HOUSTON, June 25, 2020 /PRNewswire/ -- Group 1
Automotive, Inc. (NYSE: GPI), ("Group 1" or the
"Company"), an international, Fortune 500 automotive retailer,
today provided an operational update on its business for the second
quarter 2020 and noted significantly improving market conditions
and operating trends in May and June-to-date when compared to March
and April, 2020.
In late March, the company implemented major cost reductions as
"shelter-in-place" orders dramatically curtailed operations and
overall business levels. All of the Company's U.S. automotive
retail dealership sales and service operations have been open since
early May, with the exception of a small number of temporary
facility closures due to instances of specific COVID-19
cases. Since that time, revenues for new vehicle sales and
service have increased at a much faster rate than associated
costs. As a result, U.S. operating profits are improving much
faster than anticipated.
In the UK, all vehicle sales operations closed during the second
half of March with showrooms only opening again on June 1, 2020. Additionally, dealership
service departments were closed in the second quarter until
May 18, 2020, with the exception of
selected dealerships, which had remained open for emergency
service. Although this created a financial loss in the UK in
April and May, used vehicle and service activity have dramatically
improved in June, and we expect our UK operations to show a profit
for the month.
The greatest challenge to dealership operations has been in the
Brazilian market where Group 1 dealerships were closed most of the
quarter with the final dealerships not reopening until mid-June.
However, in some of the Company's Brazilian markets, the
virus has not yet reached its predicted peak.
The rebound in vehicle sales and service performance in the U.S.
in May and June-to-date should enable the Company to offset the
financial headwinds in the UK and Brazil in the second quarter to achieve
substantial operational profits at the dealership level.
However, we would point out that there are potentially several
non-recurring charges that will impact the quarter. First, as
was previously announced in April
2020, the Company incurred approximately $10.4 million of redemption costs associated with
calling the Company's 5.250% bonds. In addition, the
uncertain nature of the long-term impact of COVID-19 on the auto
market, especially in the UK and Brazil, will trigger financial testing of
certain intangible asset values, which could result in asset
impairments also being incurred within second quarter 2020 GAAP
financial results. More details will be provided when the
Company reports second quarter results, which is expected to occur
as usually scheduled in late July
2020.
"The faster-than-expected recovery of the U.S. auto market
combined with our timely and aggressive cost cuts across all three
of our operating markets and at our headquarters will enable us to
report a better-than-expected financial quarter on an operating
basis. Despite large revenue declines for the second quarter,
we project new vehicle sales margin improvements and meaningful
cost leverage to drive a significant level of corporate
profitability. Used vehicle sales are currently strong in
both the U.S. and UK. Although we are not yet back to
pre-COVID-19 levels in new vehicle sales and service, we have seen
continuing improvement in both areas since early May in the U.S.
and since the beginning of June in the UK," said Earl J. Hesterberg, Group 1's president and
chief executive officer.
ABOUT GROUP 1 AUTOMOTIVE, INC.
Group 1 owns
and operates 186 automotive dealerships, 242 franchises, and
49 collision centers in the United States, the United
Kingdom and Brazil that offer 31 brands of
automobiles. Through its dealerships, the Company sells new and
used cars and light trucks; arranges related vehicle financing;
sells service contracts; provides automotive maintenance and repair
services; and sells vehicle parts.
Investors please visit
www.group1corp.com, www.group1auto.com, www.group1collision.com,
www.facebook.com/group1auto, and www.twitter.com/group1auto, where
Group 1 discloses additional information about the Company, its
business, and its results of operations.
FORWARD-LOOKING STATEMENTS
This press
release contains "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995, which are
statements related to future, not past, events and are based on our
current expectations and assumptions regarding our business, the
economy and other future conditions. In this context, the
forward-looking statements often include statements regarding our
strategic investments, goals, plans, projections and guidance
regarding our financial position, results of operations, business
strategy, and often contain words such as "expects," "anticipates,"
"intends," "plans," "believes," "seeks," "should," "foresee," "may"
or "will" and similar expressions. 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. These risks and
uncertainties include, among other things, (a) general economic and
business conditions, (b) the level of manufacturer incentives, (c)
the future regulatory environment, (d) our ability to obtain an
inventory of desirable new and used vehicles, (e) our relationship
with our automobile manufacturers and the willingness of
manufacturers to approve future acquisitions, (f) our cost of
financing and the availability of credit for consumers, (g) our
ability to complete acquisitions and dispositions and the risks
associated therewith, (h) foreign exchange controls and currency
fluctuations, (i) our ability to retain key personnel, (j) the
impacts of COVID-19 on our business, (k) the impacts of any
potential global recession and (l) our ability to maintain
sufficient liquidity to operate. 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 SEC, 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:
Sheila
Roth
Manager, Investor Relations
Group 1 Automotive, Inc.
713-647-5741 | sroth@group1auto.com
Media contacts:
Pete
DeLongchamps
Senior Vice President, Manufacturer Relations, Financial Services
and Public Affairs
Group 1 Automotive, Inc.
713-647-5770 | pdelongchamps@group1auto.com
or
Clint Woods
Pierpont Communications, Inc.
713-627-2223 | cwoods@piercom.com
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SOURCE Group 1 Automotive, Inc.