GROUP 1 AUTOMOTIVE INC earnings calls

planned store sales and proceeds

Q (Glenn Chin · Seaport Research Partners): Analyst asked to confirm the total revenue planned to be sold by mid-2027 and whether that count includes the dispositions already announced. He also asked about the private-label F&I products and whether Group 1 takes any risk.

A: Management said the company expects to dispose of $1.1 billion to $1.2 billion in revenues by mid-27 and expects proceeds of $625 million to $675 million. They said about half of that has been done to date, raising about $350 million. They said private-label products will be maintenance and OneCare and will be underwritten by third-party administrators, so Group 1 does not take on the risk.

"The expectation of total revenue that we will dispose of by mid 27 is $1.1 billion to $1.2 billion in revenues Expected proceeds for that $1.1 billion in revenues is somewhere between $625 million to $675 million." — Daniel James McHenry (CEO)

service recovery and pricing pressure

Q (Rajat Gupta · JPMorgan): When will parts & service revenue or profit start to recover and return to growth, and is pricing per RO declining or will pricing pressure persist?

A: Management said warranty is flat and used-car recovery will help aftersales, and they expect to see recovery over the next 12 months. They added hours per RO were unchanged year over year. They said there is no room to raise prices and they will focus on affordability and bringing customers in.

"I do not think there is room to price." — Daryl Adam Kenningham (CEO)

SG&A cost actions

Q (Rajat Gupta · JPMorgan): Are there any additional cost actions planned given the macro headwinds and parts & service softness?

A: Management said they are always focused on cost and continue to evaluate any cost reductions across the company. They said if the macro changes they will remain laser focused on cost actions.

"We continue to evaluate any cost that we can take as a company." — Daniel James McHenry (CEO)

sale prices and UK performance

Q (Michael Ward · Citi): Are the recent property/store sales getting better prices and accretive to margins? And can the UK business return to prior performance levels?

A: Management said they have been pleased with disposition prices and expect margin accretion from the Hennessey acquisition and from disposing lower-SG&A stores. On the UK, they said recent focus shifted to growth; new vehicle same-store sales were up 8% and parts & service revenue up 7%, but SG&A is still slightly above target at 80.8% and needs further cost reduction.

"We will see accretion in margins with Hennessey and with the disposal of these lower SG&A leverage stores." — Peter C. DeLongchamps

rebranding progress and impact

Q (Alexander Perry · BofA): How is the rebranding progressing, what impact has it had on KPIs, and how much of the rollout is left?

A: Management said customer awareness of the Group 1 brand is now equal to legacy brands among existing customers, and rebranded markets show about 2 percentage points better sales year over year. They said about one-third of stores remain to be rebranded and they are focusing on optimizing for AI chatbot searches and leveraging strong reputation scores.

pricing vs aftermarket and brand mix

Q (Bret Jordan · Jefferies): Are you cutting standard maintenance prices broadly to compete with aftermarket operators or using promotional offers? Also, any changes in profitability by brand (e.g., VW vs Toyota)?

A: Management said they price maintenance items to match the aftermarket and do not need broad wholesale price cuts, while using affordability promotions to bring customers in. They said they were pleased with Volkswagen in the UK—sales were up and margins did not suffer—and that brand mix (more luxury in US, Toyota/Lexus) is helping profitability.

"Volkswagen sales were up over 20%, in the quarter, and margin did not really suffer, in the quarter." — Daniel James McHenry (CEO)

divestiture scope and timeline

Q (Jeffrey Lick · Stephens): Does the $1.1–$1.2 billion include the California divestitures done in Q1, and how much remains to reach the target?

A: Management said the $1.1–$1.2 billion figure does not include the California divestitures done in Q1; that figure covers dispositions announced around the Hennessey acquisition through Q3 into Q4. They said they are about halfway through deals that are at APA stage or already closed.

"That does not include the California divestitures that we did in Q1." — Daniel James McHenry (CEO)

portfolio mix and further sales

Q (UBS): How will GPUs and aftersales margins change after the transactions, is there opportunity to dispose of more stores, and how big and profitable is CPO?

A: Management said GPUs should rise on average because the dispositions remove lower-performing stores and the additions include high-GPU brands like Land Rover and Porsche. They said aftersales margins should be similar and that there is opportunity to dispose of more stores if strategically appropriate or to lower leverage. They said CPO is about 28% of the business and on a gross profit basis CPO is less profitable due to higher reconditioning costs.

"So by pure math, you would expect the GPUs to go up in terms of profit per unit." — Daniel James McHenry (CEO)

private-label finance and rebrand

Q (Stonix): How does private-label financing fit with rebranding, is lift front-end or after-sales, how wide is rollout, and did it move results this quarter?

A: Management said private-label (white-label) maintenance is mainly an after-sales tool to support the rebrand and drive customers back to Group 1. They said prepaid maintenance OneCare has been rolled out across the US and they tested financing in after-sales with a higher take rate. They said affordability remains a focus and they will continue to capture customers until the market changes.

"it is mainly an after sales tool, and it is it is really not that complicated." — Peter C. DeLongchamps

used sourcing and timing of benefits

Q (Daniela Haigian · Morgan Stanley): How are you managing used-vehicle sourcing and mix to balance profitability and share, and when will Hennessey and other improvements flow through to SG&A and parts & service?

A: Management said they are focused on lowering acquisition costs and improving sourcing; they noted sourcing remains challenging but only about 10% of supply was from auction while 80%+ came from trades or purchases. On timing, they said Hennessey stores perform well today and they expect to see improvements over the first half of next year, with other levers visible in Q4 and into Q1.

"Sourcing remains challenging. I was very pleased to see that we are only 10% auction because, as you know, those are the usually the highest priced and lowest gross profit units that we that we merchandise." — Peter C. DeLongchamps

capital structure and consumer trends

Q (John Babcock · Barclays): With variable-rate debt and possible rising rates, are you still comfortable with a 3x leverage target and what are plans for capital use? Also, any change in consumer behavior vs last quarter?

A: Management said they completed a bond deal in Q3 that extends debt, they have about $1 billion in liquidity today and their target leverage is 3x. They said if they get down to 3x they would look to resume buybacks. On consumers, management said it is too early to tell and they have not seen a discernible change since last quarter, but affordability remains a key issue.

"I think if we get down to 3x, we would like to get back to buying our stock back." — Daniel James McHenry (CEO)

Jaguar UK decision and proceeds

Q (David Whiston · Morningstar): Why did you change course on Jaguar in the UK and what happened to the stores you planned to exit?

A: Management said the Jaguar portfolio in the UK was a tale of two halves: northern stores struggled while southern stores, especially near London, did well. They said discussions with Jaguar Land Rover and new models made keeping and selling some stores more accretive. They said they already disposed of the northern stores and received proceeds of about £50 million.

"We already have disposed of the northern stores, and we have already had the proceeds for those Northern stores, which is about £50 million" — Daniel James McHenry (CEO)