Group 1 Automotive (GPI) Announces Prelim. Q2 EPS

Group 1 Automotive, Inc. (NYSE: GPI), ("Group 1" or the "Company"), an international, Fortune 500 automotive retailer, today provided preliminary estimates of its earnings and unit sales for the three months ended June 30, 2021.

Group 1 CEO Earl Hesterberg stated, "The unprecedented supply disruption to new vehicle production largely stemming from the microprocessor shortage has made it very difficult for the financial markets to grasp the impact on our business. Therefore, we are providing some preliminary data on how we are navigating through these challenging times – and I think it is fair to say we are navigating the situation quite well."

Group 1 expects earnings per share on a GAAP and non-GAAP basis for the second quarter of 2021 to range between $10.20 and $10.70 per share. This result was driven by strong vehicle margins in the U.S., a rebound in U.S. service business, recovery of the U.K. market, and ongoing strong cost control throughout the company.

(*Consensus sees Q2 EPS of $5.51, may not compare)

Group 1 expects U.S. second quarter 2021 parts and service gross profit to have increased by approximately 10% versus the second quarter of 2019 on a same-store basis. Comparisons versus the second quarter of 2020 are distorted due to substantial COVID-related business disruptions in the second quarter of last year.

Group 1 President, U.S and Brazilian Operations, Daryl Kenningham added, "As evidenced by U.S. new vehicle industry sales volumes in recent months, the prolonged reduced level of vehicle production by our OEM suppliers has hampered industry sales volumes and our new-vehicle inventory levels by significant amounts compared with normal expectations. However, it should be noted that industry sales volume reflects a dramatic decrease in the fleet segment in the U.S., a market that Group 1 does not actively compete in. Additionally, OEMs are now producing only the fastest selling models, which improved our inventory turn and enabled us to sell more new units in the U.S. in the second quarter of 2021 than we did in the second quarter of 2019, which was the comparable period pre-COVID."

As shown below, Group 1 is also providing estimated second quarter 2021 new and used retail unit volumes, along with comparisons on a same store basis versus the second quarters of 2020 and 2019. It should be noted that both the U.K. and Brazilian markets experienced some closures during the second quarter of 2020 and 2021, which distorts comparisons to the second quarter of 2019.

U.S. new vehicle inventories ended the second quarter of 2021 at approximately 5,400 units, which equates to a 16-day supply. U.S. used vehicle inventories ended the second quarter of 2021 at approximately 12,800 units, which equates to a 29-day supply.

Regarding the inventory outlook, CEO Earl Hesterberg commented, "We believe that we are nearing our lowest point of new vehicle supply with approximately 8,500 new U.S. vehicle receipts in June 2021 and a similar number expected in July. We do not have visibility beyond that. A high percentage of our incoming units are pre-sold and we were able to retail approximately 10,000 units in June in the U.S. despite inventory levels never exceeding 7,000 units at any point during the month."

The foregoing estimated results are based on preliminary information as of this date and are subject to change following completion of the quarter-end review process and other developments arising between now and the time financial results are finalized. In addition, these preliminary unaudited results are not comprehensive financial results for the quarter ending June 30, 2021, should not be viewed as a substitute for complete GAAP financial statements or more comprehensive financial information, and are not indicative of the results for any future period. The Company expects to release earnings for the quarter ended June 30, 2021 on July 29, 2021.

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