Group 1 Automotive (GPI) Q4 2023 earnings summary

Executive summary

• FY23 revenue reached a record $17.874B; gross profit topped $3.0B, also a record.

• Record FY23 new and used vehicle units were sold, while Parts & Service generated record gross profit of $1.2B.

• Q4 revenue rose 10.1% YoY, but lower vehicle margins, higher SG&A and interest costs pressured earnings.

• Portfolio strategy combined acquisitions, dispositions, share repurchases and dividends; acquired revenues totaled $4.5B since the beginning of 2021.

Financial highlights

• Q4 revenue was $4.48B versus $4.07B, up 10.1% YoY; gross profit was $730.6M, up 1.6%.

• FY23 revenue was $17.874B; gross profit was $3.02B, up 1.9%.

• Q4 continuing-operations net income was $108.8M, down 30.6%; adjusted net income was $131.2M, down 17.2%.

• FY23 continuing-operations net income was $602.0M, down 20.2%; adjusted net income was $623.3M, down 14.5%.

• FY23 adjusted diluted EPS was $44.27; adjusted free cash flow was $581M, with adjusted operating cash of $720M and capex of $139M.

Outlook and guidance

• UK cost reductions are planned for Q1 2024, including an expected ~10% reduction in UK headcount.

• UK used-vehicle wholesale losses from inventory rebalancing are expected to continue into the quarter ending March 31, 2024.

• Investments in EV lifts, battery repair tools, charging stations and technician training aim to equip dealerships and collision centers to service all powertrain types.

• No significant debt maturities are scheduled until 2027; the U.S. credit facility matures in 2027.