~reflects~~coupled with a ~~combination of higher market prices and strong demand. Used~~decrease in same store wholesale used vehicle unit sales. The decrease in used vehicle wholesale ~~same store~~ gross profit ~~increased~~per unit sold and in wholesale used vehicle unit sales was driven by efforts to sell more used vehicles through retail sales rather than the wholesale market as ~~industry supply shortages drove up auction prices as reflected in the Manheim Index.~~ described above.

Parts and service same store gross profit ~~increased 15.4%, primarily driven by~~outperformed the ~~increase in our customer-pay business reflecting increased business activity.~~ Prior Year, as described above for parts and service revenues.

F&I, net same store gross profit ~~increased 30.3%, driven by increases in revenue discussed above.~~ outperformed the Prior Year, as described above for F&I, net same store revenues.

Table of Contents

Total same store gross margin increased ~~110~~60 basis points, primarily driven by higher new ~~and~~vehicle retail sales prices outpacing new vehicle costs of sales. This increase was partially offset by a decrease in same store used vehicle ~~margins, reflecting~~gross margin, driven by inflationary impacts on our used vehicle customers and the ongoing new vehicle supply ~~constraints and higher~~shortage increasing acquisition costs for used vehicles, as well as a decrease in same store parts and service ~~margins, reflecting improvements in customer pay and an increase in internal work associated with higher vehicle sales volumes.~~gross margin primarily due to increased labor costs.

SG&A Expenses

SG&A as a percentage of gross profit declined 51 basis points and increased 126 basis points on an as reported and same store basis, respectively, compared to the Prior Year. The increase in SG&A as a percentage of gross profit on a same store basis was partially driven by the decline in used vehicle same store gross profit described above as well as the following factors impacting total SG&A.

Total SG&A expenses in the U.S. during the ~~nine months ended September 30, 2021,~~Current Year increased ~~$177.0~~$250.1 million, or ~~25.1%~~28.3%, as compared to the ~~same period in 2020.~~Prior Year, primarily driven by the acquisition of stores. Total same store SG&A expenses in the U.S. during the ~~nine months ended September 30, 2021,~~Current Year increased ~~$180.2~~$80.8 million, or ~~25.9%~~9.3%, as compared to the ~~same period in 2020,~~Prior Year, primarily driven by increased ~~variable commission payments as a result of improvements in sales volume and margins~~labor costs and an increase in other variable expenses associated with the rise in certain business activity. Total same store SG&A expenses in the U.S. for the nine months ended September 30, 2021, included $2.8 million in disaster pay and insurance deductible expense associated with the February winter storm in Texas and Hurricane Ida, coupled with $3.8 million in acquisition costs, partially offset by $4.7 million in gains related to favorable legal settlements. Total same store SG&A expenses in the U.S. in the nine months ended September 30, 2020, included $10.6 million in expense for an out of period adjustment related to stock compensation. Total same store SG&A as a percent of gross profit decreased from 65.1% for the nine months ended September 30, 2020, to 58.5% for the same period of 2021, driven by productivity gains and higher vehicle margins.activities.

Table of Contents

Reported Operating Data — U.K.

(In millions, except unit data)


		Three Months Ended September 30,																Three Months Ended September 30,
		2021			2020			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results		Constant Currency % Change			2022			2021			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results		Constant Currency % Change
Revenues:	Revenues:																Revenues:
New vehicle retail sales	New vehicle retail sales	$	305.4		$	376.6		$	(71.2)		(18.9)	%	$	19.8	(24.2)	%	New vehicle retail sales	$	296.4		$	305.4		$	(9.0)		(2.9)	%	$	(53.8)	14.7	%
Used vehicle retail sales	Used vehicle retail sales	328.0			248.1			80.0			32.2	%	20.9		23.8	%	Used vehicle retail sales	276.5			328.0			(51.5)			(15.7)	%	(47.3)		(1.3)	%
Used vehicle wholesale sales	Used vehicle wholesale sales	38.1			39.5			(1.4)			(3.6)	%	2.4		(9.8)	%	Used vehicle wholesale sales	28.3			38.1			(9.8)			(25.7)	%	(4.9)		(12.9)	%
Total used	Total used	366.1			287.6			78.5			27.3	%	23.3		19.2	%	Total used	304.8			366.1			(61.3)			(16.7)	%	(52.2)		(2.5)	%
Parts and service sales	Parts and service sales	63.4			61.3			2.1			3.4	%	4.0		(3.2)	%	Parts and service sales	61.8			63.4			(1.5)			(2.4)	%	(10.7)		14.5	%
F&I, net	F&I, net	15.6			15.4			0.2			1.4	%	1.0		(5.1)	%	F&I, net	16.1			15.6			0.5			3.1	%	(2.8)		21.1	%
Total revenues	Total revenues	$	750.4		$	740.8		$	9.6		1.3	%	$	48.2	(5.2)	%	Total revenues	$	679.1		$	750.4		$	(71.3)		(9.5)	%	$	(119.5)	6.4	%
Gross profit:	Gross profit:																Gross profit:
New vehicle retail sales	New vehicle retail sales	$	21.5		$	16.8		$	4.7		27.9	%	$	1.4	19.7	%	New vehicle retail sales	$	25.9		$	21.5		$	4.5		20.8	%	$	(4.9)	43.7	%
Used vehicle retail sales	Used vehicle retail sales	23.9			17.2			6.7			39.0	%	1.5		30.3	%	Used vehicle retail sales	15.5			23.9			(8.5)			(35.5)	%	(2.7)		(24.4)	%
Used vehicle wholesale sales	Used vehicle wholesale sales	4.1			2.0			2.1			106.1	%	0.3		92.7	%	Used vehicle wholesale sales	(0.3)			4.1			(4.4)			(106.3)	%	—		(107.4)	%
Total used	Total used	28.1			19.2			8.9			46.0	%	1.8		36.8	%	Total used	15.2			28.1			(12.9)			(45.9)	%	(2.6)		(36.6)	%
Parts and service sales	Parts and service sales	38.5			36.2			2.3			6.3	%	2.5		(0.5)	%	Parts and service sales	36.1			38.5			(2.4)			(6.2)	%	(6.3)		10.1	%
F&I, net	F&I, net	15.6			15.4			0.2			1.4	%	1.0		(5.1)	%	F&I, net	16.1			15.6			0.5			3.1	%	(2.8)		21.1	%
Total gross profit	Total gross profit	$	103.7		$	87.6		$	16.0		18.3	%	$	6.6	10.8	%	Total gross profit	$	93.3		$	103.7		$	(10.3)		(10.0)	%	$	(16.6)	6.0	%
Gross margin:	Gross margin:																Gross margin:
New vehicle retail sales	New vehicle retail sales	7.0		%	4.5		%	2.6		%							New vehicle retail sales	8.8		%	7.0		%	1.7		%
Used vehicle retail sales	Used vehicle retail sales	7.3		%	6.9		%	0.4		%							Used vehicle retail sales	5.6		%	7.3		%	(1.7)		%
Used vehicle wholesale sales	Used vehicle wholesale sales	10.9		%	5.1		%	5.8		%							Used vehicle wholesale sales	(0.9)		%	10.9		%	(11.8)		%
Total used	Total used	7.7		%	6.7		%	1.0		%							Total used	5.0		%	7.7		%	(2.7)		%
Parts and service sales	Parts and service sales	60.8		%	59.1		%	1.6		%							Parts and service sales	58.4		%	60.8		%	(2.4)		%

Total gross margin	Total gross margin	13.8		%	11.8		%	2.0		%							Total gross margin	13.7		%	13.8		%	(0.1)		%
Units sold:	Units sold:																Units sold:
Retail new vehicles sold	Retail new vehicles sold	7,381			10,689			(3,308)			(30.9)	%					Retail new vehicles sold	7,492			7,381			111			1.5	%
Retail used vehicles sold	Retail used vehicles sold	10,810			10,101			709			7.0	%					Retail used vehicles sold	10,255			10,810			(555)			(5.1)	%
Wholesale used vehicles sold	Wholesale used vehicles sold	4,202			5,104			(902)			(17.7)	%					Wholesale used vehicles sold	3,003			4,202			(1,199)			(28.5)	%
Total used	Total used	15,012			15,205			(193)			(1.3)	%					Total used	13,258			15,012			(1,754)			(11.7)	%
Average sales price per unit sold:	Average sales price per unit sold:																Average sales price per unit sold:
New vehicle retail	New vehicle retail	$	41,370		$	35,230		$	6,140		17.4	%	$	2,677	9.8	%	New vehicle retail	$	39,563		$	41,370		$	(1,808)		(4.4)	%	$	(7,177)	13.0	%
Used vehicle retail	Used vehicle retail	$	30,346		$	24,561		$	5,785		23.6	%	$	1,932	15.7	%	Used vehicle retail	$	26,967		$	30,346		$	(3,380)		(11.1)	%	$	(4,611)	4.1	%
Gross profit per unit sold:	Gross profit per unit sold:																Gross profit per unit sold:
New vehicle retail sales	New vehicle retail sales	$	2,910		$	1,571		$	1,338		85.2	%	$	185	73.4	%	New vehicle retail sales	$	3,464		$	2,910		$	554		19.0	%	$	(655)	41.6	%
Used vehicle retail sales	Used vehicle retail sales	$	2,215		$	1,706		$	509		29.9	%	$	139	21.7	%	Used vehicle retail sales	$	1,507		$	2,215		$	(709)		(32.0)	%	$	(259)	(20.3)	%
Used vehicle wholesale sales	Used vehicle wholesale sales	$	987		$	394		$	593		NM		$	64	134.0	%	Used vehicle wholesale sales	$	(87)		$	987		$	(1,074)		(108.8)	%	$	15	(110.3)	%
Total used	Total used	$	1,872		$	1,266		$	606		47.9	%	$	118	38.6	%	Total used	$	1,146		$	1,872		$	(726)		(38.8)	%	$	(197)	(28.2)	%
F&I PRU	F&I PRU	$	857		$	739		$	117		15.9	%	$	55	8.5	%	F&I PRU	$	905		$	857		$	49		5.7	%	$	(158)	24.1	%
Other:	Other:																Other:
SG&A expenses	SG&A expenses	$	67.6		$	53.7		$	13.9		25.9	%	$	4.2	18.0	%	SG&A expenses	$	65.1		$	67.6		$	(2.5)		(3.6)	%	$	(11.3)	13.1	%

SG&A as % gross profit	SG&A as % gross profit	65.2		%	61.2		%	3.9		%							SG&A as % gross profit	69.8		%	65.2		%	4.6		%

~~NM — Not Meaningful~~

Table of Contents

Same Store Operating Data — U.K.

(In millions, except unit data)


		Three Months Ended September 30,																Three Months Ended September 30,
		2021			2020			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results		Constant Currency % Change			2022			2021			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results		Constant Currency % Change
Revenues:	Revenues:																Revenues:
New vehicle retail sales	New vehicle retail sales	$	276.6		$	374.7		$	(98.1)		(26.2)	%	$	17.9	(31.0)	%	New vehicle retail sales	$	292.0		$	305.4		$	(13.4)		(4.4)	%	$	(52.8)	12.9	%
Used vehicle retail sales	Used vehicle retail sales	287.6			246.0			41.6			16.9	%	18.3		9.5	%	Used vehicle retail sales	274.2			328.0			(53.8)			(16.4)	%	(46.8)		(2.2)	%
Used vehicle wholesale sales	Used vehicle wholesale sales	34.5			39.3			(4.9)			(12.4)	%	2.2		(18.0)	%	Used vehicle wholesale sales	28.1			38.1			(10.0)			(26.2)	%	(4.8)		(13.5)	%
Total used	Total used	322.1			285.4			36.7			12.9	%	20.5		5.7	%	Total used	302.3			366.1			(63.8)			(17.4)	%	(51.6)		(3.3)	%
Parts and service sales	Parts and service sales	55.9			58.1			(2.1)			(3.7)	%	3.6		(9.8)	%	Parts and service sales	58.7			60.5			(1.9)			(3.1)	%	(10.1)		13.6	%
F&I, net	F&I, net	14.4			15.3			(0.9)			(5.8)	%	0.9		(11.8)	%	F&I, net	16.0			15.6			0.4			2.5	%	(2.8)		20.4	%
Total revenues	Total revenues	$	669.0		$	733.4		$	(64.4)		(8.8)	%	$	43.0	(14.6)	%	Total revenues	$	668.9		$	747.6		$	(78.7)		(10.5)	%	$	(117.4)	5.2	%
Gross profit:	Gross profit:																Gross profit:
New vehicle retail sales	New vehicle retail sales	$	19.5		$	16.7		$	2.8		16.8	%	$	1.2	9.4	%	New vehicle retail sales	$	25.5		$	21.5		$	4.0		18.7	%	$	(4.8)	41.1	%
Used vehicle retail sales	Used vehicle retail sales	21.5			17.1			4.4			25.9	%	1.3		18.0	%	Used vehicle retail sales	15.2			23.9			(8.7)			(36.5)	%	(2.6)		(25.6)	%
Used vehicle wholesale sales	Used vehicle wholesale sales	4.0			2.0			2.0			101.1	%	0.3		88.0	%	Used vehicle wholesale sales	(0.3)			4.1			(4.4)			(106.3)	%	—		(107.3)	%
Total used	Total used	25.6			19.1			6.5			33.8	%	1.6		25.4	%	Total used	14.9			28.1			(13.1)			(46.8)	%	(2.6)		(37.7)	%
Parts and service sales	Parts and service sales	34.2			34.6			(0.4)			(1.2)	%	2.2		(7.5)	%	Parts and service sales	34.8			37.2			(2.4)			(6.4)	%	(6.0)		9.8	%
F&I, net	F&I, net	14.4			15.3			(0.9)			(5.8)	%	0.9		(11.8)	%	F&I, net	16.0			15.6			0.4			2.5	%	(2.8)		20.4	%
Total gross profit	Total gross profit	$	93.7		$	85.7		$	8.0		9.3	%	$	5.9	2.4	%	Total gross profit	$	91.2		$	102.4		$	(11.1)		(10.9)	%	$	(16.2)	5.0	%
Gross margin:	Gross margin:																Gross margin:
New vehicle retail sales	New vehicle retail sales	7.1		%	4.5		%	2.6		%							New vehicle retail sales	8.7		%	7.0		%	1.7		%
Used vehicle retail sales	Used vehicle retail sales	7.5		%	6.9		%	0.5		%							Used vehicle retail sales	5.5		%	7.3		%	(1.8)		%
Used vehicle wholesale sales	Used vehicle wholesale sales	11.7		%	5.1		%	6.6		%							Used vehicle wholesale sales	(0.9)		%	10.9		%	(11.8)		%
Total used	Total used	7.9		%	6.7		%	1.2		%							Total used	4.9		%	7.7		%	(2.7)		%
Parts and service sales	Parts and service sales	61.2		%	59.7		%	1.6		%							Parts and service sales	59.4		%	61.5		%	(2.1)		%

Total gross margin	Total gross margin	14.0		%	11.7		%	2.3		%							Total gross margin	13.6		%	13.7		%	(0.1)		%
Units sold:	Units sold:																Units sold:
Retail new vehicles sold	Retail new vehicles sold	6,512			10,605			(4,093)			(38.6)	%					Retail new vehicles sold	7,395			7,381			14			0.2	%
Retail used vehicles sold	Retail used vehicles sold	9,127			9,968			(841)			(8.4)	%					Retail used vehicles sold	10,166			10,810			(644)			(6.0)	%
Wholesale used vehicles sold	Wholesale used vehicles sold	3,669			5,057			(1,388)			(27.4)	%					Wholesale used vehicles sold	2,986			4,202			(1,216)			(28.9)	%
Total used	Total used	12,796			15,025			(2,229)			(14.8)	%					Total used	13,152			15,012			(1,860)			(12.4)	%
Average sales price per unit sold:	Average sales price per unit sold:																Average sales price per unit sold:
New vehicle retail	New vehicle retail	$	42,479		$	35,333		$	7,146		20.2	%	$	2,748	12.4	%	New vehicle retail	$	39,485		$	41,370		$	(1,886)		(4.6)	%	$	(7,141)	12.7	%
Used vehicle retail	Used vehicle retail	$	31,513		$	24,681		$	6,831		27.7	%	$	2,006	19.6	%	Used vehicle retail	$	26,972		$	30,346		$	(3,374)		(11.1)	%	$	(4,602)	4.0	%
Gross profit per unit sold:	Gross profit per unit sold:																Gross profit per unit sold:
New vehicle retail sales	New vehicle retail sales	$	3,000		$	1,577		$	1,423		90.3	%	$	190	78.2	%	New vehicle retail sales	$	3,448		$	2,910		$	539		18.5	%	$	(650)	40.9	%
Used vehicle retail sales	Used vehicle retail sales	$	2,358		$	1,715		$	643		37.5	%	$	148	28.9	%	Used vehicle retail sales	$	1,496		$	2,215		$	(719)		(32.5)	%	$	(256)	(20.9)	%
Used vehicle wholesale sales	Used vehicle wholesale sales	$	1,099		$	396		$	703		NM		$	72	NM		Used vehicle wholesale sales	$	(87)		$	987		$	(1,074)		(108.8)	%	$	15	(110.3)	%
Total used	Total used	$	1,997		$	1,271		$	726		57.1	%	$	126	47.2	%	Total used	$	1,137		$	1,872		$	(735)		(39.3)	%	$	(195)	(28.9)	%
F&I PRU	F&I PRU	$	919		$	742		$	177		23.9	%	$	58	16.0	%	F&I PRU	$	909		$	857		$	53		6.1	%	$	(159)	24.7	%
Other:	Other:																Other:
SG&A expenses	SG&A expenses	$	58.9		$	52.2		$	6.8		12.9	%	$	3.7	5.8	%	SG&A expenses	$	63.6		$	66.4		$	(2.8)		(4.2)	%	$	(11.1)	12.4	%

SG&A as % gross profit	SG&A as % gross profit	62.9		%	60.9		%	2.0		%							SG&A as % gross profit	69.7		%	64.9		%	4.8		%

~~NM — Not Meaningful~~

Table of Contents

U.K. Region — Three Months Ended September 30, 2022 Compared to 2021

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. The GBP to USD foreign currency exchange rate has fluctuated from £1 to $1.35 at September 30, 2021, to £1 to $1.11 at September 30, 2022, or a decline of 17.3%, leading to a decrease in U.K. results when translated from GBP to USD in the Current Quarter when compared to the Prior Year Quarter.

Revenues

Total revenues in the U.K. during the Current Quarter decreased $71.3 million, or 9.5%, as compared to the Prior Year Quarter. This decrease was primarily driven by the negative impact of foreign currency exchange rates, partially offset by the acquisition of stores.

Total same store revenues in the U.K. during the Current Quarter decreased $78.7 million, or 10.5%, as compared to the Prior Year Quarter, primarily driven by the negative impact of foreign currency exchange rates. On a constant currency basis, total same store revenues increased 5.2%, driven by outperformances across all revenue streams except used vehicle retail and wholesale sales.

New vehicle retail same store revenues, on a constant currency basis, outperformed the Prior Year Quarter. A shortage in new vehicle supply continues to drive strong pricing on a constant currency basis. Supply chain issues, including an ongoing semiconductor and vehicle parts shortage, and other logistics challenges, continued into the Current Quarter for OEMs, leading to sustained lower vehicle production and deliveries of fewer vehicles to dealerships. We ended the Current Quarter with a U.K. new vehicle inventory supply of 20 days, which is consistent with the Prior Year Quarter’s new inventory supply of 19 days.

Used vehicle retail same store revenues, on a constant currency basis, underperformed the Prior Year Quarter due to a decline in retail used vehicle unit sales, driven by inflationary impacts on our used vehicle customers and the ongoing new vehicle supply shortage impacting the supply of used vehicles, partially offset by a higher average sales price on a constant currency basis.

Parts and service same store revenues, on a constant currency basis, outperformed the Prior Year Quarter, driven by increases in all of our parts and service business lines reflecting higher business activity as compared to the Prior Year Quarter.

F&I, net same store revenues, on a constant currency basis, outperformed the Prior Year Quarter, driven by improved penetration rates on the majority of our products and higher income per contract on finance and VSCs, partially offset by fewer retail used vehicles sold in the Current Quarter.

Gross Profit

Total gross profit in the U.K. during the Current Quarter decreased $10.3 million, or 10.0%, as compared to the Prior Year Quarter, primarily driven by the negative impact of foreign currency exchange rates.

Total same store gross profit in the U.K. during the Current Quarter decreased $11.1 million, or 10.9%, as compared to the Prior Year Quarter. On a constant currency basis, total same store gross profit increased 5.0%, primarily driven by improvements in gross profit from new vehicle retail sales, parts and service sales and F&I, net.

New vehicle retail same store gross profit, on a constant currency basis, outperformed the Prior Year Quarter, driven by an increase in new vehicle retail same store gross profit per unit, resulting from increased prices as discussed above.

Used vehicle retail same store gross profit, on a constant currency basis, underperformed the Prior Year Quarter, driven by a decrease in same store used vehicle retail gross profit per unit sold, coupled with fewer same store retail used vehicle unit sales. The decrease in same store used vehicle retail gross profit and retail used vehicle unit sales was driven by inflationary impacts on customers, coupled with the ongoing new vehicle supply shortage impacting the supply of used vehicles.

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

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

Total same store gross margin in the U.K. decreased 5 basis points, primarily driven by lower same store used vehicle retail gross margin caused by inflationary impacts on our used vehicle customers and the ongoing new vehicle supply shortage impacting the supply of used vehicles, and lower parts and service gross margin caused by increased labor costs.

Table of Contents

SG&A Expenses

SG&A as a percentage of gross profit increased 459 and 484 basis points, on an as reported and same store basis, respectively, compared to the Prior Year Quarter, primarily driven by the decline in used vehicle retail and parts and service gross profit as described above, as well as the factors below impacting SG&A.

Total SG&A expenses in the U.K. during the Current Quarter decreased $2.5 million, or 3.6%, as compared to the Prior Year Quarter. Total same store SG&A expenses in the U.K. during the Current Quarter decreased $2.8 million, or 4.2%, as compared to the Prior Year Quarter. These decreases were primarily driven by the impact of foreign currency exchange rates. On a constant currency basis, total same store SG&A expenses increased 12.4%, primarily driven by increased labor costs, an increase in other variable expenses associated with the rise in certain business activities, including costs associated with recent acquisitions, and Prior Year government COVID-19 assistance, inclusive of the temporary suspension of city tax, which did not recur in the Current Year.

Table of Contents

Reported Operating Data — U.K.

(In millions, except unit data)


	Nine Months Ended September 30,
	2022			2021			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results		Constant Currency % Change
Revenues:
New vehicle retail sales	$	898.0		$	869.7		$	28.3		3.3	%	$	(97.6)	14.5	%
Used vehicle retail sales	906.3			820.5			85.8			10.5	%	(91.5)		21.6	%
Used vehicle wholesale sales	101.2			98.4			2.8			2.8	%	(10.0)		12.9	%
Total used	1,007.5			919.0			88.6			9.6	%	(101.4)		20.7	%
Parts and service sales	183.4			170.2			13.2			7.7	%	(19.0)		18.9	%
F&I, net	51.4			41.9			9.6			22.8	%	(5.4)		35.7	%
Total revenues	$	2,140.3		$	2,000.7		$	139.6		7.0	%	$	(223.4)	18.1	%
Gross profit:
New vehicle retail sales	$	79.6		$	54.6		$	25.0		45.8	%	$	(9.0)	62.3	%
Used vehicle retail sales	50.4			52.9			(2.5)			(4.7)	%	(5.0)		4.7	%
Used vehicle wholesale sales	(1.8)			6.5			(8.3)			(127.2)	%	0.2		(129.9)	%
Total used	48.7			59.5			(10.8)			(18.1)	%	(4.8)		(10.0)	%
Parts and service sales	109.5			102.1			7.4			7.2	%	(11.3)		18.3	%
F&I, net	51.4			41.9			9.6			22.8	%	(5.4)		35.7	%
Total gross profit	$	289.2		$	258.1		$	31.2		12.1	%	$	(30.6)	23.9	%
Gross margin:
New vehicle retail sales	8.9		%	6.3		%	2.6		%
Used vehicle retail sales	5.6		%	6.5		%	(0.9)		%
Used vehicle wholesale sales	(1.7)		%	6.6		%	(8.4)		%
Total used	4.8		%	6.5		%	(1.6)		%
Parts and service sales	59.7		%	60.0		%	(0.3)		%

Total gross margin	13.5		%	12.9		%	0.6		%
Units sold:
Retail new vehicles sold	21,922			21,316			606			2.8	%
Retail used vehicles sold	30,505			28,416			2,089			7.4	%
Wholesale used vehicles sold	9,556			11,464			(1,908)			(16.6)	%
Total used	40,061			39,880			181			0.5	%
Average sales price per unit sold:
New vehicle retail	$	40,962		$	40,800		$	162		0.4	%	$	(4,452)	11.3	%
Used vehicle retail	$	29,711		$	28,876		$	835		2.9	%	$	(2,999)	13.3	%
Gross profit per unit sold:
New vehicle retail sales	$	3,633		$	2,563		$	1,070		41.8	%	$	(412)	57.8	%
Used vehicle retail sales	$	1,653		$	1,863		$	(210)		(11.3)	%	$	(164)	(2.5)	%
Used vehicle wholesale sales	$	(185)		$	568		$	(753)		(132.6)	%	$	19	(135.9)	%
Total used	$	1,215		$	1,491		$	(276)		(18.5)	%	$	(121)	(10.4)	%
F&I PRU	$	981		$	842		$	139		16.5	%	$	(103)	28.7	%
Other:
SG&A expenses	$	196.6		$	173.3		$	23.3		13.4	%	$	(20.6)	25.3	%



SG&A as % gross profit	68.0		%	67.1		%	0.8		%

Table of Contents

Same Store Operating Data — U.K.

(In millions, except unit data)


	Nine Months Ended September 30,
	2022			2021			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results		Constant Currency % Change
Revenues:
New vehicle retail sales	$	844.5		$	869.3		$	(24.9)		(2.9)	%	$	(93.3)	7.9	%
Used vehicle retail sales	831.4			819.6			11.8			1.4	%	(86.0)		11.9	%
Used vehicle wholesale sales	95.0			98.3			(3.3)			(3.3)	%	(9.5)		6.3	%
Total used	926.4			917.9			8.6			0.9	%	(95.5)		11.3	%
Parts and service sales	166.7			161.9			4.8			3.0	%	(17.5)		13.8	%
F&I, net	48.5			41.8			6.7			16.0	%	(5.2)		28.4	%
Total revenues	$	1,986.2		$	1,991.0		$	(4.8)		(0.2)	%	$	(211.5)	10.4	%
Gross profit:
New vehicle retail sales	$	74.5		$	54.6		$	19.9		36.4	%	$	(8.6)	52.2	%
Used vehicle retail sales	46.0			52.9			(6.9)			(13.1)	%	(4.7)		(4.3)	%
Used vehicle wholesale sales	(1.6)			6.6			(8.1)			(123.7)	%	0.2		(126.1)	%
Total used	44.4			59.5			(15.0)			(25.3)	%	(4.5)		(17.7)	%
Parts and service sales	99.9			98.3			1.6			1.6	%	(10.6)		12.4	%
F&I, net	48.5			41.8			6.7			16.0	%	(5.2)		28.4	%
Total gross profit	$	267.4		$	254.2		$	13.2		5.2	%	$	(28.9)	16.5	%
Gross margin:
New vehicle retail sales	8.8		%	6.3		%	2.5		%
Used vehicle retail sales	5.5		%	6.5		%	(0.9)		%
Used vehicle wholesale sales	(1.6)		%	6.7		%	(8.3)		%
Total used	4.8		%	6.5		%	(1.7)		%
Parts and service sales	59.9		%	60.7		%	(0.8)		%

Total gross margin	13.5		%	12.8		%	0.7		%
Units sold:
Retail new vehicles sold	20,406			21,300			(894)			(4.2)	%
Retail used vehicles sold	27,587			28,359			(772)			(2.7)	%
Wholesale used vehicles sold	8,781			11,439			(2,658)			(23.2)	%
Total used	36,368			39,798			(3,430)			(8.6)	%
Average sales price per unit sold:
New vehicle retail	$	41,383		$	40,813		$	569		1.4	%	$	(4,571)	12.6	%
Used vehicle retail	$	30,138		$	28,900		$	1,238��		4.3	%	$	(3,118)	15.1	%
Gross profit per unit sold:
New vehicle retail sales	$	3,650		$	2,563		$	1,087		42.4	%	$	(422)	58.9	%
Used vehicle retail sales	$	1,666		$	1,865		$	(199)		(10.7)	%	$	(169)	(1.6)	%
Used vehicle wholesale sales	$	(177)		$	573		$	(750)		(130.9)	%	$	18	(133.9)	%
Total used	$	1,221		$	1,494		$	(273)		(18.3)	%	$	(124)	(9.9)	%
F&I PRU	$	1,011		$	842		$	169		20.1	%	$	(108)	32.9	%
Other:
SG&A expenses	$	183.6		$	169.2		$	14.4		8.5	%	$	(19.5)	20.0	%



SG&A as % gross profit	68.7		%	66.6		%	2.1		%

Table of Contents

U.K. Region — Nine Months Ended September 30, 2022 Compared to 2021

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. At the end of 2020, the U.K. experienced a surge in COVID-19 cases, which led to a government-mandated closure of all non-essential businesses beginning January 4, 2021 through April 12, 2021. In mid-April 2021, the COVID-19 restrictions affecting our U.K. dealership showrooms were lifted, and our dealerships were able to reopen. In the prior year, the government-mandated closure of non-essential businesses remained in effect through May 18, 2020, for service and June 1, 2020, for our showrooms. During the third quarter of 2020, our U.K. dealership operations steadily recovered from the COVID-19 closures.

Revenues

Total revenues in the U.K. during the ~~three months ended September 30, 2021,~~Current Year increased ~~$9.6~~$139.6 million, or ~~1.3%~~7.0%, as compared to the ~~same period in 2020.~~ Prior Year, primarily driven by the acquisition of stores, partially offset by the negative impact of foreign currency exchange rates.

Total same store revenues in the U.K. during the ~~three months ended September 30, 2021,~~Current Year decreased ~~$64.4~~$4.8 million, or ~~8.8%~~0.2%, as compared to the ~~same period in 2020.~~Prior Year, driven by the negative impact of foreign currency exchange rates. On a constant currency basis, total same store revenues ~~decreased 14.6%~~increased 10.4%, driven by ~~decreases in most of our~~outperformances across all revenue ~~streams, partially offset by an improvement in used vehicle retail same store revenues.~~ streams.

New vehicle retail same store revenues, ~~decreased 31.0%,~~ on a constant currency basis, outperformed the Prior Year, driven by increased sales prices, partially offset by a ~~38.6%~~modest decrease in same store retail new vehicle unit sales. Supply chain issues, including an ongoing semiconductor and vehicle parts shortage, and other logistics challenges continue for OEMs, leading to sustained lower vehicle production and deliveries of fewer vehicles to dealerships. The increase in the new vehicle retail same store ~~unit sales, partially offset by a 12.4% increase in the~~ average new vehicle retail same store sales price. The decrease in new vehicle retail same store revenues primarily reflects supply constraints as OEMs struggled to produce new vehicles due to parts shortages, including the global semiconductor chip shortage. At September 30, 2021, our U.K. new vehicle inventory supply was 19 days, which was 1 day lower than the same period in 2020 and 83 days lower than December 31, 2020 days’ supply of 102. The increase in the average new vehicle retail same store sales price per unit sold was driven by both ~~supply~~new vehicle shortages, as described above, and strong vehicle demand, which was pent-up over past years due to Brexit and the COVID-19 pandemic. ~~On a constant currency basis, used~~

Used vehicle retail same store revenues increased 9.5%, as an 8.4% decline in used vehicle retail same store unit sales was more than offset by a 19.6% increase in average used vehicle retail same store sales price. The increase in used vehicle retail same store revenues was due to higher consumer demand and new vehicle shortages. Parts and service same store revenues decreased 9.8%, on a constant currency basis, as a 16.3% increase in wholesale revenues was more than offset by decreases in our other parts and service businesses, reflecting higher pent-up demand in the third quarter of 2020 due to prior COVID-19 related closures. F&I same store revenues, on a constant currency basis, ~~decreased 11.8%, driven by~~outperformed the Prior Year, despite a ~~decrease~~modest decline in retail used vehicle unit sales, ~~volumes, partially offset by~~as increased demand drove higher ~~income per contract on retail finance fees and other product offerings and improved penetration rates.~~prices.

~~Gross Profit~~

Total gross profit in the U.K. during the three months ended September 30, 2021, increased $16.0 million, or 18.3%, as compared to the same period in 2020. Total same store gross profit in the U.K. during the three months ended September 30, 2021, increased $8.0 million, or 9.3%, as compared to the same period in 2020. On a constant currency basis, total same store gross profit increased 2.4%, driven by improvements in new and used retail same store gross profit, partially offset by decreases in parts and service and F&I same store gross profit. New vehicle retail same store gross profit increased 9.4%, on a constant currency basis, driven by a 78.2% increase in new vehicle retail same store gross profit per unit, partially offset with a 38.6% decrease in new vehicle retail same store unit sales. The increase in new vehicle gross profit per unit primarily reflects both higher demand and the supply constraints previously discussed. On a constant currency basis, used vehicle retail same store gross profit improved 18.0%, reflecting a 28.9% increase in used vehicle retail same store gross profit per unit sold, partially offset by an 8.4% decrease in used vehicle retail same store unit sales. The increase in used vehicle retail same store gross profit per unit sold was driven by increased consumer demand and new vehicle shortages. Parts and service same store gross profit, on a constant currency basis declined 7.5%, driven by the decreases in our businesses discussed above. F&I same store gross profit on a constant currency basis, decreased 11.8% as previously discussed. Total same store gross margin in the U.K. increased 230 basis points, driven by higher new and used vehicle margins due to higher demand, vehicle supply constraints and improved customer-pay margins.

~~SG&A Expenses~~

Total SG&A expenses in the U.K. during the three months ended September 30, 2021, increased $13.9 million, or 25.9%, as compared to the same period in 2020. Total same store SG&A expenses in the U.K. during the three months ended September 30, 2021, increased $6.8 million, or 12.9%, as compared to the same period in 2020. On a constant currency basis, total same store SG&A expenses increased 5.8%, reflecting the temporary suspension of city tax in 2020 that expired at the end of the second quarter of 2021. As a percentage of gross profit, total same store SG&A expenses increased from 60.9% for the third quarter of 2020 to 62.9% for the same period of 2021. Total same store SG&A expenses in the third quarter of 2021 included $0.6 million in acquisition costs.

~~Table of Contents~~

~~Reported Operating Data — U.K.~~

~~(In millions, except unit data)~~

Nine Months Ended September 30,
2021 2020 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change
Revenues:
New vehicle retail sales $ 869.7 $ 800.1 $ 69.6 8.7 % $ 70.1 (0.1) %
Used vehicle retail sales 820.5 529.7 290.8 54.9 % 62.0 43.2 %
Used vehicle wholesale sales 98.4 90.6 7.8 8.7 % 7.4 0.5 %
Total used 919.0 620.3 298.7 48.1 % 69.4 37.0 %
Parts and service sales 170.2 139.5 30.6 22.0 % 12.8 12.8 %
F&I, net 41.9 35.1 6.8 19.5 % 3.3 10.0 %
Total revenues $ 2,000.7 $ 1,595.0 $ 405.7 25.4 % $ 156.2 15.6 %
Gross profit:
New vehicle retail sales $ 54.6 $ 34.7 $ 19.9 57.4 % $ 4.5 44.4 %
Used vehicle retail sales 52.9 31.3 21.7 69.3 % 4.0 56.6 %
Used vehicle wholesale sales 6.5 2.3 4.2 NM 0.5 NM
Total used 59.5 33.6 25.8 76.9 % 4.4 63.7 %
Parts and service sales 102.1 78.5 23.6 30.1 % 7.7 20.3 %
F&I, net 41.9 35.1 6.8 19.5 % 3.3 10.0 %
Total gross profit $ 258.1 $ 181.9 $ 76.2 41.9 % $ 19.9 30.9 %
Gross margin:
New vehicle retail sales 6.3 % 4.3 % 1.9 %
Used vehicle retail sales 6.5 % 5.9 % 0.5 %
Used vehicle wholesale sales 6.6 % 2.6 % 4.0 %
Total used 6.5 % 5.4 % 1.1 %
Parts and service sales 60.0 % 56.3 % 3.7 %
Total gross margin 12.9 % 11.4 % 1.5 %
Units sold:
Retail new vehicles sold 21,316 23,424 (2,108) (9.0) %
Retail used vehicles sold 28,416 22,165 6,251 28.2 %
Wholesale used vehicles sold 11,464 11,517 (53) (0.5) %
Total used 39,880 33,682 6,198 18.4 %
Average sales price per unit sold:
New vehicle retail $ 40,800 $ 34,157 $ 6,644 19.5 % $ 3,288 9.8 %
Used vehicle retail $ 28,876 $ 23,899 $ 4,977 20.8 % $ 2,181 11.7 %
Gross profit per unit sold:
New vehicle retail sales $ 2,563 $ 1,482 $ 1,081 72.9 % $ 211 58.7 %
Used vehicle retail sales $ 1,863 $ 1,411 $ 452 32.0 % $ 140 22.1 %
Used vehicle wholesale sales $ 568 $ 203 $ 365 NM $ 41 NM
Total used $ 1,491 $ 998 $ 493 49.4 % $ 111 38.2 %
F&I PRU $ 842 $ 769 $ 73 9.5 % $ 67 0.8 %
Other:
SG&A expenses $ 173.3 $ 141.8 $ 31.4 22.2 % $ 13.5 12.6 %
SG&A as % gross profit 67.1 % 78.0 % (10.8) %

~~NM — Not Meaningful~~

~~Table of Contents~~

~~Same Store Operating Data — U.K.~~

~~(In millions, except unit data)~~

Nine Months Ended September 30,
2021 2020 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change
Revenues:
New vehicle retail sales $ 840.8 $ 796.1 $ 44.7 5.6 % $ 67.9 (2.9) %
Used vehicle retail sales 779.6 525.6 254.0 48.3 % 59.0 37.1 %
Used vehicle wholesale sales 94.7 90.3 4.4 4.9 % 7.1 (3.0) %
Total used 874.4 615.9 258.5 42.0 % 66.2 31.2 %
Parts and service sales 157.7 132.2 25.5 19.3 % 11.8 10.3 %
F&I, net 40.6 34.7 5.9 17.0 % 3.2 7.7 %
Total revenues $ 1,913.5 $ 1,578.9 $ 334.6 21.2 % $ 149.8 11.7 %
Gross profit:
New vehicle retail sales $ 52.7 $ 34.5 $ 18.1 52.6 % $ 4.3 40.0 %
Used vehicle retail sales 50.5 31.0 19.5 62.8 % 3.8 50.6 %
Used vehicle wholesale sales 6.4 2.3 4.1 NM 0.5 NM
Total used 56.9 33.3 23.6 70.9 % 4.3 58.0 %
Parts and service sales 95.5 75.1 20.3 27.1 % 7.2 17.5 %
F&I, net 40.6 34.7 5.9 17.0 % 3.2 7.7 %
Total gross profit $ 245.7 $ 177.7 $ 68.0 38.3 % $ 19.0 27.6 %
Gross margin:
New vehicle retail sales 6.3 % 4.3 % 1.9 %
Used vehicle retail sales 6.5 % 5.9 % 0.6 %
Used vehicle wholesale sales 6.8 % 2.6 % 4.2 %
Total used 6.5 % 5.4 % 1.1 %
Parts and service sales 60.5 % 56.8 % 3.7 %
Total gross margin 12.8 % 11.3 % 1.6 %
Units sold:
Retail new vehicles sold 20,439 23,236 (2,797) (12.0) %
Retail used vehicles sold 26,707 21,890 4,817 22.0 %
Wholesale used vehicles sold 10,918 11,415 (497) (4.4) %
Total used 37,625 33,305 4,320 13.0 %
Average sales price per unit sold:
New vehicle retail $ 41,137 $ 34,262 $ 6,875 20.1 % $ 3,322 10.4 %
Used vehicle retail $ 29,192 $ 24,012 $ 5,181 21.6 % $ 2,211 12.4 %
Gross profit per unit sold:
New vehicle retail sales $ 2,577 $ 1,486 $ 1,091 73.4 % $ 212 59.1 %
Used vehicle retail sales $ 1,890 $ 1,416 $ 474 33.5 % $ 142 23.4 %
Used vehicle wholesale sales $ 590 $ 203 $ 387 NM $ 43 NM
Total used $ 1,513 $ 1,001 $ 513 51.2 % $ 113 39.9 %
F&I PRU $ 862 $ 769 $ 93 12.0 % $ 68 3.1 %
Other:
SG&A expenses $ 162.0 $ 137.3 $ 24.7 18.0 % $ 12.7 8.8 %
SG&A as % gross profit 65.9 % 77.3 % (11.4) %

~~NM — Not Meaningful~~

~~Table of Contents~~

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. At the end of 2020, the U.K. experienced a surge in COVID-19 cases, which led to a government-mandated closure of all non-essential businesses beginning January 4, 2021 through April 12, 2021. In mid-April 2021, the COVID-19 restrictions affecting our U.K. dealership showrooms were lifted and our dealerships were able to reopen. In the prior year, the government-mandated closure of non-essential businesses remained in effect through May 18, 2020, for service and June 1, 2020, for our showrooms. During the third quarter of 2020, our U.K. dealership operations steadily recovered from the COVID-19 closures.

~~Revenues~~

Total revenues in the U.K. during the nine months ended September 30, 2021, increased $405.7 million, or 25.4%, as compared to the same period in 2020. Total same store revenues in the U.K. during the nine months ended September 30, 2021, increased $334.6 million, or 21.2%, as compared to the same period in 2020. On a constant currency basis, total same store revenues increased 11.7%, driven by increases in used vehicle retail, F&I, and parts and service, partially offset by a decline in new vehicle retail and used vehicle wholesale same store revenues. New vehicle retail same store revenues decreased 2.9% on a constant currency basis, driven by a 12.0% decrease in new vehicle retail same store unit sales, partially offset by a 10.4% increase in average new vehicle retail same store sales price. The decrease in new vehicle retail same store revenues primarily reflects supply constraints as OEMs struggled to produce new vehicles due to parts shortages, including the global semiconductor chip shortage. The increase in the average new vehicle retail same store sales price was driven by both supply shortages and high vehicle demand, which was pent-up over past years due to Brexit and the COVID-19 pandemic. On a constant currency basis, used vehicle retail same store revenues increased 37.1%, driven by a 22.0% growth in used vehicle retail same store unit sales, coupled with a 12.4% increase in average used vehicle retail same store sales price. The increase in used vehicle retail same store revenues was due to strong consumer demand and new vehicle inventory shortages. Parts and service same store revenues increased 10.3%, on a constant currency basis, driven by increases in customer-pay, warranty and wholesale businesses reflecting increased business activity with the reduction of COVID-19 restrictions in 2021. F&I same store revenues, on a constant currency basis, ~~increased 7.7%,~~outperformed the Prior Year, driven by increased business activity across all of our parts and service business lines with the reduction of COVID-19 restrictions compared to the Prior Year.

F&I, net same store revenues, on a constant currency basis, outperformed the Prior Year, driven by improved penetration rates on all finance and other products and higher income per contract ~~on retail~~for finance ~~fees~~ and ~~other product offerings~~VSCs, partially offset by a decline in same store new and ~~an increase in~~ used vehicle ~~same store~~retail unit sales.

Gross Profit

Total gross profit in the U.K. during the ~~nine months ended September 30, 2021,~~Current Year increased ~~$76.2~~$31.2 million, or ~~41.9%~~12.1%, as compared to the Prior Year, primarily driven by the acquisition of stores and higher same ~~period in 2020.~~ store results.

Total same store gross profit in the U.K. during the ~~nine months ended September 30, 2021,~~Current Year increased ~~$68.0~~$13.2 million, or ~~38.3%~~5.2%, as compared to the ~~same period in 2020.~~Prior Year. On a constant currency basis, total same store gross profit increased ~~27.6%~~16.5%, driven by improvements in ~~all of our operations.~~ new vehicle retail sales, parts and service sales and F&I, net.

New vehicle retail same store gross profit, on a constant currency basis, ~~increased 40.0%, driven by a 59.1% increase in new vehicle retail same store average gross profit per unit sold, partially offset by a 12.0% decline in new vehicle retail same store unit sales. The~~outperformed the Prior Year, due to an increase in new vehicle retail same store gross profit per unit sold, ~~reflects both~~resulting from increased ~~demand and supply constraints related to the COVID-19 pandemic and the global semiconductor chip shortage.~~ prices as discussed above, partially offset by a modest decline in same store retail new vehicle unit sales.

Used vehicle retail same store gross profit, on a constant currency basis, ~~increased 50.6% on~~underperformed the Prior Year, due to a ~~23.4% increase~~decrease in used vehicle retail same store ~~average~~ gross profit per unit sold, coupled with a ~~22.0% increase~~decrease in same store retail used vehicle ~~retail same store~~ unit sales. ~~The increase in used vehicle retail same store average gross profit per unit sold reflects higher demand and~~These decreases were driven by inflationary impacts on customers coupled with the ongoing new vehicle supply ~~shortages.~~ shortage impacting the supply of used vehicles.

Parts and service same store gross profit, on a constant currency basis, ~~increased 17.5%,~~outperformed the Prior Year, driven by the increases in ~~our businesses discussed above.~~ parts and service same store revenues.

F&I, net same store gross profit, on a constant currency basis, ~~increased 7.7%,~~outperformed the Prior Year as ~~previously discussed.~~ described above in F&I, net same store revenues.

Total same store gross margin in the ~~U.K.~~U.K. increased ~~160~~69 basis points, driven by improvements in new vehicle retail gross margin due to higher ~~new~~prices from increased customer demand and vehicle supply constraints. The increase was partially offset by a decrease in same store total used vehicle ~~margins due to increased demand and supply constraints and increased parts and service margins, reflecting improved customer-pay margins and higher internal work as a result of increased~~retail gross margin, resulting from inflationary impacts on our used vehicle ~~sales volumes.~~customers and the ongoing new vehicle supply shortage increasing acquisition costs for used vehicles.

SG&A Expenses

SG&A as a percentage of gross profit increased 82 and 211 basis points on an as reported and same store basis, respectively, compared to the Prior Year.

Table of Contents

Total SG&A expenses in the U.K. during the ~~nine months ended September 30, 2021,~~Current Year increased ~~$31.4~~$23.3 million, or ~~22.2%~~13.4%, as compared to the Prior Year, primarily driven by increases in same ~~period in 2020.~~store SG&A and the acquisition of stores. Total same store SG&A expenses in the U.K. during the ~~nine months ended September 30, 2021,~~Current Year increased ~~$24.7~~$14.4 million, or ~~18.0%~~8.5%, as compared to the ~~same period in 2020.~~Prior Year. On a constant currency basis, total same store SG&A expenses increased ~~8.8%,~~20.0%. These increases were primarily driven by ~~increased~~higher business activity as COVID-19 restrictions were lifted early in the second quarter of 2021. We have continued to focus on cost discipline throughout the year. As a percentage of gross profit, total same store SG&A expenses decreased from 77.3% for the nine months ended September 30, 2020 to 65.9% for the same period of 2021, driven by productivity gains and ~~higher vehicle margins. Total same store SG&A expenses in 2021 included $0.6 million in~~ acquisition ~~costs. Total same store SG&A expenses in 2020 included $1.2 million in severance~~ costs ~~for redundancy due~~compared to the ~~COVID-19 pandemic.~~

~~Table of Contents~~

~~Reported Operating Data — Brazil~~

~~(In millions, except unit data)~~

Three Months Ended September 30,
2021 2020 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change
Revenues:
New vehicle retail sales $ 62.3 $ 31.9 $ 30.5 95.6 % $ 1.6 90.5 %
Used vehicle retail sales 18.0 10.9 7.0 64.6 % 0.5 60.3 %
Used vehicle wholesale sales 3.3 2.4 0.9 36.7 % 0.1 33.2 %
Total used 21.3 13.4 7.9 59.5 % 0.6 55.3 %
Parts and service sales 11.1 8.0 3.2 39.9 % 0.3 36.2 %
F&I, net 1.7 1.1 0.6 54.5 % — 50.1 %
Total revenues $ 96.4 $ 54.3 $ 42.2 77.7 % $ 2.5 73.0 %
Gross profit:
New vehicle retail sales $ 6.2 $ 2.6 $ 3.5 134.6 % $ 0.2 128.6 %
Used vehicle retail sales 1.5 1.0 0.5 49.4 % — 45.2 %
Used vehicle wholesale sales 0.2 0.2 — 21.5 % — 18.1 %
Total used 1.8 1.2 0.5 44.9 % — 40.9 %
Parts and service sales 4.9 3.7 1.2 33.3 % 0.1 29.7 %
F&I, net 1.7 1.1 0.6 54.5 % — 50.1 %
Total gross profit $ 14.5 $ 8.6 $ 5.9 68.7 % $ 0.4 64.1 %
Gross margin:
New vehicle retail sales 9.9 % 8.3 % 1.6 %
Used vehicle retail sales 8.4 % 9.3 % (0.9) %
Used vehicle wholesale sales 7.1 % 8.0 % (0.9) %
Total used 8.2 % 9.1 % (0.8) %
Parts and service sales 43.9 % 46.1 % (2.2) %
Total gross margin 15.0 % 15.8 % (0.8) %
Units sold:
Retail new vehicles sold 1,761 1,200 561 46.8 %
Retail used vehicles sold 726 552 174 31.5 %
Wholesale used vehicles sold 301 282 19 6.7 %
Total used 1,027 834 193 23.1 %
Average sales price per unit sold:
New vehicle retail $ 35,394 $ 26,558 $ 8,836 33.3 % $ 924 29.8 %
Used vehicle retail $ 24,732 $ 19,766 $ 4,967 25.1 % $ 644 21.9 %
Gross profit per unit sold:
New vehicle retail sales $ 3,510 $ 2,196 $ 1,314 59.8 % $ 90 55.7 %
Used vehicle retail sales $ 2,090 $ 1,840 $ 250 13.6 % $ 58 10.4 %
Used vehicle wholesale sales $ 792 $ 696 $ 96 13.8 % $ 22 10.7 %
Total used $ 1,709 $ 1,453 $ 256 17.6 % $ 47 14.4 %
F&I PRU $ 675 $ 621 $ 55 8.9 % $ 19 5.7 %
Other:
SG&A expenses $ 8.8 $ 6.9 $ 2.0 28.5 % $ 0.2 25.0 %
SG&A as % gross profit 60.9 % 79.9 % (19.0) %

~~Table of Contents~~

~~Same Store Operating Data — Brazil~~

~~(In millions, except unit data)~~

Three Months Ended September 30,
2021 2020 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change
Revenues:
New vehicle retail sales $ 62.3 $ 31.9 $ 30.5 95.6 % $ 1.6 90.5 %
Used vehicle retail sales 18.0 10.9 7.0 64.6 % 0.5 60.3 %
Used vehicle wholesale sales 3.3 2.4 0.9 36.7 % 0.1 33.2 %
Total used 21.3 13.4 7.9 59.5 % 0.6 55.3 %
Parts and service sales 11.1 7.9 3.2 39.9 % 0.3 36.2 %
F&I, net 1.7 1.1 0.6 54.5 % — 50.1 %
Total revenues $ 96.4 $ 54.3 $ 42.2 77.7 % $ 2.5 73.1 %
Gross profit:
New vehicle retail sales $ 6.2 $ 2.6 $ 3.5 134.6 % $ 0.2 128.6 %
Used vehicle retail sales 1.5 1.0 0.5 49.4 % — 45.2 %
Used vehicle wholesale sales 0.2 0.2 — 21.5 % — 18.1 %
Total used 1.8 1.2 0.5 44.9 % — 40.9 %
Parts and service sales 4.9 3.7 1.2 33.4 % 0.1 29.7 %
F&I, net 1.7 1.1 0.6 54.5 % — 50.1 %
Total gross profit $ 14.5 $ 8.6 $ 5.9 68.7 % $ 0.4 64.1 %
Gross margin:
New vehicle retail sales 9.9 % 8.3 % 1.6 %
Used vehicle retail sales 8.4 % 9.3 % (0.9) %
Used vehicle wholesale sales 7.1 % 8.0 % (0.9) %
Total used 8.2 % 9.1 % (0.8) %
Parts and service sales 43.9 % 46.1 % (2.2) %
Total gross margin 15.0 % 15.8 % (0.8) %
Units sold:
Retail new vehicles sold 1,761 1,200 561 46.8 %
Retail used vehicles sold 726 552 174 31.5 %
Wholesale used vehicles sold 301 282 19 6.7 %
Total used 1,027 834 193 23.1 %
Average sales price per unit sold:
New vehicle retail $ 35,394 $ 26,558 $ 8,836 33.3 % $ 924 29.8 %
Used vehicle retail $ 24,732 $ 19,766 $ 4,967 25.1 % $ 644 21.9 %
Gross profit per unit sold:
New vehicle retail sales $ 3,510 $ 2,196 $ 1,314 59.8 % $ 90 55.7 %
Used vehicle retail sales $ 2,090 $ 1,840 $ 250 13.6 % $ 58 10.4 %
Used vehicle wholesale sales $ 792 $ 696 $ 96 13.8 % $ 22 10.7 %
Total used $ 1,709 $ 1,453 $ 256 17.6 % $ 47 14.4 %
F&I PRU $ 675 $ 621 $ 55 8.9 % $ 19 5.7 %
Other:
SG&A expenses $ 8.8 $ 6.9 $ 1.9 27.7 % $ 0.2 24.2 %
SG&A as % gross profit 60.4 % 79.8 % (19.4) %

~~Table of Contents~~

The following discussion of our Brazil 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,Prior Year, as well as new add-point openings. During the third quarter of 2021, all of our dealerships were fully operational unlike the comparable period where the operations had been significantly impacted by the reduced demand caused by thegovernment COVID-19 ~~pandemic~~assistance and the ~~restrictions put~~related temporary suspension of city tax in ~~place by local governments.~~the Prior Year which did not recur in the Current Year.

~~Revenues~~

~~Total~~Consolidated Selected Comparisons — Three and ~~same store revenues in Brazil during the three months ended~~Nine Months Ended September 30, ~~2021, increased $42.2 million, or 77.7%, as compared~~2022 Compared to the same period in 2020. On a constant currency basis, total same store revenues increased 73.1%, driven by increases in all revenue streams. This increase in revenue was the result of the lifting of COVID-19 restrictions and increased customer demand in 2021 as compared to last year. New vehicle retail same store revenues, on a constant currency basis, increased 90.5%, driven by a 46.8% increase in new vehicle retail same store unit sales and a 29.8% increase in new vehicle retail same store average sales price per unit sold. Used vehicle retail same store revenues, on a constant currency basis, increased 60.3%, reflecting a 31.5% increase in used vehicle retail same store unit sales, coupled with a 21.9% increase in used vehicle retail same store average sales price per unit sold. Used vehicle wholesale same store revenues increased 33.2%, on a constant currency basis, reflecting a 6.7% increase in wholesale used vehicle same store unit sales and a 24.8% increase in used vehicle wholesale same store sales price. The increases in new and used vehicle same store revenues was the result of higher consumer demand, improved selling conditions and new vehicle inventory constraints as OEM’s were producing and delivering fewer vehicles due to parts shortages, including the global semiconductor chip shortage. At September 30, 2021, our Brazil new vehicle inventory supply was 23 days, which was 18 days lower than the same period in 2020 and 4 days lower than December 31, 2020 days’ supply of 27. Parts and service same store revenues on a constant currency basis increased 36.2%, driven by improvements in customer-pay and collision revenues, which were partially offset by a decline in warranty revenues. F&I same store revenues on a constant currency basis increased 50.1%, driven by increases in income per contract for our retail finance fees and higher retail sales volumes partially offset by lower penetration rates.

~~Gross Profit~~

Total and same store gross profit in Brazil during the three months ended September 30, 2021, increased $5.9 million, or 68.7%, as compared to the same period in 2020. On a constant currency basis, total same store gross profit increased 64.1%, driven by increases in all business lines. New vehicle retail same store gross profit, on a constant currency basis, increased 128.6%, driven by a 46.8% increase in new vehicle retail same store units sales and a 55.7% increase in new vehicle retail same store average gross profit per unit sold. The increase in new vehicle same store gross profit per retail unit sold was the result of increased consumer demand and inventory constraints as discussed above. Used vehicle retail same store gross profit, on a constant currency basis, increased 45.2%, reflecting a 31.5% increase in used vehicle retail same store unit sales, coupled with a 10.4% increase in used vehicle retail same store average gross profit per unit, driven by new vehicle inventory shortages, which drove customers to purchase used vehicles and an improved selling environment compared to 2020. Parts and service same store gross profit, on a constant currency basis, increased 29.7%, driven by increases in our customer-pay and collision operations, reflecting the increase in business activity over the prior year, partially offset by a slight decline in our warranty business. F~~&I same store gross profit, on a constant currency basis, increased 50.1% as discussed above.~~ Total same store gross margin declined 80 basis points during the three months ended September 30, 2021, as compared to the same period in 2020, primarily driven by decreases in customer-pay and warranty margins partially offset by increases in new vehicle margins resulting from the improved selling environment, higher consumer demand and supply constraints.

~~SG&A Expenses~~

Total SG&A expenses in Brazil during the three months ended September 30, 2021, increased $2.0 million, or 28.5%, as compared to the same period in 2020. Total same store SG&A expenses in Brazil during the three months ended September 30, 2021, increased $1.9 million, or 27.7%, as compared to the same period in 2020. On a constant currency basis, total same store SG&A expenses increased 24.2%~~, driven by increased variable commission payments as a result of increased sales and higher new vehicle margins during the third quarter of 2021, as compared to last year.~~ SG&A as a percentage of gross profit decreased from 79.8% in 2020 to 60.4% in 2021, on a constant currency basis, driven by productivity gains and higher new vehicle margins realized during the third quarter of 2021. We continued to focus on cost discipline throughout the third quarter of 2021.

~~Table of Contents~~

~~Reported Operating Data — Brazil~~

~~(In millions, except unit data)~~

Nine Months Ended September 30,
2021 2020 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change
Revenues:
New vehicle retail sales $ 146.3 $ 109.1 $ 37.1 34.0 % $ (12.9) 45.9 %
Used vehicle retail sales 40.5 38.3 2.1 5.6 % (3.7) 15.2 %
Used vehicle wholesale sales 8.0 9.2 (1.2) (12.8) % (0.5) (7.0) %
Total used 48.4 47.5 1.0 2.0 % (4.2) 10.8 %
Parts and service sales 28.2 23.4 4.8 20.4 % (1.9) 28.6 %
F&I, net 4.4 3.4 1.1 31.1 % (0.4) 42.8 %
Total revenues $ 227.3 $ 183.4 $ 43.9 23.9 % $ (19.4) 34.5 %
Gross profit:
New vehicle retail sales $ 14.8 $ 7.5 $ 7.2 95.9 % $ (1.1) 111.0 %
Used vehicle retail sales 3.6 2.5 1.1 44.2 % (0.2) 54.1 %
Used vehicle wholesale sales 0.6 0.5 0.1 26.5 % — 34.7 %
Total used 4.2 3.0 1.2 41.3 % (0.3) 51.0 %
Parts and service sales 12.3 10.3 1.9 18.8 % (0.8) 26.8 %
F&I, net 4.4 3.4 1.1 31.1 % (0.4) 42.8 %
Total gross profit $ 35.7 $ 24.2 $ 11.5 47.3 % $ (2.6) 58.1 %
Gross margin:
New vehicle retail sales 10.1 % 6.9 % 3.2 %
Used vehicle retail sales 8.9 % 6.5 % 2.4 %
Used vehicle wholesale sales 7.6 % 5.2 % 2.4 %
Total used 8.7 % 6.3 % 2.4 %
Parts and service sales 43.5 % 44.1 % (0.6) %
Total gross margin 15.7 % 13.2 % 2.5 %
Units sold:
Retail new vehicles sold 4,383 3,865 518 13.4 %
Retail used vehicles sold 1,742 2,006 (264) (13.2) %
Wholesale used vehicles sold 770 1,081 (311) (28.8) %
Total used 2,512 3,087 (575) (18.6) %
Average sales price per unit sold:
New vehicle retail $ 33,370 $ 28,238 $ 5,133 18.2 % $ (2,947) 28.6 %
Used vehicle retail $ 23,222 $ 19,100 $ 4,122 21.6 % $ (2,106) 32.6 %
Gross profit per unit sold:
New vehicle retail sales $ 3,368 $ 1,950 $ 1,419 72.8 % $ (260) 86.1 %
Used vehicle retail sales $ 2,067 $ 1,245 $ 822 66.0 % $ (143) 77.5 %
Used vehicle wholesale sales $ 789 $ 444 $ 345 77.6 % $ (51) 89.1 %
Total used $ 1,676 $ 965 $ 711 73.7 % $ (115) 85.6 %
F&I PRU $ 724 $ 576 $ 148 25.7 % $ (64) 36.9 %
Other:
SG&A expenses $ 24.0 $ 23.1 $ 0.9 4.0 % $ (1.8) 11.8 %
SG&A as % gross profit 67.3 % 95.3 % (28.0) %

~~Table of Contents~~

~~Same Store Operating Data — Brazil~~

~~(In millions, except unit data)~~

Nine Months Ended September 30,
2021 2020 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change
Revenues:
New vehicle retail sales $ 146.3 $ 109.1 $ 37.1 34.0 % $ (12.9) 45.9 %
Used vehicle retail sales 40.5 38.3 2.2 5.7 % (3.7) 15.2 %
Used vehicle wholesale sales 8.0 9.2 (1.2) (12.8) % (0.5) (7.0) %
Total used 48.4 47.4 1.0 2.1 % (4.2) 10.9 %
Parts and service sales 28.2 23.4 4.8 20.5 % (1.9) 28.6 %
F&I, net 4.4 3.4 1.1 31.1 % (0.4) 42.8 %
Total revenues $ 227.3 $ 183.4 $ 44.0 24.0 % $ (19.4) 34.5 %
Gross profit:
New vehicle retail sales $ 14.8 $ 7.5 $ 7.2 95.9 % $ (1.1) 111.0 %
Used vehicle retail sales 3.6 2.5 1.1 44.5 % (0.2) 54.5 %
Used vehicle wholesale sales 0.6 0.5 0.1 26.5 % — 34.7 %
Total used 4.2 3.0 1.2 41.6 % (0.3) 51.3 %
Parts and service sales 12.3 10.3 1.9 18.8 % (0.8) 26.8 %
F&I, net 4.4 3.4 1.1 31.1 % (0.4) 42.8 %
Total gross profit $ 35.7 $ 24.2 $ 11.5 47.3 % $ (2.6) 58.1 %
Gross margin:
New vehicle retail sales 10.1 % 6.9 % 3.2 %
Used vehicle retail sales 8.9 % 6.5 % 2.4 %
Used vehicle wholesale sales 7.6 % 5.2 % 2.4 %
Total used 8.7 % 6.3 % 2.4 %
Parts and service sales 43.5 % 44.1 % (0.6) %
Total gross margin 15.7 % 13.2 % 2.5 %
Units sold:
Retail new vehicles sold 4,383 3,865 518 13.4 %
Retail used vehicles sold 1,742 2,006 (264) (13.2) %
Wholesale used vehicles sold 770 1,081 (311) (28.8) %
Total used 2,512 3,087 (575) (18.6) %
Average sales price per unit sold:
New vehicle retail $ 33,370 $ 28,238 $ 5,133 18.2 % $ (2,947) 28.6 %
Used vehicle retail $ 23,222 $ 19,086 $ 4,136 21.7 % $ (2,107) 32.7 %
Gross profit per unit sold:
New vehicle retail sales $ 3,368 $ 1,950 $ 1,419 72.8 % $ (260) 86.1 %
Used vehicle retail sales $ 2,070 $ 1,244 $ 826 66.4 % $ (143) 77.9 %
Used vehicle wholesale sales $ 789 $ 444 $ 345 77.6 % $ (51) 89.1 %
Total used $ 1,677 $ 964 $ 713 74.0 % $ (115) 85.9 %
F&I PRU $ 724 $ 576 $ 148 25.7 % $ (64) 36.9 %
Other:
SG&A expenses $ 23.9 $ 23.0 $ 0.9 3.7 % $ (1.8) 11.4 %
SG&A as % gross profit 66.9 % 95.1 % (28.1) %

~~Table of Contents~~

The following discussion of our Brazil 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. Brazil saw a rise in COVID-19 cases due to the Brazilian variant in the first quarter of 2021, which led the government to cancel Carnival in 2021 and implement various lockdowns for non-essential businesses in the first and second quarters of 2021 impacting our ability to sell new and used vehicles. Conditions in the third quarter improved significantly as all of our dealerships were fully operational increasing our ability to operate more efficiently. In the prior year, beginning March 20, 2020, our dealership operations were significantly impacted by the reduced demand caused by the COVID-19 pandemic and the restrictions put in place by local governments.

~~Revenues~~

Total revenues in Brazil during the nine months ended September 30, 2021, increased $43.9 million, or 23.9%, as compared to the same period in 2020. Total same store revenues in Brazil during the nine months ended September 30, 2021, increased $44.0 million, or 24.0%, as compared to the same period in 2020. On a constant currency basis, total same store revenues increased 34.5%, driven by increases in new vehicle, used vehicle retail, parts and services and F&I sales, partially offset by declines in used vehicle wholesale revenues. New vehicle retail same store revenues, on a constant currency basis, increased 45.9%, reflecting a 28.6% increase in new vehicle retail same store average sales price per unit sold, coupled with a 13.4% increase in new vehicle retail same store unit sales. The increase in new vehicle retail same store units was driven by improved business conditions as the COVID-19 pandemic had a lesser impact in 2021 than in 2020. The increase in new vehicle retail same store average sales price was driven by inventory constraints as OEMs were producing and delivering fewer vehicles due to parts shortages, including the global semiconductor chip shortage. Used vehicle retail same store revenues, on a constant currency basis, increased 15.2%, as a 32.7% increase in used vehicle retail same store average sales price per unit sold was partially offset by a 13.2% decrease in used vehicle retail same store unit sales, reflecting higher demand in a supply constraint environment. Used vehicle wholesale same store revenues decreased 7.0%, on a constant currency basis, driven by a 28.8% decline in used vehicle wholesale units. The decline in used wholesale same store units sold reflects challenges with the availability of inventory. Parts and service same store revenues, on a constant currency basis, increased 28.6%, driven by increases in customer-pay, warranty and collision revenues. F&I same store revenues, on a constant currency basis, ~~increased 42.8%~~, ~~driven by improved income per contract on our retail finance fees and higher new vehicle retail unit sales, partially offset by a decline in penetration.~~

~~Gross Profit~~

Total and same store gross profit in Brazil during the nine months ended September 30, 2021, increased $11.5 million, or 47.3%, as compared to the same period in 2020. On a constant currency basis, total same store gross profit increased 58.1%, driven by increases in all revenue streams. New vehicle retail same store gross profit, on a constant currency basis, increased 111.0%, driven by a 86.1% increase in new vehicle retail same store average gross profit per unit sold, coupled with a 13.4% increase in new vehicle retail same store units sold. Used vehicle retail same store gross profit, on a constant currency basis, increased 54.5%, reflecting a 77.9% increase in used vehicle retail same store average gross profit per unit sold, partially offset by a 13.2% decrease in used vehicle retail same store unit sales. The improvement in new and used vehicle retail same store gross profit and gross profit per unit reflects increased consumer demand and supply constraints. Parts and service same store gross profit increased 26.8%, on a constant currency basis, driven by improvements in customer-pay, warranty and collision, reflecting the increase in business activity over the prior year. F&I same store gross profit, on a constant currency basis, increased 42.8% as discussed above. Total same store gross margin increased 250 basis points during the nine months ended September 30, 2021, as compared to the same period in 2020, as a result of increases in new and used vehicle margins resulting from the improved selling environment, higher consumer demand and supply constraints.

~~SG&A Expenses~~

Total SG&A expenses in Brazil during the nine months ended September 30, 2021, increased $0.9 million, or 4.0%, as compared to the same period in 2020. Total same store SG&A expenses in Brazil during the nine months ended September 30, 2021, increased $0.9 million, or 3.7%, as compared to the same period in 2020. On a constant currency basis, total same store SG&A expenses increased 11.4%, driven by increased variable commission payments as a result of increased sales and vehicle margins in 2021 as compared to last year. Total same store SG&A as a percentage of gross profit decreased from 95.1% in 2020 to 66.9% in 2021, reflecting a 58.1% increase in total same store gross profit, on a constant currency basis, driven by productivity gains and higher vehicle margins realized in 2021. We continued our focus on cost discipline throughout the nine months ended September 30, 2021. Total same store SG&A expenses in 2020 included $0.9 million of severance costs associated with the termination of employees as a result of the COVID-19 pandemic.

~~Table of Contents~~

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


		Three Months Ended September 30,									Three Months Ended September 30,
		2021		2020		Increase/ (Decrease)		% Change			2022		2021		Increase/ (Decrease)		% Change
Depreciation and amortization expense	Depreciation and amortization expense	$	19.6	$	19.1	$	0.5	2.5	%	Depreciation and amortization expense	$	21.8	$	19.2	$	2.6	13.5	%
Asset impairments		$	1.7	$	—	$	1.7	—	%

Floorplan interest expense	Floorplan interest expense	$	4.8	$	8.1	$	(3.3)	(40.9)	%	Floorplan interest expense	$	6.5	$	4.3	$	2.2	50.1	%
Other interest expense, net	Other interest expense, net	$	13.2	$	14.6	$	(1.5)	(10.1)	%	Other interest expense, net	$	19.6	$	13.1	$	6.5	49.9	%
Loss on extinguishment of debt		$	3.8	$	3.3	$	0.5	15.2	%

Provision for income taxes	Provision for income taxes	$	52.9	$	34.6	$	18.3	53.1	%	Provision for income taxes	$	60.2	$	51.6	$	8.6	16.6	%

		Nine Months Ended September 30,									Nine Months Ended September 30,
		2021		2020		Increase/ (Decrease)		% Change			2022		2021		Increase/ (Decrease)		% Change
Depreciation and amortization expense	Depreciation and amortization expense	$	57.9	$	56.5	$	1.4	2.4	%	Depreciation and amortization expense	$	65.9	$	56.8	$	9.1	16.1	%
Asset impairments		$	1.7	$	23.8	$	(22.1)	(92.8)	%

Floorplan interest expense	Floorplan interest expense	$	21.2	$	31.1	$	(9.9)	(32.0)	%	Floorplan interest expense	$	17.7	$	20.5	$	(2.8)	(13.7)	%
Other interest expense, net	Other interest expense, net	$	40.7	$	49.0	$	(8.3)	(17.0)	%	Other interest expense, net	$	55.5	$	39.8	$	15.7	39.5	%
Loss on extinguishment of debt		$	3.8	$	13.7	$	(9.9)	(72.0)	%

Provision for income taxes	Provision for income taxes	$	134.6	$	55.8	$	78.8	141.1	%	Provision for income taxes	$	182.1	$	132.2	$	50.0	37.8	%

Depreciation and Amortization Expense

Total depreciation and amortization expense ~~during~~for both the ~~three~~Current Quarter and ~~nine months ended September 30, 2021, as~~Current Year, was higher compared to the ~~same periods in 2020, had no material changes.~~

~~Impairment of Assets~~

~~We evaluate long-lived assets that are held-for-use, including our~~Prior Year Quarter and Prior Year, primarily attributable to acquired property and equipment and operating lease assets, for impairment at the lowest level of identifiable cash flows whenever there are indicators that the carrying value of these assets may not be recoverable. During the three months ended September 30, 2021, we recognized fixed asset impairment charges of $1.7 million relating to one dealership and one collision center within the U.S. During the three months ended June 30, 2020, we recorded goodwill impairment charges of $10.7 million within the Brazil reporting unit and franchise rights impairment charges of $11.1 million within the U.K. segment and $0.1 million within the Brazil segment. During the three months ended June 30, 2020, we also recognized right-of-use asset impairment charges of $1.7 million relating to seven dealerships within the U.K. segment and $0.2 million relating to one dealership within the Brazil segment.

~~The impairment charges were recognized within~~ ~~Asset impairments~~in our ~~Condensed Consolidated Statements~~U.S. region, as we continue to strategically add dealership related real estate to our investment portfolio and make improvements to our existing facilities intended to enhance the profitability of ~~Operations.~~our dealerships and the overall customer experience.

Floorplan Interest Expense

Total floorplan interest expense during the three months ended September 30, 2021, decreased $3.3 million, or 40.9%, as compared to the same period in 2020. For the nine months ended September 30, 2021, floorplan interest expense decreased $9.9 million, or 32.0%, as compared to the same period in 2020. Our floorplan interest expense fluctuates with changes in our outstanding borrowings ~~outstanding~~ and associated interest rates, which are based on ~~LIBOR, Prime~~SOFR, the U.S. prime rate or a benchmark rate. Outstanding borrowings largely fluctuate based on our levels of new and used vehicle inventory. 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. ~~The decrease~~

Total floorplan interest expense during the ~~three months ended September 30, 2021, is~~Current Quarter, increased $2.2 million, or 50.1%, as compared to the Prior Year Quarter, driven primarily ~~due to lower~~by higher new and used vehicle inventories in the Current Quarter, resulting in additional floorplan ~~borrowings as a result of lower inventory levels, lower weighted average~~ interest ~~rates mainly due to a decline in LIBOR, lower realized~~ expense, ~~on our interest rate swaps~~ and an unrealized ~~gains~~gain on interest rate swaps of $0.9 million in the Prior Year Quarter which did not recur in the Current Quarter.

For the Current Year, floorplan interest expense decreased $2.8 million, or 13.7%, as compared to the Prior Year, driven primarily ~~related to mark-to-market gains associated with de-designated interest rate swaps. The decrease during the nine months ended September 30, 2021, is primarily due to~~by lower ~~floorplan borrowings as a result of lower inventory levels and lower weighted average interest rates mainly due to a decline in LIBOR, partially offset by higher~~ realized ~~expense~~losses on our interest rate ~~swaps~~swap portfolio in the current year, due to increases in corresponding interest rates and an unrealized loss on interest rate swaps of $1.4 million ~~primarily resulting from~~in the ~~impact of~~Prior Year which did not recur in the ~~de-designation of certain~~Current Year. These decreases were partially offset by an increase in floorplan interest ~~rate swaps~~expense on used vehicles due to ~~lower inventory levels.~~ an increase in used vehicle inventories between periods.

Refer to Note 6.7. Financial Instruments and Fair Value Measurements within our Notes to Condensed Consolidated Financial Statements for additional discussion of interest rate swaps.

4944

Table of Contents

Other Interest Expense, Net

Total other interest expense, net during the three months ended September 30, 2021, decreased $1.5 million, or 10.1%, as compared to the same period in 2020. For the nine months ended September 30, 2021, other interest expense decreased $8.3 million, or 17.0%, as compared to the same period 2020. Other interest expense, net consists of interest charges primarily on our 4.00% Senior Notes, real estate related debt and other debt, partially offset by interest income.

Other interest expense, net during the Current Quarter, increased $6.5 million, or 49.9%, as compared to the Prior Year Quarter. For the Current Year, other interest expense, net, increased $15.7 million, or 39.5%, as compared to the Prior Year. The ~~decrease from both comparative periods~~increase in other interest expense, net during the Current Quarter and Current Year, was primarily attributable to ~~lower interest rates achieved through debt refinancing activities~~the additional 4.00% Senior Notes issued in October 2021 and an increase in borrowings used to acquire property in our U.S. region, primarily related to the ~~prior year.~~

~~Loss on Extinguishment of~~Prime Acquisition. Refer to Note 9. Debt

During the three and nine months ended September 30, 2021, we recognized a $3.8 million loss on the extinguishment of $15.9 million in aggregate principal amount of real estate related and other debt in Brazil. During the three months ended September 30, 2020, we recognized a $3.3 million loss on extinguishment within our Notes to Condensed Consolidated Financial Statements for additional discussion of our 5.00% Senior Notes due June 2022 (the “5.00% Senior Notes”). During the nine months ended September 30, 2020, we recognized a $13.7 million loss on the extinguishment of our 5.00% Senior Notes and 5.25% Senior Notes due June 2023 (the “5.25% Senior Notes”).debt.

Provision for Income Taxes

Provision for income taxes of ~~$52.9~~$60.2 million during the ~~three months ended September 30, 2021,~~Current Quarter increased by ~~$18.3~~$8.6 million, or ~~53.1%~~16.6%, as compared to the ~~same period in 2020.~~Prior Year Quarter. For the ~~nine months ended September 30, 2021,~~Current Year, our provision for income taxes of ~~$134.6~~$182.1 million increased ~~$78.8~~by $50.0 million, or ~~141.1%~~37.8%, as compared to the ~~same period~~Prior Year. The tax expense increases in ~~2020. These increases~~the Current Quarter and Current Year, as compared to the Prior Year, were primarily due to higher pre-tax book income. ~~For the three months ended September 30, 2021, our~~Our Current Quarter effective tax rate increased to ~~23.5%~~23.4% from ~~21.5%~~23.0%, as compared to the ~~same period in 2020. This~~Prior Year Quarter. The tax rate increase was primarily due to the increase of state income tax expense due to the mix of domestic earnings following the Prime Acquisition, partially offset by tax benefits from an increase in ~~valuation allowances provided for net operating losses~~foreign earnings taxed at lower rates in ~~Brazil that were higher~~the Current Quarter as compared to the ~~same period in 2020.~~Prior Year Quarter.

We expect our effective tax rate for the remainder of ~~2021 will~~2022 to be between ~~22.5~~23.5 % and ~~23.5%~~24.0%. We ~~believe~~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.

Liquidity and Capital Resources

Our liquidity and capital resources are primarily derived from cash on hand, cash temporarily invested as a pay down of our U.S. Floorplan Line and FMCC Facility levels (refer to Note 9.10. Floorplan Notes Payable in our Notes to Condensed Consolidated Financial Statements for additional information), cash from operations, borrowings under our credit facilities, ~~which provide vehicle floorplan financing,~~ working capital, dealership and real estate acquisition financing and proceeds from debt and equity offerings. ~~Based on current facts and circumstances, we believe~~We anticipate we will ~~have adequate~~generate sufficient cash ~~flow,~~flows from operations, coupled with cash on hand and available borrowing capacity under our credit facilities, to fund our ~~current operations,~~working capital ~~expenditures~~requirements, service our debt and ~~acquisitions for~~meet any other recurring operating expenditures.

Available Liquidity Resources

We had the next 12 months. If economic and business conditions deteriorate or if our capital expenditures or acquisition plans for 2021 change, we may need to access the private or public capital markets to obtain additional funding. Refer to Sources and Usesfollowing sources of ~~Liquidity from Investing Activities below for further discussion of expectations regarding future capital expenditures.~~

~~Cash on Hand~~

~~As of September 30, 2021, our total cash on hand was $296.9 million. The balance of cash on hand excludes $334.7 million of immediately~~liquidity available ~~funds used to pay down our U.S. Floorplan Line as of September 30, 2021. We use the pay down of our U.S. Floorplan Line and FMCC Facility as a channel for the short-term investment of excess cash.~~(in millions):


	September 30, 2022
Cash and cash equivalents	$	20.5
Floorplan offset accounts	218.5
Available capacity under Acquisition Line	551.2
Total liquidity	$	790.3

Cash Flows

We ~~utilize various credit facilities to finance the purchase of~~arrange our new and used vehicle ~~inventory. With respect to all new~~inventory floorplan financing through lenders affiliated with our vehicle ~~floorplan borrowings~~manufacturers and our Revolving Credit Facility (as defined in Note 10. Floorplan Notes Payable in the ~~normal course of business, the manufacturers of the vehicles draft our credit facilities directly with no cash flows~~Notes to ~~or from us. With respect to borrowings for used vehicle financing, we finance up to 85% of the value of our used vehicle inventory in the U.S., and the funds flow directly between us and the lender.~~

~~Table of Contents~~

~~We categorize the cash flows associated with borrowings and repayments on these various credit facilities as~~ ~~Cash Flows from Operating Activities~~ or ~~Cash Flows from Financing Activities~~ ~~in our~~ Condensed Consolidated ~~Statements of Cash Flows. All borrowings from, and repayments to,~~Financial Statements). In accordance with U.S. GAAP, we report floorplan financed with lenders affiliated with our vehicle manufacturers (excluding the cash flows from or to manufacturer-affiliated lenders participating in our syndicated lending group) ~~are presented~~ within Cash Flows from Operating Activities in the Condensed Consolidated Statements of Cash ~~Flows in conformity~~Flows. We report floorplan financed with ~~U.S. GAAP. All borrowings from, and repayments to,~~ the Revolving Credit Facility ~~(refer to Note 9. Floorplan Notes Payable in the Notes to Condensed Consolidated Financial Statements for additional information)~~ (including the cash flows from or to manufacturer-affiliated lenders participating in the facility) and other credit facilities in the U.K. ~~and Brazil,~~ unaffiliated with our manufacturer partners, ~~(collectively, “Non-OEM Floorplan Credit Facilities”), are presented~~ within Cash Flows from Financing Activities in ~~conformity with U.S. GAAP. However,~~ the ~~incurrence~~Condensed Consolidated Statements of ~~all floorplan notes payable represents an activity necessary~~Cash Flows. Refer to ~~acquire inventory~~Note 10. Floorplan Notes Payable within our Notes to Condensed Consolidated Financial Statements for ~~resale, resulting in a trade payable. Our decision to utilize~~additional discussion of our Revolving Credit ~~Facility does not substantially alter the process by which our vehicle inventory is financed, nor does it significantly impact the economics of our vehicle procurement activities. Therefore,~~Facility.

However, we believe that all floorplan financing of inventory purchases in the normal course of business should correspond with the related inventory activity and be classified as an operating activity. As a result, we use the non-GAAP measure “Adjusted net cash provided by/used in operating activities” and “Adjusted net cash provided by/used in financing activities” to further evaluate our cash flows. We believe that this classification eliminates excess volatility in our operating cash flows prepared in accordance with U.S. ~~GAAP and avoids the potential to mislead the users of our financial statements.~~

GAAP. In addition, for dealership acquisitions and dispositions that are negotiated as asset purchases, we do not assume transfer of liabilities for floorplan financing in the execution of the transactions. Therefore, borrowings and repayments of all floorplan financing associated with dealership acquisitions and dispositions are ~~characterized as either~~ ~~Cash Flow from Operating Activities~~ or ~~Cash Flow from Financing Activities~~ in our Condensed Consolidated Statements of Cash Flows presented in conformity with U.S. GAAP, depending on the relationship described above. However, the floorplan financing activity is so closely related to the inventory acquisition process that we believe the presentation of all acquisition and disposition related floorplan financing activities should be classified as investing ~~activity~~activities on an adjusted basis to ~~correspond with the associated inventory activity, which more closely reflects the cash flows associated with our acquisition and disposition strategy and eliminates~~eliminate excess volatility in our operating cash flows prepared in accordance with U.S. GAAP. ~~We have made such adjustments in our adjusted operating cash flow presentations.~~

Table of Contents

The following table reconciles cash flows ~~provided by (used in) operating, investing and financing activities~~ on a U.S. GAAP basis to the corresponding adjusted amounts (in millions):


		Nine Months Ended September 30,							Nine Months Ended September 30,
		2021		2020		% Change			2022		2021		% Change
CASH FLOWS FROM OPERATING ACTIVITIES:	CASH FLOWS FROM OPERATING ACTIVITIES:							CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by operating activities:	Net cash provided by operating activities:	$	1,117.5	$	712.7	56.8	%	Net cash provided by operating activities:	$	533.4	$	1,117.5	(52.3)	%
Change in Floorplan notes payable — credit facilities and other, excluding floorplan offset and net acquisitions and dispositions	Change in Floorplan notes payable — credit facilities and other, excluding floorplan offset and net acquisitions and dispositions	(511.2)		(368.9)				Change in Floorplan notes payable — credit facilities and other, excluding floorplan offset and net acquisitions and dispositions	187.8		(511.2)
Change in Floorplan notes payable — manufacturer affiliates associated with net acquisitions and dispositions and floorplan offset activity	Change in Floorplan notes payable — manufacturer affiliates associated with net acquisitions and dispositions and floorplan offset activity	(12.5)		14.5				Change in Floorplan notes payable — manufacturer affiliates associated with net acquisitions and dispositions and floorplan offset activity	9.1		(12.5)
Adjusted net cash provided by operating activities	Adjusted net cash provided by operating activities	$	593.8	$	358.3	65.8	%	Adjusted net cash provided by operating activities	$	730.3	$	593.8	23.0	%
CASH FLOWS FROM INVESTING ACTIVITIES:	CASH FLOWS FROM INVESTING ACTIVITIES:							CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash used in investing activities:	Net cash used in investing activities:	$	(163.5)	$	(78.8)	(107.6)	%	Net cash used in investing activities:	$	(325.9)	$	(163.5)	(99.3)	%
Change in cash paid for acquisitions, associated with Floorplan notes payable	Change in cash paid for acquisitions, associated with Floorplan notes payable	5.3		—				Change in cash paid for acquisitions, associated with Floorplan notes payable	7.7		5.3
Change in proceeds from disposition of franchises, property and equipment, associated with Floorplan notes payable	Change in proceeds from disposition of franchises, property and equipment, associated with Floorplan notes payable	(6.4)		—				Change in proceeds from disposition of franchises, property and equipment, associated with Floorplan notes payable	(3.9)		(6.4)
Adjusted net cash used in investing activities	Adjusted net cash used in investing activities	$	(164.6)	$	(78.8)	(108.9)	%	Adjusted net cash used in investing activities	$	(322.1)	$	(164.6)	(95.7)	%
CASH FLOWS FROM FINANCING ACTIVITIES:	CASH FLOWS FROM FINANCING ACTIVITIES:							CASH FLOWS FROM FINANCING ACTIVITIES:
Net cash used in financing activities:	Net cash used in financing activities:	$	(742.2)	$	(590.4)	(25.7)	%	Net cash used in financing activities:	$	(198.4)	$	(742.2)	73.3	%
Change in Floorplan notes payable, excluding floorplan offset	Change in Floorplan notes payable, excluding floorplan offset	524.8		354.4				Change in Floorplan notes payable, excluding floorplan offset	(200.7)		524.8
Adjusted net cash used in financing activities	Adjusted net cash used in financing activities	$	(217.4)	$	(236.0)	7.9	%	Adjusted net cash used in financing activities	$	(399.1)	$	(217.4)	(83.5)	%

~~Table of Contents~~

Sources and Uses of Liquidity from Operating Activities — Nine Months Ended September 30, 2022 Compared to 2021

For the ~~nine months ended September 30, 2021, we generated $1,117.5 million of~~Current Year, net cash ~~flows from~~provided by operating ~~activities.~~activities decreased by $584.1 million, as compared to the Prior Year. On an adjusted basis for the same period, ~~we generated $593.8 million in~~adjusted net cash ~~flows from~~provided by operating activities increased by $136.4 million. The increase on an adjusted basis was primarily ~~consisting of $465.0~~driven by an $809.3 million increase in adjusted net floorplan borrowings and a $129.6 million increase in net income, coupled with non-cash adjustments related to depreciation and amortization of $57.9 million, stock-based compensation of $19.0 million and operating lease assets of $18.1 million. Adjusted net cash flows from operating activities also included a $17.5 million adjusted net change in operating assets and liabilities, primarily due to $643.0 million from decreases in inventory levels as a result of global semiconductor chip shortages, $43.1 million from decreases in contracts-in-transit and vehicle receivables, partially offset by ~~$636.2~~a $799.6 million ~~of adjusted net floorplan repayments and $21.6 million from decreases in accounts payable and accrued expenses.~~

For the nine months ended September 30, 2020, we generated $712.7 million of net cash flows from operating activities. On an adjusted basis for the same period, we generated $358.3 million in net cash flows from operating activities, primarily consisting of $186.4 million in net income, coupled with non-cash adjustments related to depreciation and amortization of $56.5 million, stock-based compensation of $27.0 million, asset impairments of $23.8 million, operating lease assets of $18.1 million and a loss on extinguishment of $13.7 million related to the 5.00% Senior Notes and 5.25% Senior Notes. Adjusted net cash flows from operating activities also included a $31.1 million adjusted net change in operating assets and liabilities, including cash inflows of $499.6 million from decreasesincrease in inventory levels, $41.1 million from net decreases in prepaid expenses and other assets, $33.0 million from net decreases in contracts-in-transit and vehicle receivables and $25.2 million from net decreases in accounts and notes receivable. These cash inflows were partially offset by cash outflows of $492.3 million from adjusted net floorplan repayments and $58.8 million from decreases in accounts payable and accrued expenses.

~~Working Capital~~

At September 30, 2021, we had a $524.7 million surplus of working capital. This represents an increase of $363.2 million from December 31, 2020, when we had a $161.5 million surplus of working capital. Changes in our working capital are typically explained by changes in floorplan notes payable outstanding. Borrowings on our new vehicle floorplan notes payable, subject to agreed-upon pay-off terms, are equal to 100% of the factory invoice of the vehicles. Borrowings on our used vehicle floorplan notes payable, subject to agreed-upon pay-off terms, are limited to 85% of the aggregate book value of our usedvehicle inventory, except in the U.K. and Brazil. At times, we have made payments on our floorplan notes payable using excess cash flows from operations and the proceeds of debt and equity offerings. As needed, we re-borrow the amounts later, up to the limits on the floorplan notes payable discussed above, for working capital, acquisitions, capital expenditures or general corporate purposes.levels.

Sources and Uses of Liquidity from Investing Activities

~~During the nine months ended~~ — Nine Months Ended September 30, 2022 Compared to 2021 ~~we used $163.5 million in~~

For the Current Year, net cash ~~flow from investing activities.~~used in investing activities increased by $162.3 million, as compared to the Prior Year. On an adjusted basis for the same period, ~~we used $164.6 million in~~adjusted net cash ~~flows from~~used in investing activities increased by $157.5 million, primarily ~~consisting of $88.4~~driven by a $347.2 million ~~used for purchases of property and equipment and to construct new and improve existing facilities, $69.3 million used for~~increase in acquisition activity, ~~and $20.4 million primarily related to a payment in connection with the Prime Acquisition,~~ partially offset by ~~cash inflows of $13.4~~a $115.3 million ~~related to the~~increase in proceeds from disposition of franchises and property and ~~equipment. Of the $88.4~~equipment and a $59.4 million in property and equipment purchases, $71.8 million was used for non-real estate related capital expenditures and $18.7 million was used for the purchase of real estate associated with existing dealership operations, partially offset by a $2.1 million net increase in net proceeds from the ~~accrual for capital expenditures during the nine months ended September 30, 2021.~~

During the nine months ended September 30, 2020, we used $78.8 million in net cash flows from investing activities on both an unadjusted and adjusted basis, which represents $78.8 million used for purchasessale of property and equipment and to construct new and improve existing facilities and $1.3 million used for acquisition activity, partially offset by cash inflows of $1.3 million related to the disposition of property and equipment. Of the $78.8 million in property and equipment purchases, $55.4 million was used for non-real estate related capital expenditures, $22.4 million was used for the purchase of real estate associated with existing dealership operations and $1.0 million represented the net decrease in the accrual for capital expenditures during the nine months ended September 30, 2020.discontinued operations.

Capital Expenditures

Our capital expenditures include costs to extend the useful lives of current dealership facilities, as well as to start or expand operations. In general, expenditures relating to the construction or expansion of dealership facilities are driven by dealership acquisition activity, new franchises being granted to us by a manufacturer, significant growth in sales at an existing facility, relocation opportunities or manufacturer imaging programs. We critically evaluate all planned future capital spending, working closely with our manufacturer partners to maximize the return on our investments. We forecast our capital expenditures for the full year of ~~2021~~2022 will be approximately ~~$100~~$105.0 million as compared to $99.6 million for the full year in 2021, excluding expenditures related to real estate purchases and future acquisitions, which could generally be funded from excess cash.

~~Table~~For the Current Year, $93.3 million was used to purchase property and equipment, primarily consisting of ~~Contents~~

~~Acquisitions~~

~~We evaluate the expected return on investment~~$83.7 million in ~~our consideration~~capital expenditures and $10.0 million in purchases of potential business purchases. Cash needed to complete our acquisitions generally comes from excess working capital, operating cash flows of our dealerships and borrowings under our floorplan facilities, term loans and our Acquisition Line.real estate associated with existing dealership operations.

Sources and Uses of Liquidity from Financing Activities — Nine Months Ended September 30, 2022 Compared to 2021

For the ~~nine months ended September 30, 2021, we used $742.2 million in~~Current Year, net cash ~~flows from~~used in financing ~~activities.~~activities decreased by $543.8 million, as compared to the Prior Year. On an adjusted basis for the same period, weadjusted net cash used ~~$217.4 million~~in financing activities increased by $181.7 million. The increase in net cash ~~flows from~~used in financing activities on an adjusted basis was primarily ~~related to cash outflows~~driven by Current Year increases in share repurchases of ~~$158.3~~$340.9 million and net repayment of debt of $49.6 million, partially offset by increases in net ~~repayments~~borrowings on our ~~U.S.~~ Floorplan ~~Line~~lines of $211.6 million (representing the net cash activity in our floorplan offset account)~~, $33.7 million in net repayments on other debt, $18.6 million related to the repurchase~~.

Table of ~~our common stock and $17.9 million in dividend payments, partially offset by $7.4 million in net borrowings on our Acquisition Line.~~

~~For the nine months ended September 30, 2020, we used $590.4 million in n~~et cash flows from financing activities. On an adjusted basis for the same period, we used $236.0 million in net cash flows from financing activities, primarily related to cash outflows of $857.9 million related to the extinguishment of our 5.00% and 5.25% Senior Notes, $48.9 million related to the repurchase of our common stock and $5.5 million in dividend payments. These cash outflows were partially offset by $550.0 million from the issuance of our 4.00% Senior Notes. The $162.1 million net borrowings on other debt primarily reflected increased mortgage borrowings in the U.S. to partially fund the redemption of the 5.25% Senior Notes.Contents

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 September 30, ~~2021~~2022 (in millions):


		Total Commitment		Outstanding		Available			Total Commitment		Outstanding		Available
U.S. Floorplan Line (1)	U.S. Floorplan Line (1)	$	1,396.0	$	40.9	$	1,355.1	U.S. Floorplan Line (1)	$	1,200.0	$	496.2	$	703.8
Acquisition Line (2)	Acquisition Line (2)	349.0		66.7		282.3		Acquisition Line (2)	763.4		212.2		551.2
Total revolving credit facility	Total revolving credit facility	1,745.0		107.6		1,637.4		Total revolving credit facility	1,963.4		708.4		1,255.0
FMCC Facility (3)	FMCC Facility (3)	300.0		26.1		273.9		FMCC Facility (3)	300.0		19.0		281.0
Total U.S. credit facilities (4)	Total U.S. credit facilities (4)	$	2,045.0	$	133.7	$	1,911.3	Total U.S. credit facilities (4)	$	2,263.4	$	727.4	$	1,536.0

(1) The available balance at September 30, ~~2021, includes $331.2~~2022, includes $206.1 million of immediately available funds. The remaining available balance can be used for vehicle inventory financing.

(2) The outstanding balance of ~~$66.7~~$212.2 million is related to outstanding letters of credit of ~~$12.6~~$12.2 million and ~~$54.1~~$200.0 million in borrowings. The borrowings outstanding under the Acquisition Line included no$200.0 million USD ~~borrowings and~~ £~~40.0 million of GBP borrowings~~translated at the spot rate on the day borrowed, solely for the purpose of calculating the outstanding and available borrowings under the Acquisition Line in accordance with the credit facility agreement.borrowings. The available borrowings may be limited from time to time, based on certain debt covenants.

(3) The available balance at September 30, ~~2021,~~2022, includes ~~$3.5~~$12.4 million of immediately available funds. The remaining available balance can be used for Ford new vehicle inventory financing.

(4) The outstanding balance excludes ~~$251.0~~$230.7 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. credit facilities.

We have other credit facilities in the U.S., and the U.K. ~~and Brazil~~ with third-party financial institutions, most of which are affiliated with the automobile manufacturers that provide financing for portions of our new, used and rental vehicle inventories. In addition, we have outstanding debt instruments, including our 4.00% Senior Notes, as well as real estate related and other debt instruments. Refer to Note 8.9. Debt in our Notes to Condensed Consolidated Financial Statements for further information.

~~New 4.00% Senior Notes~~

On October 21, 2021, we issued an additional $200.0 million aggregate principal amount of our 4.00% Senior Notes due 2028 (the “New Notes”) for net proceeds of approximately $199.7 million. The New Notes will have identical terms as the initial 4.00% Senior Notes issued on August 17, 2020, and will be treated as a single class of securities.

~~Table of Contents~~

~~Bridge Facility~~

In connection with entering into the Purchase Agreement, we entered into a commitment letter, dated September 12, 2021 (the “Commitment Letter”), with Wells Fargo Bank, National Association (“Wells Fargo”), pursuant to which, among other things, Wells Fargo has committed to provide a portion of the debt financing for the Prime Acquisition, consisting of a $250.0 million unsecured bridge loan (the “Bridge Facility”), on the terms and subject to the conditions set forth in the Commitment Letter. Although Wells Fargo has committed to fund up to $250.0 million under the Bridge Facility, we anticipate utilizing only a portion of such commitment to finance the Prime Acquisition. The Bridge Facility is subject to mandatory prepayment at 100% of the outstanding principal amount thereof with the net proceeds from the issuance of any debt securities of us and upon other specified events. The obligation of Wells Fargo to provide this debt financing is subject to a number of customary conditions, including, without limitation, execution and delivery of certain definitive documentation.

Covenants

Our Revolving Credit Facility, indentures governing our senior notes and certain mortgage term loans contain customary financial and operating covenants that place restrictions on us, including our ability to incur additional indebtedness, create liens or to sell or otherwise dispose of assets and to merge or consolidate with other entities. 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 September 30, ~~2021,~~2022, 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 September 30, ~~2021~~2022
	Required	Actual
Total adjusted leverage ratio	< ~~5.50~~5.75	~~1.54~~1.77
Fixed charge coverage ratio	> 1.20	~~5.81~~5.77

As of September 30, 2021, we had $296.9 million of cash on hand and an additional $334.7 million invested in our floorplan offset accounts, bringing total cash liquidity to $631.6 million. In addition, we had $282.3 million of additional borrowing capacity on our Acquisition Line, bringing total immediate liquidity to $913.9 million as of September 30, 2021. Based on our position as of September 30, ~~2021,~~2022, 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.

Refer to Note 8.9. Debt and Note 9.10. 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 September 30, ~~2021.~~2022.

Table of Contents

Share Repurchases and Dividends

~~Our~~From time to time, our Board of Directors ~~from time to time,~~ authorizes the repurchase of shares of our common stock up to a certain monetary limit. On August 16, 2022, our Board of Directors increased the share repurchase authorization by $130.5 million to $250.0 million. During the nine months ended September 30, ~~2021, 125,069~~2022, 2,047,658 shares were repurchased at an average price of ~~$148.79~~$175.58 per share, for a total of ~~$18.6~~$359.5 million. As of September 30, ~~2021,~~2022, we had ~~$150.1~~$164.0 million available under our current ~~share~~stock repurchase authorization.

During the ~~three months ended~~Current Quarter, we adopted a Rule 10b5-1 trading plan that was effective from October 3, 2022 to October 19, 2022. Under the plan, we repurchased an additional 638,072 shares subsequent to September 30, ~~2021,~~2022, at an average price of $156.70 per share, for a total cost of $100.0 million.

During the Current Quarter, our Board of Directors approved a quarterly cash dividend of ~~$0.34~~$0.38 per share on all shares of our common stock, which resulted in ~~$6.0~~$5.8 million paid to common shareholders and $0.2 million to unvested RSA holders. During the nine months ended September 30, 2021, we have declared cash dividends of $0.98 per share on all shares of our common stock, for a total of $17.2 million paid to common shareholders and $0.5 million to unvested RSA holders.

Future share repurchases and the payment of any future dividends are subject to the business judgment of our Board of Directors, taking into consideration our historical and projected results of operations, financial condition, cash flows, capital requirements, covenant compliance, current economic environment and other factors considered relevant.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to a variety of market risks, including interest rate risk and foreign currency exchange rate risk. We address interest rate risks primarily through the use of interest rate swaps. We do not currently hedge foreign exchange risk, as discussed further below. The following quantitative and qualitative information is provided regarding our foreign currency exchange rates and financial instruments to which we are a party at September 30, ~~2021,~~2022, and from which we may incur future gains or losses from changes in market interest rates and/or foreign currency rates. We do not enter into derivative or other financial instruments for speculative or trading purposes.

~~Table of Contents~~

Interest Rates

We have interest rate risk on our ~~variable-rate~~variable-rate debt obligations, primarily consisting of our U.S. Floorplan Line. Based on ~~the amount of~~ variable-rate borrowings outstanding of $1.6 billion and $0.8 billion ~~and $1.6 billion as of~~for the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively, a 100 basis-point change in interest rates would have resulted in an approximate $6.2 million and $1.2 million ~~decrease and a $6.9 million increase~~change to our annual interest expense, respectively, after consideration of the average interest rate swaps in ~~effect.~~effect during the periods.

~~Our~~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. In addition, our exposure to changes in interest rates with respect to our variable-rate floorplan borrowings is partially mitigated by manufacturers’ interest assistance, which in some cases is influenced by changes in ~~market based~~market-based variable interest rates. We reflect interest assistance as a reduction of new vehicle inventory cost until the associated vehicle is sold. During the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, we recognized $42.1 million and $40.6 million, ~~and $33.0 million~~respectively, of interest assistance as a reduction of new vehicle cost of ~~sales, respectively.~~

~~For additional information about the potential impact of LIBOR phase out on our results of operations, see Item 1A. Risk Factors of our 2020 Form 10-K.~~sales.

Foreign Currency Exchange Rates

The functional currency of our U.K. subsidiaries is the ~~GBP and of our Brazil subsidiaries is the BRL.~~GBP. Our exposure to fluctuating foreign currency exchange rates relates to the effects of translating financial statements of those subsidiaries into our reporting currency, which we do not hedge against based on our investment strategy in these foreign operations. A 10% devaluation in average foreign currency exchange rates for the GBP to the USD would have resulted in a ~~$181.9~~$194.6 million and ~~$145.0~~$181.9 million decrease to our revenues for the nine months ended September 30, ~~2021~~2022 and 2020, respectively. A 10% devaluation in average foreign currency exchange rates for the BRL to the USD would have resulted in a $20.7 million and $16.7 million decrease to our revenues for the nine months ended September 30, 2021, ~~and 2020,~~ respectively.

~~For additional information about our market sensitive financial instruments, refer~~Refer to Note 6.7. Financial Instruments and Fair Value Measurements in our Notes to Condensed Consolidated Financial ~~Statements.~~Statements for further information about our market sensitive financial instruments.

Table of Contents

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) under the Exchange Act, we have evaluated, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this quarterly report. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the ~~Securities and Exchange Commission.~~SEC. Based upon that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of September 30, ~~2021,~~2022, at the reasonable assurance level.

Our management, including our principal executive officer and our principal financial officer, does not expect that our disclosure controls and procedures can prevent all possible errors or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that objectives of the control system are met. There are inherent limitations in all control systems, including the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes. Additionally, controls can be circumvented by the intentional acts of one or more persons. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events and while our disclosure controls and procedures are designed to be effective under circumstances where they should reasonably be expected to operate effectively, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of the inherent limitations in any control system, misstatements due to possible errors or fraud may occur and not be detected.

Changes in Internal Control over Financial Reporting

During the three months ended September 30, ~~2021,~~2022, there were no changes in our system of internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

5549

Table of Contents

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are not party to any legal proceedings, including class action lawsuits that, individually or in the aggregate, are reasonably expected to have a material adverse effect on our results of operations, financial condition or cash flows. For a discussion of our legal proceedings, refer to Note ~~11.~~12. Commitments and Contingencies within our Notes to Condensed Consolidated Financial Statements.

Item 1A. Risk Factors

Except as set forth below, during the nine months ended September 30, ~~2021,~~2022, there were no changes to the Risk Factors disclosed in Item 1A. Risk Factors of our ~~2020~~2021 Form 10-K.

~~We are subject~~The Russian invasion of Ukraine and the retaliatory measures imposed by the U.S., U.K., European Union and other countries and the responses of Russia to ~~risks associated with our dependence on manufacturer business relationships~~such measures have caused significant disruptions to domestic and ~~agreements.~~foreign economies.

The ~~success~~Russia and Ukraine Conflict had an immediate impact on the global economy resulting in higher prices for oil and other commodities. The U.S., U.K., European Union and other countries responded to Russia’s invasion of ~~our dealerships~~Ukraine by imposing various economic sanctions and bans. Russia has responded with its own retaliatory measures. These measures have impacted the availability and price of certain raw materials throughout the global economy. The invasion and retaliatory measures also disrupted economic markets. The global impact of these measures is ~~dependent on vehicle manufacturers whom we rely exclusively on for our~~continually evolving and cannot be predicted with certainty and there is no assurance that Russia’s invasion of Ukraine and responses thereto will not further disrupt the global economy and supply chain. In particular, the Russia and Ukraine Conflict has further impacted the ability of certain OEMs to produce new vehicles and new vehicle ~~inventory. Our~~parts, which may result in continued disruptions to the supply of new and used vehicles. Further, there is no assurance that when the Russia and Ukraine Conflict ends, countries will not continue to impose sanctions and bans.

While these events have not materially interrupted our operations, these or future developments resulting from the Russia and Ukraine Conflict, such as a cyberattack on the U.S. or our suppliers, could disrupt our operations, increase the cost or decrease the availability of certain materials necessary to produce vehicles we sell or obtain parts to complete maintenance and collision repair services, or make it difficult to access debt and equity capital on attractive terms, if at all, and impact our ability to ~~sell new vehicles is dependent on a vehicle manufacturer’s ability to produce~~fund business activities and/or limit future acquisition activity.

Recent economic and ~~allocate to our dealerships an attractive,~~financial developments, including rising inflation, high ~~quality~~energy prices, increasing interest rates and ~~desirable product mix at~~ the right time in order to satisfy customer demand. Manufacturers generally support their franchisees by providing direct financial assistance in various areas, including, among others, incentives, floorplan assistance and advertising assistance. A discontinuation or change in our manufacturers’ warranty and incentive programspotential recessionary environment could adversely affect our ~~business. Manufacturers also provide product warranties~~operations and financial condition.

During the Current Year, the global economy experienced rising inflation and an increase in ~~some cases, service contracts~~gasoline and energy prices. In response to ~~customers. Our dealerships perform warranty~~inflationary pressures and ~~service contract work~~macroeconomic conditions, the U.S. Federal Reserve, along with other central banks, including in the U.K., continued to increase interest rates throughout 2022, which could lower demand for new and used vehicles under manufacturer product warranties and service contracts and we bill the manufacturer directly as opposed to invoicing the customer. In addition, we rely on manufacturers for various financing programs, OEM replacement parts, training, up-to-date product design, development of advertising materials and programs and other items necessaryin future periods. Additionally, U.S. GDP shrank for the ~~success~~second consecutive quarter as of ~~our dealerships.~~

~~Vehicle manufacturers~~the quarter ended June 30, 2022, indicating that the U.S. economy may be ~~adversely impacted by economic downturns or recessions, significant declines in the sales~~entering a recession. In Europe, rising energy costs as a result of ~~their new vehicles, increases in interest rates, adverse fluctuations in currency exchange rates, declines in their credit ratings, reductions in access to capital or credit, labor strikes or similar~~supply disruptions ~~(including within their major suppliers), supply shortages, rising raw material costs, rising employee benefit costs, adverse publicity that may reduce consumer~~and increased winter demand for their products, including due to bankruptcy, product defects, litigation, ability to keep up with technology and business model changes, poor product mix or unappealing vehicle design, governmental laws and regulations, natural disasters or other adverse events. In particular, all our OEMs are investing material amounts to develop electric and autonomous vehicles. These investmentsheating could ~~cause financial~~place additional strain on our ~~OEMs~~suppliers’ ability to maintain current production levels of vehicles and vehicle parts. Across the European Union, these energy constraints could result in nations or ~~fail to deliver attractive vehicles~~regions enacting emergency energy related policies, limiting energy availability for ~~customers which~~manufacturers. Any such production constraints could ~~lead to adverse impacts~~further exacerbate an already ailing supply chain. The impact of these macroeconomic developments on our ~~business. The OEMs are also impacted by~~operations cannot be predicted with certainty.

Rising inflation, increased energy costs and a prolonged recession could adversely impact our operations, the ~~COVID-19 pandemic’s~~operations of our suppliers and customer demand for our vehicles and services. Refer to Item 1A. Risk Factors of our 2021 Form 10-K for additional information regarding the potential impact of economic and financial risks on the ~~economy, factory production, parts shortages, including semiconductor chips, and other disruptions. These and other risks~~Company. Continued interest rate increases could have a material adverse effect on the financial condition of any manufacturer and impact its ability to profitably design, market, produce or distribute new vehicles, which in turn could have a material adverse effect on our business, results of operations and financial condition.

During the nine months ended September 30, 2021 and through the date of this report, vehicle manufacturers were producing and delivering fewer vehicles to our dealerships due to a global semiconductor chip shortage. The chip shortage is impacting the automobile industry’s new vehicle production which has decreased our new vehicle inventory. Our new vehicle days’ supply of inventory was approximately 14 days for the quarter ended September 30, 2021, as compared to 20 days for the quarter ended June 30, 2021, 52 days for the quarter ended December 31, 2020, and 41 days for the quarter ended September 30, 2020. If new vehicle days’ supply of inventory continues to decline, it will impact our ability to satisfy customer demand. It is impossible to predict with certainty the duration of the semiconductor chip shortage, but we expect our inventory levels to be low through the remainder of 2021 and into the first half of 2022. If our manufacturers’ production remains at current reduced levels or continues to decline, diminishing our ability to meet the immediate needs of our customers, the semiconductor shortage could have a material and adverse impact on our ~~financial~~interest expense and ~~operating results.~~

Additionally, many U.S. manufacturers of vehicles, parts and supplies are dependent on imported products and raw materials in their production. Any significant increase in existing tariffs on such goods and raw materials, or implementationability to obtain financing through the debt markets, as well as consumers’ ability to obtain financing for the purchase of new ~~tariffs, could adversely affect~~and used vehicles. Refer to Item 3. Quantitative and Qualitative Disclosures About Market Risk for additional analysis regarding our ~~profits on the vehicles we sell.~~interest rate sensitivity.

~~Table of Contents~~

~~Vehicle manufacturers may alter their distribution models.~~

Certain of our vehicle manufacturers serving the U.K. market recently announced plans to explore an agency model for selling new vehicles. Under an agency model, our franchised dealerships would receive a fee for facilitating the sale of a new vehicle to a customer but would no longer record the vehicle in inventory, as has been historical practice. The agency model, if adopted, would reduce revenues, although the other impacts to our U.K. segment and consolidated results of operations remain uncertain. We are uncertain if agency models will be widely adopted in the U.K. and, if so, the impact to our results of operations.

We cannot assure you that manufacturers will approve our operation of dealership locations acquired in connection with the Prime Acquisition in a timely manner, if at all, which may have a material adverse effect on our acquisition strategy.

In connection with the Prime Acquisition, we must obtain manufacturer approval in order to operate the associated dealerships. However, manufacturer approval is not a condition to the closing of the Prime Acquisition, and we are obligated to close on the Prime Acquisition even if we are unable to obtain the necessary manufacturer approvals with respect to some or all of the associated dealerships.

~~Receipt of manufacturer approval may be subject to established limitations or guidelines, including the:~~

•~~number of such manufacturers’ dealership locations that may be acquired by a single owner;~~

•~~number of dealership locations that may be acquired in any market or region;~~

•~~percentage of market share that may be controlled by one automotive retailer group;~~

•~~ownership of dealership locations in contiguous markets;~~

•~~performance requirements for existing dealership locations; and~~

•~~frequency of acquisitions and other expansions.~~

In addition, some manufacturers require that no other manufacturers’ brands be sold from the same dealership location, and many manufacturers have site control agreements in place that limit our ability to change the use of the facility without their approval. Therefore, there are no assurances we will get approval and be able to operate the dealerships associated with the Prime Acquisition.

If we are unable to obtain the necessary manufacturer consents, enter into new franchise agreements, or maintain or renew the existing franchise agreements on favorable terms in connection with the Prime Acquisition, our operations may be significantly impaired, and we may be required to sell such non-approved dealerships and related assets at our sole expense and potentially at a loss.

~~The Prime Acquisition, if consummated, will create numerous risks and uncertainties which could adversely affect our business, financial condition and results of operations.~~

After consummation of the Prime Acquisition, we will have a significantly larger business and more assets and employees than we did prior to the transaction. The integration process will require us to expend significant capital and significantly expand the scope of our operations and financial and other systems. Our management will be required to devote a substantial amount of time and attention to the process of integrating the operations of Prime into our business. There is a great degree of difficulty and management involvement inherent in that process. These difficulties include:

•~~integrating the operations of Prime while carrying on the ongoing operations of our business;~~

•~~managing a significantly larger company than before consummation of the Prime Acquisition;~~

•~~the possibility of faulty or inaccurate assumptions underlying our expectations regarding the integration process, including, among other things, unanticipated delays, costs or inefficiencies;~~

•~~the effects of unanticipated liabilities;~~

•~~operating a more diversified business;~~

•~~integrating two separate business cultures, which may prove to be incompatible;~~

•~~attracting, retaining and motivating the necessary personnel associated with the business of Prime following the Prime Acquisition;~~

5750

Table of Contents

•Recent proposed changes to regulations could adversely impact our operations.~~implementing uniform standards, controls, procedures, policies and information systems and controlling the costs associated with such matters; and~~

•~~integrating information, purchasing, accounting, finance,~~New laws and regulations at the state and federal level may be enacted which could materially adversely impact our business. For example, in 2022, the Federal Trade Commission proposed new regulations for automotive dealers that would prohibit a wide range of current industry-accepted sales ~~billing, payroll~~practices with regard to sales and ~~regulatory compliance systems.~~

~~As a private company, Prime was not required~~advertising of our vehicles and products, require an extensive series of both oral and written disclosures to ~~obtain an audit of its internal control over financial reporting or otherwise have such internal control assessed, except~~be made at the initial contact in regard to the ~~extent required in connection with audits pursuant~~sale price of vehicles, financial terms and voluntary protection products, mandate the posting of certain pricing and other information on dealer websites, and impose burdensome recordkeeping requirements. Failure to ~~GAAP; however, following the consummation of the Prime Acquisition, the financial systems of Prime will be integrated into our financial system and~~adhere to these new policies could subject ~~to the internal control audit required with respect to~~ the Company to significant monetary and other penalties or require us to make adjustments to our products and services, any or all of which could result in lost revenues, increased expenses and substantial adverse publicity. These changes, if adopted as ~~a public company.~~

proposed, may lead to additional transaction times for the sale of vehicles, complicate the transaction process, decrease customer satisfaction, and impose recordkeeping burdens on our employees, among other effects. If ~~any of~~ these factors limits our ability to integrate Prime into our operations successfully or on a timely basis, our expectations regarding future results of operations, including certain run-rate synergies expected to result from the Prime Acquisition, might not be met. As a result, we may not be able to realize the expected benefits that we seek to achieve from the Prime Acquisition. In addition, we may be required to spend additional time or money on integration that otherwise would be spent on the development and expansion of our business, including efforts to further expand our product portfolio.

~~If the Prime Acquisition is consummated, our post-closing recourse for liabilities related to Prime is limited.~~

As part of the Prime Acquisition, we will assume certain liabilities of Prime. There may be liabilities that we failed or were unable to discover in the course of performing due diligence investigations into Prime. In addition, as Prime is integrated into our business, we may learn additional information about Prime, such as unknown or contingent liabilitiesregulations or other ~~issues relating~~adverse changes in law were to ~~the operations of Prime. Any such liabilities or issues, individually or in the aggregate,~~be enacted, it could have ~~a material~~an adverse effect on our business, financial condition and results of operations. Under the Purchase Agreement, the sellers will be liable for certain breaches of representations, warranties and covenants but our recovery may be contingent upon the aggregate damages arising out of any such breaches exceeding specified dollar thresholds and is subject to other time-based and monetary-based limitations. Accordingly, we may not be able to enforce certain claims against the sellers with respect to liabilities of Prime.

~~The purchase price for the Prime Acquisition could increase significantly from our estimates, which may adversely impact our liquidity.~~

The estimated Purchase Price for the Prime Acquisition is based, in part, on the value of the vehicle inventory at the Prime dealerships as of July 31, 2021. The actual purchase price will be based, in part, on the value of vehicle inventory at the Prime dealerships on the closing date of the Prime Acquisition. The value of vehicle inventories at automobile dealerships fluctuates significantly due to changes in economic conditions, the availability of consumer financing and the seasonality of demand for vehicles, among other factors. If the value of the vehicle inventory at the Prime dealerships is greater than we estimated at July 31, 2021, we will be required to pay additional purchase price consideration, which may require us to draw on existing sources of liquidity, including the Revolving Credit Facility and cash on hand. To the extent we are required to pay a higher purchase price for the Prime Acquisition, we may have less liquidity to fund our other operations and growth strategies, which may adversely impact our financial condition, results of operations or cash flows.business.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Recent Sales of Unregistered Securities

None.

Use of Proceeds

None.

Issuer Purchases of Equity Securities

The following table sets forth information with respect to shares of common stock repurchased by us during the three months ended September 30, 2022:


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) (1)
July 1, 2022 — July 31, 2022	5,600	$	175.41	5,600	$	138.0
August 1, 2022 — August 31, 2022	230,229	$	181.82	230,229	$	226.6
September 1, 2022 — September 30, 2022	374,100	$	167.28	374,100	$	164.0
Total	609,929			609,929

(1)Our Board of Directors from time to time authorizes the repurchase of shares of our common stock up to a certain monetary limit. On ~~October 5, 2020,~~August 16, 2022, our Board of Directors ~~approved a $200.0 million~~increased the share repurchase ~~authorization.~~authorization by $130.5 million to $250.0 million. Our share repurchase authorization does not have an expiration date.

During the three months ended September 30, ~~2021,~~2022, we ~~did not repurchase any~~adopted a Rule 10b5-1 trading plan that was effective from October 3, 2022 to October 19, 2022. Under the plan, we repurchased an additional 638,072 shares ~~of our common stock. As of~~subsequent to September 30, ~~2021, we had $150.1 million available under our current share repurchase authorization.~~2022 at an average price of $156.70, for a total cost of $100.0 million.

Future share repurchases are subject to the business judgment of our Board of Directors, taking into consideration our historical and projected results of operations, financial condition, cash flows, capital requirements, covenant compliance, current economic environment and other factors considered relevant. As of September 30, 2022, we had $164.0 million available under our current share repurchase authorization.

Table of Contents

Item 6. Exhibits

The exhibits required to be filed or furnished by Item 601 of Regulation S-K are listed below.

~~Table of Contents~~

EXHIBIT INDEX

Exhibit

Number

Description

~~2.1*#~~2.1#

—

Purchase Agreement, dated as of September 12, 2021, by and among Group 1 Automotive, Inc., GPB Portfolio Automotive, LLC, Capstone Automotive Group, LLC, Capstone Automotive Group II, LLC, Automile Parent Holdings, LLC, Automile TY Holdings, LLC and Prime Real Estate Holdings, LLC (incorporated by reference to Exhibit 2.1 of Group 1 Automotive, Inc.’s Quarterly Report on Form 10-Q (File No. 001-13461) for the quarter ended September 30, 2021)

2.2

—

Share Repurchase Agreement, dated November 12, 2021, by and between Group 1 Automotive, Inc., Buyer and UAB as intervening party (English translation) (incorporated by reference to Exhibit 2.1 of Group 1 Automotive Inc.’s Current Report on Form 8-K (File No. 001-13461) filed on November 15, 2021)

3.1

—

Amended and Restated Certificate of Incorporation of Group 1 Automotive, Inc. (incorporated by reference to Exhibit 3.1 of Group 1 Automotive, Inc.’s Current Report on Form 8-K (File No. 001-13461) filed May 22, 2015)

3.2

—

Third Amended and Restated Bylaws of Group 1 Automotive, Inc. (incorporated by reference to Exhibit 3.1 of Group 1 Automotive, Inc.’s Current Report on Form 8-K (File No. 001-13461) filed April 6, 2017)

10.1*10.1

—

~~Commitment Letter,~~First Amendment to the Twelfth Amended and Restated Revolving Credit Agreement dated effective as of ~~September 12, 2021,~~August 18, 2022 (incorporated by reference to Exhibit 10.1 of Group 1 Automotive, Inc.’s Current Report on Form 8-K (File No. 001-13461) filed August 23, 2022)

10.2*†

—

First Amendment to Incentive, Compensation, Confidentiality, Non-Disclosure and ~~among~~Non-Compete Agreement, effective as of August 24, 2022, between Group 1 Automotive, Inc. and ~~Wells Fargo Bank, National Association~~Daryl A. Kenningham

10.3*†

—

Second Amendment to Employment Agreement, effective as of August 24, 2022, between Group 1 Automotive, Inc. and Earl J. Hesterberg

31.1*

—

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*

—

Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*

—

Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2*

—

Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS*

—

XBRL Instance Document

101.SCH*

—

XBRL Taxonomy Extension Schema Document

101.CAL*

—

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*

—

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*

—

XBRL Taxonomy Extension Label Linkbase Document

101.PRE*

—

XBRL Taxonomy Extension Presentation Linkbase Document

104*

—

Cover Page Interactive Data File (formatted in Inline XBRL and contained in exhibit 101)


*						Filed or furnished herewith
†						Management contract or compensatory plan or arrangement
#						The exhibits and schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K and will be provided to the ~~Securities and Exchange Commission~~SEC upon request.

5952

Table of Contents

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



			Group 1 Automotive, Inc.

Date:	~~November 4, 2021~~October 28, 2022	By:	/s/ Daniel J. McHenry
			Daniel J. McHenry
			Senior Vice President and Chief Financial Officer

6053


	Three Months Ended September 30, 2020								Nine Months Ended September 30, 2020
	U.S.		U.K.		Brazil		Total		U.S.		U.K.		Brazil		Total
New vehicle retail sales	$	1,172.2	$	376.6	$	31.9	$	1,580.7	$	3,076.3	$	800.1	$	109.1	$	3,985.5
Used vehicle retail sales	608.2		248.1		10.9		867.2		1,719.4		529.7		38.3		2,287.4
Used vehicle wholesale sales	44.8		39.5		2.4		86.7		122.1		90.6		9.2		221.9
Total new and used vehicle sales	1,825.2		664.2		45.2		2,534.6		4,917.8		1,420.4		156.6		6,494.8


Parts and service sales (1)	306.4		61.3		8.0		375.6		865.2		139.5		23.4		1,028.2
Finance, insurance and other, net (2)	113.0		15.4		1.1		129.5		300.2		35.1		3.4		338.7
Total revenues	$	2,244.6	$	740.8	$	54.3	$	3,039.6	$	6,083.3	$	1,595.0	$	183.4	$	7,861.7