GPI

Sonic Automotive (SAH) is expected to deliver a year-over-year increase in earnings on higher revenues when it reports results for the quarter ended September 2026. This widely-known consensus outlook gives a good sense of the company's earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price. The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on October 29. On the other hand, if they miss, the stock may move lower. While the sustainability of the immediate price change and future earnings expectations will mostly depend on management's discussion of business conditions on the earnings call, it's worth handicapping the probability of a positive EPS surprise. This auto dealer is expected to post quarterly earnings of $1.66 per share in its upcoming report, which represents a year-over-year change of +17.7%. Revenues are expected to be $4.02 billion, up 1.2% from the year-ago quarter. The consensus EPS estimate for the quarter has been revised 5.81% lower over the last 30 days to the current level. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period. Investors should keep in mind that the direction of estimate revisions by each of the covering analysts may not always get reflected in the aggregate change. Price, Consensus and EPS Surprise Estimate revisions ahead of a company's earnings release offer clues to the business conditions for the period whose results are coming out. Our proprietary surprise prediction model -- the Zacks Earnings ESP (Expected Surprise Prediction) -- has this insight at its core. The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier. Thus, a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate. However, the model's predictive power is significant for positive ESP readings only. A positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of Earnings ESP. Please note that a negative Earnings ESP reading is not indicative of an earnings miss. Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and/or Zacks Rank of 4 (Sell) or 5 (Strong Sell). For Sonic Automotive, the Most Accurate Estimate is the same as the Zacks Consensus Estimate, suggesting that there are no recent analyst views which differ from what have been considered to derive the consensus estimate. This has resulted in an Earnings ESP of 0%. On the other hand, the stock currently carries a Zacks Rank of #5. So, this combination makes it difficult to conclusively predict that Sonic Automotive will beat the consensus EPS estimate. Analysts often consider to what extent a company has been able to match consensus estimates in the past while calculating their estimates for its future earnings. So, it's worth taking a look at the surprise history for gauging its influence on the upcoming number. For the last reported quarter, it was expected that Sonic Automotive would post earnings of $1.75 per share when it actually produced earnings of $1.82, delivering a surprise of +4.00%. Over the last four quarters, the company has beaten consensus EPS estimates two times. An earnings beat or miss may not be the sole basis for a stock moving higher or lower. Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors. Similarly, unforeseen catalysts help a number of stocks gain despite an earnings miss. That said, betting on stocks that are expected to beat earnings expectations does increase the odds of success. This is why it's worth checking a company's Earnings ESP and Zacks Rank ahead of its quarterly release. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported. Sonic Automotive doesn't appear a compelling earnings-beat candidate. However, investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release. Another stock from the Zacks Automotive - Retail and Whole Sales industry, Group 1 Automotive (GPI), is soon expected to post earnings of $9.65 per share for the quarter ended September 2026. This estimate indicates a year-over-year change of -7.7%. Revenues for the quarter are expected to be $5.55 billion, down 4% from the year-ago quarter. Over the last 30 days, the consensus EPS estimate for Group 1 Automotive has been revised 3.2% down to the current level. Nevertheless, the company now has an Earnings ESP of -2.56%, reflecting a lower Most Accurate Estimate. This Earnings ESP, combined with its Zacks Rank #5 (Strong Sell), makes it difficult to conclusively predict that Group 1 Automotive will beat the consensus EPS estimate. The company could not beat consensus EPS estimates in any of the last four quarters. Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Sonic Automotive, Inc. (SAH) : Free Stock Analysis Report Group 1 Automotive, Inc. (GPI) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Group 1 Automotive (GPI) is expected to deliver a year-over-year decline in earnings on lower revenues when it reports results for the quarter ended September 2026. This widely-known consensus outlook gives a good sense of the company's earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price. The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on October 28. On the other hand, if they miss, the stock may move lower. While management's discussion of business conditions on the earnings call will mostly determine the sustainability of the immediate price change and future earnings expectations, it's worth having a handicapping insight into the odds of a positive EPS surprise. This auto dealer is expected to post quarterly earnings of $9.65 per share in its upcoming report, which represents a year-over-year change of -7.7%. Revenues are expected to be $5.55 billion, down 4% from the year-ago quarter. The consensus EPS estimate for the quarter has been revised 3.22% lower over the last 30 days to the current level. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period. Investors should keep in mind that the direction of estimate revisions by each of the covering analysts may not always get reflected in the aggregate change. Price, Consensus and EPS Surprise Estimate revisions ahead of a company's earnings release offer clues to the business conditions for the period whose results are coming out. This insight is at the core of our proprietary surprise prediction model -- the Zacks Earnings ESP (Expected Surprise Prediction). The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier. Thus, a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate. However, the model's predictive power is significant for positive ESP readings only. A positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of Earnings ESP. Please note that a negative Earnings ESP reading is not indicative of an earnings miss. Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and/or Zacks Rank of 4 (Sell) or 5 (Strong Sell). For Group 1 Automotive, the Most Accurate Estimate is lower than the Zacks Consensus Estimate, suggesting that analysts have recently become bearish on the company's earnings prospects. This has resulted in an Earnings ESP of -2.56%. On the other hand, the stock currently carries a Zacks Rank of #5. So, this combination makes it difficult to conclusively predict that Group 1 Automotive will beat the consensus EPS estimate. Analysts often consider to what extent a company has been able to match consensus estimates in the past while calculating their estimates for its future earnings. So, it's worth taking a look at the surprise history for gauging its influence on the upcoming number. For the last reported quarter, it was expected that Group 1 Automotive would post earnings of $10.79 per share when it actually produced earnings of $9.61, delivering a surprise of -10.94%. The company has not been able to beat consensus EPS estimates in any of the last four quarters. An earnings beat or miss may not be the sole basis for a stock moving higher or lower. Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors. Similarly, unforeseen catalysts help a number of stocks gain despite an earnings miss. That said, betting on stocks that are expected to beat earnings expectations does increase the odds of success. This is why it's worth checking a company's Earnings ESP and Zacks Rank ahead of its quarterly release. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported. Group 1 Automotive doesn't appear a compelling earnings-beat candidate. However, investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release. Another stock from the Zacks Automotive - Retail and Whole Sales industry, Asbury Automotive Group (ABG), is soon expected to post earnings of $6.46 per share for the quarter ended September 2026. This estimate indicates a year-over-year change of -9.9%. Revenues for the quarter are expected to be $4.43 billion, down 7.7% from the year-ago quarter. Over the last 30 days, the consensus EPS estimate for Asbury Automotive has been revised 6.1% down to the current level. Nevertheless, the company now has an Earnings ESP of 0.00%, reflecting an equal Most Accurate Estimate. When combined with a Zacks Rank of #5 (Strong Sell), this Earnings ESP makes it difficult to conclusively predict that Asbury Automotive will beat the consensus EPS estimate. Over the last four quarters, the company surpassed consensus EPS estimates two times. Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Group 1 Automotive, Inc. (GPI) : Free Stock Analysis Report Asbury Automotive Group, Inc. (ABG) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Carvana (CVNA) sold a record 197,325 cars in its latest quarter. While that figure is up 38% from a year earlier, the key metric to watch is a smaller one. The profit Carvana makes on each vehicle actually fell over the same period. At 28.9 times earnings, against 21.5 for the S&P 500, investors are likely paying for profit that grows. So why is Carvana earning less on each car as it sells more? Why Is Carvana Earning Less On Each Car? The decline comes from a mix of tough year-over-year comparisons and a choice Carvana made. During the second quarter of 2026, adjusted gross profit on the vehicle itself fell $105 a car. Management said this drop happened mainly because a tariff-related benefit had added about $100 a car a year earlier. A steeper drop occurred outside the vehicle sale itself. What Carvana earns on each car apart from the vehicle itself fell $192 a car. Management gave two main reasons for this gap: benchmark rates rose, and Carvana chose to give customers lower interest rates. The company said it had passed more than 100 basis points of rate, or more than one percentage point, back to buyers. Costs and supply worked against the company as well. Management said higher fuel prices raised operations expenses. At the same time, inventory had grown more slowly than sales for several months. Executives noted that fewer cars to choose from means fewer shoppers buy. All else equal, management added, this dynamic results in lower sales or lower profit. Carvana Has Lost Little Profitability So Far Based on the second quarter's sales volume, every $100 of profit per car is worth roughly $20 million a quarter. On that scale, the per-car declines remain small relative to overall operating income. That total hit a company record of $680 million in the quarter. Carvana's operating margin tells a similar story. Over the past twelve months, it came in at 8.9%, against 9.2% a year earlier. This represents a mild slip for a metric that stood at a loss of 7.1% three years ago. Analysts still remain focused on the trend. During its July 29, 2026 call, Carvana faced questions about three straight quarters of lower EBITDA per car, a common measure of operating profit. Adjusted EBITDA reached $769 million in the second quarter, establishing a pace of more than $3 billion a year. Yet management guided the full year to a range of $2.7 billion to $3.0 billion. And analysts asked whether that guidance would imply a step down in future performance. Where Is Carvana Making Up Lower Profit Per Car? The company is offsetting the per-car decline through overhead and higher overall volume. Selling and administrative cost per car fell $157 from a year earlier, an improvement management tied to the growth in cars sold. And even with less profit generated on each individual vehicle, total net income rose $205 million to $513 million. This growth occurred within a shrinking broader market. Management said the industry was down from a year earlier. Despite this headwind, Jefferies noted on September 29, 2026 that website data showed Carvana's sales growth accelerating to about 40% in recent weeks. What Does Carvana's Share Price Likely Assume? With the stock trading at an earnings premium to the S&P 500, its valuation likely assumes that profit keeps climbing. This expectation persists even after a weak year for the stock. Carvana stock lost 14.7% over the past twelve months, while the S&P 500 returned 17.0%. The shares have also fallen hard when broader markets were shaken. During last year's tariff shock, the stock dropped 42%, against 19% for the index. Profit per car deserves attention, but it does not warrant immediate alarm. The slip in profit per car is small against Carvana's total profit, and part of it came from Carvana's choice to give buyers lower interest rates. Investors should look to the upcoming third-quarter earnings report for the next signal. Management guided to more cars sold in that quarter than in the second. If adjusted EBITDA lands below the second quarter's $769 million on a higher volume of cars, it would show Carvana's profit per car still falling. Does This Mean You Should Act On CVNA? Our purpose is to inform you with unique data so you make the right investment decisions. That said, betting on a single stock is always risky, no matter which direction you choose. There is a smarter approach. Since its inception, the Trefis High Quality (HQ) Portfolio has returned 105%, beating the benchmark that combines the three major indices - the S&P 500, S&P Mid-cap, and Russell 2000. And it did so without taking the concentrated risk that comes with do-it-yourself stock picking. If that is how you want to invest, the HQ Portfolio is the place to start.

AutoNation Inc. AN shares fell 10% on Thursday and hit a new 52-week low, after executives gave a cautious outlook at a Morgan Stanley investor conference. The stock's move dragged the rest of the dealership sector with it. Shares of Sonic Automotive SAH Lithia Motors LAD, Asbury Automotive ABG and Group 1 Automotive GPI fell roughly 9%, 5%, 4% and 3%, respectively. The details behind the drop point to a broader problem. AutoNation’s management highlighted that parts-and-service revenues, typically one of the more stable parts of the business, are growing slower than expected heading into the third quarter. That's a significant concern, because for these auto retailers, aftermarket sales have long served as a recurring earnings buffer as vehicle sales soften. Beyond the weaker parts-and-service outlook, AutoNation also flagged that the new-vehicle gross profit is also under pressure. Additionally, electric-vehicle demand has dropped sharply. And affordability, executives said, is now affecting not just vehicle purchases but routine maintenance spending as well— a category that rarely gets cut, even in slower economic periods. The sector-wide reaction backs up the read that this is bigger than AutoNation. Carvana was the outlier, inching up less than 1%. Carvana's business is built on used-vehicle sales rather than service revenues or new-car margins, which explains why it wasn't caught in the same selloff. Two additional data points support the idea that this is a sector-level shift rather than a one-off. First, Cox Automotive's latest dealer survey shows tariff concerns have eased since March 2025, with more dealers expecting a negotiated trade outcome. But concern over parts, reconditioning and service costs has risen among both franchised and independent dealers. That lines up directly with AutoNation's commentary— the pressure point has moved from trade policy to the cost side of day-to-day dealership operations. Second, the Fed raised its benchmark rate by 25 basis points yesterday— its first hike in three years. Higher rates raise the cost of auto financing, adding pressure on buyers who are already showing signs of pulling back. Together, these four things— slower service revenues, muted expectations for new-vehicle gross profit, weak EV demand and tighter financing— are all happening at once. Service and parts revenues are usually the one part of the business that holds up when new-car sales slow. And if that part starts slipping too, dealers don't have their usual backup. All these could be weighing on the auto retailers’ third-quarter results. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Group 1 Automotive, Inc. GPI reported second-quarter 2026 adjusted earnings of $9.61 per share, which declined 16.6% year over year and missed the Zacks Consensus Estimate of $10.79 by 10.9%. Revenues declined 5.6% to $5.39 billion and missed the consensus mark of $5.65 billion by 4.7%.Results reflected persistent consumer affordability pressure, used-vehicle sourcing challenges and short-term disruption from U.S. store rebranding. Retail new-vehicle units fell 4.4% year over year to 53,335, while used retail units declined 11.2%. Group 1 Automotive, Inc. price-consensus-eps-surprise-chart | Group 1 Automotive, Inc. Quote New-vehicle retail sales decreased 4.7% year over year to $2.61 billion. Units sold fell 4.4% year over year to 53,335. The average selling price rose 2.3% to $51,726, but new-vehicle gross profit per retail unit fell 8.5% to $3,254.Used-vehicle retail sales declined 7% to $1.72 billion. Units sold fell 11.2% year over year to 53,469. Average selling price increased 4.8% to $32,195, while used retail gross profit per unit dropped 4.3% to $1,532. Used-vehicle wholesale sales declined 7.5% year over year to $151.5 million. Units sold fell 10.1% year over year to 15,315. The unit incurred a gross loss of $47 million against the gross profit of $29 million reported in the same period last year. Finance and insurance revenues fell 8.8% to $216.8 million, with F&I gross profit per retail unit down 1% to $2,030. Parts and service sales declined 3.6% year over year to $692.4 million, while gross profit decreased 3.4% to $389 million. Still, the parts and service gross margin edged up 10 basis points to 56.2%.On a same-store basis, parts and service revenues rose 2.1% to $673.3 million. U.S. same-store customer-pay revenues grew about 4%, and warranty revenues increased about 1%, helping offset weaker collision activity and lower internal reconditioning tied to reduced used-vehicle volumes. U.S. revenues fell 5.8% year over year to $3.93 billion, while gross profit dropped 9.6% to $658.5 million. Retail new-vehicle unit sales declined 6.1% to 38,549, and used retail units decreased 13.6% to 34,261.Adjusted U.S. SG&A expenses fell 6.5% to $437.5 million. Adjusted SG&A as a percentage of gross profit was 66.4%, improving more than 400 basis points sequentially as the company completed its $50 million annualized U.S. expense-reduction initiative. During the reported quarter, the retail new-vehicle, retail used-vehicle and wholesale used-vehicle units sold were 14,786, 19,208 and 6,303, respectively. U.K. revenues declined 4.9% year over year to $1.45 billion, while gross profit slipped 2.4% to $202.1 million. New-vehicle retail units increased 0.6% to 14,786, although used retail units declined 6.6% to 19,208.U.K. parts and service gross margin held at 58.1%. F&I gross profit per retail unit rose 1.7% to $1,118, while total gross margin expanded 40 basis points to 13.9%. During the reported quarter, the retail new-vehicle, retail used-vehicle and wholesale used-vehicle units sold were 38,549, 34,261 and 9,012, respectively. During the quarter, Group 1 acquired four U.S. dealerships and retained Stone Mountain Toyota and Stone Mountain Honda, which are expected to generate about $205 million in annual revenues. The company also disposed of four Jaguar Land Rover dealerships in the United Kingdom, bringing year-to-date annualized revenues associated with dispositions to $900 million.GPI separately agreed to acquire 10 Hennessy Automobile Companies dealerships in Atlanta. The transaction is expected to add about $1.7 billion in annual revenues and close by year-end 2026, subject to customary approvals. Management expects the acquisition to be immediately accretive to earnings upon closing. As of June 30, 2026, cash and cash equivalents were $164.5 million, up from $32.5 million at year-end 2025. Total debt declined 9.1% to $3.36 billion, while floorplan notes payable, net, increased 13.9% to $2.18 billion.Total liquidity was $684 million at quarter-end, and the rent-adjusted leverage ratio was 3.3x. During the first half, operating cash flow totaled $155 million, down from $410.3 million in the same period last year.The Hennessy transaction is valued at about $1.3 billion and is expected to be financed with $1.25 billion of new debt. The company expects rent-adjusted leverage to remain below 4x at closing and plans to return to its target leverage level by mid- to late 2027. As of June 30, 2026, the company had $306.3 million available under its current repurchase authorization.GPI currently has a Zacks Rank #5 (Strong Sell).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. General Motors Company GM reported second-quarter 2026 adjusted earnings of $3.57 per share, up 41.3% year over year. The figure beat the Zacks Consensus Estimate of $3.13 by 14.06%. Revenues increased 1.9% to $48.03 billion and surpassed the consensus estimate of $46.56 billion by 3.15%. Strong pricing, lower costs and disciplined incentives supported results. General Motors raised its full-year adjusted EBIT guidance to $14-$16 billion from $13.5-$15.5 billion. Adjusted earnings are now projected at $12-$14 per share, up from the prior range of $11.50-$13.50.Tesla, Inc. TSLA reported second-quarter 2026 adjusted earnings of 33 cents per share, which declined 17.5% year over year. The figure missed the Zacks Consensus Estimate of 50 cents by 34%. Revenues advanced 25.5% to $28.24 billion and surpassed the consensus estimate of $25.81 billion by 9.41%. Tesla expects 2026 capital expenditures to exceed $25 billion and rise further over the next two to three years. Ford Motor Company F reported second-quarter 2026 adjusted earnings of 42 cents per share, beating the Zacks Consensus Estimate of 33 cents by 27.27%. Earnings rose 13.5% from 37 cents a year ago. Favorable mix and net pricing helped lift adjusted EBIT by 17% to $2.5 billion, while adjusted EBIT margin expanded to 5.2% from 4.3%. Automotive revenues of $44.89 billion fell 4.4% year over year and missed the consensus mark of $45.72 billion by 1.81%. The company’s consolidated second-quarter revenues came in at $48.3 billion, down 3.7% year over year. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Group 1 Automotive, Inc. (GPI) : Free Stock Analysis Report Ford Motor Company (F) : Free Stock Analysis Report General Motors Company (GM) : Free Stock Analysis Report Tesla, Inc. (TSLA) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

HOUSTON, Aug. 11, 2026 /PRNewswire/ -- Group 1 Automotive, Inc. (NYSE: GPI) ("Group 1" or the "Company"), a Fortune 250 automotive retailer with 249 dealerships located in the U.S. and U.K., today announced its board of directors declared a quarterly dividend of $0.55 per share. The dividend is consistent with the Company's previously announced increase of 10% in its annualized dividend rate from $2.00 per share in 2025 to $2.20 per share in 2026. The dividend is payable on September 15, 2026 to stockholders of record as of September 1, 2026. ABOUT GROUP 1 AUTOMOTIVE, INC. Group 1 owns and operates 249 automotive dealerships, 310 franchises, and 32 collision centers in the United States and the United Kingdom that offer 37 brands of automobiles. Through its dealerships and omni-channel platform, 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. Group 1 discloses additional information about the Company, its business, and its results of operations at www.group1corp.com, www.group1auto.com, www.group1collision.com, www.acceleride.com, and www.facebook.com/group1auto. FORWARD-LOOKING STATEMENTSAll statements in this press release related to future, not past, events are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, which are based on our current expectations and assumptions regarding our business, the economy and other future conditions. 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. Any such forward-looking statements are not assurances of future performance and involve risks and uncertainties that may cause actual results to differ materially from those set forth in the statements. For additional information regarding known material factors that could cause our actual results to differ from our projected results, please see our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise. Investor contacts:David HeldermanSenior Manager, Investor RelationsGroup 1 Automotive, [email protected] Media contacts:Pete DeLongchampsSenior Vice President, Manufacturer Relations, Financial Services and Corporate DevelopmentGroup 1 Automotive, [email protected] Kimberly BartaHead of Advertising, Brand and CommunicationsGroup 1 Automotive, [email protected] or Jude Gorman / Clayton ErwinCollected [email protected] View original content to download multimedia:https://www.prnewswire.com/news-releases/group-1-automotive-board-declares-quarterly-dividend-302848893.html

The help that flattered the June quarter is gone from the second half, and what replaces it depends on suppliers the company does not control. Rivian Automotive (RIVN) trades at $15.56, below both its 50-day and 200-day averages and about 31% under its 52-week high. The market has already marked the stock down from its high, so the question is where the risk that remains actually sits. The biggest risk is not demand for the new R2. It is how much of the 2026 profit case now rests on one quarter. The Fourth Quarter Is Carrying The Profit Case The 2026 guide is 65,000 to 70,000 vehicles, and management says the second-half deliveries are weighted toward the fourth quarter. The profitability claim sits in the same place: positive automotive gross profit only as a 2026 exit rate. That is heavy freight for one quarter. On $1.14 billion of automotive revenue in the June quarter, the automotive line was still a $36 million loss, and that was with a $103 million year-over-year lift from regulatory credits, plus a separate tariff refund receivable. Management points to the absence of those credits in the second half as a bigger driver of the heavier second-half loss than the R2 ramp. The ramp itself is funded from the balance sheet: about $5.3 billion of cash and short-term investments at quarter end, plus roughly $1.3 billion raised in a July share sale. Funding growth out of operating cash rather than out of new shares is the ordinary condition of the businesses held in the Trefis High Quality Portfolio. Rivian only reaches that positive 2026 exit-rate gross profit by building the vehicles. The Gate Is A Supplier, Not A Buyer Demand is not the soft spot. The $58,000 version of the R2 is converting reservations into orders at a higher rate than management expected, and the company hosted more than 57,000 demo drives in the June quarter, a record. Amazon now runs more than 40,000 Rivian electric delivery vans, which keeps the commercial line growing. The constraint is upstream. By management's own description, output is gated by the slowest-moving supplier, and the plant in Normal, Illinois is still building R2 on a single shift; the second shift is not expected to add material volume until the fourth quarter. Ramp inefficiency alone added about $100 million to cost of revenue in the June quarter, and management has flagged rising raw material, memory and logistics costs on top of it. The Options Market Is Pricing Calm Into The Riskiest Stretch The stock is up about 25% over the past year, ahead of the S&P 500, and yet inside that same year it fell 43% from peak to trough, so the tape has already shown what a stumble costs. Options price implied volatility at the 21st percentile of its own trailing year, near the bottom of that range, which is the market treating the R2 ramp as routine. The one number that settles this is fourth-quarter automotive gross profit, because management has put the entire profitability claim on that single line. Until then the fall already taken out of the price is the whole compensation for holding through the ramp, and whether that is enough is what a dip screen is built to test. A Single Ramp Is A Narrow Place To Stand None of this says the ramp fails. It says one company's fourth quarter is carrying an outsized share of the outcome, and how much of a portfolio rides on that one quarter is the holder's choice, which is the argument for holding a rules-based basket such as the Trefis High Quality Portfolio alongside it. That portfolio has a track record of outpacing the three major indices - the S&P 500, S&P Mid-cap, and Russell 2000.

Image source: The Motley Fool. Thursday, April 30, 2026 at 10:00 a.m. ET Senior Vice President, Manufacturer Relations and Financial Services - Peter DeLongchamps President and Chief Executive Officer - Daryl Kenningham Senior Vice President and Chief Financial Officer - Daniel McHenry Operator: Good morning, ladies and gentlemen. Welcome to Group 1 Automotive's First Quarter 2026 Financial Results Conference Call. Please be advised that this call is being recorded. I would now like to turn the floor over to Mr. Peter DeLongchamps, Group 1's Senior Vice President, Manufacturer Relations and Financial Services. Please go ahead, Mr. DeLongchamps. Peter Delongchamps: Thank you, Jamie, and good morning, everyone, and welcome to today's call. The earnings release we issued this morning and a related slide presentation that includes reconciliations related to the adjusted results that we will refer to on this call for comparison purposes have been posted to Group 1's website. Before we begin, I'd like to make some brief remarks about forward-looking statements and the use of non-GAAP financial measures. Except for historical information mentioned during the conference call, statements made by management of Group 1 Automotive are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve both known and unknown risks and uncertainties, which may cause the company's actual results in future periods to differ materially from forecasted results. Those risks include, but are not limited to, risks associated with pricing, volume, inventory supply, conditions of the market, successful integration of acquisitions and adverse developments in the global economy and resulting impacts on demand for new and used vehicles and related services. Those and other risks are described in the company's filings with the Securities and Exchange Commission. In addition, certain non-GAAP financial measures as defined under SEC rules may be discussed on this call. As required by applicable SEC rules, the company provides reconciliations of any such non-GAAP financial measures to the most directly comparable GAAP measures on its website. Participating with me on today's call are Daryl Kenningham, our President and Chief Executive Officer; and Daniel McHenry, Senior Vice President and Chief Financial Officer. I'd now like to hand the call over to Daryl. Daryl Kenningham: Thank you, Peter. At Group 1, we pride ourselves on performing effectively in challenging times. We successfully navigated economic recessions, the COVID pandemic and the CDK outage in 2024. We focus on what we can control, and by remaining a pure-play retailer, we minimize distractions and remain focused on what we feel are our core competencies. We estimate that Q1 2026 weather impacted our results by about $7 million in gross profit, driven largely by our after-sales business. Important to note is that Group 1 typically pays our employees during weather closures. And in some markets, our stores were closed for as long as a week this year. In the first quarter of 2026, we continue to focus on our strengths. Where our performance did not meet our expectations, we acted promptly to address those issues, and I will provide further details on those areas later in my remarks. In the U.S., our new vehicle margins remained robust at over $3,300 per car, exceeding $3,250 for the third consecutive quarter. We saw sequential improvement in used vehicle PRUs and a $95 same-store year-over-year increase in adjusted F&I PRU. Two years ago, we introduced a virtual F&I process in our U.S. stores, giving customers the opportunity to conduct their transactions with a virtual agent. This innovation is now installed in 1/3 of our U.S. stores, doing 20% of our deals in those stores. We're very pleased with the results of virtual F&I. Our PRU results are strong, transaction times have improved, improving customer convenience and the overall experience. Thus far, customer feedback is very positive. In addition, compensation costs are lower than compared to our in-store transactions. We anticipate continued growth in virtual F&I through the remainder of this year and into 2027. In after-sales, we're committed to setting ourselves apart. This quarter, we increased same-store customer pay gross profits by nearly 6%. And we're pleased that in our U.S. business, our customer pay repair order count rose by 2.5%. Our growth in after-sales is driven by marketing initiatives utilizing artificial intelligence, vertically integrated customer data management, decreased technician turnover, completion of our workshop air conditioning project and the addition of 130 new technicians on a same-store basis. Turning to a progress update on our Group 1 U.S. store rebranding initiative. We successfully completed the rebranding of half of our U.S. stores and anticipate being complete by the end of the year. Our team is actively gathering insights from each converted market, allowing us to refine our approach and apply our learning as we go. In the long term, we believe rebranding will improve the effectiveness of our marketing investments and drive greater customer retention, particularly as we focus on engaging households under the Group 1 brand, especially in cluster markets. Our U.K. operation is demonstrating notable progress across key segments. New vehicle margins remained steady year-over-year, while same-store volumes increased 2%. Same-store used volumes rose nearly 5%, accompanied by sequential PRU improvements. F&I continued its positive trajectory, up year-over-year and sequentially on a same-store constant currency basis. Our U.K. parts and service business continues to accelerate, increasing 20% year-over-year in same-store gross profit, and customer pay increased 18%. We're applying many of the same principles we use in our U.S. business, opening our workshop schedules, expanding our hours, pricing our maintenance offerings on the aftermarket competition, eliminating diagnosis fees and increasing capacity by hiring technicians. Turning to our U.K. SG&A performance. We incurred $3 million in incremental costs due to government-mandated national insurance and minimum wage increases. Without this headwind, we improved our leverage, but we continue to focus on further efficiency there. In the U.S., SG&A performance did not meet our expectations. Currently, consequently, in early April, we implemented cost reduction measures in our U.S. business, cutting our headcount by nearly 700 full-time employees and reducing SG&A costs by approximately $14 million through contract and vendor elimination. We expect that these efforts will remove $50 million of annual costs from our U.S. operations, that will return our SG&A leverage to a more acceptable level. In both markets across all areas of our business, we continue to look for ways to leverage technology, including artificial intelligence, to improve our returns. Many of these investments are still in the early stages, but they are beginning to demonstrate real benefits.?AI can support customer acquisition and retention, enhance inventory optimization through more informed sourcing decisions, drive efficiencies by digitizing processes to reduce SG&A and put more consistency and performance across all of our rooftops, a key strategic focus for Group 1. We will continue to drive these efforts and look forward to sharing more details in the future. In the first quarter, we also continued our commitment to disciplined capital allocation, particularly in M&A and share buybacks. We divested 2 Mercedes-Benz dealerships in California. These stores were high-cost operations with significant real estate and operating constraints. In the U.K., aligned with the Volkswagen Group's ideal network plan, we acquired 1 Skoda and 2 Volkswagen dealerships while also disposing of one underperforming Volkswagen and one underperforming Skoda dealership. And in the U.K., we finalized a framework agreement with Chinese OEM Geely, and we will open 3 Geely dealerships in Q2 in facilities that we already own. We are in additional discussions with Geely and other Chinese OEMs about further representation. Our primary intention is to develop direct understanding of the retail model of Chinese brands. We also believe there is significant profit and sales opportunity with these brands and leveraging our large corporate fleet business in the U.K. During the quarter, we repurchased 205,190 shares or approximately 1.7% of our outstanding shares. We are managing the business with discipline and purpose, ensuring we deliver strong, resilient performance that our shareholders expect even in today's dynamic environment. I'll now turn the call over to our CFO, Daniel McHenry. Daniel McHenry: Thank you, Daryl, and good morning, everyone. In the first quarter of 2026, Group 1 Automotive reported revenues of $5.4 billion, gross profit of $878 million, adjusted net income of $104 million and adjusted diluted EPS of $8.66 from continuing operations. Starting with our U.S. operation. First quarter performance remained solid across most business despite continued pressure on volumes and margins. New vehicle unit sales declined both on a reported and same-store basis, reflecting not only ongoing affordability concerns, but a tough comparative period, which saw elevated new vehicle sales ahead of tariffs. However, new vehicle GPUs increased sequentially from $3,260 to $3,313. We continue to maintain strong operational discipline through effective cost management and process consistency. Our used vehicle operations performed in line with the broader market environment. Used vehicle retail units declined both on a reported and same-store basis, which were partially offset by higher selling prices. GPUs declined approximately 3% on a same-store and as reported basis, reflecting continued pressure on vehicle acquisition costs in a more competitive sourcing environment. We continue to leverage our scale and operational flexibility to strengthen used vehicle acquisition while executing disciplined sourcing and pricing dynamic used vehicle market. Our first quarter adjusted F&I GPUs were up nearly 4% on an as-reported and same-store basis versus prior year comparable period. Aftersales stood out as a key bright spot with both parts and service gross margin reaching a new quarterly high. Gross profit continues to benefit from our efforts to optimize our collision footprint, shifting collision space opportunistically to additional traditional service capacity and closing collision centers where returns do not meet our requirements. Same-store customer pay and warranty revenues increased approximately 3% and 5%, respectively, with corresponding gross profit growth of approximately 6% and 9%. Our technician recruiting and retention efforts continue to pay off with same-store technicians up 3% year-over-year. Overall, our U.S. business continues to demonstrate resilience with strong aftersales performance and disciplined execution helping offset ongoing normalization in vehicle margins. Turning to the U.K. While the U.K. remains a challenging operating environment, performance improved across several key areas. New vehicles performed in line with expectations. Used vehicle same-store revenues were up over 6% on a local currency basis with volumes up nearly 5%. Same-store GPUs declined 2% on a local currency basis, leading to an increase in same-store used vehicle gross profit. Performance reflects improved demand and throughput despite continued margin pressure in a competitive used vehicle market. After-sales delivered year-over-year growth in both revenue and gross profit on an as-reported and same-store basis, but F&I delivered year-over-year growth in revenue and gross profit on a same-store basis. The after-sales business remains an important stabilizer within the U.K. operations and along with F&I is a key area of focus as we work to enhance profitability by bringing best practices from the U.S. Same-store technicians are up 3%, adding significant capacity to our shops. Same-store customer pay and warranty revenues were up over 6% and 12% year-over-year on a local currency basis. Same-store F&I PRU reached 1,128 with an as reported and same-store PRU both increasing over 8% year-over-year. We are continuously taking decisive actions in both the U.S. and U.K. to control costs, strengthen operational efficiency and position the business for improved returns as market conditions stabilize. Turning to our balance sheet and liquidity. Our strong balance sheet, cash flow generation and leverage position will continue to support flexible capital allocation approach. As of March 31st, our liquidity of $714.3 million was comprised of accessible cash of $191 million and $523 million available to borrow on our acquisition line. Our rent-adjusted leverage ratio as defined by our U.S. syndicated credit facility was 3.09x at the end of March. Cash flow generation year-to-date yielded $147 million of adjusted operating cash flow and $95 million of free cash flow after backing out $53 million of CapEx. This capital was deployed in the same period through a combination of acquisitions, share repurchases and dividends, including the acquisition of $135 million of revenues through March 31, $72 million spent repurchasing 205,000 shares at an average price of $353.08 and $7 million in dividends to our shareholders. We currently have $306.3 million remaining on our Board authorized common share repurchase program. For additional detail regarding our financial condition, please refer to the schedules of additional information attached to the news release as well as the investor presentation posted on our website. I will now turn the call over to the operator to begin the question-and-answer session. Operator? Operator: Our first question today comes from Alex Perry from Bank of America. Alexander Perry I guess just first, I was wondering if you can walk us through the cost savings plan in more detail. It looks like $50 million in annualized savings with benefits beginning in the second quarter. Maybe if you could help us parse out sort of what the expected second quarter benefit is and what we should expect in the back half as well, as well as just provide a bit more color on the overall plan? Daniel McHenry: Alex, it's Daniel here. I would say coming out of January and February, we could see some weakness in the market and our SG&A leverage at that point was much lower than we would have expected. Going into March, we went about developing a cost-cutting program. 700 heads to come out of the business. They have all been completed by the end of April. Total cost effective of that headcount reduction is approximately $35 million. In addition to that, we've taken cost cutting exercises around contracts, as Daryl talked about earlier, and that's close to $15 million in terms of cost. So on an annualized basis or a quarterly basis, we would expect that to be about $12.5 million a quarter. Now what would that have done for us in terms of quarter 1, if we have taken that cost out on the 1st of January quarter 1, U.S. SG&A that was circa 70.5%, we would have expected that to have been about 68.5%. So it's about 200 basis points out of cost in terms of the U.S. Additionally, we continue to take cost out in the U.K., but we do have that additional national insurance in quarter 1 that we didn't have last year. Alexander Perry Really helpful. And then my second question is, I just wanted to ask about the used business. And what is the path in sort of getting the used profitability back up to historical levels? I know you mentioned some of the sourcing costs on the used side, but maybe just talk through the path there and if we should expect any sort of near-term improvements on the used GPUs? Daryl Kenningham: Well, this is Daryl. We saw some nice sequential improvement in used PRU. Sourcing is a big challenge right now, one, because the SAAR was depressed in the first quarter, so there were fewer trades. We ended the quarter with 26 days. We don't rely very heavily on auctions. 11% of our sourcing comes from auctions. So we really work hard on the organic sourcing. The problem there is it's heavily late model vehicles. Our mix of cheaper, higher-margin used cars in our inventory is very light compared to what it's been historically. And everybody is scrambling for those. Everybody really wants those because, obviously, one of the reasons people buy used cars is because they're more affordable. So as we get better at that, I expect we'll see margin improvement. I think we're better and more disciplined in our inventory acquisition. We're much better in more disciplined in both the U.S. and the U.K. on aging management, pricing decisions to market, trying to use more technology in both markets. So while I don't think you'll see leaps and bounds of improvement, I do think this additional discipline and the lack of supply provides a floor on used car PRUs. Operator: Our next question comes from Bret Jordan from Jefferies. Patrick Buckley This is Patrick Buckley on for Bret. There have been some recent headlines around rising negative equity values. Have you seen similar trends with your customers? And has there been any impact on converting a potential customer to buy on the sales floor when they realize they've got to write a check to make the transaction happen? Daryl Kenningham: There's a lot of -- the short answer is yes. I think it's a fact negative equity is at a high and can be a headwind. We try to watch affordability measures quite a bit. And the average car payment is high, insurance rates are high, negative equity is high. But also, there's evidence that affordability is actually a little better now than it has been in some time when you look at car payments as a percentage of people's salary and people's pay. It actually takes fewer weeks on the measure that a lot of people watch, it's better in 2026 than it has been. So I think there's a lot of things going on with affordability right now. Negative equity is one piece of that puzzle. Things like tax rebate checks are another piece of that puzzle. So I think there's puts and takes on both of that. But to answer your specific question on negative equity, I think that's -- yes, we see that, but we also see that I don't think it's a huge limiter. It's just another piece of the affordability puzzle right now. Patrick Buckley Great, that's helpful. And then focusing on the U.K., there's been a bit more of a prominent impact from recent energy spikes there. How has the consumer held up into Q2? It sounded like Q1 was a pretty healthy quarter from a demand side. But has there been any signs of a pullback more recently? One of the things that we were really pleased with in the U.K. in the first quarter was our order take rate going into the plate change month in March was very high, higher than we've seen in, honestly, several years. And so when you go into a plate change month, you really know how it's going to come out. By about the middle of February, you know what the end of March is going to look like because the order bank dictates what kind of volume you're going to do, and we were really pleased all through January and February with our March order take. And I don't see that, that has -- on a relative basis, April is not a plate change month, so don't get me wrong. But on a relative basis, I don't see that, that has changed materially. One thing we're really pleased about going into the second quarter in the U.K. is the health of our used car inventory is significantly better than it was a year ago. One of the challenges in the U.K. market is when you have two months, March and September, which drives so much of your new car volume, it creates these huge used car inventories in April and October. And if you don't have a lot of discipline in the way you manage your used car inventories, you can get caught. And candidly, in the past, we've been caught. And I'm really pleased with our aging. I'm really pleased with our inventory levels and our discipline this year in the U.K. on our used car inventories, and we hope that, that means better things for us in used cars this year there. Operator: Our next question comes from John Babcock from Barclays. John Babcock: The first one, just on your plan to exit the JLR brand, where does that stand? And also, did that impact your U.K. operations? Or is that now considered part of discontinued ops? Daryl Kenningham: It's not discontinued ops because materially, it's not -- it's a very small part of our business. We're in active negotiations on a number of them, both with the OEM and with potential buyers. We've closed one of the nine. We're in active discussions on several more and very close to contract finalization. So once we get those finalized, we'll be able to announce those. But we're pleased with where we are on that. John Babcock: Okay. And then just back to the cost actions. With the 700 people that you, I guess, cut from the workforce, where were those? Were those -- I'm sure they're probably spread across different teams, but were those more weighted to the sales side, were those more in the back office? I don't know if you could provide any more color on that, that would be useful. Daryl Kenningham: It was across the board. And what we did was we took SG&A as a percentage of gross targets by -- literally by store and market and business unit and assigned headcount targets based on that. And so, it came from across the enterprise, in the stores, in the corporate level. And fortunately, in some of our corporate activities, we've been able to implement some technology, which helps us keep our productivity up, and so we didn't need some of that headcount. But it was across the board, and that's done. I mean that's not what we're going to do. We have already done that and executed that on the headcount side. John Babcock: Yes. Understood. Are you able to provide any split between U.S. and U.K.? Daniel McHenry: That's all U.S. It's Daniel here, sorry. The all $50 million, it was all U.S. headcount reduction. Operator: And our next question comes from Rajat Gupta from JPMorgan. Rajat Gupta: I had a follow-up on the disposal question. The California stores that you divested, can you give us a sense of proceeds and any EBITDA earnings impact we should dial in from that? And I have a couple of quick follow-ups. Daniel McHenry: Rajat, we don't typically declare what the proceeds were. But I think it's fair to say the multiple that we got from those stores was much higher than the multiple that the company trades at. Both the stores needed CapEx and significant CapEx. They had a fairly expensive real estate attached to those stores. And I would say, for us as a company, we were pleased with the outcome for selling those stores. Rajat Gupta: Got it. Okay. It's helpful. And then on parts and service, thanks for calling out the weather impact. If I adjust for that, the U.S. business would have grown roughly 4% versus the 2% that you reported. I'm curious like how we should think about that in context of just the general outlook you've given in the past around mid-single-digit type rate. Maybe there's some warranty headwind. I just curious how we should think about that going forward? Daryl Kenningham: Part of -- there's a little warranty headwind. I mean, on a year-over-year basis, warranty was only up 4% for us. The mid-single digits is still safe to model, Rajat. Two things to keep in mind with us. We've converted some of our collision center into shop space. And you can't necessarily just turn that off one day as a collision center and turn it on the next day as a service workshop because you have to put all new equipment in there and you have to restaff it, so there's some transition time between when it stops being a collision center when it starts being a productive workshop. So you see a big negative on our collision comps because of some of those collision centers that we've closed. And there's -- at least what we're seeing and what we see in the sector is there's a decline in the collision business in general, which exacerbates that, but you see that in our wholesale parts numbers that we were only up 2.8%, not very much lower margin part of our business, which you take the collision decline, which is a lower margin part, you take the slower growth in wholesale parts and you mix that into CP and warranty and you see a slower number on after sales growth. So we had almost 6%, I think, gross profit growth in the same-store gross profit growth on customer pay in the U.S. Pleased with that. I always want it to be more. But when we try to pull all of our after-sales levers, that's generally directed at customer pay. I hope that helps. Rajat Gupta: That's helpful. Just one clarification. The F&I adjustment, the $6.8 million, what was that tied to? Daniel McHenry: So Rajat, that was effectively an adjustment. It represented a onetime nonrecurring adjustment to our revenue calculations for retrospective rebates effectively. Operator: Our next question comes from Jeff Lick from Stephens. Jeffrey Lick: Daryl, I was just wondering, as you look at this -- the first 4 months of this year has been pretty noisy. I was curious if you could just kind of parse out where you think the consumer is and maybe bifurcate the typical mass affluent luxury consumer versus maybe the volume consumer as we get through it. We've heard from some of your peers that April has been okay, but maybe it feels a little weak like people are being cautious because of the war. Just kind of curious your thoughts on where things are at. Daryl Kenningham: I wouldn't disagree with what I've heard so far from our peers or some of the industry experts on the consumer. There's no shortage of distractions for consumers these days, which, as you know, in our industry, consumer confidence and the SAAR run right together. And so, as consumers lack confidence, I think it is a headwind to us. I do think there's evidence that consumers are still spending. We've seen it in ex-weather, we've still seen some decent performance. But there's no shortage of distractions for consumers right now, that's for sure. And that's one of the reasons we took the cost actions we did, Jeff, because we want to make sure that we're lean enough. If the SAAR does stay in this range, mid-50s, 56, 57, something like that, that we're able to compete there effectively. Jeffrey Lick: And then just a follow-up for whoever wants to take this. On the 700 headcount, as you guys look at that, obviously, in the back of your mind, you're always thinking, well, gee, if we do this, it's conceivable, it could come back to haunt us in terms of operational ability either on the cost side or on the gross margin side. What are some of the areas where you might be worried about??And then maybe you could talk about just as you think about the dealership of the future, because obviously, I think some of that's in this as well. You're not just looking at getting rid of people as a knee-jerk reaction to cut costs, the dealerships are evolving in terms of functions that can be performed by software and whatnot. But I'm just curious, where are you worried that if you cut to the muscle, it might show up negatively? Daryl Kenningham: Well, I don't think we cut muscle on this one. We tried to be very logical about it. Where we did touch, what I'll call productive, which is not a perfect descriptor, but people who sell and service vehicles. Where we did touch that, we focused on very low productivity areas of our business. And are there places where we're using technology, which we're using a lot, especially our sales department, to manage customers and inbounds and leads and sales and conversions. And so, we feel like we have enough technology overlay that's going to compensate for those lower productivity salespeople that we might have separated with. And then on a technician basis, we touched very few technicians. And if we did, it was really around some that were very lower productivity. But we've actually leaned into more technician investment during this period. There are some things we didn't touch. We didn't touch any of our people development initiatives, any of our training initiatives, any of our people retention initiatives. We're continuing to finish out our air conditioning project across our dealerships. We continue our technician mentoring program. 3/4 of our techs are part of a mentoring program now, our hourly techs, which we feel is vital to retention and growth. So we didn't touch anything that touched what we consider longer-term growth opportunities, especially in aftersales. Daniel McHenry: Jeff, it's Daniel here. I can give you one really typical example where we cut costs. This quarter, quarter 1, we rolled out the digital deal jacket across 100% of our dealerships. Effectively, all of the deals are either signed online or held online. Traditionally, we would have had a scanner and a dealership scanned in 100-ish pieces of paper that would have formed the deal jacket. Clearly, going to 100% digital meant that the scanner was no longer required. Daryl Kenningham: Scanner being a person. Daniel McHenry: Being a person, correct. Operator: Our next question comes from David Whiston from Morningstar. David Whiston: The upcoming Geely U.K. locations, are they going to be stand-alone or in the existing Group 1 footprint somewhere? Daryl Kenningham: In buildings we already own, that's usually part of either a franchise that we have or in a cluster of dealerships that we have, where we might have -- as an example, north of London, we have a site near Watford, BMW store, where we had a MINI stand-alone store and a BMW stand-alone store. MINI is now part of the BMW operation, left us an empty showroom and service facility on the same campus, and we were able to put Geely in there. So we don't have to go sell Geelys and BMWs in the same showroom, and it gives us a separate facility, but it's one we already own. There's no incremental cost to do that except for some minor imaging investment. David Whiston: And then on the virtual F&I, I mean, just trying to balance it's great for perhaps efficiency and speed for the customer, but are F&I managers losing some opportunities here financially? Peter Delongchamps: No, they are not. And this is Peter DeLongchamps. And actually, they're gaining opportunities because they become much more efficient. They're actually doing more deals at the store level. But the key to this is customer convenience was the driving factor. And as we perfected this, what's happened is we've lowered turnover, we've lowered comp, we've actually increased the PRU on what I'd say the bottom performers. So this has really been a terrific initiative that has paid off in 4 different ways. Daryl Kenningham: One way to look at it is on the productivity of the F&I producers. And many of the folks who are virtual F&I managers for us used to work in our stores, they are now virtual F&I managers doing deals all over the country. But in an average day, an F&I manager might do 3 deals. As a virtual agent, they can do 7, 8, 9, 10, and that's kind of the numbers we see. And so, we're really pleased with that. And we think we're able to attract a different type of employee because now we can offer things like part-time work, and they can work from home, and it's taken us 2 years to get here. I don't want to make it sound like it was simple. The team has worked really hard through our learning process on this. It was a long ramp-up, and that's one of the reasons we haven't talked about it until now. But we feel like there's certainly some productivity gains as well as quality of life for our team. Operator: Our next question comes from John Saager from Evercore. John Saager: I wanted to just dig into a little bit of the divergence between the U.K. and the U.S., and where you think you might have more impact on the SG&A cost savings over time? Daryl Kenningham: In either market or in one specific area? John Saager: Yes. Is there, like, basically more low-hanging fruit in one region or the other? Daryl Kenningham: I don't think there's low-hanging fruit in any region, honestly. I feel like since COVID, we've been pretty disciplined with our SG&A, and I think we've demonstrated that. Our headcount is still lower than it was pre-COVID. And I think in the U.K., there's still opportunity. There's still things for us to do as we've -- one of the things we're really pleased with in the first quarter was our growth in our lines of business. We saw F&I grow, aftersales grow quite a bit, we had nice same-store sales growth in new cars and preowned. And so, we got to just make sure we contain the cost there as we grow. And that's a real focus for us and whether it's marketing costs or people costs and transaction costs, we don't have as much automation in our U.K. business as we have in our U.S. business. That's a focal area for us. And so, I think there's opportunity there. In the U.S., it's about people productivity. It really is. Whether it's a technician or a salesperson, and that's where most of our headcount is in our stores and how do we put them in a position to be as productive as possible. And so those are areas that we're really focused on in both markets. Daniel McHenry: John, it's Daniel here. One thing that I would note would be in the U.S. specific, January and February SG&A as a percent of gross was outsized and some of that was around the weather that we had in the U.S. March SG&A as a percent of gross was a lot more healthy. And clearly, with some of the actions that we have taken, hopefully, that will continue into quarter two and three. John Saager: That makes sense. Yes. And then relative to the 84% in the U.K. for the full year '25, you guys did have some, obviously, improvement in Q1. I would expect that to come back again in Q3. Do you think that we could end the year materially lower than that 84% or is the 80% still a bridge too far for this year? Daniel McHenry: John, it's Daniel again. The aim is to get as close to the 80% stated SG&A as a percent of gross as possible. On the basis of where we were in quarter one, I think that's possible, but it clearly will require consistent work. Operator: Our next question comes from Mike Ward from Citigroup. Michael Ward: I just want to doublecheck and make sure I'm doing the math right on this. The $7 million impact from weather was all on parts and service in the U.S. Is that correct? Daryl Kenningham: That's correct, Mike. That was our estimate, Mike. It's probably a little conservative. We tried to be conservative with it. But yes, we assume that all the vehicles that we lost were replaced, whether that's true or not, who knows. Michael Ward: Right. But there is parts and service, you don't get back. Daryl Kenningham: We felt like no. Michael Ward: Yes. Okay. And so, if I'm doing the walk right with SG&A, you still paid your people. So that had about an 80-basis point impact inflating the SG&A as a percentage of gross. So that's our start point at 70.5%. Is that right, Daniel? Is that what you're alluding to? Daniel McHenry: That's correct. Michael Ward: Okay. And so, then you have the cost savings, which knock it down 150 to 200 basis points. And then I'm assuming that with the brand rollout, there are some additional operating costs that are unusual as we go through this year. But if we're at like kind of a status state, we're getting down to somewhere in the mid-60s as a percentage of SG&A as a percentage of growth in the U.S. Is that the right way to think about it? Daniel McHenry: You know Mike, I think if you think about the walk and let's just reverse the effect of the weather and assume that we had the $12.5 million cost reduction, we're somewhere close to the high 67%. Now that doesn't include any of the rebranding or any of the other stuff that's in there. Daryl Kenningham: Mike, on your question on rebranding, we did have some incremental costs for signage and uniforms and things like that, that we've done in the stores that we've done. One thing I was really pleased to see in March was we had real leverage on our operating advertising spend. We saw some really good leverage on it in March. Now some of that is because it's March, you got more volume to spread it over. But two, what I'm -- I don't want to call it a trend yet because we don't know, but we're doing more with Group 1 advertising than we ever have because we have about 50 stores that are on it. So rather than advertising 50 different brands, we can now advertise 1 and get more leverage on it. So hopefully, we'll see that continue as we go through the year. And we're trying to do more advertising from one voice rather than 148 different stores. Michael Ward: Makes sense. Turning to the U.K. a little bit. What is your current position with the China brands? And I saw that you're expanding kind of your relationship with Geely. How many stores do you have? And like what do they represent? And where are we going, do you think? Daryl Kenningham: We have three that we signed agreements with that will become live in Q2. We have a framework agreement with Geely, so we can go beyond three. We have three stores that were -- have dealer -- specific dealer agreements with Geely that will be operational in Q2. And we're talking to Geely about more than three. We're also talking with some other OEM -- Chinese OEMs about representing them. We've taken a little slower pace. We got a little concerned. I mean, their fast growth is great, good for them. That's great. But we're a little concerned they got over-dealered in some brands, which you could -- we could say -- we could have gone and signed some dealer agreements last year and been part of that sales growth, but it might have actually hurt profitability because the UIO is still growing. Really, they've only done any real volume for 6, 8 months in the U.S., so there's not a lot of UIO yet to drive service departments. So we were taking a little slower approach, but we're in now, and we're excited to learn how the retail model really works for Geely, and we're watching some of the other brands, and we're in really active discussions with some of the other brands. And we think we're going to rely on our formula, Mike. We feel like we're good dealers, we're good representatives of OEMs, and they will want us to do business for them, and they will come to us and try to enable us expanding our footprint with them. And that's a formula that's worked for us in both markets. We feel like it will work well with the Chinese as well. Operator: And with that, everyone, we'll be concluding today's question-and-answer session. I'd like to turn the floor back over to Daryl Kenningham at Group 1 for closing remarks. Daryl Kenningham: Thank you, Jamie. In summary, we remain committed to our strategic initiatives, local focus, operating excellence, differentiated aftersales and disciplined capital management. We'll continue to build on our results from the first quarter. U.K. remains a priority as we build on improving our operating performance, executing on our various initiatives there and shaping the portfolio to drive better returns. We believe consistent execution against these priorities positions us to navigate near-term challenges, but while also building long-term value. Thank you for your time today. We look forward to discussing our second quarter results on our call in July. Operator: And with that, ladies and gentlemen, we'll be concluding today's conference call and presentation. We thank you for joining. You may now disconnect your lines. Before you buy stock in Group 1 Automotive, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Group 1 Automotive wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $386,727!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,232,139!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 3, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Group 1 Automotive (GPI) Q1 2026 Earnings Call Transcript was originally published by The Motley Fool

Track your investments for FREE with Simply Wall St, the portfolio command center trusted by over 7 million individual investors worldwide. Group 1 Automotive (GPI) has come under closer focus after reporting second quarter 2026 earnings, with revenue and net income below the prior year and key profitability metrics moving lower. See our latest analysis for Group 1 Automotive. The latest earnings miss and planned Hennessy acquisition have coincided with weaker momentum in Group 1 Automotive’s stock, with the share price declining 26.95% year to date and the 1-year total shareholder return down 29.69%, even though the 5-year total shareholder return remains positive at 77.79%. If the recent pullback in Group 1 Automotive has you reassessing your watchlist, this can be a useful time to broaden your scope and check out 18 top founder-led companies After weaker earnings, a planned acquisition and a sharp share price pullback, Group 1 Automotive now trades at a sizeable discount to analyst targets. Does that reset tilt the risk reward toward buyers, or signal that caution is still warranted? At a last close of $286.77 versus a narrative fair value of $416.42, Group 1 Automotive is framed as materially undervalued, with that gap anchored on detailed growth, margin and buyback assumptions. Read the complete narrative. Want to see what sits behind that aftersales story and the valuation gap for Group 1 Automotive? The key driver is a specific path for revenue, earnings and margins that underpins the projected upside, plus an assumed move in the earnings multiple over time. Result: Fair Value of $416.42 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, it is worth keeping in mind that faster battery EV adoption and pressure from online-only auto retailers could challenge the aftersales and showroom economics of Group 1 Automotive. Find out about the key risks to this Group 1 Automotive narrative. Given the mix of concern and optimism around Group 1 Automotive, it makes sense to consider the full picture of both. You can review the 4 key rewards and 3 important warning signs If Group 1 Automotive has sharpened your focus this earnings season, do not stop here. Broaden your watchlist now so you are not late to the next opportunity. Target potential mispricing by scanning companies that currently screen as 55 high quality undervalued stocks based on their fundamentals and recent market moves. Strengthen your income focus by reviewing companies that qualify as 9 dividend fortresses and may offer higher yield profiles than your current holdings. Reduce portfolio stress by checking stocks that pass the 81 resilient stocks with low risk scores with more resilient business and risk profiles. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include GPI. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Image source: The Motley Fool. Thursday, April 30, 2026 at 10:00 a.m. ET Senior Vice President, Manufacturer Relations and Financial Services - Peter DeLongchamps President and Chief Executive Officer - Daryl Kenningham Senior Vice President and Chief Financial Officer - Daniel McHenry Operator: Good morning, ladies and gentlemen. Welcome to Group 1 Automotive's First Quarter 2026 Financial Results Conference Call. Please be advised that this call is being recorded. I would now like to turn the floor over to Mr. Peter DeLongchamps, Group 1's Senior Vice President, Manufacturer Relations and Financial Services. Please go ahead, Mr. DeLongchamps. Peter Delongchamps: Thank you, Jamie, and good morning, everyone, and welcome to today's call. The earnings release we issued this morning and a related slide presentation that includes reconciliations related to the adjusted results that we will refer to on this call for comparison purposes have been posted to Group 1's website. Before we begin, I'd like to make some brief remarks about forward-looking statements and the use of non-GAAP financial measures. Except for historical information mentioned during the conference call, statements made by management of Group 1 Automotive are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve both known and unknown risks and uncertainties, which may cause the company's actual results in future periods to differ materially from forecasted results. Those risks include, but are not limited to, risks associated with pricing, volume, inventory supply, conditions of the market, successful integration of acquisitions and adverse developments in the global economy and resulting impacts on demand for new and used vehicles and related services. Those and other risks are described in the company's filings with the Securities and Exchange Commission. In addition, certain non-GAAP financial measures as defined under SEC rules may be discussed on this call. As required by applicable SEC rules, the company provides reconciliations of any such non-GAAP financial measures to the most directly comparable GAAP measures on its website. Participating with me on today's call are Daryl Kenningham, our President and Chief Executive Officer; and Daniel McHenry, Senior Vice President and Chief Financial Officer. I'd now like to hand the call over to Daryl. Daryl Kenningham: Thank you, Peter. At Group 1, we pride ourselves on performing effectively in challenging times. We successfully navigated economic recessions, the COVID pandemic and the CDK outage in 2024. We focus on what we can control, and by remaining a pure-play retailer, we minimize distractions and remain focused on what we feel are our core competencies. We estimate that Q1 2026 weather impacted our results by about $7 million in gross profit, driven largely by our after-sales business. Important to note is that Group 1 typically pays our employees during weather closures. And in some markets, our stores were closed for as long as a week this year. In the first quarter of 2026, we continue to focus on our strengths. Where our performance did not meet our expectations, we acted promptly to address those issues, and I will provide further details on those areas later in my remarks. In the U.S., our new vehicle margins remained robust at over $3,300 per car, exceeding $3,250 for the third consecutive quarter. We saw sequential improvement in used vehicle PRUs and a $95 same-store year-over-year increase in adjusted F&I PRU. Two years ago, we introduced a virtual F&I process in our U.S. stores, giving customers the opportunity to conduct their transactions with a virtual agent. This innovation is now installed in 1/3 of our U.S. stores, doing 20% of our deals in those stores. We're very pleased with the results of virtual F&I. Our PRU results are strong, transaction times have improved, improving customer convenience and the overall experience. Thus far, customer feedback is very positive. In addition, compensation costs are lower than compared to our in-store transactions. We anticipate continued growth in virtual F&I through the remainder of this year and into 2027. In after-sales, we're committed to setting ourselves apart. This quarter, we increased same-store customer pay gross profits by nearly 6%. And we're pleased that in our U.S. business, our customer pay repair order count rose by 2.5%. Our growth in after-sales is driven by marketing initiatives utilizing artificial intelligence, vertically integrated customer data management, decreased technician turnover, completion of our workshop air conditioning project and the addition of 130 new technicians on a same-store basis. Turning to a progress update on our Group 1 U.S. store rebranding initiative. We successfully completed the rebranding of half of our U.S. stores and anticipate being complete by the end of the year. Our team is actively gathering insights from each converted market, allowing us to refine our approach and apply our learning as we go. In the long term, we believe rebranding will improve the effectiveness of our marketing investments and drive greater customer retention, particularly as we focus on engaging households under the Group 1 brand, especially in cluster markets. Our U.K. operation is demonstrating notable progress across key segments. New vehicle margins remained steady year-over-year, while same-store volumes increased 2%. Same-store used volumes rose nearly 5%, accompanied by sequential PRU improvements. F&I continued its positive trajectory, up year-over-year and sequentially on a same-store constant currency basis. Our U.K. parts and service business continues to accelerate, increasing 20% year-over-year in same-store gross profit, and customer pay increased 18%. We're applying many of the same principles we use in our U.S. business, opening our workshop schedules, expanding our hours, pricing our maintenance offerings on the aftermarket competition, eliminating diagnosis fees and increasing capacity by hiring technicians. Turning to our U.K. SG&A performance. We incurred $3 million in incremental costs due to government-mandated national insurance and minimum wage increases. Without this headwind, we improved our leverage, but we continue to focus on further efficiency there. In the U.S., SG&A performance did not meet our expectations. Currently, consequently, in early April, we implemented cost reduction measures in our U.S. business, cutting our headcount by nearly 700 full-time employees and reducing SG&A costs by approximately $14 million through contract and vendor elimination. We expect that these efforts will remove $50 million of annual costs from our U.S. operations, that will return our SG&A leverage to a more acceptable level. In both markets across all areas of our business, we continue to look for ways to leverage technology, including artificial intelligence, to improve our returns. Many of these investments are still in the early stages, but they are beginning to demonstrate real benefits.?AI can support customer acquisition and retention, enhance inventory optimization through more informed sourcing decisions, drive efficiencies by digitizing processes to reduce SG&A and put more consistency and performance across all of our rooftops, a key strategic focus for Group 1. We will continue to drive these efforts and look forward to sharing more details in the future. In the first quarter, we also continued our commitment to disciplined capital allocation, particularly in M&A and share buybacks. We divested 2 Mercedes-Benz dealerships in California. These stores were high-cost operations with significant real estate and operating constraints. In the U.K., aligned with the Volkswagen Group's ideal network plan, we acquired 1 Skoda and 2 Volkswagen dealerships while also disposing of one underperforming Volkswagen and one underperforming Skoda dealership. And in the U.K., we finalized a framework agreement with Chinese OEM Geely, and we will open 3 Geely dealerships in Q2 in facilities that we already own. We are in additional discussions with Geely and other Chinese OEMs about further representation. Our primary intention is to develop direct understanding of the retail model of Chinese brands. We also believe there is significant profit and sales opportunity with these brands and leveraging our large corporate fleet business in the U.K. During the quarter, we repurchased 205,190 shares or approximately 1.7% of our outstanding shares. We are managing the business with discipline and purpose, ensuring we deliver strong, resilient performance that our shareholders expect even in today's dynamic environment. I'll now turn the call over to our CFO, Daniel McHenry. Daniel McHenry: Thank you, Daryl, and good morning, everyone. In the first quarter of 2026, Group 1 Automotive reported revenues of $5.4 billion, gross profit of $878 million, adjusted net income of $104 million and adjusted diluted EPS of $8.66 from continuing operations. Starting with our U.S. operation. First quarter performance remained solid across most business despite continued pressure on volumes and margins. New vehicle unit sales declined both on a reported and same-store basis, reflecting not only ongoing affordability concerns, but a tough comparative period, which saw elevated new vehicle sales ahead of tariffs. However, new vehicle GPUs increased sequentially from $3,260 to $3,313. We continue to maintain strong operational discipline through effective cost management and process consistency. Our used vehicle operations performed in line with the broader market environment. Used vehicle retail units declined both on a reported and same-store basis, which were partially offset by higher selling prices. GPUs declined approximately 3% on a same-store and as reported basis, reflecting continued pressure on vehicle acquisition costs in a more competitive sourcing environment. We continue to leverage our scale and operational flexibility to strengthen used vehicle acquisition while executing disciplined sourcing and pricing dynamic used vehicle market. Our first quarter adjusted F&I GPUs were up nearly 4% on an as-reported and same-store basis versus prior year comparable period. Aftersales stood out as a key bright spot with both parts and service gross margin reaching a new quarterly high. Gross profit continues to benefit from our efforts to optimize our collision footprint, shifting collision space opportunistically to additional traditional service capacity and closing collision centers where returns do not meet our requirements. Same-store customer pay and warranty revenues increased approximately 3% and 5%, respectively, with corresponding gross profit growth of approximately 6% and 9%. Our technician recruiting and retention efforts continue to pay off with same-store technicians up 3% year-over-year. Overall, our U.S. business continues to demonstrate resilience with strong aftersales performance and disciplined execution helping offset ongoing normalization in vehicle margins. Turning to the U.K. While the U.K. remains a challenging operating environment, performance improved across several key areas. New vehicles performed in line with expectations. Used vehicle same-store revenues were up over 6% on a local currency basis with volumes up nearly 5%. Same-store GPUs declined 2% on a local currency basis, leading to an increase in same-store used vehicle gross profit. Performance reflects improved demand and throughput despite continued margin pressure in a competitive used vehicle market. After-sales delivered year-over-year growth in both revenue and gross profit on an as-reported and same-store basis, but F&I delivered year-over-year growth in revenue and gross profit on a same-store basis. The after-sales business remains an important stabilizer within the U.K. operations and along with F&I is a key area of focus as we work to enhance profitability by bringing best practices from the U.S. Same-store technicians are up 3%, adding significant capacity to our shops. Same-store customer pay and warranty revenues were up over 6% and 12% year-over-year on a local currency basis. Same-store F&I PRU reached 1,128 with an as reported and same-store PRU both increasing over 8% year-over-year. We are continuously taking decisive actions in both the U.S. and U.K. to control costs, strengthen operational efficiency and position the business for improved returns as market conditions stabilize. Turning to our balance sheet and liquidity. Our strong balance sheet, cash flow generation and leverage position will continue to support flexible capital allocation approach. As of March 31st, our liquidity of $714.3 million was comprised of accessible cash of $191 million and $523 million available to borrow on our acquisition line. Our rent-adjusted leverage ratio as defined by our U.S. syndicated credit facility was 3.09x at the end of March. Cash flow generation year-to-date yielded $147 million of adjusted operating cash flow and $95 million of free cash flow after backing out $53 million of CapEx. This capital was deployed in the same period through a combination of acquisitions, share repurchases and dividends, including the acquisition of $135 million of revenues through March 31, $72 million spent repurchasing 205,000 shares at an average price of $353.08 and $7 million in dividends to our shareholders. We currently have $306.3 million remaining on our Board authorized common share repurchase program. For additional detail regarding our financial condition, please refer to the schedules of additional information attached to the news release as well as the investor presentation posted on our website. I will now turn the call over to the operator to begin the question-and-answer session. Operator? Operator: Our first question today comes from Alex Perry from Bank of America. Alexander Perry I guess just first, I was wondering if you can walk us through the cost savings plan in more detail. It looks like $50 million in annualized savings with benefits beginning in the second quarter. Maybe if you could help us parse out sort of what the expected second quarter benefit is and what we should expect in the back half as well, as well as just provide a bit more color on the overall plan? Daniel McHenry: Alex, it's Daniel here. I would say coming out of January and February, we could see some weakness in the market and our SG&A leverage at that point was much lower than we would have expected. Going into March, we went about developing a cost-cutting program. 700 heads to come out of the business. They have all been completed by the end of April. Total cost effective of that headcount reduction is approximately $35 million. In addition to that, we've taken cost cutting exercises around contracts, as Daryl talked about earlier, and that's close to $15 million in terms of cost. So on an annualized basis or a quarterly basis, we would expect that to be about $12.5 million a quarter. Now what would that have done for us in terms of quarter 1, if we have taken that cost out on the 1st of January quarter 1, U.S. SG&A that was circa 70.5%, we would have expected that to have been about 68.5%. So it's about 200 basis points out of cost in terms of the U.S. Additionally, we continue to take cost out in the U.K., but we do have that additional national insurance in quarter 1 that we didn't have last year. Alexander Perry Really helpful. And then my second question is, I just wanted to ask about the used business. And what is the path in sort of getting the used profitability back up to historical levels? I know you mentioned some of the sourcing costs on the used side, but maybe just talk through the path there and if we should expect any sort of near-term improvements on the used GPUs? Daryl Kenningham: Well, this is Daryl. We saw some nice sequential improvement in used PRU. Sourcing is a big challenge right now, one, because the SAAR was depressed in the first quarter, so there were fewer trades. We ended the quarter with 26 days. We don't rely very heavily on auctions. 11% of our sourcing comes from auctions. So we really work hard on the organic sourcing. The problem there is it's heavily late model vehicles. Our mix of cheaper, higher-margin used cars in our inventory is very light compared to what it's been historically. And everybody is scrambling for those. Everybody really wants those because, obviously, one of the reasons people buy used cars is because they're more affordable. So as we get better at that, I expect we'll see margin improvement. I think we're better and more disciplined in our inventory acquisition. We're much better in more disciplined in both the U.S. and the U.K. on aging management, pricing decisions to market, trying to use more technology in both markets. So while I don't think you'll see leaps and bounds of improvement, I do think this additional discipline and the lack of supply provides a floor on used car PRUs. Operator: Our next question comes from Bret Jordan from Jefferies. Patrick Buckley This is Patrick Buckley on for Bret. There have been some recent headlines around rising negative equity values. Have you seen similar trends with your customers? And has there been any impact on converting a potential customer to buy on the sales floor when they realize they've got to write a check to make the transaction happen? Daryl Kenningham: There's a lot of -- the short answer is yes. I think it's a fact negative equity is at a high and can be a headwind. We try to watch affordability measures quite a bit. And the average car payment is high, insurance rates are high, negative equity is high. But also, there's evidence that affordability is actually a little better now than it has been in some time when you look at car payments as a percentage of people's salary and people's pay. It actually takes fewer weeks on the measure that a lot of people watch, it's better in 2026 than it has been. So I think there's a lot of things going on with affordability right now. Negative equity is one piece of that puzzle. Things like tax rebate checks are another piece of that puzzle. So I think there's puts and takes on both of that. But to answer your specific question on negative equity, I think that's -- yes, we see that, but we also see that I don't think it's a huge limiter. It's just another piece of the affordability puzzle right now. Patrick Buckley Great, that's helpful. And then focusing on the U.K., there's been a bit more of a prominent impact from recent energy spikes there. How has the consumer held up into Q2? It sounded like Q1 was a pretty healthy quarter from a demand side. But has there been any signs of a pullback more recently? One of the things that we were really pleased with in the U.K. in the first quarter was our order take rate going into the plate change month in March was very high, higher than we've seen in, honestly, several years. And so when you go into a plate change month, you really know how it's going to come out. By about the middle of February, you know what the end of March is going to look like because the order bank dictates what kind of volume you're going to do, and we were really pleased all through January and February with our March order take. And I don't see that, that has -- on a relative basis, April is not a plate change month, so don't get me wrong. But on a relative basis, I don't see that, that has changed materially. One thing we're really pleased about going into the second quarter in the U.K. is the health of our used car inventory is significantly better than it was a year ago. One of the challenges in the U.K. market is when you have two months, March and September, which drives so much of your new car volume, it creates these huge used car inventories in April and October. And if you don't have a lot of discipline in the way you manage your used car inventories, you can get caught. And candidly, in the past, we've been caught. And I'm really pleased with our aging. I'm really pleased with our inventory levels and our discipline this year in the U.K. on our used car inventories, and we hope that, that means better things for us in used cars this year there. Operator: Our next question comes from John Babcock from Barclays. John Babcock: The first one, just on your plan to exit the JLR brand, where does that stand? And also, did that impact your U.K. operations? Or is that now considered part of discontinued ops? Daryl Kenningham: It's not discontinued ops because materially, it's not -- it's a very small part of our business. We're in active negotiations on a number of them, both with the OEM and with potential buyers. We've closed one of the nine. We're in active discussions on several more and very close to contract finalization. So once we get those finalized, we'll be able to announce those. But we're pleased with where we are on that. John Babcock: Okay. And then just back to the cost actions. With the 700 people that you, I guess, cut from the workforce, where were those? Were those -- I'm sure they're probably spread across different teams, but were those more weighted to the sales side, were those more in the back office? I don't know if you could provide any more color on that, that would be useful. Daryl Kenningham: It was across the board. And what we did was we took SG&A as a percentage of gross targets by -- literally by store and market and business unit and assigned headcount targets based on that. And so, it came from across the enterprise, in the stores, in the corporate level. And fortunately, in some of our corporate activities, we've been able to implement some technology, which helps us keep our productivity up, and so we didn't need some of that headcount. But it was across the board, and that's done. I mean that's not what we're going to do. We have already done that and executed that on the headcount side. John Babcock: Yes. Understood. Are you able to provide any split between U.S. and U.K.? Daniel McHenry: That's all U.S. It's Daniel here, sorry. The all $50 million, it was all U.S. headcount reduction. Operator: And our next question comes from Rajat Gupta from JPMorgan. Rajat Gupta: I had a follow-up on the disposal question. The California stores that you divested, can you give us a sense of proceeds and any EBITDA earnings impact we should dial in from that? And I have a couple of quick follow-ups. Daniel McHenry: Rajat, we don't typically declare what the proceeds were. But I think it's fair to say the multiple that we got from those stores was much higher than the multiple that the company trades at. Both the stores needed CapEx and significant CapEx. They had a fairly expensive real estate attached to those stores. And I would say, for us as a company, we were pleased with the outcome for selling those stores. Rajat Gupta: Got it. Okay. It's helpful. And then on parts and service, thanks for calling out the weather impact. If I adjust for that, the U.S. business would have grown roughly 4% versus the 2% that you reported. I'm curious like how we should think about that in context of just the general outlook you've given in the past around mid-single-digit type rate. Maybe there's some warranty headwind. I just curious how we should think about that going forward? Daryl Kenningham: Part of -- there's a little warranty headwind. I mean, on a year-over-year basis, warranty was only up 4% for us. The mid-single digits is still safe to model, Rajat. Two things to keep in mind with us. We've converted some of our collision center into shop space. And you can't necessarily just turn that off one day as a collision center and turn it on the next day as a service workshop because you have to put all new equipment in there and you have to restaff it, so there's some transition time between when it stops being a collision center when it starts being a productive workshop. So you see a big negative on our collision comps because of some of those collision centers that we've closed. And there's -- at least what we're seeing and what we see in the sector is there's a decline in the collision business in general, which exacerbates that, but you see that in our wholesale parts numbers that we were only up 2.8%, not very much lower margin part of our business, which you take the collision decline, which is a lower margin part, you take the slower growth in wholesale parts and you mix that into CP and warranty and you see a slower number on after sales growth. So we had almost 6%, I think, gross profit growth in the same-store gross profit growth on customer pay in the U.S. Pleased with that. I always want it to be more. But when we try to pull all of our after-sales levers, that's generally directed at customer pay. I hope that helps. Rajat Gupta: That's helpful. Just one clarification. The F&I adjustment, the $6.8 million, what was that tied to? Daniel McHenry: So Rajat, that was effectively an adjustment. It represented a onetime nonrecurring adjustment to our revenue calculations for retrospective rebates effectively. Operator: Our next question comes from Jeff Lick from Stephens. Jeffrey Lick: Daryl, I was just wondering, as you look at this -- the first 4 months of this year has been pretty noisy. I was curious if you could just kind of parse out where you think the consumer is and maybe bifurcate the typical mass affluent luxury consumer versus maybe the volume consumer as we get through it. We've heard from some of your peers that April has been okay, but maybe it feels a little weak like people are being cautious because of the war. Just kind of curious your thoughts on where things are at. Daryl Kenningham: I wouldn't disagree with what I've heard so far from our peers or some of the industry experts on the consumer. There's no shortage of distractions for consumers these days, which, as you know, in our industry, consumer confidence and the SAAR run right together. And so, as consumers lack confidence, I think it is a headwind to us. I do think there's evidence that consumers are still spending. We've seen it in ex-weather, we've still seen some decent performance. But there's no shortage of distractions for consumers right now, that's for sure. And that's one of the reasons we took the cost actions we did, Jeff, because we want to make sure that we're lean enough. If the SAAR does stay in this range, mid-50s, 56, 57, something like that, that we're able to compete there effectively. Jeffrey Lick: And then just a follow-up for whoever wants to take this. On the 700 headcount, as you guys look at that, obviously, in the back of your mind, you're always thinking, well, gee, if we do this, it's conceivable, it could come back to haunt us in terms of operational ability either on the cost side or on the gross margin side. What are some of the areas where you might be worried about??And then maybe you could talk about just as you think about the dealership of the future, because obviously, I think some of that's in this as well. You're not just looking at getting rid of people as a knee-jerk reaction to cut costs, the dealerships are evolving in terms of functions that can be performed by software and whatnot. But I'm just curious, where are you worried that if you cut to the muscle, it might show up negatively? Daryl Kenningham: Well, I don't think we cut muscle on this one. We tried to be very logical about it. Where we did touch, what I'll call productive, which is not a perfect descriptor, but people who sell and service vehicles. Where we did touch that, we focused on very low productivity areas of our business. And are there places where we're using technology, which we're using a lot, especially our sales department, to manage customers and inbounds and leads and sales and conversions. And so, we feel like we have enough technology overlay that's going to compensate for those lower productivity salespeople that we might have separated with. And then on a technician basis, we touched very few technicians. And if we did, it was really around some that were very lower productivity. But we've actually leaned into more technician investment during this period. There are some things we didn't touch. We didn't touch any of our people development initiatives, any of our training initiatives, any of our people retention initiatives. We're continuing to finish out our air conditioning project across our dealerships. We continue our technician mentoring program. 3/4 of our techs are part of a mentoring program now, our hourly techs, which we feel is vital to retention and growth. So we didn't touch anything that touched what we consider longer-term growth opportunities, especially in aftersales. Daniel McHenry: Jeff, it's Daniel here. I can give you one really typical example where we cut costs. This quarter, quarter 1, we rolled out the digital deal jacket across 100% of our dealerships. Effectively, all of the deals are either signed online or held online. Traditionally, we would have had a scanner and a dealership scanned in 100-ish pieces of paper that would have formed the deal jacket. Clearly, going to 100% digital meant that the scanner was no longer required. Daryl Kenningham: Scanner being a person. Daniel McHenry: Being a person, correct. Operator: Our next question comes from David Whiston from Morningstar. David Whiston: The upcoming Geely U.K. locations, are they going to be stand-alone or in the existing Group 1 footprint somewhere? Daryl Kenningham: In buildings we already own, that's usually part of either a franchise that we have or in a cluster of dealerships that we have, where we might have -- as an example, north of London, we have a site near Watford, BMW store, where we had a MINI stand-alone store and a BMW stand-alone store. MINI is now part of the BMW operation, left us an empty showroom and service facility on the same campus, and we were able to put Geely in there. So we don't have to go sell Geelys and BMWs in the same showroom, and it gives us a separate facility, but it's one we already own. There's no incremental cost to do that except for some minor imaging investment. David Whiston: And then on the virtual F&I, I mean, just trying to balance it's great for perhaps efficiency and speed for the customer, but are F&I managers losing some opportunities here financially? Peter Delongchamps: No, they are not. And this is Peter DeLongchamps. And actually, they're gaining opportunities because they become much more efficient. They're actually doing more deals at the store level. But the key to this is customer convenience was the driving factor. And as we perfected this, what's happened is we've lowered turnover, we've lowered comp, we've actually increased the PRU on what I'd say the bottom performers. So this has really been a terrific initiative that has paid off in 4 different ways. Daryl Kenningham: One way to look at it is on the productivity of the F&I producers. And many of the folks who are virtual F&I managers for us used to work in our stores, they are now virtual F&I managers doing deals all over the country. But in an average day, an F&I manager might do 3 deals. As a virtual agent, they can do 7, 8, 9, 10, and that's kind of the numbers we see. And so, we're really pleased with that. And we think we're able to attract a different type of employee because now we can offer things like part-time work, and they can work from home, and it's taken us 2 years to get here. I don't want to make it sound like it was simple. The team has worked really hard through our learning process on this. It was a long ramp-up, and that's one of the reasons we haven't talked about it until now. But we feel like there's certainly some productivity gains as well as quality of life for our team. Operator: Our next question comes from John Saager from Evercore. John Saager: I wanted to just dig into a little bit of the divergence between the U.K. and the U.S., and where you think you might have more impact on the SG&A cost savings over time? Daryl Kenningham: In either market or in one specific area? John Saager: Yes. Is there, like, basically more low-hanging fruit in one region or the other? Daryl Kenningham: I don't think there's low-hanging fruit in any region, honestly. I feel like since COVID, we've been pretty disciplined with our SG&A, and I think we've demonstrated that. Our headcount is still lower than it was pre-COVID. And I think in the U.K., there's still opportunity. There's still things for us to do as we've -- one of the things we're really pleased with in the first quarter was our growth in our lines of business. We saw F&I grow, aftersales grow quite a bit, we had nice same-store sales growth in new cars and preowned. And so, we got to just make sure we contain the cost there as we grow. And that's a real focus for us and whether it's marketing costs or people costs and transaction costs, we don't have as much automation in our U.K. business as we have in our U.S. business. That's a focal area for us. And so, I think there's opportunity there. In the U.S., it's about people productivity. It really is. Whether it's a technician or a salesperson, and that's where most of our headcount is in our stores and how do we put them in a position to be as productive as possible. And so those are areas that we're really focused on in both markets. Daniel McHenry: John, it's Daniel here. One thing that I would note would be in the U.S. specific, January and February SG&A as a percent of gross was outsized and some of that was around the weather that we had in the U.S. March SG&A as a percent of gross was a lot more healthy. And clearly, with some of the actions that we have taken, hopefully, that will continue into quarter two and three. John Saager: That makes sense. Yes. And then relative to the 84% in the U.K. for the full year '25, you guys did have some, obviously, improvement in Q1. I would expect that to come back again in Q3. Do you think that we could end the year materially lower than that 84% or is the 80% still a bridge too far for this year? Daniel McHenry: John, it's Daniel again. The aim is to get as close to the 80% stated SG&A as a percent of gross as possible. On the basis of where we were in quarter one, I think that's possible, but it clearly will require consistent work. Operator: Our next question comes from Mike Ward from Citigroup. Michael Ward: I just want to doublecheck and make sure I'm doing the math right on this. The $7 million impact from weather was all on parts and service in the U.S. Is that correct? Daryl Kenningham: That's correct, Mike. That was our estimate, Mike. It's probably a little conservative. We tried to be conservative with it. But yes, we assume that all the vehicles that we lost were replaced, whether that's true or not, who knows. Michael Ward: Right. But there is parts and service, you don't get back. Daryl Kenningham: We felt like no. Michael Ward: Yes. Okay. And so, if I'm doing the walk right with SG&A, you still paid your people. So that had about an 80-basis point impact inflating the SG&A as a percentage of gross. So that's our start point at 70.5%. Is that right, Daniel? Is that what you're alluding to? Daniel McHenry: That's correct. Michael Ward: Okay. And so, then you have the cost savings, which knock it down 150 to 200 basis points. And then I'm assuming that with the brand rollout, there are some additional operating costs that are unusual as we go through this year. But if we're at like kind of a status state, we're getting down to somewhere in the mid-60s as a percentage of SG&A as a percentage of growth in the U.S. Is that the right way to think about it? Daniel McHenry: You know Mike, I think if you think about the walk and let's just reverse the effect of the weather and assume that we had the $12.5 million cost reduction, we're somewhere close to the high 67%. Now that doesn't include any of the rebranding or any of the other stuff that's in there. Daryl Kenningham: Mike, on your question on rebranding, we did have some incremental costs for signage and uniforms and things like that, that we've done in the stores that we've done. One thing I was really pleased to see in March was we had real leverage on our operating advertising spend. We saw some really good leverage on it in March. Now some of that is because it's March, you got more volume to spread it over. But two, what I'm -- I don't want to call it a trend yet because we don't know, but we're doing more with Group 1 advertising than we ever have because we have about 50 stores that are on it. So rather than advertising 50 different brands, we can now advertise 1 and get more leverage on it. So hopefully, we'll see that continue as we go through the year. And we're trying to do more advertising from one voice rather than 148 different stores. Michael Ward: Makes sense. Turning to the U.K. a little bit. What is your current position with the China brands? And I saw that you're expanding kind of your relationship with Geely. How many stores do you have? And like what do they represent? And where are we going, do you think? Daryl Kenningham: We have three that we signed agreements with that will become live in Q2. We have a framework agreement with Geely, so we can go beyond three. We have three stores that were -- have dealer -- specific dealer agreements with Geely that will be operational in Q2. And we're talking to Geely about more than three. We're also talking with some other OEM -- Chinese OEMs about representing them. We've taken a little slower pace. We got a little concerned. I mean, their fast growth is great, good for them. That's great. But we're a little concerned they got over-dealered in some brands, which you could -- we could say -- we could have gone and signed some dealer agreements last year and been part of that sales growth, but it might have actually hurt profitability because the UIO is still growing. Really, they've only done any real volume for 6, 8 months in the U.S., so there's not a lot of UIO yet to drive service departments. So we were taking a little slower approach, but we're in now, and we're excited to learn how the retail model really works for Geely, and we're watching some of the other brands, and we're in really active discussions with some of the other brands. And we think we're going to rely on our formula, Mike. We feel like we're good dealers, we're good representatives of OEMs, and they will want us to do business for them, and they will come to us and try to enable us expanding our footprint with them. And that's a formula that's worked for us in both markets. We feel like it will work well with the Chinese as well. Operator: And with that, everyone, we'll be concluding today's question-and-answer session. I'd like to turn the floor back over to Daryl Kenningham at Group 1 for closing remarks. Daryl Kenningham: Thank you, Jamie. In summary, we remain committed to our strategic initiatives, local focus, operating excellence, differentiated aftersales and disciplined capital management. We'll continue to build on our results from the first quarter. U.K. remains a priority as we build on improving our operating performance, executing on our various initiatives there and shaping the portfolio to drive better returns. We believe consistent execution against these priorities positions us to navigate near-term challenges, but while also building long-term value. Thank you for your time today. We look forward to discussing our second quarter results on our call in July. 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Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of July 30, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Group 1 Automotive (GPI) Q1 2026 Earnings Call Transcript was originally published by The Motley Fool