UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2019~~March 31, 2020



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-13461

Group 1 Automotive, Inc.

(Exact name of registrant as specified in its charter)



Delaware		76-0506313
(State of other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
800 Gessner,	Suite 500	77024
Houston,	TX	(Zip code)
(Address of principal executive offices)

(713) 647-5700

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)



Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Ticker symbol(s)	Name of exchange on which registered
Common stock, par value $0.01 per share	GPI	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this Chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer	þ	¨	Accelerated filer

Non-accelerated filer	¨	☐	Smaller reporting company

		☐	Emerging growth company

If an emerging growth company, indicate by check mark if that registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

As of ~~October 28, 2019,~~May 4, 2020, the registrant had ~~18,619,112~~18,175,569 shares of common stock outstanding.

TABLE OF CONTENTS




GLOSSARY OF DEFINITIONS		3
PART I. FINANCIAL INFORMATION		4
Item 1.	Financial Statements	34
	Cautionary Statement about Forward-Looking Statements	3221
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	3424
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	6344
Item 4.	Controls and Procedures	6445

PART II. OTHER INFORMATION		46
Item 1.	Legal Proceedings	6446
Item 1A.	Risk Factors	6446
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6446
Item 6.	Exhibits	6547
SIGNATURE		6749

GLOSSARY OF DEFINITIONS

The following are abbreviations and definitions of terms used within this report:



Terms		Definitions
ASC		Accounting Standards Codification
ASU		Accounting Standards Update
Brexit		Withdrawal of the U.K. from the EU
BRL		Brazilian Real (R$)
COVID-19 pandemic		Coronavirus disease first emerging in December 2019 and resulting in the ongoing global pandemic in 2020
EPS		Earnings per share
EU		European Union
F&I		Finance, insurance and other
FASB		Financial Accounting Standards Board
FMCC		Ford Motor Credit Company
GBP		British Pound Sterling (£)
LIBOR		London Interbank Offered Rate
OEM		Original equipment manufacturer
PRU		Per retail unit
ROU		Right-of-use
RSA		Restricted stock award
SEC		Securities and Exchange Commission
SG&A		Selling, general and administrative
USD		United States Dollar
U.K.		United Kingdom
U.S.		United States of America
U.S. GAAP		Accounting principles generally accepted in the U.S.
WHO		World Health Organization
WLTP		Worldwide Harmonised Light Vehicle Test Procedure

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

GROUP 1 AUTOMOTIVE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In millions, except share data)


	September 30, 2019			December 31, 2018
	(Unaudited)						March 31, 2020			December 31, 2019
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	41.0		$	15.9		$	19.2		$	23.8
Contracts-in-transit and vehicle receivables, net	256.2			265.7			115.5			253.8
Accounts and notes receivable, net	222.2			194.0			177.1			225.1
Inventories, net	1,792.7			1,844.1			1,992.6			1,901.7
Prepaid expenses and other current assets	74.4			82.7
Prepaid expenses							82.6			96.4
Other current assets							12.3			15.5
TOTAL CURRENT ASSETS	2,386.5			2,402.4			2,399.3			2,516.3
Property and equipment, net of accumulated depreciation of $380.5 and $347.3, respectively	1,484.8			1,347.8
Property and equipment, net of accumulated depreciation of $405.7 and $400.2, respectively							1,549.0			1,547.1
Operating lease assets	204.7			—			218.7			220.1
Goodwill	979.0			963.9			999.8			1,008.3
Intangible franchise rights	252.9			259.6			251.7			253.5
Other assets	21.1			27.4
Other long-term assets							22.5			24.8
TOTAL ASSETS	$	5,329.0		$	5,001.1		$	5,441.1		$	5,570.2

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Floorplan notes payable — credit facility and other, net of offset account of $25.0 and $33.6, respectively	$	1,199.8		$	1,258.9
Floorplan notes payable — manufacturer affiliates, net of offset account of $0.2 and $0.1, respectively	410.5			417.8
Floorplan notes payable — credit facility and other, net of offset account of $82.6 and $106.8, respectively							$	1,168.6		$	1,144.4
Floorplan notes payable — manufacturer affiliates, net of offset account of $0.2 and $4.1, respectively							484.9			459.9
Current maturities of long-term debt	66.0			93.0			354.7			59.1
Current operating lease liabilities	23.9			—			24.4			24.6
Accounts payable	483.3			419.4			410.7			527.5
Accrued expenses and other current liabilities	213.8			197.6			197.1			206.7
TOTAL CURRENT LIABILITIES	2,397.3			2,386.7			2,640.4			2,422.3
Long-term debt, net of current maturities	1,308.0			1,281.4
Operating lease liabilities, net of current portion	195.5			—
Long-term debt							1,137.7			1,432.1
Long-term operating lease liabilities							208.9			210.7
Deferred income taxes	131.4			134.7			135.8			145.7
Other liabilities	110.5			102.6
Commitments and Contingencies (Note 10)
Long-term interest rate swap liabilities							41.7			4.4
Other long-term liabilities							102.0			99.2
Commitments and Contingencies (Note 12)
STOCKHOLDERS’ EQUITY:
Common stock, $0.01 par value, 50,000,000 shares authorized; 25,504,131 and 25,494,328 shares issued, respectively	0.3			0.3
Common stock, $0.01 par value, 50,000,000 shares authorized; 25,448,274 and 25,486,711 shares issued, respectively							0.3			0.3
Additional paid-in capital	291.9			292.8			287.8			295.3
Retained earnings	1,499.8			1,394.8			1,566.7			1,542.4
Accumulated other comprehensive income (loss)	(169.5		)	(137.8		)	(206.0		)	(147.0		)
Treasury stock, at cost; 6,885,019 and 7,171,661 shares, respectively	(436.2		)	(454.4		)
Treasury stock, at cost; 7,272,601 and 6,858,503 shares, respectively							(474.1		)	(435.3		)
TOTAL STOCKHOLDERS’ EQUITY	1,186.3			1,095.7			1,174.6			1,255.7
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	5,329.0		$	5,001.1		$	5,441.1		$	5,570.2

GROUP 1 AUTOMOTIVE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In millions, except per share data)


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2019		2018		2019		2018		2020		2019
REVENUES:
New vehicle retail sales	$	1,652.2	$	1,539.5	$	4,632.2	$	4,608.7	$	1,342.2	$	1,414.5
Used vehicle retail sales	869.7		792.4		2,527.8		2,394.8		779.0		819.2
Used vehicle wholesale sales	85.3		86.6		273.4		283.4		86.5		92.1
Parts and service sales	383.5		354.5		1,130.8		1,062.1		370.6		369.2
Finance, insurance and other, net	127.6		116.1		368.2		343.5		112.5		113.4
Total revenues	3,118.3		2,889.1		8,932.4		8,692.5		2,690.8		2,808.4
COST OF SALES:
New vehicle retail sales	1,577.0		1,461.9		4,415.7		4,379.1		1,279.4		1,343.1
Used vehicle retail sales	815.5		742.3		2,372.5		2,250.0		736.9		771.4
Used vehicle wholesale sales	84.9		86.9		272.7		281.8		85.5		91.7
Parts and service sales	175.3		162.9		520.1		488.6		172.6		170.7
Total cost of sales	2,652.7		2,454.0		7,581.0		7,399.5		2,274.3		2,376.9
GROSS PROFIT:	465.6		435.1		1,351.4		1,293.0
GROSS PROFIT									416.5		431.5
Selling, general and administrative expenses	354.0		316.8		1,020.4		949.2		328.0		327.7
Depreciation and amortization expense	18.0		16.9		53.0		50.0		18.6		17.0
Asset impairments	10.3		23.2		10.8		27.4
INCOME (LOSS) FROM OPERATIONS	83.3		78.2		267.2		266.4		69.9		86.8
INTEREST EXPENSE:
Floorplan interest expense	15.4		14.7		47.0		43.3		12.9		15.7
Other interest expense, net	18.9		19.1		55.8		57.4		18.1		18.9
INCOME (LOSS) BEFORE INCOME TAXES	49.0		44.4		164.4		165.7		38.9		52.2
(Benefit) provision for income taxes	11.0		9.6		38.5		38.6		9.1		13.5
NET INCOME (LOSS)	$	38.0	$	34.8	$	125.9	$	127.1	$	29.8	$	38.6
BASIC EARNINGS (LOSS) PER SHARE	$	2.04	$	1.74	$	6.78	$	6.18	$	1.62	$	2.09
Weighted average common shares outstanding	18.0		19.3		17.9		19.9		17.8		17.8
DILUTED EARNINGS (LOSS) PER SHARE	$	2.04	$	1.74	$	6.77	$	6.18	$	1.61	$	2.08
Weighted average dilutive common shares outstanding	18.0		19.3		17.9		19.9		17.8		17.8

GROUP 1 AUTOMOTIVE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(In millions)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2019			2018			2019			2018			2020			2019
NET INCOME (LOSS)	$	38.0		$	34.8		$	125.9		$	127.1		$	29.8		$	38.6
Other comprehensive income (loss):
Other comprehensive income (loss), net of taxes:
Foreign currency translation adjustment	(11.6		)	(5.9		)	(12.0		)	(22.2		)	(27.9		)	3.6
Net unrealized gain (loss) on interest rate risk management activities, net of tax:
Unrealized gain (loss) arising during the period, net of tax benefit (provision) of $1.7, ($0.8), $6.0 and ($4.4), respectively	(5.6		)	2.7			(19.2		)	14.0
Reclassification adjustment for realized (gain) loss on interest rate swap termination included in SG&A, net of tax benefit (provision) of $0.0, $-, $0.0 and ($0.2), respectively	0.1			—			0.1			(0.7		)
Reclassification adjustment for (gain) loss included in interest expense, net of tax benefit (provision) of $0.0, $0.3, ($0.2) and $1.1, respectively	0.1			0.8			(0.6		)	3.4
Unrealized gain (loss) arising during the period, net of tax benefit (provision) of $9.7 and $1.3, respectively													(31.6		)	(4.2		)
Reclassification adjustment for (gain) loss included in interest expense, net of tax benefit (provision) of $0.2 and ($0.1), respectively													0.5			(0.3		)
Unrealized gain (loss) on interest rate risk management activities, net of tax	(5.4		)	3.5			(19.7		)	16.7			(31.1		)	(4.6		)
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXES	(17.0		)	(2.4		)	(31.7		)	(5.5		)
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX													(59.0		)	(1.0		)
COMPREHENSIVE INCOME (LOSS)	$	21.0		$	32.4		$	94.2		$	121.6		$	(29.3	)	$	37.7

GROUP 1 AUTOMOTIVE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(In millions, except share data)



	Common Stock				Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total
	Shares		Amount		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total
BALANCE, December 31, 2019	25,486,711		$	0.3	$	295.3		$	1,542.4		$	(147.0	)	$	(435.3	)	$	1,255.7
Net income (loss)	—		—		—			29.8			—			—			29.8
Other comprehensive income (loss), net of taxes	—		—		—			—			(59.0		)	—			(59.0		)
Purchases of treasury stock	—		—		—			—			—			(48.9		)	(48.9		)
Net issuance of treasury shares to stock compensation plans	(38,436	)	—		(12.7		)	—			—			10.2			(2.5		)
Stock-based compensation	—		—		5.1			—			—			—			5.1
Dividends declared ($0.30 per share)	—		—		—			(5.5		)	—			—			(5.5		)
BALANCE, March 31, 2020	25,448,275		$	0.3	$	287.8		$	1,566.7		$	(206.0	)	$	(474.1	)	$	1,174.6

Common Stock
Additional
Paid-in Capital
Retained Earnings
Accumulated
Other
Comprehensive Income (Loss)
Treasury Stock Total
Shares Amount
BALANCE, June 30, 2019 25,510,280
$ 0.3
$ 288.2
$ 1,467.0
$ (152.5 ) $ (438.8 ) $ 1,164.2
Net income (loss) —
—
—
38.0
—
—
38.0
Other comprehensive income (loss), net of taxes —
—
—
—
(17.0 ) —
(17.0 )
Net issuance of treasury shares to employee stock compensation plans (6,149 ) —
(0.7 ) —
—
2.6
1.9
Stock-based compensation —
—
4.4
—
—
—
4.4
Dividends paid, net of estimated forfeitures relative to participating securities ($0.28 per share) —
—
—
(5.2 ) —
—
(5.2 )
BALANCE, September 30, 2019 25,504,131
$ 0.3
$ 291.9
$ 1,499.8
$ (169.5 ) $ (436.2 ) $ 1,186.3

Common Stock
Additional
Paid-in Capital
Retained Earnings
Accumulated
Other
Comprehensive Income (Loss)
Treasury Stock Total
Shares Amount
BALANCE, December 31, 2018 25,494,328
$ 0.3
$ 292.8
$ 1,394.8
$ (137.8 ) $ (454.4 ) $ 1,095.7
Net income (loss) —
—
—
125.9
—
—
125.9
Other comprehensive income (loss), net of taxes —
—
—
—
(31.7 ) —
(31.7 )
Net issuance of treasury shares to employee stock compensation plans 9,803
—
(15.3 ) —
—
18.2
2.9
Stock-based compensation —
—
14.4
—
—
—
14.4
Dividends paid, net of estimated forfeitures relative to participating securities ($0.80 per share) —
—
—
(14.8 ) —
—
(14.8 )
ASC 842 cumulative adjustment —
—
—
(6.1 ) —
—
(6.1 )
BALANCE, September 30, 2019 25,504,131
$ 0.3
$ 291.9
$ 1,499.8
$ (169.5 ) $ (436.2 ) $ 1,186.3

~~GROUP 1 AUTOMOTIVE, INC.~~

~~CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY~~

~~(Unaudited)~~

~~(In millions, except share data)~~

Common Stock
Additional
Paid-in Capital
Retained Earnings
Accumulated
Other
Comprehensive Income (Loss)
Treasury Stock Total
Shares Amount
BALANCE, June 30, 2018 25,511,536
$ 0.3
$ 288.5
$ 1,339.2
$ (126.4 ) $ (328.9 ) $ 1,172.7
Net income (loss) —
—
—
34.8
—
—
34.8
Other comprehensive income (loss), net of taxes —
—
—
—
(2.3 ) —
(2.3 )
Tax effects reclassified from accumulated other comprehensive income (loss) —
—
—
0.1
(0.1 ) —
—
Purchases of treasury stock —
—
—
—
—
(57.3 ) (57.3 )
Net issuance of treasury shares to employee stock compensation plans (17,100 ) —
(2.2 ) —
—
3.6
1.4
Stock-based compensation —
—
4.3
—
—
—
4.3
Dividends paid, net of estimated forfeitures relative to participating securities ($0.26 per share) —
—
—
(5.2 ) —
—
(5.2 )
BALANCE, September 30, 2018 25,494,436
$ 0.3
$ 290.6
$ 1,368.9
$ (128.8 ) $ (382.6 ) $ 1,148.4

Common Stock
Additional
Paid-in Capital
Retained Earnings
Accumulated
Other
Comprehensive Income (Loss)
Treasury Stock Total
Shares Amount
BALANCE, December 31, 2017 25,515,374
$ 0.3
$ 291.4
$ 1,246.3
$ (123.2 ) $ (290.5 ) $ 1,124.3
Net income (loss) —
—
—
127.1
—
—
127.1
Other comprehensive income (loss), net of taxes —
—
—
—
(5.5 ) —
(5.5 )
Tax effects reclassified from accumulated other comprehensive income (loss) —
—
—
0.1
(0.1 ) —
—
Purchases of treasury stock —
—
—
—
—
(108.6 ) (108.6 )
Net issuance of treasury shares to employee stock compensation plans (20,938 ) —
(15.0 ) —
—
16.5
1.5
Stock-based compensation —
—
14.2
—
—
—
14.2
Dividends paid, net of estimated forfeitures relative to participating securities ($0.78 per share) —
—
—
(16.0 ) —
—
(16.0 )
ASC 606 cumulative adjustment —
—
—
11.4
—
—
11.4
BALANCE, September 30, 2018 25,494,436
$ 0.3
$ 290.6
$ 1,368.9
$ (128.8 ) $ (382.6 ) $ 1,148.4



	Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total
	Shares	Amount		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total
BALANCE, December 31, 2018	25,494,328	$	0.3	$	292.8		$	1,394.8		$	(137.8	)	$	(454.4	)	$	1,095.7
Net income (loss)	—	—		—			38.6			—			—			38.6
Other comprehensive income (loss), net of taxes	—	—		—			—			(1.0		)	—			(1.0		)
Net issuance of treasury shares to stock compensation plans	28,055	—		(11.7		)	—			—			10.9			(0.8		)
Stock-based compensation	—	—		6.1			—			—			—			6.1
Dividends declared ($0.26 per share)	—	—		—			(4.8		)	—			—			(4.8		)
ASC 842 cumulative adjustment	—	—		—			(6.1		)	—			—			(6.1		)
BALANCE, March 31, 2019	25,522,383	$	0.3	$	287.1		$	1,422.6		$	(138.7	)	$	(443.5	)	$	1,127.7

GROUP 1 AUTOMOTIVE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In millions)


	Nine Months Ended September 30,						Three Months Ended March 31,
	2019			2018			2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	125.9		$	127.1		$	29.8		$	38.6
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	53.0			50.0			18.6			17.0
Change in operating lease assets	21.2			—			6.4			7.6
Deferred income taxes	3.6			4.1			(0.4		)	4.1
Asset impairments	10.8			27.4
Stock-based compensation	14.4			14.2			5.1			6.1
Amortization of debt discount and issue costs	3.1			2.5			1.0			0.9
(Gain) loss on disposition of assets	(5.9		)	(27.0		)	—			(5.8		)
Other	0.7			0.6			0.4			0.2
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
Changes in assets and liabilities, net of acquisitions and dispositions:
Accounts payable and accrued expenses	99.1			35.5			(98.1		)	101.6
Accounts and notes receivable	(31.6		)	28.4			41.6			9.2
Inventories	41.7			33.7			(125.7		)	(28.1		)
Contracts-in-transit and vehicle receivables	8.1			70.2			135.2			5.1
Prepaid expenses and other assets	(10.5		)	(22.4		)	1.8			(17.7		)
Floorplan notes payable - manufacturer affiliates	(1.1		)	13.9
Floorplan notes payable — manufacturer affiliates							35.9			(2.5		)
Deferred revenues	(0.4		)	(0.8		)	(0.2		)	(0.2		)
Operating lease liabilities	(21.3		)	—			(7.3		)	(8.4		)
Net cash provided by (used in) operating activities	310.8			357.4			44.1			127.9
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for acquisitions, net of cash received	(97.0		)	(135.3		)
Proceeds from disposition of franchises, property and equipment	43.1			107.7			0.5			35.1
Purchases of property and equipment, including real estate	(139.5		)	(118.3		)
Purchases of property and equipment							(31.6		)	(41.7		)
Other	(0.1		)	0.4			—			(0.2		)
Net cash provided by (used in) investing activities	(193.5		)	(145.5		)	(31.1		)	(6.8		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on credit facility - floorplan line and other	5,311.2			5,106.8
Repayments on credit facility - floorplan line and other	(5,364.3		)	(5,185.2		)
Borrowings on credit facility - acquisition line	230.5			98.6
Repayments on credit facility - acquisition line	(211.4		)	(91.4		)
Borrowings on credit facility — floorplan line and other							1,691.6			1,631.5
Repayments on credit facility — floorplan line and other							(1,665.6		)	(1,697.5		)
Borrowings on credit facility — acquisition line							30.0			107.8
Repayments on credit facility — acquisition line							(30.0		)	(111.5		)
Debt issue costs	(3.2		)	—			(0.1		)	—
Borrowings on other debt	130.8			123.3			27.3			20.3
Principal payments on other debt	(133.7		)	(105.6		)	(26.0		)	(26.7		)
Borrowings on debt related to real estate, net of debt issue costs	74.8			54.7
Borrowings on debt related to real estate							18.9			—
Principal payments on debt related to real estate	(112.8		)	(83.2		)	(7.6		)	(20.9		)
Employee stock purchase plan purchases, net of employee tax withholdings	2.8			1.5
Proceeds from termination of mortgage swap	—			0.9
Proceeds from employee stock purchase plan							2.5			2.1
Payment of tax withholding for stock-based awards							(5.0		)	(2.9		)
Repurchases of common stock, amounts based on settlement date	—			(108.6		)	(48.9		)	—
Dividends paid	(14.8		)	(16.0		)	(5.5		)	(4.8		)
Net cash provided by (used in) financing activities	(90.1		)	(204.2		)	(18.5		)	(102.5		)
Effect of exchange rate changes on cash	(1.3		)	(2.9		)	(3.4		)	(0.5		)
Net increase (decrease) in cash, cash equivalents and restricted cash	25.9			4.8			(8.9		)	18.1
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period	18.7			29.6			28.1			18.7
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period	$	44.6		$	34.4		$	19.2		$	36.9

~~The~~See accompanying ~~notes are an integral part of these condensed consolidated financial statements.~~Notes to Condensed Consolidated Financial Statements

Table of Contents

GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. INTERIM FINANCIAL INFORMATION

Business

Group 1 Automotive, Inc., a Delaware corporation, ~~(“Group 1” and together with its subsidiaries, the “Company”)~~ is a leading operator in the automotive retailing industry with business activities in 15 states in the ~~United States of America (“~~U.S.”), 33 towns in the ~~United Kingdom (“~~U.K.”) and 3 states in Brazil. Group 1 Automotive, Inc. and its subsidiaries are collectively referred to as the “Company” in these Notes to Condensed Consolidated Financial Statements. The Company, through its ~~three~~ regions, sells new and used ~~vehicles,~~cars and light trucks; arranges related vehicle ~~financing,~~financing; sells service and insurance ~~contracts,~~contracts; provides automotive maintenance and repair ~~services~~services; and sells vehicle parts.

As of ~~September 30, 2019,~~March 31, 2020, the Company’s ~~U.S.~~ retail network consisted of ~~117~~119 dealerships ~~within~~in the ~~following states: Alabama, California, Florida, Georgia, Kansas, Louisiana, Maryland, Massachusetts, Mississippi, New Hampshire, New Jersey, New Mexico, Oklahoma, South Carolina~~U.S., 50 dealerships in the U.K. and ~~Texas.~~17 dealerships in Brazil. The U.S. and Brazil are led by the President, of U.S. and Brazilian Operations, ~~reports~~and the U.K. is led by a Managing Director, each reporting directly to the ~~Company’s~~Company's Chief Executive ~~Officer~~Officer. The President, U.S. and isBrazilian Operations, and the U.K. Managing Director are responsible for the overall performance of ~~the U.S. region,~~their respective regions, as well as for overseeing the market directors and dealership general managers. In addition, as of September 30, 2019, the Company had 2 international regions: (i) the U.K., which consisted of 49 dealerships and (ii) Brazil, which consisted of 17 dealerships. The operations of the Company’s international regions are structured similarly to the U.S. region.field level management.

The Company’s operating results are generally subject to seasonal variations, as well as changes in the economic environment. In the U.S., wethe Company generally ~~experience~~experiences higher volumes of vehicle sales and service in the second and third calendar quarters of each year. In addition, in some regions of the U.S., vehicle purchases decline during the winter months due to inclement weather. ~~As a result, our U.S. revenues and operating income are typically lower in the first and fourth quarters and higher in the second and third quarters.~~ In the U.K., the first and third quarters tend to be stronger, driven by the vehicle license plate change months of March and September. In Brazil, the first quarter is generally the weakest, driven by more consumer vacations and activities associated with Carnival, while the third and fourth quarters tend to be stronger. Other factors unrelated to seasonality, such as changes in economic conditions, manufacturer incentive programs, supply issues, seasonal weather events and/or changes in currency exchange rates may exaggerate seasonal or cause counter-seasonal fluctuations in the Company’s revenues and operating income. ~~Due~~

COVID-19 Pandemic

Since emerging in December 2019, the COVID-19 pandemic has spread globally, including to ~~seasonality~~all of the Company’s markets in the U.S., U.K. and Brazil, significantly impacting the Company’s operating results starting in March. On March 11, 2020, the WHO declared COVID-19 a pandemic, and subsequently, various countries including the U.S., U.K. and Brazil declared the COVID-19 pandemic a national emergency. Along with these declarations, there have been extraordinary and wide-ranging actions taken by international, federal, state and local public health and governmental authorities to contain and combat the outbreak and spread of the COVID-19 pandemic in regions across the world, including mandates for many individuals to substantially restrict daily activities and for many businesses to curtail or cease normal operations. Beginning in mid-March, these measures have either completely shut down or significantly reduced operating capacity of all of the Company’s dealerships in the U.S., the U.K. and Brazil. The length of the stay-at-home orders, travel restrictions and other ~~factors,~~restrictions on operating businesses and resulting economic impacts are uncertain. To date, these measures have significantly reduced the Company’s new and used vehicle sales volumes, parts and service revenues and F&I revenues, as well as impacted the Company’s vehicle and parts supply chain.

During the three months ended March 31, 2020, the Company incurred certain incremental charges as a result of the COVID-19 pandemic, which included one-time employee termination benefits associated with severance of $0.9 million recorded in Selling, general and administrative expenses, additional used vehicle inventory reserves of $4.8 million as a result of the adjustment to lower of specific cost or net realizable value and additional allowance for doubtful accounts reserves of $0.4 million as further described in Note 7 “Receivables and Contract Assets, Net.” The Company also performed an interim impairment assessment of goodwill and intangible franchise rights and concluded that it was not more-likely-than-not that the Company’s goodwill and intangible franchise rights were impaired as of March 31, 2020. Refer to Note 8 “Intangibles” for additional discussion of the Company’s interim impairment assessment.

The anticipated effects of the COVID-19 pandemic should not materially impact the Company’s estimated effective tax rate for the full-year of 2020.

As the potential impact from the COVID-19 pandemic is difficult to predict, the extent to which it may negatively affect the Company’s future operating results or the duration of any potential business disruption is uncertain. Any potential impact will depend on future developments and new information that may emerge regarding the severity and duration of the COVID-19 pandemic and the actions taken by authorities to contain it or treat its impact, all of which are beyond the Company’s control. These potential impacts, while uncertain, could adversely affect the Company’s business, financial condition and results of operations ~~for~~and could also exacerbate the ~~interim period are not necessarily indicative~~risks identified in the risk factors listed in this Form 10-Q.

Table of ~~the results that will be realized for any other interim period or for the entire fiscal year.~~Contents

GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)– (Continued)

Basis of Presentation

The accompanying Condensed Consolidated Financial Statements and notes thereto, have been prepared in accordance with U.S. ~~generally accepted accounting principles (“U.S. GAAP”)~~GAAP for interim financial information and in accordance with the rules and regulations of the ~~Securities and Exchange Commission (“SEC”).~~SEC. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. Results for interim periods are not necessarily indicative of the results that can be expected for a full year and therefore should be read in conjunction with the Company’s audited Financial Statements and notes thereto included within the Company’s most recent Annual Report on Form 10-K. ~~Certain reclassifications~~

The accompanying Condensed Consolidated Financial Statements reflect the consolidated accounts of the parent company, Group 1 Automotive, Inc., and its subsidiaries, all of which are wholly owned. The results of operations of all business combinations completed during the period are included from the effective dates of the closings of the acquisitions. All intercompany balances and transactions have been ~~made to prior periods~~eliminated in consolidation.

Certain prior-period amounts have been reclassified to conform to current-period presentation. Specifically, the long-term liabilities associated with ~~current period presentation with~~the Company’s interest rate swaps have been reclassified from the caption Other long-term liabilities to the caption Long-term interest rate swap liabilities in the Condensed Consolidated Balance Sheets. This reclassification had no effect on any subtotal in the ~~Company’s previously reported consolidated financial position, results of operations or cash flows.~~Condensed Consolidated Balance Sheets. Certain disclosures are reported as zero balances, or may not compute, due to rounding. These Condensed Consolidated Financial Statements reflect, in the opinion of management, all normal recurring adjustments necessary to fairly state, in all material respects, the Company’s financial position and results of operations for the periods presented.

Use of Estimates

The preparation of the Company’s financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions. These estimates and assumptions ~~that~~ affect the reported amounts of assets and liabilities, ~~and~~ the ~~disclosure~~disclosures of contingent assets and liabilities at the balance sheet date and the ~~reported~~ amounts of revenues and expenses recognized during the reporting period. ~~Actual~~Management analyzes the Company’s estimates based on historical experience and other assumptions that are believed to be reasonable under the circumstances; however, actual results could differ materially from ~~these~~such estimates. Significant estimates made in the accompanying Condensed Consolidated Financial Statements include, but are not limited to, inventory ~~market~~valuation adjustments, reserves for future chargebacks ~~against revenue recognized from~~on finance, insurance and vehicle service contract fees, self-insured property and casualty insurance exposure, the ~~sale~~fair value of ~~finance~~assets acquired and ~~insurance products, reserves for self-insurance programs, certain assumptions related to~~liabilities assumed in business combinations, the valuation of goodwill and intangible franchise rights and reserves for potential ~~legal or similar proceedings related to~~litigation. Additionally, while the ~~Company’s business.~~

full impact of the COVID-19 pandemic is unknown and cannot be reasonably estimated, the Company has made accounting estimates based on the facts and circumstances available as of the reporting date.

Recent Accounting Pronouncements

~~Accounting for Leases~~Reference Rate Reform

In ~~February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02,~~ ~~Leases (“Topic 842”),~~ that amends the accounting guidance on leases. The standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. The Company adopted this ASU and all subsequent amendments on January 1, 2019, using the optional transition method applied to leases existing at January 1, 2019, with no restatement of comparative periods. Results for reporting periods beginning after January 1, 2019 are presented under Topic 842, while prior period amounts have not been adjusted and continue to be reported in accordance with the Company’s historical accounting policies under Accounting Standards Codification (“ASC”) Topic 840, ~~Leases~~ ~~(“ASC 840”).~~

The Company elected the package of practical expedients available under the transition guidance within Topic 842, which among other things, permits the Company to carry forward its historical lease classification. The Company also elected other practical expedients under the transition guidance to (i) not record leases with an initial term of 12 months or less on the balance sheet for all asset classes; (ii) not apply hindsight when determining its lease terms or assessing impairment of its ROU assets during transition; and (iii) combine and account for both lease and non-lease components as a single component for all asset classes, except dealership operating assets. For our dealership operating leases, the Company elected to separate lease and non-lease components and have allocated the consideration between the lease and non-lease components based on the estimated fair value of the leased component.

Upon adoption of Topic 842, the Company recognized ROU assets and lease liabilities based on the present value of its remaining minimum rental payments for existing operating leases as of the adoption date, utilizing the Company’s applicable incremental borrowing rate also as of the adoption date. The adoption of Topic 842 resulted in the Company recognizing $222.6 million of operating ROU assets and $236.7 million of operating lease liabilities as of January 1, 2019. The difference between ROU assets and lease liabilities is primarily the result of prepaid rent, favorable lease assets and net unfavorable lease liabilities. Additionally, the Company recognized a $6.1 million cumulative-effect adjustment, net of deferred tax impact, to retained earnings as of January 1, 2019 resulting from the impairment of certain operating ROU assets upon the adoption of Topic 842. The Company’s accounting for its finance leases, previously termed as capital leases under ASC 840, remained substantially unchanged. The adoption of Topic 842 had no material impact on the Company’s Condensed Consolidated Statements of Operations or Condensed Consolidated Statements of Cash Flows. For further details, see Note 11, “Leases”.

~~Credit Losses~~

~~In June 2016,~~March 2020, the FASB issued ASU ~~2016-13,~~2020-04, ~~Financial Instruments - Credit Losses~~Reference Rate Reform (Topic ~~326)~~848): ~~Measurement~~Facilitation of ~~Credit Losses~~the Effects ofReference Rate Reform on Financial ~~Instruments~~Reporting. The ~~amendment~~ASU provides optional expedients and exceptions for companies that have contracts, hedging relationships and other transactions that reference LIBOR or other reference rates expected to be discontinued because of reference rate reform. The optional expedients and exceptions apply during the transition period and are intended to ease the financial reporting burdens mainly related to contract modification accounting, hedge accounting and lease accounting. The transition period is effective as of March 12, 2020 and will apply through December 31, 2022. LIBOR is used as an interest rate “benchmark” in ~~this update replaces~~ the ~~current incurred loss impairment methodology~~majority of ~~recognizing credit losses when a loss is probable, with a methodology that reflects expected credit losses~~the Company’s floorplan notes payable, as well as its mortgages, other debt and ~~requires consideration of a broader range of reasonable and supportable information~~lease contracts. Additionally, the Company’s derivative instruments are benchmarked to ~~assess credit loss estimates. The standard will be effective for fiscal years beginning after December 15, 2019, with early adoption permitted for periods after December 15, 2018.~~LIBOR. The Company is ~~currently evaluating~~expecting to adopt the ~~impact that the adoption~~relief described as its arrangements are modified.

Table of ~~the provisions of the ASU will have on its consolidated financial statements, but does not expect the impact of the amendment of this ASU to be significant.~~Contents

GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)– (Continued)

2. ~~REVENUE~~REVENUES

The following tables present the Company’s revenues disaggregated by revenue source and geographical segments (in millions):



	Three Months Ended March 31, 2020
	U.S.		U.K.		Brazil		Total
REVENUES:
New vehicle retail sales	$	988.4	$	296.3	$	57.5	$	1,342.2
Used vehicle retail sales	570.3		188.8		19.9		779.0
Used vehicle wholesale sales	46.8		35.8		3.8		86.5
Total new and used vehicle sales	1,605.5		520.9		81.3		2,207.7
Parts and service sales ⁽¹⁾	304.6		56.4		9.6		370.6
Finance, insurance and other, net ⁽²⁾	97.4		13.3		1.7		112.5
Total revenues	$	2,007.6	$	590.7	$	92.5	$	2,690.8

Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019
U.S. U.K. Brazil Total U.S. U.K. Brazil Total
REVENUES:
New vehicle retail sales $ 1,291.7
$ 290.7
$ 69.8
$ 1,652.2
$ 3,512.1
$ 911.6
$ 208.5
$ 4,632.2
Used vehicle retail sales 657.6
189.3
22.8
869.7
1,877.6
586.8
63.4
2,527.8
Used vehicle wholesale sales 45.9
35.0
4.4
85.3
133.0
127.1
13.3
273.4
Total new and used vehicle sales 1,995.2
515.0
97.0
2,607.2
5,522.7
1,625.5
285.2
7,433.4
Parts and service sales ⁽¹⁾
314.9
56.6
12.0
383.5
922.2
172.5
36.1
1,130.8
Finance, insurance and other, net ⁽²⁾
112.7
13.0
1.9
127.6
319.4
43.2
5.6
368.2
Total revenues $ 2,422.8
$ 584.6
$ 110.9
$ 3,118.3
$ 6,764.3
$ 1,841.2
$ 326.9
$ 8,932.4


	Three Months Ended September 30, 2018								Nine Months Ended September 30, 2018								Three Months Ended March 31, 2019
	U.S.		U.K.		Brazil		Total		U.S.		U.K.		Brazil		Total		U.S.		U.K.		Brazil		Total
REVENUES:
New vehicle retail sales	$	1,196.6	$	278.0	$	64.9	$	1,539.5	$	3,433.4	$	971.1	$	204.2	$	4,608.7	$	1,031.7	$	318.6	$	64.2	$	1,414.5
Used vehicle retail sales	572.0		200.1		20.3		792.4		1,727.8		600.7		66.3		2,394.8		594.4		203.6		21.2		819.2
Used vehicle wholesale sales	40.7		41.7		4.2		86.6		137.5		134.4		11.5		283.4		42.8		45.3		4.1		92.1
Total new and used vehicle sales	1,809.3		519.8		89.4		2,418.5		5,298.7		1,706.2		282.0		7,286.9		1,669.0		567.4		89.4		2,325.8
Parts and service sales ⁽¹⁾	289.3		53.8		11.4		354.5		862.6		165.0		34.5		1,062.1		297.6		59.6		12.0		369.2
Finance, insurance and other, net ⁽²⁾	101.6		12.3		2.2		116.1		295.2		42.3		6.0		343.5		96.2		15.2		2.0		113.4
Total revenues	$	2,200.2	$	585.9	$	103.0	$	2,889.1	$	6,456.5	$	1,913.5	$	322.5	$	8,692.5	$	2,062.8	$	642.2	$	103.4	$	2,808.4

⁽¹⁾The Company has applied the optional exemption not to disclose ~~revenue~~revenues related to remaining performance obligations on ~~our~~its maintenance and repair services as the duration of these contracts is less than one year. Revenues from these contracts is recognized upon completion of the services, which occurs over time.

⁽²⁾Includes variable consideration recognized of ~~$2.6~~$4.0 million and ~~$6.8~~$3.2 million during the three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018 and $14.8 million and $12.5 million during the nine months ended September 30, 2019 and 2018,~~ respectively, relating to performance obligations satisfied in previous periods on ~~our~~the Company’s retrospective commission income contracts.

See Note 7 “Receivables and Contract Assets, Net” for additional information on the Company’s contract assets associated with ~~revenue~~revenues from the arrangement of financing and sale of service and insurance ~~contracts totaled $19.9 million and $14.6 million as of September 30, 2019 and December 31, 2018, respectively, reflected in~~ ~~Prepaid expenses and other current assets~~ ~~and~~ ~~Other assets~~ ~~within the Condensed Consolidated Balance Sheets.~~contracts.

3. ACQUISITIONS AND DISPOSITIONS

Acquisitions

The Company accounts for business combinations under the acquisition method of accounting, under which the Company allocates the purchase price to the assets and liabilities assumed based on an estimate of fair value.

During the ~~nine~~three months ended ~~September 30,~~March 31, 2020, the Company had no activity related to acquisitions.

During the three months ended March 31, 2019, the Company acquired 2 dealerships representing 4 franchises in the U.S. and 4 dealerships representing 5 franchises in the U.K. Aggregate consideration paid for these dealerships, which were accounted for as business combinations, totaled $97.0 million, including the associated real estate and goodwill. The purchase prices were allocated based upon the consideration paid and the estimated fair values of the assets acquired and liabilities assumed at the acquisition dates. The Company also opened 1 dealership representing 1 ~~awarded~~ franchise in the U.S. and 1 dealership representing 1 ~~awarded~~ franchise in the U.K.

Dispositions

During the ~~nine~~three months ended ~~September 30, 2018,~~March 31, 2020, the Company ~~acquired 5~~had no activity related to dispositions.

During the three months ended March 31, 2019, the Company’s dispositions included 3 dealerships representing ~~8 franchises and added 1 franchise in the U.K., acquired 1 dealership representing 1 franchise in Brazil, and acquired 4 dealerships inclusive of 4~~6 franchises in the U.S. ~~Aggregate consideration paid for these dealerships, which were accounted for as business combinations, totaled $140.4 million, including the associated real estate~~ and goodwill. Also included in the consideration paid was $5.1 million of cash received in the acquisition of the dealerships. The purchase prices were allocated based upon the consideration paid and the estimated fair values of the assets acquired and liabilities assumed at the acquisition dates.

~~Dispositions~~

During the nine months ended September 30, 2019, the Company disposed of 4 dealerships representing 7 franchises and terminated 2 franchises in the U.S., disposed of 3 dealerships representing 4 franchises in the U.K. and disposed of 1 dealership representing 1 franchise in Brazil. The Company recorded a net pre-tax gain totaling $5.0 million related to the these dispositions, which consisted of dealership assets and related real estate. During the nine months ended September 30, 2018, the Company disposed of 2 dealerships representing 3 franchises and terminated 1 franchise in the U.S. and disposed of 1 franchise in the U.K. The Company recorded a net pre-tax gain totaling ~~$24.4~~$5.2 million related to these dispositions.

The Company’s dispositions ~~which consisted~~generally consist of dealership assets and related real estate. Gains and losses on dispositions are recorded in Selling, general and administrative expenses in the Condensed Consolidated Statement of Operations.

Table of Contents

GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)– (Continued)

4. ~~EQUITY~~SEGMENT INFORMATION

~~Performance Awards~~

~~During the nine months ended September 30, 2019 under the 2014 Long-Term Incentive Plan,~~As of March 31, 2020, the Company ~~granted 30,555 performance awards to certain employees at no cost~~had 3 reportable segments: the U.S., the U.K. and Brazil. The U.S. and Brazil segments are led by the President, U.S. and Brazilian Operations, and the U.K. segment is led by a Managing Director, each reporting directly to the ~~recipient.~~Company's Chief Executive Officer, who is the Chief Operating Decision Maker. The ~~weighted average grant date fair value~~President, U.S. and Brazilian Operations, and the U.K. Managing Director are responsible for the overall performance of ~~these awards was $67.17 per share. The performance awards do not qualify~~their respective regions, as participating securities. The performance awards contain both performance and market conditions to be evaluated over a two-year performance period and are subject to vesting over a three-year service period. Based on the performance criteria, up to 200%well as for overseeing field level management. Each of the ~~granted shares may be earned. Compensation expense for the awards with performance conditions~~segments is ~~calculated based on the market price~~comprised of retail automotive franchises that sell new and used cars and light trucks; arrange related vehicle financing; sell service insurance contracts; provide automotive maintenance and repair services; and sell vehicle parts. The vast majority of the Company’s ~~common stock at~~corporate activities are associated with the ~~date~~operations of ~~grant~~the U.S. segment and therefore the ~~forecasted achievement of such performance conditions~~corporate financial results are included within the U.S. segment.

Reportable segment revenues and ~~is recognized over the requisite service period. Compensation expense~~income (loss) before income taxes were as follows for the ~~awards with market conditions is calculated based upon~~three months ended March 31, 2020 and 2019 (in millions):



	Three Months Ended March 31, 2020
	U.S.		U.K.			Brazil			Total
Total revenues	$	2,007.6	$	590.7		$	92.5		$	2,690.8
Income (loss) before income taxes ⁽¹⁾	$	42.2	$	(2.7	)	$	(0.6	)	$	38.9



	Three Months Ended March 31, 2019
	U.S.		U.K.		Brazil			Total
Total revenues	$	2,062.8	$	642.2	$	103.4		$	2,808.4
Income (loss) before income taxes ⁽²⁾	$	46.4	$	6.2	$	(0.4	)	$	52.2

⁽¹⁾ Income (loss) before income taxes for the ~~fair value~~three months ended March 31, 2020 includes a $0.9 million severance expense in the Brazil segment as further described in Note 1“Interim Financial Information.”

⁽²⁾ Income (loss) before income taxes for the three months ended March 31, 2019 includes a $5.2 million net gain on disposition of real estate and dealership transactions in the ~~award~~U.S. segment, a $2.4 million loss on legal matters in the ~~date of grant~~U.S. and ~~is recognized over~~Brazil segments and $2.0 million in expense related to Oklahoma hail storm damages in the ~~requisite service period. All performance awards remained unvested as of September 30, 2019.~~U.S. segment.

5. EARNINGS PER SHARE

The two-class method is utilized for the computation of the Company’s ~~earnings per share (“EPS”).~~EPS. The two-class method requires a portion of net income to be allocated to participating securities, which are unvested awards of share-based payments with non-forfeitable rights to receive dividends. The Company’s ~~restricted stock awards~~RSAs are participating securities. Income allocated to these participating securities is excluded from net earnings available to common shares, as shown in the table below. Basic EPS is computed by dividing net income available to basic common shares by the weighted average number of basic common shares outstanding during the period. Diluted EPS is computed by dividing net income available to diluted common shares by the weighted average number of dilutive common shares outstanding during the period.

Table of Contents

GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)– (Continued)

The following table sets forth the calculation of EPS for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~ (in millions, except share data):


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2019		2018		2019		2018		2020		2019
Weighted average basic common shares outstanding	17,961,555		19,252,948		17,889,572		19,858,643		17,763,451		17,797,318
Dilutive effect of stock awards and employee stock purchases, net of assumed repurchase of treasury stock	17,145		8,122		17,978		8,876
Dilutive effect of stock-based awards and employee stock purchases									44,810		52,016
Weighted average dilutive common shares	17,978,700		19,261,070		17,907,550		19,867,519		17,808,261		17,849,334
Basic:
Net income (loss)	$	38.0	$	34.8	$	125.9	$	127.1	$	29.8	$	38.6
Less: Earnings (loss) allocated to participating securities	1.4		1.2		4.7		4.3		1.1		1.5
Net income (loss) available to basic common shares	$	36.6	$	33.6	$	121.2	$	122.8	$	28.7	$	37.2
Basic earnings (loss) per common share	$	2.04	$	1.74	$	6.78	$	6.18	$	1.62	$	2.09
Diluted:
Net income (loss)	$	38.0	$	34.8	$	125.9	$	127.1	$	29.8	$	38.6
Less: Earnings (loss) allocated to participating securities	1.4		1.2		4.7		4.3		1.1		1.5
Net income (loss) available to diluted common shares	$	36.6	$	33.6	$	121.2	$	122.8	$	28.7	$	37.2
Diluted earnings (loss) per common share	$	2.04	$	1.74	$	6.77	$	6.18	$	1.61	$	2.08

6. ~~CASH FLOW INFORMATION~~

The Company utilizes various credit facilities to finance the purchase of its new and used vehicle inventory. With respect to all new vehicle floorplan borrowings, the manufacturers of the vehicles draft the Company’s credit facilities directly with no cash flow to or from the Company. With respect to borrowings for used vehicle financing in the U.S., the Company finances up to 85% of the value of the used vehicle inventory and the funds flow directly between the Company and the lender. In the U.K. and Brazil, the Company chooses which used vehicles to finance and the borrowings flow directly to the Company from the lender.

The Company categorizes the cash flows associated with borrowings and repayments on these various credit facilities as Operating or Financing Activities in its Condensed Consolidated Statements of Cash Flows. All borrowings from, and repayments to, lenders affiliated with the vehicle manufacturers (excluding the cash flows from or to manufacturer affiliated lenders participating in the Company’s syndicated lending group under the Revolving Credit Facility, as defined in Note 7, “Floorplan Notes Payable”) are presented within Cash Flows from Operating Activities in the Company’s Condensed Consolidated Statements of Cash Flows. All borrowings from, and repayments to, the syndicated lending group under the Revolving Credit Facility (including the cash flows from or to manufacturer affiliated lenders participating in the facility), as well as borrowings from, and repayments to, the Company’s other credit facilities, are presented within Cash Flows from Financing Activities.

~~Cash, Cash Equivalents and Restricted Cash~~

The total amounts presented on the Company’s Condensed Consolidated Statements of Cash Flows include cash, cash equivalents and restricted cash. Restricted cash includes certain unsecured investment obligations with manufacturer-affiliated finance companies, which bear interest at a variable rate and are redeemable on demand by the Company. The following table reconciles cash and cash equivalents reported in the Company’s Condensed Consolidated Balances Sheets to the total amounts reported in the Company’s Condensed Consolidated Statements of Cash Flows (in millions):

September 30, 2019 December 31, 2018
Cash and cash equivalents $ 41.0
$ 15.9
Restricted cash, included in Other assets
3.6
2.8
Total cash, cash equivalents and restricted cash $ 44.6
$ 18.7

~~Non-cash Investing and Financing Activities~~

The Company accrued for purchases of property and equipment, including real estate of $5.6 million and $6.1 million at September 30, 2019 and 2018, respectively. Additionally, the Company obtained ROU in exchange for lease obligations during the nine months ended September 30, 2019. See Note 11, “Leases”, for supplemental information on lease liabilities.

~~Interest and Income Taxes Paid~~

Cash paid for interest, including the monthly settlement of the Company’s interest rate derivatives, was $83.1 million and $84.4 million for the nine months ended September 30, 2019 and 2018, respectively. Cash paid for taxes, net of refunds, was $34.8 million and $31.0 million for the nine months ended September 30, 2019 and 2018, respectively.

~~7. FLOORPLAN NOTES PAYABLE~~

~~The Company’s floorplan notes payable consisted of the following (in millions):~~

September 30, 2019 December 31, 2018
Revolving credit facility - floorplan notes payable $ 1,189.8
$ 1,251.4
Revolving credit facility - floorplan notes payable offset account (25.0 ) (33.6 )
Revolving credit facility - floorplan notes payable, net 1,164.8
1,217.8
Other non-manufacturer facilities 35.0
41.1
Floorplan notes payable - credit facility and other, net $ 1,199.8
$ 1,258.9

FMCC facility $ 166.9
$ 160.8
FMCC facility offset account (0.2 ) (0.1 )
FMCC facility, net 166.7
160.7
Other manufacturer affiliate facilities 243.8
257.1
Floorplan notes payable - manufacturer affiliates, net $ 410.5
$ 417.8

~~Floorplan Notes Payable - Credit Facility~~

~~Revolving Credit Facility~~

In the U.S., the Company has a $1.8 billion revolving syndicated credit arrangement that matures on June 27, 2024 (“Revolving Credit Facility”). The Revolving Credit Facility consists of two tranches: (i) a $1.75 billion maximum capacity tranche for U.S. vehicle inventory floorplan financing (“Floorplan Line”), which had a net outstanding balance of $1.2 billion as of September 30, 2019 reported in ~~Floorplan notes payable - credit facility and other, net~~;~~and (ii) a~~$360.0 million maximum capacity and $50.0 million minimum capacity tranche (“Acquisition Line”), which is not due until maturity of the Revolving Credit Facility and is therefore classified as long-term debt in ~~Long-termdebt, net of current maturities -~~ see Note 8, “Debt”, for additional discussion. The capacity under these two tranches can be re-designated within the overall $1.8 billion commitment, subject to the aforementioned limits. The weighted average interest rate on the Floorplan Line was 3.1% as of September 30, 2019, excluding the impact of the Company’s interest rate derivative instruments.

On June 27, 2019, the Company amended the Revolving Credit Facility to extend the maturity date to June 27, 2024 and reduce the number of participating financial institutions to 23. Additionally, following the amendment, the Floorplan Line bears interest at rates equal to the London Interbank Offered Rate (“LIBOR”) plus 110 basis points for new vehicle inventory and the LIBOR plus 140 basis points for used vehicle inventory. The Acquisition Line bears interest at LIBOR or a LIBOR equivalent plus 100 to 200 basis points, depending on the Company’s total adjusted leverage ratio, on borrowings in U.S. dollars, Euros or British pound sterling. The Floorplan Line requires a commitment fee of 0.15% per annum on the unused portion. Amounts borrowed by the Company under the Floorplan Line for specific vehicle inventory are to be repaid upon the sale of the vehicle financed and in no case is a borrowing for a vehicle to remain outstanding for greater than one year. The Acquisition Line requires a commitment fee ranging from 0.15% to 0.40% per annum, depending on the Company’s total adjusted leverage ratio, based on a minimum commitment of $50.0 million less outstanding borrowings.

~~In conjunction with the Revolving Credit Facility, the Company has $4.9 million of related unamortized debt issuance costs as of September 30, 2019, which are included in~~ ~~Prepaid expenses and other current assets~~ ~~and~~ ~~Other assets~~ ~~in the Company’s Condensed Consolidated Balance Sheets and amortized over the term of the facility.~~

~~Floorplan Notes Payable - Manufacturer Affiliates~~

~~Ford Motor Credit Company Facility~~

The Company has a $300.0 million floorplan arrangement with Ford Motor Credit Company for financing of new Ford vehicles in the U.S. (“FMCC Facility”). This facility bears interest at a rate of Prime plus 150 basis points minus certain incentives. The interest rate on the FMCC Facility was 6.5% before considering the applicable incentives as of September 30, 2019.

~~Other Manufacturer Facilities~~

The Company has other credit facilities in the U.S., U.K. and Brazil with financial institutions affiliated with manufacturers for financing of new, used and rental vehicle inventories. As of September 30, 2019, borrowings outstanding under these facilities totaled $243.8 million, comprised of $112.6 million in the U.S. with annual interest rates ranging from 3.8% to 6.5%, $116.8 million in the U.K. with annual interest rates ranging from 1.3% to 4.3%, and $14.4 million in Brazil with annual interest rates ranging from 11.1% to 14.7%.

~~8. DEBT~~

~~Long-term debt consisted of the following (in millions):~~

September 30, 2019 December 31, 2018
5.00% Senior Notes due June 1, 2022 (aggregate principal of $550.0) ⁽¹⁾
$ 546.1
$ 545.0
5.25% Senior Notes due December 15, 2023 (aggregate principal of $300.0) ⁽¹⁾
297.9
297.5
Acquisition Line 49.2
31.8
Real estate related 382.9
420.8
Finance leases ⁽²⁾
66.1
48.6
Other 34.2
33.6
Total debt 1,376.4
1,377.3
Less: unamortized debt issuance costs (2.4 ) (2.9 )
Less: current maturities of long-term debt and short-term financing (66.0 ) (93.0 )
Long-term debt, net of current maturities $ 1,308.0
$ 1,281.4

⁽¹⁾~~See Note 9, “Financial Instruments and Fair Value Measurements”, for further discussion of the fair value.~~

⁽²⁾ Balances as of December 31, 2018 were unchanged under the optional transition method applied as part of the implementation of Topic 842. See Note 1, “Interim Financial Information” and Note 11, “Leases” for further information.

~~Acquisition Line~~

~~The proceeds of the Acquisition Line are used for working capital, general corporate and acquisition purposes.~~As of September 30, 2019, borrowings under the Acquisition Line, a component of the Revolving Credit Facility (as described in Note 7, “Floorplan Notes Payable”), totaled $49.2 million. The interest rate on this facility was 1.95% as of September 30, 2019, representing the applicable rate for borrowings in British pound sterling.

~~Real Estate Related~~

The Company has mortgage loans in the U.S., U.K. and Brazil that are paid in monthly installments. As of September 30, 2019, borrowings outstanding under these facilities totaled $382.9 million, net of debt issuance costs, comprised of $315.1 million in the U.S. maturing between October 2019 and November 2032, $65.8 million in the U.K. maturing between August 2023 and September 2034 and $2.0 million in Brazil maturing in April 2025. The U.S. loans bear interest at fixed rates between 3.25% and 4.69% and at variable indexed rates plus a spread between 1.45% and 2.10% per annum. The U.K. and Brazil loans bear interest at variable indexed rates.

9. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Accounting standards define fair value as the price that would be received from selling an asset or paid to transfer a liability in the most advantageous market in an orderly transaction between market participants at the measurement date. Accounting standards establish a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value and also establishes the following three levels of inputs that may be used to measure fair value:


•	Level 1 — Quoted prices for identical assets or liabilities in active markets.


•	Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets and liabilities; quoted prices in markets that are not active; or model-derived valuations or other inputs that are observable or that can be corroborated by observable market data for substantially the full term of the assets or liabilities.


•	Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or ~~liabilities~~liabilities.

The Company’s financial instruments consist of cash and cash equivalents, contracts-in-transit and vehicle receivables, accounts and notes receivable, investments in debt and equity securities, accounts payable, credit facilities, long-term debt and interest rate derivative instruments. Other than the Company’s fixed rate long-term debt, the carrying amount of all significant financial instruments approximates fair value due to either the length of maturity, the existence of variable interest rates that approximate prevailing market rates or as a result of mark to market accounting.

Cash and Cash Equivalents, Contracts-In-Transit and Vehicle Receivables, Accounts and Notes Receivable, Accounts Payable, Variable Rate Long-Term Debt and ~~Credit Facilities~~Floorplan Notes Payable

The fair values of these financial instruments approximate their carrying values due to the short-term nature of these instruments and/or the existence of variable interest rates.

Fixed Rate Long-Term Debt

The Company’s fixed rate long-term debt primarily consists of amounts outstanding under its senior unsecured notes and certain mortgage facilities. See Note 9 “Debt” for further discussion of the Company’s long-term debt arrangements. The Company estimates the fair value of its ~~senior unsecured notes~~5.00% Senior Notes using quoted prices for the identical liability (Level 1) and estimates the fair value of its fixed-rate mortgage facilities using a present value technique based on current market interest rates for similar ~~type~~types of financial instruments (Level 2).

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GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)– (Continued)

The carrying value and fair value of the Company’s 5.00% Senior Notes and fixed rate ~~long-term debt~~mortgages were as follows ~~at the dates indicated~~ (in millions):


	September 30, 2019				December 31, 2018				March 31, 2020				December 31, 2019
	Carrying Value⁽¹⁾		Fair Value		Carrying Value⁽¹⁾		Fair Value		Carrying Value ⁽¹⁾		Fair Value		Carrying Value ⁽¹⁾		Fair Value
5.00% Senior Notes	$	546.1	$	558.6	$	545.0	$	521.6	$	546.8	$	510.4	$	546.4	$	559.5
5.25% Senior Notes	297.9		309.1		297.5		286.5
Real estate related	44.8		45.2		79.7		76.2		39.3		38.9		40.7		41.1
Total	$	888.8	$	912.9	$	922.2	$	884.3	$	586.1	$	549.3	$	587.1	$	600.6

(1)Carrying value includes unamortized discount and excludes ~~unamortized~~ debt issuance costs

~~Investments~~.

~~The~~As described in Note 9 “Debt,” on April 2, 2020, the Company ~~maintains investment balances with certain financial institutions~~fully redeemed $300.0 million in ~~Brazil that provide credit facilities for the financing~~aggregate principal amount of ~~new, used and rental vehicle inventories. The investment balances bear interest~~its outstanding 5.25% Senior Notes due June 2023, at a ~~variable rate and are redeemable by~~premium of 102.625%. The total redemption price, consisting of the ~~Company in~~principal amount of the ~~future under certain conditions.~~notes redeemed plus associated premium, amounted to $307.9 million. The ~~investment balances totaled $3.6 million and $2.8 million~~redemption price approximated the fair value of the 5.25% Senior Notes as of ~~September 30, 2019 and December~~March 31, ~~2018, respectively, which the Company has classified as restricted cash within~~ ~~Other assets~~ in its Condensed Consolidated Balance Sheets. The Company determined that the valuation measurement inputs of these instruments include inputs other than quoted market prices that are observable or that can be corroborated by observable data by correlation (Level 2). See Note 6, “Cash Flow Information” for further details regarding the Company’s investment balances.2020.

Derivative financial instruments

The Company holds ~~derivative financial instruments consisting of~~ interest rate swaps ~~which~~to hedge against variability of interest payments indexed to LIBOR. The interest rate swaps are designated as cash flow ~~hedges. The~~hedges and the related gains or losses ~~on these interest rate swaps~~ are deferred in stockholders’ equity as a component of ~~accumulated~~Accumulated other comprehensive income (loss). The deferred gains or losses are recognized in income in the period in which the related items being hedged are recognized in expense. Monthly contractual settlements of the positions are recognized as Floorplan interest expense or Other interest expense, net, in the Company’s Condensed Consolidated Statements of Operations. The Company had 0 gains or losses related to ineffectiveness recognized in the Condensed Consolidated Statements of Operations for the three ~~and nine~~ months ended ~~September 30, 2019 or 2018.~~March 31, 2020 and 2019.

As of ~~September 30, 2019,~~March 31, 2020, the Company held 2529 interest rate swaps in effect with a total notional value of ~~$896.9~~$786.2 million that fixed its underlying one-month LIBOR at a weighted average rate of ~~2.3%~~1.91%. For the three months ended September 30, 2019 and 2018, the Company’s interest rate swaps in effect increased interest expense by $0.1 million and by $1.1 million, respectively. For the nine months ended September 30, 2019 and 2018, the Company’s interest rate swaps in effect decreased interest expense by $0.7 million and increased interest expense by $4.5 million, respectively.

The Company also held 813 additional interest rate swaps with forward start dates beginning April 2020 that had an aggregate notional value of $580.8 million and a weighted average interest rate of 1.60% as of March 31, 2020. The maturity dates of the Company’s interest rate swaps range between December 2020 and ~~January 2022 and expiration dates between January 2024 and~~ December 2030.

The ~~aggregate notional value of these 8 forward-starting~~Company’s interest rate swaps ~~was $450.0 million~~are measured at fair value utilizing the option-pricing Black-Scholes present value technique. This technique utilizes a one-month LIBOR forward yield curve matched to the identical maturity term of the instrument being measured. Observable inputs utilized in the income approach valuation technique incorporate identical contractual notional amounts, fixed coupon rates, periodic terms for interest payments and ~~the weighted average interest rate was 1.7%.~~contract maturity. The ~~combination~~fair value of the interest rate swaps ~~currently~~also considers the credit risk of the Company for instruments in ~~effect~~a liability position or the counterparty for instruments in an asset position. The credit risk is calculated using the spread between the one-month LIBOR yield curve and the ~~forward-starting~~relevant interest rate ~~swaps is structured such that~~according to Standard and Poor’s. The inputs to the ~~notional~~fair value ~~in effect at any given time through December 2030 does not exceed $896.9 million, which is less than the Company’s expectation for variable-rate debt outstanding during such period.~~

measurements reflect level 2 inputs.

Assets and liabilities associated with the Company’s interest rate swaps ~~within Level 2 of the hierarchy framework,~~ as reflected in the ~~accompanying balance sheets~~Condensed Consolidated Balance Sheets were as follows (in millions):

September 30, 2019 December 31, 2018
Assets from interest rate risk management activities:
Prepaid expenses and other current assets $ —
$ 0.4
Other assets 0.3
13.1
Total $ 0.3
$ 13.5
Liabilities from interest rate risk management activities:
Accrued expenses and other current liabilities $ 0.5
$ 0.1
Other liabilities 13.9
1.7
Total $ 14.4
$ 1.8



	March 31, 2020		December 31, 2019
Assets from interest rate risk management activities:
Other long-term assets	$	—	$	1.9
Liabilities from interest rate risk management activities:
Accrued expenses and other current liabilities	$	4.4	$	2.8
Long-term interest rate swap liabilities	41.7		4.4
Total long-term liabilities from interest rate risk management activities	$	46.1	$	7.2

Included in Accumulated other comprehensive income (loss) as of ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ were unrealized gains (losses), net of ~~income taxes,~~tax, totaling ~~$10.8~~($35.2) million and ~~$15.9~~$4.4 million, respectively, related to the Company’s interest rate swaps.

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GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)– (Continued)

The following tables present the impact of the Company’s interest rate swaps (in millions):


	Amount of Unrealized Income (Loss), Net of Tax, Recognized in Other Comprehensive Income (Loss)						Amount of Unrealized Income (Loss), Net of Tax, Recognized in Other Comprehensive Income (Loss)
	Nine Months Ended September 30,						Three Months Ended March 31,
Derivatives in Cash Flow Hedging Relationship	2019			2018			2020			2019
Interest rate swaps	$	(19.2	)	$	14.0		$	(31.6	)	$	(4.2	)

	Amount of Income (Loss) Reclassified from Other Comprehensive Income (Loss) into Statements of Operations						Amount of Income (Loss) Reclassified from Other Comprehensive Income (Loss) into Statements of Operations
Location of Income (Loss) Reclassified from Other Comprehensive Income (Loss) into Statements of Operations	Nine Months Ended September 30,						Three Months Ended March 31,
	2019			2018			2020			2019
Floorplan interest expense, net	$	0.4		$	(4.0	)	$	(0.6	)	$	0.3
Other interest expense, net	$	0.3		$	(0.5	)	$	(0.1	)	$	0.1

The net amount of loss expected to be reclassified out of Accumulated other comprehensive income (loss) into earnings as an offset to Floorplan interest expense or Other interest expense, net in the next twelve months is ~~$0.5~~$4.4 million.

7. RECEIVABLES AND CONTRACT ASSETS, NET

The Company’s financial assets measured at amortized cost and the associated allowance for doubtful accounts consisted of the following (in millions):



	March 31, 2020		December 31, 2019
Contracts-in-transit and vehicle receivables, net
Contracts-in-transit	$	67.0	$	169.9
Vehicle receivables	48.7		84.3
Total contracts-in-transit and vehicle receivables	115.8		254.1
Less: allowance for doubtful accounts ⁽¹⁾	0.3		0.3
Total contracts-in-transit and vehicle receivables, net	$	115.5	$	253.8

Accounts and notes receivables, net
Manufacturer receivables	$	97.5	$	124.0
Parts and service receivables	51.2		57.0
F&I receivables	19.0		28.3
Other	12.8		18.6
Total accounts and notes receivables	180.5		227.9
Less: allowance for doubtful accounts ⁽¹⁾	3.4		2.8
Total accounts and notes receivables, net	$	177.1	$	225.1

Within Other current assets and Other long-term assets
Total contract assets, net ^{(1), (2)}	$	22.7	$	21.6

⁽¹⁾ The allowance for doubtful accounts as of March 31, 2020 is calculated under the current expected credit loss (“CECL”) model described below, which was introduced under ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASC 326”), that became effective for the Company on January 1, 2020. The adoption of ASC 326 did not materially change the calculation of the allowance for doubtful accounts.

⁽²⁾ No allowance for doubtful accounts was recorded for Contract assets, net as of March 31, 2020 or December 31, 2019. No past due balances existed as of either date, and there were no expected credit losses as of March 31, 2020.

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GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)– (Continued)

The CECL model applies to financial assets measured at amortized cost, as shown in the table above, and requires the Company to reflect expected credit losses over the remaining contractual term of the asset. As the large majority of the Company’s receivables settle within 30 days, the forecast period under the CECL model is a relatively short horizon. The Company uses an aging method to estimate allowances for doubtful accounts under the CECL model as the Company has determined that the aging method adequately reflects expected credit losses, as corroborated by historical loss-rates. However, the Company will apply adjustments for asset-specific factors and current economic conditions as needed at each reporting date.

The Company recorded an adjustment of approximately $0.4 million for expected credit losses as of March 31, 2020 as a result of adverse economic conditions in the U.S. arising from the COVID-19 pandemic. The adjustment primarily impacted receivables that were not past due and thus were not subject to estimated credit losses under the aging method.

8. INTANGIBLES

The Company evaluates its intangible assets, consisting entirely of indefinite-lived franchise rights and goodwill, for impairment annually, or more frequently if events or circumstances indicate possible impairment. The Company performs interim reviews of its intangible assets when evidence exists that the carrying value may not be recoverable.

As described in Note 1 “Interim Financial Information,” since emerging in December 2019, the COVID-19 pandemic has spread globally, including to all of the Company’s markets in the U.S., U.K. and Brazil, significantly impacting the Company’s operating results starting in March. Measures taken by international, federal, state and local public health and governmental authorities to contain and combat the outbreak and spread of the COVID-19 pandemic have either completely shut down or significantly reduced operating capacity of all of the Company’s dealerships in the U.S., the U.K. and Brazil. The length of the stay-at-home orders, travel restrictions and other restrictions on operating businesses is uncertain. To date, these measures have significantly reduced the Company’s new and used vehicle sales volumes, parts and service revenues and F&I revenues, as well as impacted the Company’s inventory supply chain.

During the three months ended March 31, 2020, the Company performed an interim impairment assessment of goodwill and intangible franchise rights to determine if events or changes in circumstances, including the impact of the COVID-19 pandemic, indicated that it was more-likely-than-not that the assets were impaired. This included an initial qualitative assessment of factors potentially indicating a more-likely-than-not impairment. Based on the results of the assessment, it was concluded that it was not more-likely-than-not that the Company’s goodwill and intangible franchise rights were impaired as of March 31, 2020, mainly due to the belief that the impact from the COVID-19 pandemic on the Company’s business is temporary in nature. If the Company’s assumptions around the temporary nature of the impact or strength of recovery change in future periods, this could result in a more-likely-than-not impairment.

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GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)– (Continued)

9. DEBT

Long-term debt consisted of the following (in millions):



	March 31, 2020			December 31, 2019
5.00% Senior Notes due June 1, 2022	$	550.0		$	550.0
5.25% Senior Notes redeemed April 2, 2020 ⁽¹⁾	300.0			300.0
Acquisition Line	68.1			72.5
Real estate related	455.9			453.3
Finance leases	87.4			83.0
Other	38.4			42.8
Total debt	1,499.8			1,501.7
Less: unamortized discount on 5.00% and 5.25% Notes	(5.1		)	(5.6		)
Less: unamortized debt issuance costs	(2.3		)	(4.8		)
Less: current maturities ⁽¹⁾	(354.7		)	(59.1		)
Long-term debt	$	1,137.7		$	1,432.1

⁽¹⁾The Company’s 5.25% Senior Notes were fully redeemed on April 2, 2020 and therefore the debt balance of $297.5 million, net of unamortized discount and debt issuance costs, was included in current maturities as of March 31, 2020. See Subsequent 5.25% Senior Notes Redemption and Debt Refinancing for further discussion.

Acquisition Line

The proceeds of the Acquisition Line are used for working capital, general corporate and acquisition purposes.As of March 31, 2020, borrowings under the Acquisition Line, a component of the Revolving Credit Facility (as described in Note 10, “Floorplan Notes Payable”), totaled $68.1 million. The average interest rate on this facility was 1.85% during the three months ended March 31, 2020, representing the applicable rate for borrowings in GBP.

Real Estate Related

The Company has mortgage loans in the U.S., U.K. and Brazil that are paid in monthly installments. As of March 31, 2020, borrowings outstanding under these facilities totaled $455.9 million, gross of debt issuance costs, comprised of $366.0 million in the U.S., $78.9 million in the U.K. and $11.0 million in Brazil.

Subsequent 5.25% Senior Notes Redemption and Debt Refinancing

On April 2, 2020, the Company fully redeemed $300.0 million in aggregate principal amount of its outstanding 5.25% Senior Notes due June 2023, at a premium of 102.625%. The total redemption price, consisting of the principal amount of the notes redeemed plus associated premium, amounted to $307.9 million. The Company recognized a loss on redemption of $10.4 million which included write offs of unamortized discount in the amount of $1.9 million and unamortized premium in the amount of $0.6 million. Additionally, the Company paid accrued interest of $4.6 million. The redemption was funded through a combination of Acquisition Line borrowings, mortgage borrowings and excess cash. Additional mortgage debt will be funded during the second quarter of 2020 to provide supplemental liquidity. From April 1, 2020 through the date of this filing, the Company entered into additional mortgage loans in the U.S. totaling approximately $130 million.

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GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)– (Continued)

10. FLOORPLAN NOTES PAYABLE

The Company’s floorplan notes payable consisted of the following (in millions):



	March 31, 2020			December 31, 2019
Revolving credit facility — floorplan notes payable	$	1,207.8		$	1,206.0
Revolving credit facility — floorplan notes payable offset account	(82.6		)	(106.8		)
Revolving credit facility — floorplan notes payable, net	1,125.1			1,099.1
Other non-manufacturer facilities	43.5			45.3
Floorplan notes payable — credit facility and other, net	$	1,168.6		$	1,144.4

FMCC facility	$	235.5		$	208.5
FMCC facility offset account	(0.2		)	(4.1		)
FMCC facility, net	235.4			204.5
Other manufacturer affiliate facilities	249.5			255.4
Floorplan notes payable — manufacturer affiliates, net	$	484.9		$	459.9

Floorplan Notes Payable - Credit Facility

Revolving Credit Facility

In the U.S., the Company has a $1.75 billion revolving syndicated credit arrangement with 22 participating financial institutions that matures on June 27, 2024 (“Revolving Credit Facility”). The Revolving Credit Facility consists of two tranches: (i) a $1.70 billion maximum capacity tranche for U.S. vehicle inventory floorplan financing (“Floorplan Line”) which the outstanding balance, net of offset account discussed below, is reported in Floorplan notes payable - credit facility and other, net;and (ii) a$349.0 million maximum capacity and $50.0 million minimum capacity tranche (“Acquisition Line”), which is not due until maturity of the Revolving Credit Facility and is therefore classified in Long-termdebt - see Note 9 “Debt” for additional discussion. The capacity under these two tranches can be re-designated within the overall $1.75 billion commitment, subject to the aforementioned limits. The Acquisition Line includes a $100 million sub-limit for letters of credit. As of March 31, 2020 and December 31, 2019, the Company had $20.6 million and $23.6 million, respectively, in outstanding letters of credit.

The Floorplan Line bears interest at rates equal to the LIBOR plus 110 basis points for new vehicle inventory and LIBOR plus 140 basis points for used vehicle inventory. The weighted average interest rate on the Floorplan Line was 1.76% as of March 31, 2020, excluding the impact of the Company’s interest rate derivative instruments. The Acquisition Line bears interest at LIBOR or a LIBOR equivalent plus 100 to 200 basis points, depending on the Company’s total adjusted leverage ratio, on borrowings in U.S. dollars, Euros or British pound sterling. The Floorplan Line requires a commitment fee of 0.15% per annum on the unused portion. Amounts borrowed by the Company under the Floorplan Line for specific vehicle inventory are to be repaid upon the sale of the vehicle financed and in no case is a borrowing for a vehicle to remain outstanding for greater than one year. The Acquisition Line requires a commitment fee ranging from 0.15% to 0.40% per annum, depending on the Company’s total adjusted leverage ratio, based on a minimum commitment of $50.0 million less outstanding borrowings.

In conjunction with the Revolving Credit Facility, the Company has $4.5 million of related unamortized debt issuance costs as of March 31, 2020, which are included in Prepaid expenses and Other long-term assets in the Company’s Condensed Consolidated Balance Sheets and amortized over the term of the facility.

Offset accounts

Offset accounts consist of immediately available cash used to pay down the Floorplan Line and FMCC Facility, and therefore offset the respective outstanding balances in the Company’s Condensed Consolidated Balance Sheets. The offset accounts are the Company’s primary options for the short-term investment of excess cash.

Floorplan Notes Payable - Manufacturer Affiliates

FMCC Facility

The Company has a $300.0 million floorplan arrangement with FMCC for financing of new Ford vehicles in the U.S. This facility bears interest at a rate of Prime plus 150 basis points minus certain incentives. The interest rate on the FMCC Facility was 4.75% before considering the applicable incentives as of March 31, 2020.

Table of Contents

GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)– (Continued)

Other Manufacturer Facilities

The Company has other credit facilities in the U.S., U.K. and Brazil with financial institutions affiliated with manufacturers for financing of new, used and rental vehicle inventories. As of March 31, 2020, borrowings outstanding under these facilities totaled $249.5 million, comprised of $109.6 million in the U.S., with annual interest rates ranging from less than 1% to approximately 5%, $126.0 million in the U.K., with annual interest rates ranging from approximately 1% to 4%, and $13.9 million in Brazil, with annual interest rates ranging from approximately 4% to 14%.

11. CASH FLOW INFORMATION

Cash, Cash Equivalents and Restricted Cash

The total amounts presented on the Company’s Condensed Consolidated Statements of Cash Flows include cash, cash equivalents and restricted cash. As of March 31, 2020, the Company had cash and cash equivalents of $19.2 million and as of December 31, 2019, the Company had cash and cash equivalents of $23.8 million and restricted cash of $4.3 million included in Other long-term assets.

Non-cash Activities

The Company had a net increase of $0.7 million and a net decrease of $4.1 million in the accrual for capital expenditures for the three months ended March 31, 2020 and 2019, respectively.

The following table presents ROU assets obtained in exchange for lease obligations (in millions):



	Three Months Ended March 31,
	2020			2019
ROU assets obtained in exchange for lease obligations:
Operating leases, initial recognition	$	0.1		$	4.3
Operating leases, modifications and remeasurements	$	11.9		$	0.7
Finance leases, initial recognition	$	10.0		$	—
Finance leases, modifications and remeasurements	$	(1.5	)	$	—

Interest and Income Taxes Paid

Cash paid for interest, including the monthly settlement of the Company’s interest rate derivatives, was $19.9 million and $21.9 million for the three months ended March 31, 2020 and 2019, respectively. The Company received a net tax refund of $6.2 million for the three months ended March 31, 2020. Cash paid for income taxes, net of refunds, was $1.2 million for the three months ended March 31, 2019.

12. COMMITMENTS AND CONTINGENCIES

From time to time, the Company’s dealerships are named in various types of litigation involving customer claims, employment matters, class action claims, purported class action claims, as well as claims involving the manufacturers of automobiles, contractual disputes and other matters arising in the ordinary course of business. The Company may be involved in legal proceedings or suffer losses that could have a material adverse effect on the Company’s business. In the normal course of business, the Company is required to respond to customer, employee and other third-party complaints. In addition, the manufacturers of the vehicles that the Company sells and services have audit rights allowing them to review the validity of amounts claimed for incentive, rebate or warranty-related items and charge the Company back for amounts determined to be invalid payments under the manufacturers’ programs, subject to the Company’s right to appeal any such decision.

Legal Proceedings

As of ~~September 30, 2019,~~March 31, 2020, the Company was not party to any legal proceedings that, individually or in the aggregate, are reasonably expected to have a material adverse effect on the Company’s results of operations, financial condition or cash flows, including class action lawsuits. However, the results of current or future matters cannot be predicted with certainty and an unfavorable resolution of one or more of such matters could have a material adverse effect on the Company’s results of operations, financial condition or cash flows.

Table of Contents

GROUP 1 AUTOMOTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)– (Continued)

Other Matters

The Company has sold a number of dealerships to third parties and as a condition to certain of those dispositions, remains liable for the remaining lease payments of such dealerships in the event of non-payment by the purchaser. Although the Company has no reason to believe that it will be called upon to perform under any such assigned leases, the Company estimates that lessee remaining rental obligations were ~~$39.9~~$38.5 million as of ~~September 30, 2019.~~

~~11. LEASES~~

~~The Company leases real estate, office equipment, dealership operating assets under long-term lease agreements and subleases~~March 31, 2020. In certain ~~real estate to third parties. For leases effective on or after January 1, 2019,~~instances, the Company ~~determines if an arrangement is a lease at inception and recognizes ROU assets and lease liabilities at commencement date based on~~obtains collateral support for the present value of lease payments over the lease term. For such leases, the aggregate present value of the Company’s lease payments may include options to purchase the leased property or lease terms with options to renew or terminate the lease, when it is reasonably certainrental obligations that the Company ~~will exercise such an option. The exercise~~remains obligated upon sale of ~~lease renewals, terminations, or purchase options~~a dealership to a lessee. Total associated letters of credit issued on behalf of the lessee where the Company is ~~generally at~~ the Company’s discretion. The Company’s leases may also include rental payments adjusted periodically for inflation. Payments based on a change in an index or rates are not considered in the determination of lease payments for purposes of measuring the related lease liability. The Company discounts lease payments using its incremental borrowing rate based on information availablebeneficiary was $6.1 million as of the measurement date. Subsequent to the recognition of its ROU assets and lease liabilities, the Company recognizes lease expense related to its operating lease payments on a straight-line basis over the lease term. None of the Company’s lease agreements contain material residual value guarantees or material restrictive covenants.

The Company performs interim reviews of its ROU assets for impairment when evidence exists that the carrying value of an asset may not be recoverable. During the three months ended September 30, 2019, the Company recognized a ROU asset impairment charge of $1.4 million relating to 2 operating leases within the U.K. segment. The impairment charge was recognized within ~~Asset impairments~~ ~~in the Company's Condensed Consolidated Statements of Operations.~~

~~Additional information regarding the Company’s operating and finance leases is as follows (in millions, except for lease term and discount rate information):~~

Leases Balance Sheet Classification September 30, 2019
Assets:
Operating Operating lease assets $ 204.7
Finance Property and equipment, net 59.0
Total $ 263.7
Liabilities:
Current:
Operating Current operating lease liabilities $ 23.9
Finance Current maturities of long-term debt 6.4
Noncurrent:
Operating Operating lease liabilities, net of current portion 195.5
Finance Long-term debt, net of current maturities 59.7
Total $ 285.5

Lease Expense Income Statement Classification Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019
Operating Selling, general and administrative expenses $ 10.0
$ 31.1
Operating Asset impairments 1.4
1.4
Variable Selling, general and administrative expenses 0.6
1.6
Sublease income Selling, general and administrative expenses (0.4 ) (1.0 )
Finance:
Amortization of lease assets Depreciation and amortization expense 1.7
4.1
Interest on lease liabilities Other interest expense, net 1.5
3.5
Net lease expense $ 14.8
$ 40.7

September 30, 2019
Maturities of Lease Liabilities Operating Leases Finance Leases
2019 (excluding the nine months ended September 30, 2019) $ 6.8
$ 4.6
2020 38.5
8.5
2021 36.7
8.5
2022 32.4
8.4
2023 29.4
7.2
Thereafter 170.0
65.6
Total lease payments 313.8

102.8
Less: Interest (94.4 ) (36.7 )
Present value of lease liabilities $ 219.4

$ 66.1



~~Weighted-Average Lease Term and Discount Rate~~	~~September 30, 2019~~
~~Weighted-average remaining lease terms:~~
~~Operating~~	~~11.5~~
~~Financing~~	~~14.6~~
~~Weighted-average discount rates:~~
~~Operating~~	~~5.9~~	%
~~Financing~~	~~7.8~~	%

Other Information Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
  Operating cash flows from operating leases $ 31.1
  Operating cash flows from finance leases $ 3.5
  Financing cash flows from finance leases $ 2.7
Right-of-use assets obtained in exchange for lease obligations:
Operating leases, initial recognition $ 18.2
Operating leases, modifications and remeasurements $ (9.5 )
Finance leases, initial recognition $ 14.0
Finance leases, modifications and remeasurements $ 8.2

March 31, 2020.

~~12. INTANGIBLES~~

~~The following is a roll-forward of the company’s goodwill accounts by reportable segment (in millions):~~

Goodwill
U.S. U.K. Brazil Total
Balance, December 31, 2018 ⁽¹⁾
$ 861.6
$ 87.6
$ 14.7
$ 963.9
Additions through acquisitions 19.3
1.3
—
20.6
Disposals and purchase price allocation adjustments (1.3 ) —
(0.3 ) (1.6 )
Currency translation —
(3.0 ) (0.9 ) (3.9 )
Balance, September 30, 2019 ⁽¹⁾
$ 879.6
$ 85.9
$ 13.5
$ 979.0

⁽¹⁾~~Net of accumulated impairments of $97.8 million. There were 0 impairments to goodwill during the nine months ended September 30, 2019.~~

The Company evaluates its intangible assets, consisting entirely of indefinite-lived franchise rights and goodwill assets, for impairment annually, or more frequently if events or circumstances indicate possible impairment. The Company performs interim reviews of its intangible assets when evidence exists that the carrying value may not be recoverable. The ongoing uncertainty related to the ultimate resolution of the Referendum of the United Kingdom’s Membership of the European Union

(“E.U.”) advising for the exit of the U.K. from the E.U. (referred to as “Brexit”), continues to generate much uncertainty in the U.K., as well as in global markets. During the three months ended September 30, 2019, as a result of increased uncertainty in the U.K. regarding the outcome and timing of Brexit and the related impact on our U.K. new vehicle business and certain U.S. dealerships identified in our quarterly review, the Company identified circumstances indicating possible impairment of its franchise rights, requiring a quantitative assessment as of August 31, 2019. In estimating fair value, the Company used a direct value method discounted cash flow model, or income approach, specifically the excess earnings method. Significant inputs to the model included an estimated weighted average cost of capital and estimated residual values at the end of the forecasted period, which were unobservable inputs, or level 3 in the fair value hierarchy. Based on the results of the Company's assessment, the Company determined that the fair value of the franchise rights on 7 of its U.K. dealerships and 1 of its U.S. dealerships were below its respective carrying values. This resulted in franchise rights impairment charges of $5.6 million in the U.K segment and $3.0 million in the U.S. segment. The impairment charges were recognized within ~~Asset impairments~~ ~~in the Company's Condensed Consolidated Statements of Operations. There were no events or circumstances indicating possible impairments of goodwill.~~

During the three months ended September 30, 2019, the Company recorded $3.1 million in additional indefinite-lived intangible franchise rights and $19.3 million in additional goodwill associated with acquisitions in the U.S. and $1.3 million in additional goodwill associated with acquisitions in the U.K. See Note 3, “Acquisitions and Dispositions”, for additional discussion.

13. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Changes in the balances of each component of ~~accumulated~~Accumulated other comprehensive income (loss) ~~for the nine months ended September 30, 2019 and 2018~~ were as follows (in millions):


	Nine Months Ended September 30, 2019									Three Months Ended March 31, 2020
	Accumulated income (loss) on foreign currency translation			Accumulated income (loss) on interest rate swaps			Total			Accumulated income (loss) on foreign currency translation			Accumulated income (loss) on interest rate swaps			Total
Balance, December 31, 2018	$	(146.7	)	$	8.9		$	(137.8	)
Balance, December 31, 2019										$	(142.9	)	$	(4.1	)	$	(147.0	)
Other comprehensive income (loss) before reclassifications:
Pre-tax	(12.0		)	(25.2		)	(37.2		)	(27.9		)	(41.3		)	(69.2		)
Tax effect	—			6.0			6.0			—			9.7			9.7
Amounts reclassified from accumulated other comprehensive income (loss):
Floorplan interest expense (pre-tax)	—			(0.4		)	(0.4		)	—			0.6			0.6
Other interest expense, net (pre-tax)	—			(0.4		)	(0.4		)	—			0.1			0.1
Realized (gain) loss on interest rate swap termination (pre-tax)	—			0.1			0.1
Provision (benefit) for income taxes	—			0.2			0.2			—			(0.2		)	(0.2		)
Net current period other comprehensive income (loss)	(12.0		)	(19.7		)	(31.7		)	(27.9		)	(31.1		)	(59.0		)
Balance, September 30, 2019	$	(158.7	)	$	(10.8	)	$	(169.5	)
Balance, March 31, 2020										$	(170.8	)	$	(35.2	)	$	(206.0	)


	Nine Months Ended September 30, 2018									Three Months Ended March 31, 2019
	Accumulated income (loss) on foreign currency translation			Accumulated income (loss) on interest rate swaps			Total			Accumulated income (loss) on foreign currency translation			Accumulated income (loss) on interest rate swaps			Total
Balance, December 31, 2017	$	(122.5	)	$	(0.7	)	$	(123.2	)
Balance, December 31, 2018										$	(146.7	)	$	8.9		$	(137.8	)
Other comprehensive income (loss) before reclassifications:
Pre-tax	(22.2		)	18.4			(3.8		)	3.6			(5.6		)	(1.9		)
Tax effect	—			(4.4		)	(4.4		)	—			1.3			1.3
Amounts reclassified from accumulated other comprehensive income (loss) to:
Floorplan interest expense (pre-tax)	—			4.0			4.0			—			(0.3		)	(0.3		)
Other interest expense (pre-tax)	—			0.5			0.5			—			(0.1		)	(0.1		)
Realized (gain) loss on interest rate swap termination (pre-tax)	—			(0.9		)	(0.9		)
Provision (benefit) for income taxes	—			(0.9		)	(0.9		)	—			0.1			0.1
Net current period other comprehensive income (loss)	(22.2		)	16.7			(5.5		)	3.6			(4.6		)	(1.0		)
Tax effects reclassified from accumulated other comprehensive income (loss)	—			(0.1		)	(0.1		)
Balance, September 30, 2018	$	(144.7	)	$	15.9		$	(128.8	)
Balance, March 31, 2019										$	(143.1	)	$	4.4		$	(138.7	)

~~14. SEGMENT INFORMATION~~

As of September 30, 2019, the Company had 3 reportable segments: the U.S., the U.K. and Brazil. The reportable segments are the business activities of the Company for which discrete financial information is available and for which operating results are regularly reviewed by its chief operating decision maker (“CODM”) to allocate resources and assess performance. The Company’s CODM is its Chief Executive Officer. Each of the reportable segments is comprised of retail automotive franchises which sell new and used cars, light duty trucks, arrange related vehicle financing, sell service and insurance contracts, provide automotive maintenance and repair services and sell vehicle parts. The vast majority of the Company’s corporate activities are associated with the operations of the U.S. reportable segment and, therefore, the corporate financial results are included within the U.S. reportable segment.

~~Reportable segment revenues and income (loss) before income taxes were as follows for the three and nine months ended September 30, 2019 and 2018 (in millions):~~

Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019
U.S. U.K. Brazil Total U.S. U.K. Brazil Total
Total revenues $ 2,422.8
$ 584.6
$ 110.9
$ 3,118.3
$ 6,764.3
$ 1,841.2
$ 326.9
$ 8,932.4
Income (loss) before income taxes ⁽¹⁾
$ 54.6
$ (7.4 ) $ 1.8
$ 49.0
$ 164.8
$ (2.7 ) $ 2.3
$ 164.4

Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018
U.S. U.K. Brazil Total U.S. U.K. Brazil Total
Total revenues $ 2,200.2
$ 585.9
$ 103.0
$ 2,889.1
$ 6,456.5
$ 1,913.5
$ 322.5
$ 8,692.5
Income (loss) before income taxes ⁽²⁾
$ 43.4
$ 2.7
$ (1.7 ) $ 44.4
$ 152.9
$ 14.4
$ (1.6 ) $ 165.7

⁽¹⁾ ~~Income (loss) before income taxes for the three months ended September 30, 2019 includes~~ ~~$11.9 million~~ in expense related to flood damage from Tropical Storm Imelda in Texas and $3.3 million in asset impairment charges in the U.S. segment and $7.0 million in asset impairment charges in the U.K. segment. Income (loss) before taxes for the nine months ended September 30, 2019 includes $17.8 million in expense related to flood damage from Tropical Storm Imelda and hail storm damages in Texas and $3.3 million in asset impairment charges in the U.S. segment, $7.0 million in asset impairment charges in the U.K. segment and $0.5 million in asset impairment charges in the Brazil segment.

⁽²⁾ Income (loss) before income taxes for the three months ended September 30, 2018 includes $23.2 million in asset impairment charges in the U.S. segment. Income (loss) before taxes for the nine months ended September 30, 2018 includes $5.8 million of expense related to hail storm damages and $27.4 million in asset impairment charges in the U.S. segment.

~~15. RECEIVABLES, NET~~

~~The Company’s Accounts and notes receivable consisted of the following (in millions):~~

September 30, 2019 December 31, 2018
Amounts due from manufacturers $ 111.8
$ 105.1
Parts and service receivables 57.0
52.0
Finance and insurance receivables 24.9
26.4
Other 31.0
13.7
Total accounts and notes receivable 224.7
197.2
Less: allowance for doubtful accounts 2.5
3.2
Accounts and notes receivable, net $ 222.2
$ 194.0

The Contracts-in-transit and vehicle receivables, net balance within the Company’s Condensed Consolidated Balance Sheets was offset by an allowance of $0.3 million and $0.3 million as of September 30, 2019 and December 31, 2018, respectively.

~~16. CONDENSED CONSOLIDATING FINANCIAL INFORMATION~~

The following tables include condensed consolidating financial information as of September 30, 2019 and December 31, 2018 and for the three and nine months ended September 30, 2019 and 2018, respectively, for Group 1 Automotive, Inc. (as issuer of the 5.00% Notes) and its guarantor and non-guarantor subsidiaries (representing foreign entities). The condensed consolidating financial information includes certain allocations of balance sheet, statement of operations and cash flows items that are not necessarily indicative of the financial position, results of operations, or cash flows of these entities had they operated on a stand-alone basis. In accordance with Rule 3-10 of Regulation S-X, condensed consolidated financial statements of non-guarantors are not required. The Company has no assets or operations independent of its subsidiaries. Obligations under the 5.00% Notes are fully and unconditionally and jointly and severally guaranteed on a senior unsecured basis by the Company’s current 100%-owned domestic subsidiaries and certain of the Company’s future domestic subsidiaries, with the exception of the Company’s “minor” subsidiaries (as defined by Rule 3-10 of Regulation S-X). There are no significant restrictions on the ability of the Company or subsidiary guarantors for the Company to obtain funds from its subsidiary guarantors by dividend or loan. None of the subsidiary guarantors’ assets represent restricted assets pursuant to SEC Rule 4-08(e)(3) of Regulation S-X.

~~CONDENSED CONSOLIDATED BALANCE SHEET~~

~~As of September 30, 2019~~

~~(Unaudited, in millions)~~

Group 1 Automotive, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Elimination Total Company
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ —
$ 4.0
$ 37.0
$ —
$ 41.0
Contracts-in-transit and vehicle receivables, net —
185.9
70.3
—
256.2
Accounts and notes receivable, net 0.1
173.8
48.3
—
222.2
Intercompany accounts receivable 49.2
10.3
—
(59.5 ) —
Inventories, net —
1,466.9
325.8
—
1,792.7
Prepaid expenses and other current assets 0.6
20.6
53.2
—
74.4
TOTAL CURRENT ASSETS 49.9
1,861.5
534.6
(59.5 ) 2,386.5
Property and equipment, net of accumulated depreciation of $380.5 —
1,233.2
251.6
—
1,484.8
Operating lease assets —
118.5

86.2

—
204.7
Goodwill —
879.7
99.3
—
979.0
Intangible franchise rights —
224.5
28.4
—
252.9
Investment in subsidiaries 3,282.7
—
—
(3,282.7 ) —
Other assets —
11.9
9.2
—
21.1
TOTAL ASSETS $ 3,332.6
$ 4,329.3
$ 1,009.3
$ (3,342.2 ) $ 5,329.0

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Floorplan notes payable — credit facility and other, net of offset account of $25.0 $ —
$ 1,164.7
$ 35.1
$ —
$ 1,199.8
Floorplan notes payable — manufacturer affiliates, net of offset account of $0.2 —
279.3
131.2
—
410.5
Current maturities of long-term debt —
38.0
28.0
—
66.0
Current operating lease liabilities —
17.2
6.7
—
23.9
Accounts payable —
211.6
271.7
—
483.3
Intercompany accounts payable 1,253.5
—
75.9
(1,329.4 ) —
Accrued expenses and other current liabilities —
182.0
31.8
—
213.8
TOTAL CURRENT LIABILITIES 1,253.5
1,892.8
580.4
(1,329.4 ) 2,397.3
Long-term debt, net of current maturities 891.4
306.7
109.9
—
1,308.0
Operating lease liabilities, net of current portion —
109.1
86.4
—
195.5
Deferred income taxes and other liabilities 1.4
236.4
4.1
—
241.9
STOCKHOLDERS’ EQUITY:
Group 1 stockholders’ equity 1,186.3
3,054.2
228.5
(3,282.7 ) 1,186.3
Intercompany note receivable —
(1,269.9 ) —
1,269.9
—
TOTAL STOCKHOLDERS’ EQUITY 1,186.3
1,784.3
228.5
(2,012.8 ) 1,186.3
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 3,332.6
$ 4,329.3
$ 1,009.3
$ (3,342.2 ) $ 5,329.0

~~CONDENSED CONSOLIDATED BALANCE SHEET~~

~~As of December 31, 2018~~

~~(In millions)~~

Group 1 Automotive, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Elimination Total Company
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ —
$ 4.6
$ 11.3
$ —
$ 15.9
Contracts-in-transit and vehicle receivables, net —
232.1
33.6
—
265.7
Accounts and notes receivable, net —
153.9
40.1
—
194.0
Intercompany accounts receivable 31.9
21.6
—
(53.5 ) —
Inventories, net —
1,468.5
375.6
—
1,844.1
Prepaid expenses and other current assets 1.0
32.1
49.6
—
82.7
TOTAL CURRENT ASSETS 32.9
1,912.8
510.2
(53.5 ) 2,402.4
Property and equipment, net of accumulated depreciation of $347.3 —
1,124.5
223.3
—
1,347.8
Goodwill —
861.6
102.3
—
963.9
Intangible franchise rights —
224.4
35.2
—
259.6
Investment in subsidiaries 3,100.9
—
—
(3,100.9 ) —
Other assets —
16.2
11.2
—
27.4
TOTAL ASSETS $ 3,133.8
$ 4,139.5
$ 882.2
$ (3,154.4 ) $ 5,001.1

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Floorplan notes payable — credit facility and other, net of offset account of $33.6 $ —
$ 1,217.8
$ 41.1
$ —
$ 1,258.9
Floorplan notes payable — manufacturer affiliates, net of offset account of $0.1 —
276.7
141.1
—
417.8
Current maturities of long-term debt —
73.9
19.1
—
93.0
Accounts payable —
201.0
218.4
—
419.4
Intercompany accounts payable 1,165.0
—
53.4
(1,218.4 ) —
Accrued expenses and other current liabilities —
165.0
32.6
—
197.6
TOTAL CURRENT LIABILITIES 1,165.0
1,934.4
505.7
(1,218.4 ) 2,386.7
Long-term debt, net of current maturities 872.3
294.3
114.8
—
1,281.4
Deferred income taxes and other liabilities 0.8
224.7
11.8
—
237.3
STOCKHOLDERS’ EQUITY:
Group 1 stockholders’ equity 1,095.7
2,851.0
249.9
(3,100.9 ) 1,095.7
Intercompany note receivable —
(1,164.9 ) —
1,164.9
—
TOTAL STOCKHOLDERS’ EQUITY 1,095.7
1,686.1
249.9
(1,936.0 ) 1,095.7
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 3,133.8
$ 4,139.5
$ 882.2
$ (3,154.4 ) $ 5,001.1

~~CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)~~

~~Three Months Ended September 30, 2019~~

~~(Unaudited, in millions)~~

Group 1 Automotive, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Elimination Total Company
Revenues $ —
$ 2,422.8
$ 695.5
$ —
$ 3,118.3
Cost of sales —
2,035.9
616.8
—
2,652.7
Gross profit —
386.9
78.7
—
465.6
Selling, general and administrative expenses 0.4
283.7
69.9
—
354.0
Depreciation and amortization expense —
13.8
4.2
—
18.0
Asset impairments —
3.3
7.0
—
10.3
Income (loss) from operations (0.4 ) 86.1
(2.4 ) —
83.3
Interest expense:
Floorplan interest expense —
13.3
2.1
—
15.4
Other interest expense, net —
16.6
2.3
—
18.9
Income (loss) before income taxes and equity in earnings of subsidiaries (0.4 ) 56.2
(6.8 ) —
49.0
(Benefit) provision for income taxes (0.1 ) 12.8
(1.7 ) —
11.0
Equity in earnings of subsidiaries 38.4
—
—
(38.4 ) —
Net income (loss) $ 38.1
$ 43.4
$ (5.1 ) $ (38.4 ) $ 38.0
Comprehensive income (loss) (17.0 ) (5.4 ) (11.6 ) 17.0
(17.0 )
Comprehensive income (loss) attributable to parent $ 21.1
$ 38.0
$ (16.7 ) $ (21.4 ) $ 21.0

~~CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)~~

~~Nine Months Ended September 30, 2019~~

~~(Unaudited, in millions)~~

Group 1 Automotive, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Elimination Total Company
Revenues $ —
$ 6,764.3
$ 2,168.1
$ —
$ 8,932.4
Cost of sales —
5,653.8
1,927.2
—
7,581.0
Gross profit —
1,110.5
240.9
—
1,351.4
Selling, general and administrative expenses 3.4
801.3
215.7
—
1,020.4
Depreciation and amortization expense —
41.3
11.7
—
53.0
Asset impairments —
3.2
7.6
—
10.8
Income (loss) from operations (3.4 ) 264.7
5.9
—
267.2
Interest expense:
Floorplan interest expense —
41.3
5.7
—
47.0
Other interest expense, net —
50.4
5.4
—
55.8
Income (loss) before income taxes and equity in earnings of subsidiaries (3.4 ) 173.0
(5.2 ) —
164.4
(Benefit) provision for income taxes (0.8 ) 41.0
(1.7 ) —
38.5
Equity in earnings of subsidiaries 128.5
—
—
(128.5 ) —
Net income (loss) $ 125.9
$ 132.0
$ (3.5 ) $ (128.5 ) $ 125.9
Comprehensive income (loss) (31.7 ) (19.8 ) (12.0 ) 31.8
(31.7 )
Comprehensive income (loss) attributable to parent $ 94.2
$ 112.2
$ (15.5 ) $ (96.7 ) $ 94.2

~~CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)~~

~~Three Months Ended September 30, 2018~~

~~(Unaudited, in millions)~~

Group 1 Automotive, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Elimination Total Company
Revenues $ —
$ 2,200.3
$ 688.8
$ —
$ 2,889.1
Cost of sales —
1,847.8
606.2
—
2,454.0
Gross profit —
352.5
82.6
—
435.1
Selling, general and administrative expenses 0.3
240.2
76.3
—
316.8
Depreciation and amortization expense —
13.5
3.4
—
16.9
Asset impairments —
23.2
—
—
23.2
Income (loss) from operations (0.3 ) 75.6
2.9
—
78.2
Interest expense:
Floorplan interest expense —
12.9
1.8
—
14.7
Other interest (income) expense, net —
17.2
1.9
—
19.1
Income (loss) before income taxes and equity in earnings of subsidiaries (0.3 ) 45.5
(0.8 ) —
44.4
(Benefit) provision for income taxes (0.1 ) 9.2
0.5
—
9.6
Equity in earnings of subsidiaries 35.0
—
—
(35.0 ) —
Net income (loss) $ 34.8
$ 36.3
$ (1.3 ) $ (35.0 ) $ 34.8
Comprehensive income (loss) —
3.5
(5.9 ) —
(2.4 )
Comprehensive income (loss) attributable to parent $ 34.8
$ 39.8
$ (7.2 ) $ (35.0 ) $ 32.4

~~CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)~~

~~Nine Months Ended September 30, 2018~~

~~(Unaudited, in millions)~~

Group 1 Automotive, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Elimination Total Company
Revenues $ —
$ 6,456.7
$ 2,235.8
$ —
$ 8,692.5
Cost of sales —
5,417.9
1,981.6
—
7,399.5
Gross profit —
1,038.8
254.2
—
1,293.0
Selling, general and administrative expenses 2.7
721.3
225.2
—
949.2
Depreciation and amortization expense —
39.4
10.6
—
50.0
Asset impairments —
27.4
—
—
27.4
Income (loss) from operations (2.7 ) 250.7
18.4
—
266.4
Interest expense:
Floorplan interest expense —
38.0
5.3
—
43.3
Other interest expense, net —
51.6
5.8
—
57.4
Income (loss) before income taxes and equity in earnings of subsidiaries (2.7 ) 161.1
7.3
—
165.7
(Benefit) provision for income taxes (0.6 ) 36.5
2.8
—
38.6
Equity in earnings of subsidiaries 129.1
—
—
(129.1 ) —
Net income (loss) $ 127.1
$ 124.6
$ 4.5
$ (129.1 ) $ 127.1
Comprehensive income (loss) —
16.7
(22.2 ) —
(5.5 )
Comprehensive income (loss) attributable to parent $ 127.1
$ 141.3
$ (17.7 ) $ (129.1 ) $ 121.6

~~CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS~~

~~Nine Months Ended September 30, 2019~~

~~(Unaudited, in millions)~~

Group 1 Automotive, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Total Company
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by (used in) operating activities $ 125.9
$ 123.8
$ 61.1
$ 310.8
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid in acquisitions, net of cash received —
(67.7 ) (29.3 ) (97.0 )
Proceeds from disposition of franchises, property and equipment —
37.2
5.9
43.1
Purchases of property and equipment, including real estate —
(114.0 ) (25.5 ) (139.5 )
Other (0.1 ) —
—
(0.1 )
Net cash provided by (used in) investing activities (0.1 ) (144.5 ) (48.9 ) (193.5 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on credit facility - floorplan line and other —
5,274.6
36.6
5,311.2
Repayments on credit facility - floorplan line and other —
(5,322.6 ) (41.7 ) (5,364.3 )
Borrowings on credit facility - acquisition line 230.5
—
—
230.5
Repayments on credit facility - acquisition line (211.4 ) —
—
(211.4 )
Debt issue costs —
(3.2 ) —
(3.2 )
Borrowings on other debt —
36.6
94.2
130.8
Principal payments on other debt —
(42.2 ) (91.5 ) (133.7 )
Borrowings on debt related to real estate, net of debt issue costs —
74.8
—
74.8
Principal payments on debt related to real estate —
(106.5 ) (6.3 ) (112.8 )
Employee stock purchase plan purchases, net of employee tax withholdings 2.8
—
—
2.8
Dividends paid (14.8 ) —
—
(14.8 )
Borrowings (repayments) with subsidiaries 86.7
(111.4 ) 24.7
—
Investment in subsidiaries (219.6 ) 220.0
(0.4 ) —
Net cash provided by (used in) financing activities (125.8 ) 20.1
15.6
(90.1 )
Effect of exchange rate changes on cash —
—
(1.3 ) (1.3 )
Net increase (decrease) in cash, cash equivalents and restricted cash —
(0.6 ) 26.5
25.9
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period —
4.6
14.1
18.7
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period $ —
$ 4.0
$ 40.6
$ 44.6

~~CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS~~

~~Nine Months Ended September 30, 2018~~

~~(Unaudited, in millions)~~

Group 1 Automotive, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Total Company
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by (used in) operating activities $ 127.1
$ 192.9
$ 37.4
$ 357.4
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid in acquisitions, net of cash received —
(91.9 ) (43.5 ) (135.3 )
Proceeds from disposition of franchises, property and equipment —
101.4
6.3
107.7
Purchases of property and equipment, including real estate —
(79.5 ) (38.7 ) (118.3 )
Other 0.4
—
—
0.4
Net cash provided by (used in) investing activities 0.4
(70.0 ) (75.8 ) (145.5 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on credit facility - floorplan line and other —
5,036.1
70.7
5,106.8
Repayments on credit facility - floorplan line and other —
(5,124.9 ) (60.4 ) (5,185.2 )
Borrowings on credit facility - acquisition line 98.6
—
—
98.6
Repayments on credit facility - acquisition line (91.4 ) —
—
(91.4 )
Borrowings on other debt —
70.7
52.6
123.3
Principal payments on other debt (24.7 ) (36.2 ) (44.6 ) (105.6 )
Borrowings on debt related to real estate, net of debt issue costs —
42.7
12.1
54.7
Principal payments on debt related to real estate —
(71.8 ) (11.5 ) (83.2 )
Employee stock purchase plan purchases, net of employee tax withholdings 1.5
—
—
1.5
Repurchases of common stock, amounts based on settlement date (108.6 ) —
—
(108.6 )
Proceeds from termination of mortgage swap —
0.9
—
0.9
Dividends paid (16.0 ) —
—
(16.0 )
Borrowings (repayments) with subsidiaries 208.7
(219.2 ) 10.5
—
Investment in subsidiaries (195.4 ) 177.6
17.8
—
Net cash provided by (used in) financing activities (127.4 ) (124.0 ) 47.2
(204.2 )
Effect of exchange rate changes on cash —
—
(2.9 ) (2.9 )
Net increase (decrease) in cash, cash equivalents and restricted cash —
(1.0 ) 5.8
4.8
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period —
10.1
19.5
29.6
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period $ —
$ 9.1
$ 25.3
$ 34.4

CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Form 10-Q”) includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (“Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). Forward-looking statements may appear throughout this report including, but not limited to, the following sections: “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Quantitative and Qualitative Disclosures About Market Risk.” This information includes statements regarding our strategy, plans, goals or current expectations with respect to, among other things:

•our future operating performance;

•our ability to maintain or improve our margins;

•operating cash flows and availability of capital;

•the completion of future acquisitions and divestitures;

•the future revenues of acquired dealerships;

•future stock repurchases, refinancing of debt and dividends;

•future capital expenditures;

•changes in sales volumes and availability of credit for customer financing in new and used vehicles and sales volumes in the parts and service markets;

•business trends in the retail automotive industry, including the level of manufacturer incentives, new and used vehicle retail sales volume, customer demand, interest rates and changes in industry-wide inventory levels;

•manufacturer quality issues, including the recall of vehicles and any related negative impact on vehicle sales and brand reputation;

•availability of financing for inventory, working capital, real estate and capital expenditures; ~~and~~

•changes in regulatory practices, tariffs and taxes, including Brexit;

•the ~~Referendum~~impacts of any potential global recession;

•our ability to meet our financial covenants in our debt obligations and to maintain sufficient liquidity to operate; and

•the impacts of the ~~United Kingdom’s (“U.K.”) Membership of the European Union (“E.U.”) advising for the exit of the U.K. from the E.U. (referred to as “Brexit”).~~COVID-19 pandemic on our business.

Although we believe that the expectations reflected in these forward-looking statements are reasonable when and as made, we cannot assure you that these expectations will prove to be correct. When used in this Form 10-Q, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may” and similar expressions ~~as they relate to our company and management,~~ are intended to identify forward-looking ~~statements, which are generally not historical in nature.~~statements. These forward-looking statements are based on our expectations and beliefs as of the date of this Form 10-Q concerning future developments and their potential effect on us. 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. All comments concerning our expectations for future revenues and operating results are based on our forecasts for our existing operations and do not include the potential impact of any future acquisitions. Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections. Known material factors that could cause actual results to differ from those in the forward-looking statements include:

•adverse developments in the global economy as well as the public health crisis related to the COVID-19 pandemic and the resulting impact on the demand for new and used vehicles and related parts and services;

•uncertainty regarding the length of time it will take for the U.S. and the rest of the world to slow the spread of the COVID-19 pandemic to the point where applicable authorities are comfortable easing current restrictions on various commercial and economic activities;

•uncertainty regarding the timing, pace and extent of an economic recovery in the U.S. and elsewhere, which in turn will likely affect demand for our vehicles, parts and services;

•uncertainty regarding the future actions of foreign oil producers such as Saudi Arabia and Russia and the effect such actions could have on oil prices which have a ~~number~~significant impact on the local economies where many of ~~reasons, include:~~our dealerships operate in the U.S.;

•future deterioration in the economic environment, including consumer confidence, consumer preferences, interest rates, the prices of oil and gasoline, the level of manufacturer incentives, the implementation of international and domestic trade tariffs and the availability of consumer credit may affect the demand for new and used vehicles, replacement parts, maintenance and repair services, and ~~finance and insurance~~F&I products;

•adverse domestic and international developments such as war, terrorism, political conflicts or other hostilities may adversely affect the demand for our products and services;

• uncertainty of the potential impact of Brexit on the overall U.K. economy and, more specifically, the potential adverse effect on retail automotive industry sales could have a material adverse effect on our revenues and business ~~operations.~~operations;

•the existing and future regulatory environment, including legislation related to the Dodd-Frank Wall Street Reform and Consumer Protection Act, climate control ~~changes~~ legislation, changes to U.S. federal, U.S. state, U.K. or Brazil tax regulations and unexpected litigation or adverse legislation, including changes in U.S. state franchise laws, may impose additional costs on us or otherwise adversely affect us;

•a concentration of risk associated with our principal automobile manufacturers, especially Toyota, Nissan, Honda, BMW, Ford, Daimler, General Motors, Chrysler, Hyundai and Volkswagen, because of financial distress, bankruptcy, natural disasters or pandemics, such as the COVID-19 pandemic, that disrupt production, or other reasons, may not continue to produce or make available to us vehicles that are in high demand by our customers or provide financing, insurance, advertising or other assistance to us;

•restructuring by one or more of our principal manufacturers, up to and including bankruptcy, may cause us to suffer financial loss in the form of uncollectible receivables, devalued inventory or loss of franchises;

•requirements imposed on us by our manufacturers may require dispositions, limit our acquisitions or require increases in the level of capital expenditures related to our dealership facilities;

•our existing and/or new dealership operations may not perform at expected levels or achieve expected improvements;

•our failure to achieve expected future cost savings or future costs may be higher than we expect;

•manufacturer quality issues, including the recall of vehicles, may negatively impact vehicle sales and brand reputation;

•available capital resources, increases in cost of financing (such as higher interest rates) and our various debt agreements may limit our ability to complete acquisitions, complete construction of new or expanded facilities, repurchase shares, or pay dividends;

•our ability to refinance or obtain financing in the future may be limited and the cost of financing could increase significantly;

•our ability to facilitate credit for consumers;

•foreign exchange controls and currency fluctuations;

•new accounting standards could materially impact our reported ~~earnings per share;~~EPS;

•our ability to acquire new dealerships and successfully integrate those dealerships into our business;

•the impairment of our goodwill, our indefinite-lived intangibles and our other long-lived assets;

•natural disasters, adverse weather events and other catastrophic events;

•a cybersecurity event of our systems or a third party partners’ systems, including a breach of personally identifiable information about our customers or employees or a ~~shut down~~shutdown of our operating systems;

•our foreign operations and sales in the U.K. and Brazil, which pose additional risks;

•the inability to adjust our cost structure and inventory levels to offset any reduction in the demand for our products and services;

•loss of our key personnel;

•~~competition in our industry may impact our operations or our ability to complete additional acquisitions;~~

•~~insurance costs could increase significantly and all of~~ our losses may not be fully covered by ~~insurance;~~ insurance or may only be fully covered with a significant increase to our insurance costs;

•our inability to obtain inventory of new and used vehicles and parts, including imported inventory, at the cost, or in the volume, we expect; and

•advancements in vehicle technology and changes in vehicle ownership models/consumer preferences.

For additional information regarding known material factors that could cause our actual results to differ from our projected results, please see Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 (the ~~“2018~~“2019 Form 10-K”), and this Form 10-Q, as well as “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Quantitative and Qualitative Disclosures About Market Risk.”

Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We undertake no responsibility and expressly disclaim any duty, to update any such statements, whether as a result of new information, new developments or otherwise, or to publicly release the result of any revision of our forward-looking statements after the date they are made, except to the extent required by law.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties. Actual results of Group 1 Automotive, Inc. may differ materially from those discussed in the forward-looking statements because of various factors. See “Cautionary Statement about Forward-Looking Statements.” Unless the context requires otherwise, references to “we,” “us,” “our,” “the Company” are intended to mean the business and operations of Group 1 Automotive, Inc. and its subsidiaries.

Overview

We are a leading operator in the automotive retail industry. Through our dealerships, we sell new and used cars and light ~~duty trucks,~~trucks; arrange related vehicle ~~financing,~~financing; sell service and other insurance ~~contracts,~~contracts; provide automotive maintenance and repair ~~services~~services; and sell vehicle parts. Our operations are inaligned into three ~~geographic regions: the United States (“~~regions, which comprise our reportable segments: (1) U.S.”), ~~the~~(2) U.K. and (3) Brazil. ~~Our~~The U.S. and Brazil segments are led by the President, of U.S. and Brazilian Operations, ~~reports~~and the U.K segment is led by a Managing Director, each reporting directly to our Chief Executive ~~Officer~~Officer. The President, U.S. and isBrazilian Operations, and the U.K Managing Director are responsible for the overall performance of ~~the U.S. region, including dealership operations~~their respective regions, as well as for overseeing field level management. The ~~operations of the Company’s international regions are structured similar to the~~ U.S. ~~region. As such, our three reportable segments are the U.S., which~~segment includes the activities of our corporate ~~office, the U.K. and Brazil.~~office.

As of ~~September 30, 2019, we owned and operated 238 franchises, representing~~March 31, ~~brands~~2020, our retail network consisted of ~~automobiles, at 183 dealership locations and 49 collision centers worldwide. We owned 151 franchises at 117~~119 dealerships ~~and 30 collision centers~~ in the U.S., ~~65 franchises at 49~~50 dealerships ~~and 12 collision centers~~ in the U.K. and ~~22 franchises at~~ 17 dealerships ~~and seven collision centers~~ in Brazil. Our operations are primarily located in major metropolitan areas in ~~Alabama, California, Florida, Georgia, Kansas, Louisiana, Maryland, Massachusetts, Mississippi, New Hampshire, New Jersey, New Mexico, Oklahoma, South Carolina and Texas~~15 states in the U.S., in 33 towns ofin the U.K. and ~~in key metropolitan markets in the~~three states ~~of São Paulo, Paraná and Santa Catarina~~ in Brazil.

~~Outlook~~Long-Term Strategy

~~The Company’s operating results~~Our business strategy primarily focuses on the performance of our existing dealerships to achieve growth, capture market share and maximize the investment return to our stockholders. We are ~~generally subject to seasonal variations, as well as changes in the economic environment. In the U.S., we generally experience higher volumes of vehicle sales~~also focused on enhancing our dealership portfolio through strategic acquisitions and service in the second and third calendar quarters of each year. In addition, in some regions of the U.S., vehicle purchases decline during the winter months due to inclement weather. As a result, our U.S. revenues and operating income are typically lower in the first and fourth quarters and higher in the second and third quarters. In the U.K., the first and third quarters tend to be stronger, driven by the vehicle license plate change months of March and September. In Brazil, the first quarter is generally the weakest, driven by more consumer vacations and activities associated with Carnival, while the third and fourth quarters tend to be stronger. Other factors unrelated to seasonality, such as changes in economic conditions, manufacturer incentive programs, supply issues, seasonal weather events and/or changes in currency exchange rates may exaggerate seasonal or cause counter-seasonal fluctuations in the Company’s revenues and operating income.

~~U.S.~~

dispositions. We ~~continued to focus on~~constantly evaluate opportunities to ~~counter~~improve the ~~decline in industry~~overall profitability of our dealerships. Our long-term strategic areas of emphasis include:

Used Vehicle Retail Growth

•

Gross profit from the sale of used vehicles depends primarily on a dealership’s ability to obtain a high-quality supply of used vehicles at reasonable prices. Our new vehicle operations generally provide our used vehicle operations with a large supply of high-quality trade-ins and off-lease vehicles, which are our best source of used vehicle inventory. Our dealerships supplement their used vehicle inventory with purchases at auctions, including manufacturer-sponsored auctions available only to franchised dealers.


•	Our data-driven pricing strategies ensure that our used vehicles are priced at market to generate more traffic to our websites. We review our market pricing on a regular basis and work to limit discounting from our advertised prices.

We will continue efforts to expand our “Val-U-Line®” sales ~~volumes and enhance our operating results by: (a) maintaining and growing our new and~~program, a strategic used vehicle ~~gross profit per unit sold; (b) expanding used vehicle sales by maximizing~~initiative that targets a growing customer niche and enables us to retail lower cost, higher mileage units that would otherwise have been sent to the auction. The Val-U-Line® initiative is expected to increase used retail ~~sales opportunities~~volume by leveraging our scale, internal on-line buying center, internal auction capability and ~~limiting wholesale activity; (c) continuing to focus~~transportation infrastructure.

Parts and Service Growth

We remain focused on sustained growth in our higher margin parts and service ~~(or aftersales)~~operations which continue to hinge on the retention and hiring of service technicians and advisors. Our four-day work week implemented in 2019 has allowed us to extend our hours of operations and increase service technicians and advisors retention, thereby expanding our service capacity without investing additional capital in facilities. We seek to increase the retention of our customers through more convenient service hours, training of our service advisors, selling service contracts with vehicles sales and customer relationship management software that allows us to provide target marketing to our customers. The increasing complexity of vehicles, especially in the area of electronics and technological advancements, is making it difficult for independent repairs shops to retain the expertise and technology to work on these vehicles and provides us the opportunity to increase our market share.

Digital Initiatives to Enhance the Customer Experience

Our digital initiatives focus on ensuring that we can do business ~~by implementing strategic selling methods~~with our customers where and ~~improving operational efficiencies; (d) investing capital where necessary~~when they want to ~~support~~do business. Our online new and used vehicle retail platform, AcceleRide®, which was deployed to all of our ~~anticipated growth, particularly~~U.S. dealerships in 2019, allows a customer to complete a vehicle transaction entirely online or start the sales process online and complete the transaction at our dealerships. In addition, our parts and service ~~business; (e) further leveraging~~digital efforts focus on our ~~revenue~~online customer scheduling appointment system. We have seen continued growth in the percentage of appointments scheduled online over the past few years as we have continued to enhance this tool.

Cost Management

We continue our efforts to fully leverage our scale and ~~gross profit~~cost structure. As our business evolves, we will manage our costs carefully and look for additional opportunities to improve our processes and disseminate best practices. Additionally, see “COVID-19 Pandemic” section below for specific cost-cutting measures in response to the COVID-19 pandemic. We believe that our management structure supports more rapid decision making and facilitates an efficient and effective roll-out of new processes.

Employee training and retention

A key to the execution of our business strategy is the leverage of what we believe to be one of our key strengths - the talent of our people. We are focused on the retention and training of our talented dealership employees. We believe that we have developed a distinguished management team with substantial industry expertise. With our management structure and level of executive talent, we plan to continue empowering the operators of our dealerships to make appropriate decisions to grow their respective dealership operations and to control fixed and variable costs. We believe this approach allows us to provide the best possible service to our customers, as well as attract and retain talented employees.

Strategic Acquisitions and Dispositions

We will continue to focus on opportunities to enhance our current dealership portfolio through strategic acquisitions and improving or disposing of underperforming dealerships. We believe that substantial opportunities for growth through acquisitions remain in our industry in the ~~continued implementation of cost efficiencies; (f) implementing focused strategies to improve employee retention~~U.S., the U.K. and ~~recruitment in both our vehicle sales and aftersales sectors~~Brazil upon an economic recovery from the impacts of the ~~business;~~COVID-19 pandemic. Further, we intend to continue to critically evaluate our return on invested capital in our current dealership portfolio for disposition opportunities.

COVID-19 Pandemic

Since emerging in December 2019, the COVID-19 pandemic has spread globally, including to all of our markets in the U.S., U.K. and ~~(g) growing~~Brazil, significantly impacting our ~~online digital effort~~operating results starting in March. On March 11, 2020, the WHO declared COVID-19 a pandemic, and subsequently, various countries including the U.S., U.K. and Brazil declared the COVID-19 pandemic a national emergency. Along with these declarations, there have been extraordinary and wide-ranging actions taken by international, federal, state and local public health and governmental authorities to contain and combat the outbreak and spread of COVID-19 across the world, including mandates for many individuals to substantially restrict daily activities and for many businesses to curtail or cease normal operations. Beginning in mid-March, these measures have either completely shut down or significantly reduced operating capacity of all of our dealerships in the U.S., the U.K. and Brazil. The length of the stay-at-home orders, travel restrictions, other restrictions on operating businesses and resulting economic impacts are uncertain. To date, these measures have significantly reduced our new and used vehicle sales volumes, parts and ~~aftersales.~~service revenues and F&I revenues, as well as impacted our vehicle and parts supply chain. The primary COVID-19 impacts on our global business and our response to date include:

U.S.

Virtually all of our U.S. dealerships are located in markets operating in some form of shelter-in-place or restricted travel environments in accordance with applicable state and local orders. Dealership service facilities remain open to provide essential services to customers. Overall, service activity levels have decreased due to the reduced number of vehicles on the road caused by government restrictions and our customers’ concerns related to the virus. While dealership sales departments have closed in some jurisdictions, they are in most cases permitted to continue to operate, with a dramatically reduced staffing level. Our online selling platform Acceleride® continues to show increased utilization rates which are likely to continue in a restricted social distancing environment.

U.S. sales were well above prior year levels through February. As the market shutdowns began, March U.S. sales dropped sharply from February, with new and used retail unit sales dropping approximately 50% and service repair orders also declining by approximately 50% for the last two weeks of March 2020 compared to the last two weeks of March 2019. This pace continued into early April, but recently we have begun to see signs of improvement as shelter-in-place policies are beginning to be partially lifted. For the last week of April, total U.S. retail unit sales were down approximately 25% and service repair orders were down approximately 30% as compared to the same week a year ago.

In addition, the Texas and Oklahoma economies are significantly affected by oil and natural gas prices, which were severely impacted by reduced demand related to the COVID-19 pandemic and the increased production from certain large international crude oil producers, including Saudi Arabia and Russia. We cannot predict whether or when oil production and economic activities will return to normalized levels. However, oil and natural gas prices remaining at current depressed levels could have a significant impact on economic activity in Texas and Oklahoma, which could negatively impact our vehicle sales, financial condition and results of operations in those markets. New vehicle unit sales in Texas and Oklahoma represented approximately 43% of our total new vehicle unit sales for the year ended December 31, 2019 and approximately 42% for the three months ended March 31, 2020. Used vehicle retail unit sales in Texas and Oklahoma represented approximately 49% of our total used vehicle retail unit sales for the year ended December 31, 2019 and approximately 49% for the three months ended March 31, 2020.

U.K.

~~The ongoing uncertainty related~~U.K. vehicle sales levels were well above prior year levels in most of our brands through February. March, which is a plate change month, is one of the largest selling months of the year with many vehicles delivered from orders placed in January and February. Due to the ~~ultimate resolution~~closure of ~~Brexit continues~~our facilities and various business restrictions put in place as a result of a shut-down order from the government, effective through May 10^th, we were not able to ~~generate much uncertainty~~deliver approximately 35% of our vehicles we had contracted to sell prior to the shut-down restrictions. We have closed all of our U.K. dealerships except for emergency services as required by the mandate and will maintain a skeleton service staff to provide the emergency only service. Operations in the U.K. are not expected to resume until mid-to-late May, subject to any further governmental actions.

Brazil

Effective March 20, 2020, all of our dealerships were required to close. Historically, March represents approximately 40% of first quarter new vehicle unit sales in the Brazilian market. In April, our stores were allowed to re-open for service operations only, and we anticipate in-person sales to resume shortly, subject to any further government actions.

Cost-Cutting Actions

In all regions we have taken aggressive actions to reduce costs and preserve liquidity, with about 4,800 employees (over 40% of the workforce) furloughed or terminated in the U.S., 2,800 employees (over 90% of the workforce) furloughed in the U.K., and over 450 employees (over 45% of the workforce) furloughed or terminated in Brazil. In addition, other measures have been implemented and have significantly reduced costs in all three regions including reductions of as much as 50% in management compensation, 100% of Board of Directors’ compensation, over 75% reduction in advertising expense and cuts across all other cost categories. Additionally, as announced in April 2020, we suspended our dividend and canceled our share repurchase program, as well as implemented capital expenditure deferrals. As discussed in ~~global markets. The U. K.’s negotiations~~“Liquidity and Capital Resources,” we have sufficient liquidity currently and do not anticipate any material liquidity constraints or issues with our ability to remain in compliance with debt covenants.

While the ~~E.U.~~potential long-term impact of the ~~withdrawal terms have been extended~~COVID-19 pandemic is difficult to ~~January 31, 2020. While it is anticipated that additional negotiations~~predict, we expect our second quarter results to be significantly lower than the prior year. Moving forward, we anticipate service will ~~occur, if no formal withdrawal agreement can ultimately be reached between the U.K. and the E.U., then it is expected that the U.K.’s membership~~recover quicker than vehicle sales, with both beginning to recover in the ~~E.U. would terminate without any clear trading agreements between the two governing bodies. Such negotiations have been extremely difficult to date. Brexit has,~~late spring and ~~could~~summer months as shelter-in-place policies continue to ~~adversely affect U.K., European~~be lifted and ~~worldwide economic and market conditions and could contribute~~consumers transition to instability in some global financial and foreign exchange markets, including continued volatility in the value of the British pound sterling. More specifically, it could lead to increased U.K. retail prices for new vehicles as the majority of vehiclesmore normal habits, at which time we sell in the U.K. are imported from other countries in Europe and may be subject to additional tariffs, potential shortages in new vehicle inventory availability as breakdowns in the supply chain of automotive retailers and manufacturers due to custom checks could delay delivery of vehicles or parts and other negative effects, which are difficult to predict. As a result of the uncertainty of the potential impact of Brexit, the overall U.K. economy and, more specifically, the adverse effect on retail automotive industry sales could have a material adverse effect onwill re-evaluate our revenues and business operations. Similar to our priorities in the U.S., we are focused on opportunities in the U.K. to enhance our operating results by: (i) integrating recent acquisitions and further leveraging our revenue and gross profit growth through the continued implementation of cost efficiencies; (ii) expanding used vehicle sales by maximizing used retail sales opportunities and limiting wholesale activity; (iii) continuing to focus on our higher margin parts and service business, implementing strategic selling methods and improving operational efficiencies; and (iv) investing capital where necessary to support our anticipated growth, particularly in our parts and service business.

~~Brazil~~

We expect macro-economic conditions in Brazil, as well as retail automotive industry sales, to continue to improve. We remain focused on optimizing our brand portfolio, continuing implementation of cost efficiencies, growing our used vehicle and parts and service business and leveraging our structure with dealership acquisitions. Longer term, we expect sustained improvements in industry sales volumes and are utilizing a strategy of aligning with growing brands.cutting measures.

Critical Accounting Policies and Accounting Estimates

The preparation of our Condensed Consolidated Financial Statements in conformity with U.S. ~~generally accepted accounting principles (“U.S. GAAP”)~~GAAP requires management to make certain estimates and assumptions. ~~We disclosed certain~~For additional discussion of our critical accounting policies and accounting estimates, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our ~~2018~~most recent Annual Report on Form ~~10-K and no significant changes have occurred since that time.~~10-K.

Results of Operations

The ~~“Same Store”~~“same store” amounts presented below include the results of dealerships and corporate headquarters for the identical months in each period presented in comparison, commencing with the first full month in which the dealership was owned by us and, in the case of dispositions, ending with the last full month it was owned by us. For example, for a dealership acquired on August 15, 2020, the results from this dealership will appear in our same store comparison beginning in 2021 for the period September 2021 through December 2021, when comparing to September 2020 through December 2020 results. If we disposed of a store on August 15, 2020, the results from this store would be excluded from same store results beginning in August 2020 as July 2020 was the last full month the dealership was owned by us. Same ~~Store~~store results ~~also include the activities~~provide a measurement of our ~~corporate headquarters.~~ability to grow revenue and profitability of our existing stores and also provide a metric for peer group comparisons. For these reasons, same store results allow management to manage and monitor the performance of the business and is also useful to investors.

We evaluate our results of operations on both an as reported and a constant currency basis. The constant currency presentation, which is a non-GAAP measure, excludes the impact of fluctuations in foreign currency exchange rates. We believe providing constant currency information provides valuable supplemental information regarding our underlying business and results of operations, consistent with how we evaluate our performance. We calculate constant currency percentages by converting our current period reported results for entities reporting in currencies other than ~~U.S. dollars~~USD using comparative period exchange rates rather than the actual exchange rates in effect during the respective periods. The constant currency performance measures should not be considered a substitute for, or superior to, the measures of financial performance prepared in accordance with U.S. GAAP. Additionally, we caution investors not to place undue reliance on non-GAAP measures, but also to consider them with the most directly comparable U.S. GAAP measures. Our management also uses constant currency and adjusted cash flows from operating, investing and financing activities in conjunction with U.S. GAAP financial measures to assess our business, including communication with our Board of Directors, investors and industry analysts concerning financial performance. We disclose these non-GAAP measures, and the related reconciliations, because we believe investors use these metrics in evaluating longer-term period-over-period performance, and to allow investors to better understand and evaluate the information used by management to assess operating performance.

Certain disclosures are reported as zero balances, or may not compute, due to rounding.

The following tables summarize our operating results on a reported basis and on a ~~Same Store basis for the three and nine months ended September 30, 2019, as compared to 2018.~~

same store basis:

Reported Operating Data - Consolidated

(In millions, except unit and per unit amounts)


	Three Months Ended September 30,																Three Months Ended March 31,
	2019			2018			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results			Constant Currency % Change		2020			2019			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results			Constant Currency % Change
Revenues:
New vehicle retail sales	$	1,652.2		$	1,539.5		$	112.7		7.3	%	$	(16.9	)	8.4	%	$	1,342.2		$	1,414.5		$	(72.3	)	(5.1	)%	$	(19.2	)	(3.8	)%
Used vehicle retail sales	869.7			792.4			77.3			9.8	%	(10.9		)	11.1	%	779.0			819.2			(40.2		)	(4.9	)%	(5.7		)	(4.2	)%
Used vehicle wholesale sales	85.3			86.6			(1.3		)	(1.5	)%	(1.9		)	0.7	%	86.5			92.1			(5.6		)	(6.1	)%	(1.0		)	(5.0	)%
Total used	955.0			879.0			76.0			8.6	%	(12.8		)	10.1	%	865.6			911.3			(45.8		)	(5.0	)%	(6.7		)	(4.3	)%
Parts and service sales	383.5			354.5			29.0			8.2	%	(3.2		)	9.1	%	370.6			369.2			1.4			0.4	%	(2.4		)	1.0	%
Finance, insurance and other, net	127.6			116.1			11.5			9.9	%	(0.7		)	10.5	%
F&I, net																	112.5			113.4			(0.9		)	(0.8	)%	(0.6		)	(0.3	)%
Total revenues	$	3,118.3		$	2,889.1		$	229.2		7.9	%	$	(33.6	)	9.1	%	$	2,690.8		$	2,808.4		$	(117.6	)	(4.2	)%	$	(29.0	)	(3.2	)%
Gross profit:
New vehicle retail sales	$	75.2		$	77.6		$	(2.4	)	(3.1	)%	$	(0.9	)	(1.9	)%	$	62.8		$	71.4		$	(8.6	)	(12.0	)%	$	(1.1	)	(10.5	)%
Used vehicle retail sales	54.2			50.1			4.1			8.2	%	(0.5		)	9.2	%	42.1			47.8			(5.7		)	(11.8	)%	(0.3		)	(11.2	)%
Used vehicle wholesale sales	0.4			(0.3		)	0.7			233.3	%	0.1			197.5	%	1.0			0.5			0.5			121.7	%	—			128.8	%
Total used	54.6			49.8			4.8			9.6	%	(0.4		)	10.5	%	43.1			48.3			(5.1		)	(10.6	)%	(0.4		)	(9.9	)%
Parts and service sales	208.2			191.6			16.6			8.7	%	(1.7		)	9.6	%	198.0			198.5			(0.4		)	(0.2	)%	(1.2		)	0.4	%
Finance, insurance and other, net	127.6			116.1			11.5			9.9	%	(0.7		)	10.5	%
F&I, net																	112.5			113.4			(0.9		)	(0.8	)%	(0.6		)	(0.3	)%
Total gross profit	$	465.6		$	435.1		$	30.5		7.0	%	$	(3.7	)	7.9	%	$	416.5		$	431.5		$	(15.1	)	(3.5	)%	$	(3.3	)	(2.7	)%
Gross margin:
New vehicle retail sales	4.6		%	5.0		%	(0.4		)%								4.7		%	5.0		%	(0.4		)%
Used vehicle retail sales	6.2		%	6.3		%	(0.1		)%								5.4		%	5.8		%	(0.4		)%
Used vehicle wholesale sales	0.5		%	(0.3		)%	0.8		%								1.2		%	0.5		%	0.7		%
Total used	5.7		%	5.7		%	—		%								5.0		%	5.3		%	(0.3		)%
Parts and service sales	54.3		%	54.0		%	0.3		%								53.4		%	53.8		%	(0.3		)%
Finance, insurance and other, net	100.0		%	100.0		%	—		%
F&I, net																	100.0		%	100.0		%	—		%
Total gross margin	14.9		%	15.1		%	(0.2		)%								15.5		%	15.4		%	0.1		%
Units sold:
Retail new vehicles sold	44,632			43,584			1,048			2.4	%						35,360			38,874			(3,514		)	(9.0	)%
Retail used vehicles sold	41,297			37,676			3,621			9.6	%						36,790			38,836			(2,046		)	(5.3	)%
Wholesale used vehicles sold	12,889			12,902			(13		)	(0.1	)%						12,086			12,989			(903		)	(7.0	)%
Total used	54,186			50,578			3,608			7.1	%						48,876			51,825			(2,949		)	(5.7	)%
Average sales price per unit sold:
New vehicle retail	$	37,018		$	35,323		$	1,695		4.8	%	$	(380	)	5.9	%	$	37,957		$	36,386		$	1,571		4.3	%	$	(544	)	5.8	%
Used vehicle retail	$	21,060		$	21,032		$	28		0.1	%	$	(265	)	1.4	%	$	21,175		$	21,094		$	82		0.4	%	$	(155	)	1.1	%
Gross profit per unit sold:
New vehicle retail sales	$	1,685		$	1,780		$	(95	)	(5.3	)%	$	(20	)	(4.2	)%	$	1,777		$	1,836		$	(60	)	(3.3	)%	$	(31	)	(1.6	)%
Used vehicle retail sales	$	1,312		$	1,330		$	(18	)	(1.4	)%	$	(13	)	(0.4	)%	$	1,146		$	1,231		$	(85	)	(6.9	)%	$	(9	)	(6.2	)%
Used vehicle wholesale sales	$	31		$	(23	)	$	54		234.8	%	$	6		197.6	%	$	83		$	35		$	48		138.3	%	$	(3	)	145.9	%
Total used	$	1,008		$	985		$	23		2.3	%	$	(8	)	3.1	%	$	883		$	931		$	(48	)	(5.2	)%	$	(7	)	(4.4	)%
Finance, insurance and other, net (per retail unit)	$	1,485		$	1,429		$	56		3.9	%	$	(8	)	4.5	%
F&I PRU																	$	1,559		$	1,459		$	100		6.8	%	$	(9	)	7.4	%
Other:
Selling, general and administrative (“SG&A”) expenses	$	354.0		$	316.8		$	37.2		11.7	%	$	(3.2	)	12.7	%
SG&A expenses																	$	328.0		$	327.7		$	0.2		0.1	%	$	(3.0	)	1.0	%
SG&A as % gross profit	76.0		%	72.8		%	3.2		%								78.7		%	75.9		%	2.8		%
Floorplan expense:
Floorplan interest expense	$	15.4		$	14.7		$	0.7		4.8	%	$	—		4.8	%	$	12.9		$	15.7		$	(2.8	)	(18.1	)%	$	—		(17.8	)%
Less: floorplan assistance ⁽¹⁾	13.3			12.0			1.3			10.8	%	—			10.8	%	10.6			10.5			0.1			0.8	%	—			0.8	%
Net floorplan expense	$	2.1		$	2.7		$	(0.6	)	(22.2	)%	$	—		(22.2	)%	$	2.3		$	5.2		$	(2.9	)	(56.0	)%	$	—		(55.2	)%

⁽¹⁾ Floorplan assistance is included within New vehicle retail Gross Profit above and New vehicle retail Cost of sales in ~~the Company’s~~our Condensed Consolidated Statements of Operations.

Same Store Operating Data - Consolidated

(In millions, except unit and per unit amounts)

Three Months Ended September 30,
2019 2018 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change
Revenues:
New vehicle retail sales $ 1,601.4
$ 1,502.6
$ 98.8
6.6 % $ (16.0 ) 7.6 %
Used vehicle retail sales 838.6
770.4
68.2
8.9 % (10.1 ) 10.2 %
Used vehicle wholesale sales 82.8
83.1
(0.3 ) (0.4 )% (1.9 ) 1.9 %
Total used 921.4
853.5
67.9
8.0 % (12.0 ) 9.4 %
Parts and service sales 371.3
342.8
28.5
8.3 % (2.8 ) 9.1 %
Finance, insurance and other, net 124.0
113.5
10.5
9.3 % (0.6 ) 9.9 %
Total revenues $ 3,018.1
$ 2,812.4
$ 205.7
7.3 % $ (31.4 ) 8.4 %
Gross profit:
New vehicle retail sales $ 71.9
$ 76.3
$ (4.4 ) (5.8 )% $ (0.9 ) (4.7 )%
Used vehicle retail sales 52.5
48.7
3.8
7.8 % (0.2 ) 8.7 %
Used vehicle wholesale sales 0.4
(0.2 ) 0.6
300.0 % (0.1 ) 300.0 %
Total used 52.9
48.5
4.4
9.1 % (0.3 ) 9.9 %
Parts and service sales 201.3
186.2
15.1
8.1 % (1.7 ) 8.9 %
Finance, insurance and other, net 124.0
113.5
10.5
9.3 % (0.6 ) 9.9 %
Total gross profit $ 450.1
$ 424.5
$ 25.6
6.0 % $ (3.5 ) 6.8 %
Gross margin:
New vehicle retail sales 4.5 % 5.1 % (0.6 )%
Used vehicle retail sales 6.3 % 6.3 % — %
Used vehicle wholesale sales 0.5 % (0.2 )% 0.7 %
Total used 5.7 % 5.7 % — %
Parts and service sales 54.2 % 54.3 % (0.1 )%
Finance, insurance and other, net 100.0 % 100.0 % — %
Total gross margin 14.9 % 15.1 % (0.2 )%
Units sold:
Retail new vehicles sold 42,964
42,130
834
2.0 %
Retail used vehicles sold 39,730
36,534
3,196
8.7 %
Wholesale used vehicles sold 12,420
12,435
(15 ) (0.1 )%
Total used 52,150
48,969
3,181
6.5 %
Average sales price per unit sold:
New vehicle retail $ 37,273
$ 35,666
$ 1,607
4.5 % $ (369 ) 5.5 %
Used vehicle retail $ 21,107
$ 21,087
$ 20
0.1 % $ (257 ) 1.3 %
Gross profit per unit sold:
New vehicle retail sales $ 1,673
$ 1,811
$ (138 ) (7.6 )% $ (19 ) (6.6 )%
Used vehicle retail sales $ 1,321
$ 1,333
$ (12 ) (0.9 )% $ (12 ) — %
Used vehicle wholesale sales $ 32
$ (16 ) $ 48
300.0 % $ 2
254.4 %
Total used $ 1,014
$ 990
$ 24
2.4 % $ (8 ) 3.2 %
Finance, insurance and other, net (per retail unit) $ 1,500
$ 1,443
$ 57
4.0 % $ (8 ) 4.5 %
Other:
SG&A expenses $ 340.0
$ 308.2
$ 31.8
10.3 % $ (3.0 ) 11.3 %
SG&A as % gross profit 75.5 % 72.6 % 2.9 %

~~Reported Operating Data - Consolidated~~

~~(In millions, except unit and per unit amounts)~~

Nine Months Ended September 30,
2019 2018 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change
Revenues:
New vehicle retail sales $ 4,632.2
$ 4,608.7
$ 23.5
0.5 % $ (74.5 ) 2.1 %
Used vehicle retail sales 2,527.8
2,394.8
133.0
5.6 % (40.7 ) 7.3 %
Used vehicle wholesale sales 273.4
283.4
(10.0 ) (3.5 )% (8.4 ) (0.6 )%
Total used 2,801.2
2,678.2
123.0
4.6 % (49.1 ) 6.4 %
Parts and service sales 1,130.8
1,062.1
68.7
6.5 % (13.3 ) 7.7 %
Finance, insurance and other, net 368.2
343.5
24.7
7.2 % (3.0 ) 8.1 %
Total revenues $ 8,932.4
$ 8,692.5
$ 239.9
2.8 % $ (139.9 ) 4.4 %
Gross profit:
New vehicle retail sales $ 216.5
$ 229.6
$ (13.1 ) (5.7 )% $ (3.2 ) (4.3 )%
Used vehicle retail sales 155.3
144.8
10.5
7.3 % (1.9 ) 8.6 %
Used vehicle wholesale sales 0.7
1.6
(0.9 ) (56.3 )% —
(56.3 )%
Total used 156.0
146.4
9.6
6.6 % (1.9 ) 7.9 %
Parts and service sales 610.7
573.5
37.2
6.5 % (7.0 ) 7.7 %
Finance, insurance and other, net 368.2
343.5
24.7
7.2 % (3.0 ) 8.1 %
Total gross profit $ 1,351.4
$ 1,293.0
$ 58.4
4.5 % $ (15.1 ) 5.7 %
Gross margin:
New vehicle retail sales 4.7 % 5.0 % (0.3 )%
Used vehicle retail sales 6.1 % 6.0 % 0.1 %
Used vehicle wholesale sales 0.3 % 0.6 % (0.3 )%
Total used 5.6 % 5.5 % 0.1 %
Parts and service sales 54.0 % 54.0 % — %
Finance, insurance and other, net 100.0 % 100.0 % — %
Total gross margin 15.1 % 14.9 % 0.2 %
Units sold:
Retail new vehicles sold 125,599
128,245
(2,646 ) (2.1 )%
Retail used vehicles sold 119,878
111,900
7,978
7.1 %
Wholesale used vehicles sold 38,962
41,798
(2,836 ) (6.8 )%
Total used 158,840
153,698
5,142
3.3 %
Average sales price per unit sold:
New vehicle retail $ 36,881
$ 35,937
$ 944
2.6 % $ (593 ) 4.3 %
Used vehicle retail $ 21,086
$ 21,401
$ (315 ) (1.5 )% $ (340 ) 0.1 %
Gross profit per unit sold:
New vehicle retail sales $ 1,724
$ 1,790
$ (66 ) (3.7 )% $ (25 ) (2.3 )%
Used vehicle retail sales $ 1,295
$ 1,294
$ 1
0.1 % $ (17 ) 1.4 %
Used vehicle wholesale sales $ 18
$ 38
$ (20 ) (52.6 )% $ 1
(55.6 )%
Total used $ 982
$ 953
$ 29
3.0 % $ (13 ) 4.4 %
Finance, insurance and other, net (per retail unit) $ 1,500
$ 1,430
$ 70
4.9 % $ (12 ) 5.7 %
Other:
SG&A expenses $ 1,020.4
$ 949.2
$ 71.2
7.5 % $ (13.0 ) 8.9 %
SG&A as % gross profit 75.5 % 73.4 % 2.1 %

Floorplan expense:
Floorplan interest expense $ 47.0
$ 43.3
$ 3.7
8.5 % $ (0.3 ) 9.2 %
Less: floorplan assistance ⁽¹⁾
35.6
34.5
1.1
3.2 % 0.1
3.2 %
Net floorplan expense $ 11.4
$ 8.8
$ 2.6
29.5 % $ (0.4 ) 32.9 %

⁽¹⁾ ~~Floorplan assistance is included within~~ ~~Cost of sales~~ ~~in the Company’s Condensed Consolidated Statements of Operations.~~

~~Same Store Operating Data - Consolidated~~

~~(In millions, except unit and per unit amounts)~~


		Nine Months Ended September 30,																Three Months Ended March 31,
		2019			2018			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results			Constant Currency % Change		2020			2019			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results			Constant Currency % Change
Revenues:	Revenues:
New vehicle retail sales	New vehicle retail sales	$	4,476.8		$	4,474.7		$	2.1		—	%	$	(69.8	)	1.6	%	$	1,298.4		$	1,393.8		$	(95.4	)	(6.8	)%	$	(18.6	)	(5.5	)%
Used vehicle retail sales	Used vehicle retail sales	2,434.8			2,330.0			104.8			4.5	%	(38.5		)	6.1	%	752.8			803.9			(51.1		)	(6.4	)%	(5.6		)	(5.7	)%
Used vehicle wholesale sales	Used vehicle wholesale sales	263.5			274.3			(10.8		)	(3.9	)%	(8.2		)	(0.9	)%	82.9			88.6			(5.6		)	(6.3	)%	(1.0		)	(5.2	)%
Total used	Total used	2,698.3			2,604.3			94.0			3.6	%	(46.7		)	5.4	%	835.7			892.5			(56.8		)	(6.4	)%	(6.6		)	(5.6	)%
Parts and service sales	Parts and service sales	1,099.5			1,023.2			76.3			7.5	%	(12.2		)	8.7	%	357.6			360.4			(2.8		)	(0.8	)%	(2.3		)	(0.1	)%
Finance, insurance and other, net		357.4			335.6			21.8			6.5	%	(2.9		)	7.3	%
F&I, net																		110.4			112.2			(1.8		)	(1.6	)%	(0.6		)	(1.1	)%
Total revenues	Total revenues	$	8,632.0		$	8,437.8		$	194.2		2.3	%	$	(131.6	)	3.9	%	$	2,602.2		$	2,759.0		$	(156.8	)	(5.7	)%	$	(28.1	)	(4.7	)%
Gross profit:	Gross profit:
New vehicle retail sales	New vehicle retail sales	$	208.5		$	223.8		$	(15.3	)	(6.8	)%	$	(2.9	)	(5.5	)%	$	59.7		$	70.5		$	(10.8	)	(15.3	)%	$	(1.1	)	(13.8	)%
Used vehicle retail sales	Used vehicle retail sales	150.3			141.1			9.2			6.5	%	(1.8		)	7.8	%	40.6			47.3			(6.7		)	(14.2	)%	(0.3		)	(13.5	)%
Used vehicle wholesale sales	Used vehicle wholesale sales	1.0			2.0			(1.0		)	(50.0	)%	—			(50.0	)%	1.0			0.6			0.4			63.8	%	—			69.1	%
Total used	Total used	151.3			143.1			8.2			5.7	%	(1.8		)	7.0	%	41.6			48.0			(6.3		)	(13.2	)%	(0.3		)	(12.4	)%
Parts and service sales	Parts and service sales	592.2			555.0			37.2			6.7	%	(6.5		)	7.9	%	191.1			194.3			(3.2		)	(1.6	)%	(1.1		)	(1.1	)%
Finance, insurance and other, net		357.4			335.6			21.8			6.5	%	(2.9		)	7.3	%
F&I, net																		110.4			112.2			(1.8		)	(1.6	)%	(0.6		)	(1.1	)%
Total gross profit	Total gross profit	$	1,309.4		$	1,257.5		$	51.9		4.1	%	$	(14.1	)	5.2	%	$	402.8		$	424.9		$	(22.1	)	(5.2	)%	$	(3.2	)	(4.5	)%
Gross margin:	Gross margin:
New vehicle retail sales	New vehicle retail sales	4.7		%	5.0		%	(0.3		)%								4.6		%	5.1		%	(0.5		)%
Used vehicle retail sales	Used vehicle retail sales	6.2		%	6.1		%	0.1		%								5.4		%	5.9		%	(0.5		)%
Used vehicle wholesale sales	Used vehicle wholesale sales	0.4		%	0.7		%	(0.3		)%								1.2		%	0.7		%	0.5		%
Total used	Total used	5.6		%	5.5		%	0.1		%								5.0		%	5.4		%	(0.4		)%
Parts and service sales	Parts and service sales	53.9		%	54.2		%	(0.3		)%								53.4		%	53.9		%	(0.5		)%
Finance, insurance and other, net		100.0		%	100.0		%	—		%
F&I, net																		100.0		%	100.0		%	—		%
Total gross margin	Total gross margin	15.2		%	14.9		%	0.3		%								15.5		%	15.4		%	0.1		%
Units sold:	Units sold:
Retail new vehicles sold	Retail new vehicles sold	120,596			123,896			(3,300		)	(2.7	)%						34,154			37,906			(3,752		)	(9.9	)%
Retail used vehicles sold	Retail used vehicles sold	115,154			108,716			6,438			5.9	%						35,669			38,043			(2,374		)	(6.2	)%
Wholesale used vehicles sold	Wholesale used vehicles sold	37,270			40,543			(3,273		)	(8.1	)%						11,615			12,592			(977		)	(7.8	)%
Total used	Total used	152,424			149,259			3,165			2.1	%						47,284			50,635			(3,351		)	(6.6	)%
Average sales price per unit sold:	Average sales price per unit sold:
New vehicle retail	New vehicle retail	$	37,122		$	36,117		$	1,005		2.8	%	$	(580	)	4.4	%	$	38,017		$	36,771		$	1,246		3.4	%	$	(544	)	4.9	%
Used vehicle retail	Used vehicle retail	$	21,144		$	21,432		$	(288	)	(1.3	)%	$	(334	)	0.2	%	$	21,105		$	21,132		$	(27	)	(0.1	)%	$	(156	)	0.6	%
Gross profit per unit sold:	Gross profit per unit sold:
New vehicle retail sales	New vehicle retail sales	$	1,729		$	1,806		$	(77	)	(4.3	)%	$	(24	)	(3.0	)%	$	1,747		$	1,859		$	(112	)	(6.0	)%	$	(31	)	(4.3	)%
Used vehicle retail sales	Used vehicle retail sales	$	1,305		$	1,298		$	7		0.5	%	$	(16	)	1.8	%	$	1,140		$	1,245		$	(105	)	(8.4	)%	$	(9	)	(7.7	)%
Used vehicle wholesale sales	Used vehicle wholesale sales	$	27		$	49		$	(22	)	(44.9	)%	$	(1	)	(42.8	)%	$	86		$	49		$	38		77.6	%	$	(3	)	83.3	%
Total used	Total used	$	993		$	959		$	34		3.5	%	$	(12	)	4.8	%	$	881		$	947		$	(66	)	(7.0	)%	$	(7	)	(6.2	)%
Finance, insurance and other, net (per retail unit)		$	1,516		$	1,443		$	73		5.1	%	$	(12	)	5.9	%
F&I PRU																		$	1,581		$	1,477		$	104		7.0	%	$	(9	)	7.6	%
Other:	Other:
SG&A expenses	SG&A expenses	$	987.3		$	936.0		$	51.3		5.5	%	$	(12.2	)	6.8	%	$	315.0		$	323.4		$	(8.4	)	(2.6	)%	$	(2.9	)	(1.7	)%
SG&A as % gross profit	SG&A as % gross profit	75.4		%	74.4		%	1.0		%								78.2		%	76.1		%	2.1		%

Reported Operating Data - U.S.

(In millions, except unit and per unit amounts)


	Three Months Ended September 30,											Three Months Ended March 31,
	2019			2018			Increase/(Decrease)			% Change		2020			2019			Increase/(Decrease)			% Change
Revenues:
New vehicle retail sales	$	1,291.7		$	1,196.6		$	95.1		7.9	%	$	988.4		$	1,031.7		$	(43.4	)	(4.2	)%
Used vehicle retail sales	657.6			572.0			85.6			15.0	%	570.3			594.4			(24.1		)	(4.1	)%
Used vehicle wholesale sales	45.9			40.7			5.2			12.8	%	46.8			42.8			4.0			9.3	%
Total used	703.5			612.7			90.8			14.8	%	617.1			637.2			(20.1		)	(3.2	)%
Parts and service sales	314.9			289.3			25.6			8.8	%	304.6			297.6			7.0			2.4	%
Finance, insurance and other, net	112.7			101.6			11.1			10.9	%
F&I, net												97.4			96.2			1.2			1.3	%
Total revenues	$	2,422.8		$	2,200.2		$	222.6		10.1	%	$	2,007.6		$	2,062.8		$	(55.2	)	(2.7	)%
Gross profit:
New vehicle retail sales	$	58.6		$	57.3		$	1.3		2.3	%	$	47.3		$	50.8		$	(3.5	)	(7.0	)%
Used vehicle retail sales	43.5			37.2			6.3			16.9	%	31.9			38.3			(6.3		)	(16.6	)%
Used vehicle wholesale sales	0.4			0.4			—			—	%	0.8			1.2			(0.3		)	(28.9	)%
Total used	43.9			37.6			6.3			16.8	%	32.8			39.4			(6.7		)	(16.9	)%
Parts and service sales	171.8			156.0			15.8			10.1	%	163.5			160.5			3.0			1.9	%
Finance, insurance and other, net	112.7			101.6			11.1			10.9	%
F&I, net												97.4			96.2			1.2			1.3	%
Total gross profit	$	387.0		$	352.5		$	34.5		9.8	%	$	340.9		$	346.9		$	(6.0	)	(1.7	)%
Gross margin:
New vehicle retail sales	4.5		%	4.8		%	(0.3		)%			4.8		%	4.9		%	(0.1		)%
Used vehicle retail sales	6.6		%	6.5		%	0.1		%			5.6		%	6.4		%	(0.8		)%
Used vehicle wholesale sales	0.9		%	1.0		%	(0.1		)%			1.8		%	2.7		%	(1.0		)%
Total used	6.2		%	6.1		%	0.1		%			5.3		%	6.2		%	(0.9		)%
Parts and service sales	54.6		%	53.9		%	0.7		%			53.7		%	53.9		%	(0.2		)%
Finance, insurance and other, net	100.0		%	100.0		%	—		%
F&I, net												100.0		%	100.0		%	—		%
Total gross margin	16.0		%	16.0		%	—		%			17.0		%	16.8		%	0.2		%
Units sold:
Retail new vehicles sold	33,041			32,058			983			3.1	%	24,495			26,390			(1,895		)	(7.2	)%
Retail used vehicles sold	31,505			28,125			3,380			12.0	%	27,668			29,317			(1,649		)	(5.6	)%
Wholesale used vehicles sold	7,565			7,118			447			6.3	%	7,027			7,150			(123		)	(1.7	)%
Total used	39,070			35,243			3,827			10.9	%	34,695			36,467			(1,772		)	(4.9	)%
Average sales price per unit sold:
New vehicle retail	$	39,094		$	37,326		$	1,768		4.7	%	$	40,350		$	39,096		$	1,254		3.2	%
Used vehicle retail	$	20,873		$	20,338		$	535		2.6	%	$	20,613		$	20,276		$	338		1.7	%
Gross profit per unit sold:
New vehicle retail sales	$	1,774		$	1,787		$	(13	)	(0.7	)%	$	1,929		$	1,925		$	4		0.2	%
Used vehicle retail sales	$	1,381		$	1,323		$	58		4.4	%	$	1,154		$	1,306		$	(152	)	(11.6	)%
Used vehicle wholesale sales	$	53		$	56		$	(3	)	(5.4	)%	$	118		$	163		$	(45	)	(27.7	)%
Total used	$	1,124		$	1,067		$	57		5.3	%	$	944		$	1,082		$	(137	)	(12.7	)%
Finance, insurance and other, net (per retail unit)	$	1,746		$	1,688		$	58		3.4	%
F&I PRU												$	1,868		$	1,727		$	141		8.2	%
Other:
SG&A expenses	$	285.4		$	242.2		$	43.2		17.8	%	$	257.5		$	256.2		$	1.4		0.5	%
SG&A as % gross profit	73.7		%	68.7		%	5.0		%			75.5		%	73.8		%	1.7		%

Same Store Operating Data - U.S.

(In millions, except unit and per unit amounts)


	Three Months Ended September 30,											Three Months Ended March 31,
	2019			2018			Increase/(Decrease)			% Change		2020			2019			Increase/(Decrease)			% Change
Revenues:
New vehicle retail sales	$	1,259.8		$	1,172.4		$	87.4		7.5	%	$	970.4		$	1,024.0		$	(53.6	)	(5.2	)%
Used vehicle retail sales	639.0			560.1			78.9			14.1	%	558.0			587.9			(29.9		)	(5.1	)%
Used vehicle wholesale sales	45.0			39.8			5.2			13.1	%	46.4			41.6			4.8			11.5	%
Total used	684.0			599.9			84.1			14.0	%	604.4			629.5			(25.1		)	(4.0	)%
Parts and service sales	309.2			282.1			27.1			9.6	%	298.4			293.6			4.7			1.6	%
Finance, insurance and other, net	110.1			99.6			10.5			10.5	%
F&I, net												96.6			95.5			1.1			1.1	%
Total revenues	$	2,363.1		$	2,154.0		$	209.1		9.7	%	$	1,969.7		$	2,042.6		$	(72.8	)	(3.6	)%
Gross profit:
New vehicle retail sales	$	56.3		$	56.4		$	(0.1	)	(0.2	)%	$	45.1		$	50.5		$	(5.4	)	(10.6	)%
Used vehicle retail sales	42.5			36.5			6.0			16.4	%	31.1			38.0			(6.9		)	(18.1	)%
Used vehicle wholesale sales	0.4			0.3			0.1			33.3	%	0.8			1.2			(0.3		)	(29.2	)%
Total used	42.9			36.8			6.1			16.6	%	31.9			39.2			(7.2		)	(18.5	)%
Parts and service sales	168.0			152.8			15.2			9.9	%	160.0			158.7			1.4			0.9	%
Finance, insurance and other, net	110.1			99.6			10.5			10.5	%
F&I, net												96.6			95.5			1.1			1.1	%
Total gross profit	$	377.3		$	345.6		$	31.7		9.2	%	$	333.6		$	343.8		$	(10.2	)	(3.0	)%
Gross margin:
New vehicle retail sales	4.5		%	4.8		%	(0.3		)%			4.6		%	4.9		%	(0.3		)%
Used vehicle retail sales	6.7		%	6.5		%	0.2		%			5.6		%	6.5		%	(0.9		)%
Used vehicle wholesale sales	0.9		%	0.8		%	0.1		%			1.8		%	2.9		%	(1.0		)%
Total used	6.3		%	6.1		%	0.2		%			5.3		%	6.2		%	(0.9		)%
Parts and service sales	54.3		%	54.2		%	0.1		%			53.6		%	54.0		%	(0.4		)%
Finance, insurance and other, net	100.0		%	100.0		%	—		%
F&I, net												100.0		%	100.0		%	—		%
Total gross margin	16.0		%	16.0		%	—		%			16.9		%	16.8		%	0.1		%
Units sold:
Retail new vehicles sold	32,212			31,311			901			2.9	%	24,154			26,145			(1,991		)	(7.6	)%
Retail used vehicles sold	30,664			27,396			3,268			11.9	%	27,210			28,868			(1,658		)	(5.7	)%
Wholesale used vehicles sold	7,401			6,929			472			6.8	%	6,960			6,962			(2		)	—	%
Total used	38,065			34,325			3,740			10.9	%	34,170			35,830			(1,660		)	(4.6	)%
Average sales price per unit sold:
New vehicle retail	$	39,110		$	37,444		$	1,666		4.4	%	$	40,175		$	39,164		$	1,010		2.6	%
Used vehicle retail	$	20,839		$	20,445		$	394		1.9	%	$	20,509		$	20,365		$	144		0.7	%
Gross profit per unit sold:
New vehicle retail sales	$	1,748		$	1,801		$	(53	)	(2.9	)%	$	1,867		$	1,930		$	(63	)	(3.3	)%
Used vehicle retail sales	$	1,386		$	1,332		$	54		4.1	%	$	1,142		$	1,315		$	(173	)	(13.1	)%
Used vehicle wholesale sales	$	54		$	43		$	11		25.6	%	$	121		$	171		$	(50	)	(29.2	)%
Total used	$	1,127		$	1,072		$	55		5.1	%	$	934		$	1,093		$	(159	)	(14.5	)%
Finance, insurance and other, net (per retail unit)	$	1,751		$	1,697		$	54		3.2	%
F&I PRU												$	1,880		$	1,736		$	144		8.3	%
Other:
SG&A expenses	$	278.1		$	238.7		$	39.4		16.5	%	$	252.0		$	256.2		$	(4.2	)	(1.6	)%
SG&A as % gross profit	73.7		%	69.1		%	4.6		%			75.5		%	74.5		%	1.0		%

The following discussion of our U.S. operating results is on a same store basis. The difference between reported amounts and same store amounts is related to acquisition and disposition ~~activity.~~activity, as well as new add-point openings. Our U.S. dealership operations have been significantly impacted by the reduced demand caused by the COVID-19 pandemic and the restrictions put in place by local governments to contain the virus.

~~Revenue~~Revenues

Total ~~revenue~~revenues in the U.S. during the three months ended ~~September 30, 2019 increased $222.6~~March 31, 2020 decreased $55.2 million, or ~~10.1%~~2.7%, as compared to the same period in ~~2018.~~2019. Total same store ~~revenue~~revenues in the U.S. during the three months ended ~~September 30, 2019 increased $209.1~~March 31, 2020 decreased $72.8 million, or ~~9.7%~~3.6%, as compared to the same period in ~~2018,~~2019, driven by ~~growth~~declines in ~~all revenue streams. New~~new vehicle and used vehicle retail ~~same store revenue increased 7.5% as a result~~sales which were partially offset by increases in used vehicle wholesale, parts and service and F&I sales. The declines of ~~a 2.9% increase~~5.2% in unit sales and a 4.4% increase in average sale price per unit. The increase in average sales price was driven by an increase in overall industry prices and the continued mix shift in sales from cars to trucks. Same store new vehicle truck sales represented 68.5% of same store new vehicle retail ~~unit~~ sales ~~as compared to 64.9% last year. Used~~and 5.1% in same store used vehicle retail ~~same store revenue increased 14.1%,~~sales were driven by ~~an 11.9% increase~~a 7.6% and a 5.7% decrease in new vehicle and used vehicle retail unit sales, ~~as our Val-U-Line® initiative continues to gain traction. In addition, our recent online~~respectively. The declines in new and used vehicle unit sales ~~initiative, “AcceleRide®” , was implemented in nearly all~~were due to reduced demand at our dealerships caused by the COVID-19 pandemic. Total same store used vehicle wholesale revenues increased 11.5% over the same period last year due to a higher mix of ~~our U.S. dealerships.~~luxury cars wholesaled during the first two months of the quarter. Parts and service same store ~~revenue~~revenues increased ~~9.6%~~1.6% with growth ~~across all businesses lines. The growth was~~ driven by ~~an 11.1%~~a 5.4% increase in wholesale parts revenues, a 2.8% increase in customer pay and a ~~10.6% increase in warranty, an 8.3%~~5.0% increase in collision revenues which was partially offset by a 6.9% decline in warranty revenues. Parts and ~~a 6.6% increase~~service same store revenues increased through February 2020 compared to the same period last year but were dampened by the impacts of the COVID-19 pandemic during March 2020. F&I same store revenues increased 1.1%, driven by improvements in ~~wholesale parts revenue. Our four-day work week has been rolled out at 72 U.S. dealerships~~income per contract on finance and vehicle services contracts, as of September 30, 2019 and has driven an increase in our technician count of over 300 professionals in the last twelve months. We expect to roll out a four-day work week in our service departments at additional dealerships in the fourth quarter of 2019, resulting in coverage of approximately 85%well as higher penetration rates on all of our parts and service revenue. The increase in technician count has significantly driven our increase in parts and service revenue. Finance, insurance and other, net (“F&I”) revenue increased 10.5% as F&I per retail unit (“PRU”) sold increased $54, or 3.2%, resulting from higher finance ~~contract~~ and insurance product ~~penetration rates.~~offerings, which were partially offset by a 6.6% decrease in total same store retail units as discussed above.

Gross ~~profit~~Profit

Total gross profit in the U.S. during the three months ended ~~September 30, 2019 increased $34.5~~March 31, 2020 decreased $6.0 million, or ~~9.8%~~1.7%, as compared to the same period in ~~2018.~~2019. Total same store gross profit in the U.S. during the three months ended ~~September 30, 2019 increased $31.7~~March 31, 2020 decreased $10.2 million, or ~~9.2%~~3.0%, as compared to the same period in ~~2018.~~2019. The ~~increase~~decrease in same store gross profit was driven by new and used vehicle retail gross profit which was partially offset by an increase in parts and service and F&I gross profit. New vehicle retail same store gross profit decreased 10.6% driven by a 7.6% decline in new vehicle retail unit sales coupled with a 3.3% decline in new vehicle gross profit PRU over the first quarter of 2019. Used vehicle retail same store gross profit ~~increased by $6.0 million, or 16.4%,~~decreased 18.1% as ~~our~~used vehicle retail same store unit sales ~~increased~~decreased by ~~11.9%~~5.7% and ~~our recently implemented big-data driven pricing strategies drove a 4.1% increase in~~used vehicle retail same store gross profit ~~PRU.~~PRU decreased 13.1% over the same period in 2019. The decline in new vehicle and used vehicle retail same store gross profit was related to the reduced demand caused by the COVID-19 pandemic. Parts and service same store gross profit and F&I same store gross profit increased by ~~9.9%~~0.9% and ~~10.5%~~1.1%, respectively, driven by the increases discussed ~~above~~above. Total same store gross margin increased 10 basis points primarily due to the change in ~~the revenue section.~~mix of sales towards higher margin parts and service and F&I businesses.

SG&A ~~Expense~~Expenses

Our SG&A ~~expense consists~~expenses consist primarily of personnel costs, including salaries, commissions and incentive-based compensation, as well as rent and facility costs, advertising and other expenses, which include legal, professional fees and general corporate expenses. Total SG&A ~~expense~~expenses in the U.S. during the three months ended ~~September 30, 2019~~March 31, 2020 increased ~~$43.2~~$1.4 million, or ~~17.8%~~0.5%, as compared to the same period in ~~2018.~~2019. Total same store SG&A ~~expense~~expenses in the U.S. during the three months ended ~~September 30, 2019 increased $39.4~~March 31, 2020 decreased $4.2 million, or ~~16.5%~~1.6%, as compared to the same period in ~~2018.~~2019. As mentioned above, in March 2020, the U.S. dealership operations were directly impacted by reduced demand caused by the COVID-19 pandemic. In an effort to reduce costs, we furloughed and terminated employees in late March and significantly reduced advertising and other outside services. Total same store SG&A ~~expense~~expenses in the U.S. in the first quarter of 2019 includes $11.9 million in insurance deductible expense related to inventory and building damage due to flooding from Tropical Storm Imelda in Texas and $0.4 million in real estate transaction costs. Total same store SG&A expense in 2018 includes $1.7 million of net gains on real estate transactions and a gain of $1.4 million relating to favorable resolution of legal matters. Same store SG&A expense as a % of gross profit increased 460 basis points driven by increased personnel costs as a percentage of gross profit, higher insurance deductible expense and a reduction in gains on real estate transactions. The increase in insurance deductible expense was attributable to $11.9 million in building and vehicle inventory deductibles related to flooding from Tropical Storm Imelda in Texas in 2019. The reduction in net gains is due to $0.4included $2.0 million in net ~~losses on real estate transactions in 2019 compared to $1.7 million in net gains on real estate transactions in 2018.~~

~~Reported Operating Data - U.S.~~

~~(In millions, except unit and per unit amounts)~~

Nine Months Ended September 30,
2019 2018 Increase/(Decrease) % Change
Revenues:
New vehicle retail sales $ 3,512.1
$ 3,433.4
$ 78.7
2.3 %
Used vehicle retail sales 1,877.6
1,727.8
149.8
8.7 %
Used vehicle wholesale sales 133.0
137.5
(4.5 ) (3.3 )%
Total used 2,010.6
1,865.3
145.3
7.8 %
Parts and service sales 922.2
862.6
59.6
6.9 %
Finance, insurance and other, net 319.4
295.2
24.2
8.2 %
Total revenues $ 6,764.3
$ 6,456.5
$ 307.8
4.8 %
Gross profit:
New vehicle retail sales $ 164.3
$ 166.8
$ (2.5 ) (1.5 )%
Used vehicle retail sales 125.1
109.5
15.6
14.2 %
Used vehicle wholesale sales 2.4
3.4
(1.0 ) (29.4 )%
Total used 127.5
112.9
14.6
12.9 %
Parts and service sales 499.4
463.9
35.5
7.7 %
Finance, insurance and other, net 319.4
295.2
24.2
8.2 %
Total gross profit $ 1,110.6
$ 1,038.8
$ 71.8
6.9 %
Gross margin:
New vehicle retail sales 4.7 % 4.9 % (0.2 )%
Used vehicle retail sales 6.7 % 6.3 % 0.4 %
Used vehicle wholesale sales 1.8 % 2.5 % (0.7 )%
Total used 6.3 % 6.1 % 0.2 %
Parts and service sales 54.2 % 53.8 % 0.4 %
Finance, insurance and other, net 100.0 % 100.0 % — %
Total gross margin 16.4 % 16.1 % 0.3 %
Units sold:
Retail new vehicles sold 89,749
91,119
(1,370 ) (1.5 )%
Retail used vehicles sold 91,299
83,919
7,380
8.8 %
Wholesale used vehicles sold 21,543
23,793
(2,250 ) (9.5 )%
Total used 112,842
107,712
5,130
4.8 %
Average sales price per unit sold:
New vehicle retail $ 39,132
$ 37,680
$ 1,452
3.9 %
Used vehicle retail $ 20,565
$ 20,589
$ (24 ) (0.1 )%
Gross profit per unit sold: —

New vehicle retail sales $ 1,831
$ 1,831
$ —
— %
Used vehicle retail sales $ 1,370
$ 1,305
$ 65
5.0 %
Used vehicle wholesale sales $ 111
$ 143
$ (32 ) (22.4 )%
Total used $ 1,130
$ 1,048
$ 82
7.8 %
Finance, insurance and other, net (per retail unit) $ 1,764
$ 1,686
$ 78
4.6 %
Other:
SG&A expenses $ 809.6
$ 729.4
$ 80.2
11.0 %
SG&A as % gross profit 72.9 % 70.2 % 2.7 %

~~Same Store Operating Data - U.S.~~

~~(In millions, except unit and per unit amounts)~~

Nine Months Ended September 30,
2019 2018 Increase/(Decrease) % Change
Revenues:
New vehicle retail sales $ 3,430.1
$ 3,348.2
$ 81.9
2.4 %
Used vehicle retail sales 1,828.5
1,687.2
141.3
8.4 %
Used vehicle wholesale sales 130.2
133.7
(3.5 ) (2.6 )%
Total used 1,958.7
1,820.9
137.8
7.6 %
Parts and service sales 910.2
836.2
74.0
8.8 %
Finance, insurance and other, net 311.9
289.0
22.9
7.9 %
Total revenues $ 6,610.9
$ 6,294.3
$ 316.6
5.0 %
Gross profit:
New vehicle retail sales $ 159.3
$ 162.6
$ (3.3 ) (2.0 )%
Used vehicle retail sales 122.6
107.0
15.6
14.6 %
Used vehicle wholesale sales 2.4
3.4
(1.0 ) (29.4 )%
Total used 125.0
110.4
14.6
13.2 %
Parts and service sales 491.0
451.6
39.4
8.7 %
Finance, insurance and other, net 311.9
289.0
22.9
7.9 %
Total gross profit $ 1,087.2
$ 1,013.6
$ 73.6
7.3 %
Gross margin:
New vehicle retail sales 4.6 % 4.9 % (0.3 )%
Used vehicle retail sales 6.7 % 6.3 % 0.4 %
Used vehicle wholesale sales 1.8 % 2.5 % (0.7 )%
Total used 6.4 % 6.1 % 0.3 %
Parts and service sales 53.9 % 54.0 % (0.1 )%
Finance, insurance and other, net 100.0 % 100.0 % — %
Total gross margin 16.4 % 16.1 % 0.3 %
Units sold:
Retail new vehicles sold 87,369
88,913
(1,544 ) (1.7 )%
Retail used vehicles sold 88,826
81,846
6,980
8.5 %
Wholesale used vehicles sold 20,940
23,158
(2,218 ) (9.6 )%
Total used 109,766
105,004
4,762
4.5 %
Average sales price per unit sold:
New vehicle retail $ 39,260
$ 37,657
$ 1,603
4.3 %
Used vehicle retail $ 20,585
$ 20,614
$ (29 ) (0.1 )%
Gross profit per unit sold:
New vehicle retail sales $ 1,823
$ 1,829
$ (6 ) (0.3 )%
Used vehicle retail sales $ 1,380
$ 1,307
$ 73
5.6 %
Used vehicle wholesale sales $ 115
$ 147
$ (32 ) (21.8 )%
Total used $ 1,139
$ 1,051
$ 88
8.4 %
Finance, insurance and other, net (per retail unit) $ 1,770
$ 1,692
$ 78
4.6 %
Other:
SG&A expenses $ 794.2
$ 728.4
$ 65.8
9.0 %
SG&A as % gross profit 73.1 % 71.9 % 1.2 %

~~The following discussion of our U.S. operating results is on a same store basis. The difference between reported amounts and same store amounts is related to acquisition and disposition activity.~~

~~Revenue~~

Total revenue in the U.S. during the nine months ended September 30, 2019 increased $307.8 million, or 4.8%, as compared to the same period in 2018. Total same store revenue in the U.S. during the nine months ended September 30, 2019 increased $316.6 million, or 5.0%, as compared to the same period in 2018. The increase in U.S. same store revenue was driven by growth in all of our revenue streams with the exception of used vehicle wholesale sales. New vehicle retail same store revenue increased 2.4% as a 1.7% decrease in unit sales was more than offset by a 4.3% increase in average sales price per unit. The average sales price increase was driven by an increase in overall industry prices and the continued mix shift in sales from cars to trucks. Same store new vehicle truck sales represented 67.2% of total same store new vehicle retail unit sales, as compared to 64.0% in prior year. Used vehicle retail same store revenue increased 8.4% and units increased 8.5% as our Val-U-Line® initiative enabled us to move older model, higher mileage units from wholesale to retail sales. Parts and service same store revenue increased 8.8% driven by a 10.2% increase in customer-pay revenue, a 12.5% increase in warranty, a 5.4% increase in wholesale parts and a 5.1% increase in collision revenue. The implementation of our four-day work week service schedule improved hiring and retention of our service technicians and advisors and increased capacity and efficiency in our service departments. Our four-day work week has been rolled out at 72 U.S. dealerships as of September 30, 2019 and has driven an increase in our technician count of over 300 professionals in the last twelve months. We expect to roll out additional dealerships in the fourth quarter of 2019, resulting in coverage of approximately 85% of our parts and service revenue. F&I same store revenue increased 7.9% as a result of an increase in our retail unit sales, improvements in income per contract on vehicle service and finance contracts, as well as higher penetration rates on finance and other insurance product offerings.

~~Gross profit~~

Total gross profit in the U.S. during the nine months ended September 30, 2019 increased $71.8 million, or 6.9%, as compared to the same period in 2018. Total same store gross profit in the U.S. during the nine months ended September 30, 2019 increased $73.6 million, or 7.3%, as compared to the same period in 2018. The increase in total gross profit was driven by increases in parts and service, F&I and used vehicle retail gross profit, partially offset by a decrease in new vehicle gross profit. New vehicle retail same store gross profit decreased 2.0% due to lower new vehicle unit sales as industry new vehicle sales have slowed. Used vehicle retail same store gross profit increased 14.6% as a result of an 8.5% increase in used vehicle retail unit sales and a 5.6% increase in used vehicle retail same store average gross profit PRU. The increased same store used vehicle retail PRU reflects our recently implemented big-data driven pricing strategies. Parts and service same store gross profit and F&I same store gross profit increased 8.7% and 7.9%, respectively, driven by the increase in revenue described above. Total same store gross margin increased 30 basis points as our higher margin businesses grew at a faster pace than our lower gross margin new vehicle business.

~~SG&A Expense~~

Our SG&A expense consists primarily of personnel costs, including salaries, commissions and incentive-based compensation, as well as rent and facility costs, advertising and other expenses, which include legal, professional fees and general corporate expenses. Total SG&A expense in the U.S. during the nine months ended September 30, 2019 increased $80.2 million, or 11.0%, as compared to the same period in 2018. Total same store SG&A expense in the U.S. during the nine months ended September 30, 2019, increased $65.8 million, or 9.0%, as compared to the same period in 2018. Same store SG&A expense in 2019 includes $17.9 million of costs associated with ~~hail storms and flooding from Tropical Storm Imelda~~a hailstorm in Texas; ~~$0.7~~$1.1 million in net gains on real estate and dealership transactions; and $1.8 million in non-core legal expenses. ~~Same store SG&A expense in 2018 includes $5.8 million for costs associated with hail storms; $4.9 million in net gains on real estate transactions; and $0.6 million in non-core legal expenses.~~ Total same store SG&A ~~expense~~ as a %percent of gross profit increased ~~120~~100 basis points ~~primarily attributable to a $12.1 million increase~~over the same period in ~~insurance costs~~2019 driven by ~~$11.9 million~~the decline in ~~deductible expenses associated with the building and vehicle deductibles related~~gross profit due to the ~~flooding from Tropical Storm Imelda in Texas and a $4.2 million decrease in net gains in real estate and dealership transactions.~~impact of the COVID-19 pandemic.

Reported Operating Data - U.K.

(In millions, except unit and per unit amounts)


	Three Months Ended September 30,																Three Months Ended March 31,
	2019			2018			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results			Constant Currency % Change		2020			2019			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results			Constant Currency % Change
Revenues:
New vehicle retail sales	$	290.7		$	278.0		$	12.7		4.6	%	$	(16.4	)	10.5	%	$	296.3		$	318.6		$	(22.3	)	(7.0	)%	$	(9.1	)	(4.1	)%
Used vehicle retail sales	189.3			200.1			(10.8		)	(5.4	)%	(10.8		)	—	%	188.8			203.6			(14.8		)	(7.3	)%	(2.3		)	(6.2	)%
Used vehicle wholesale sales	35.0			41.7			(6.7		)	(16.1	)%	(1.9		)	(11.5	)%	35.8			45.3			(9.4		)	(20.8	)%	(0.4		)	(19.8	)%
Total used	224.3			241.8			(17.5		)	(7.2	)%	(12.7		)	(2.0	)%	224.6			248.8			(24.2		)	(9.7	)%	(2.7		)	(8.6	)%
Parts and service sales	56.6			53.8			2.8			5.2	%	(3.2		)	11.1	%	56.4			59.6			(3.1		)	(5.3	)%	(0.8		)	(3.9	)%
Finance, insurance and other, net	13.0			12.3			0.7			5.7	%	(0.7		)	11.5	%
F&I, net																	13.3			15.2			(1.9		)	(12.4	)%	(0.3		)	(10.3	)%
Total revenues	$	584.6		$	585.9		$	(1.3	)	(0.2	)%	$	(33.0	)	5.4	%	$	590.7		$	642.2		$	(51.5	)	(8.0	)%	$	(12.9	)	(6.0	)%
Gross profit:
New vehicle retail sales	$	12.1		$	15.1		$	(3.0	)	(19.9	)%	$	(0.8	)	(14.4	)%	$	12.1		$	16.8		$	(4.7	)	(28.1	)%	$	(0.5	)	(25.2	)%
Used vehicle retail sales	8.9			11.6			(2.7		)	(23.3	)%	(0.5		)	(19.0	)%	9.2			8.3			0.9			10.5	%	(0.1		)	12.1	%
Used vehicle wholesale sales	(0.3		)	(0.8		)	0.5			62.5	%	—			62.5	%	—			(1.0		)	1.0			96.9	%	—			96.4	%
Total used	8.6			10.8			(2.2		)	(20.4	)%	(0.5		)	(15.6	)%	9.1			7.3			1.9			25.4	%	(0.1		)	27.2	%
Parts and service sales	31.3			30.5			0.8			2.6	%	(1.8		)	8.4	%	30.3			32.7			(2.4		)	(7.4	)%	(0.5		)	(5.9	)%
Finance, insurance and other, net	13.0			12.3			0.7			5.7	%	(0.7		)	11.5	%
F&I, net																	13.3			15.2			(1.9		)	(12.4	)%	(0.3		)	(10.3	)%
Total gross profit	$	65.0		$	68.7		$	(3.7	)	(5.4	)%	$	(3.8	)	0.2	%	$	64.8		$	72.0		$	(7.2	)	(9.9	)%	$	(1.4	)	(8.0	)%
Gross margin:
New vehicle retail sales	4.2		%	5.4		%	(1.2		)%								4.1		%	5.3		%	(1.2		)%
Used vehicle retail sales	4.7		%	5.8		%	(1.1		)%								4.9		%	4.1		%	0.8		%
Used vehicle wholesale sales	(0.9		)%	(1.9		)%	1.0		%								(0.1		)%	(2.2		)%	2.1		%
Total used	3.8		%	4.5		%	(0.7		)%								4.1		%	2.9		%	1.1		%
Parts and service sales	55.3		%	56.7		%	(1.4		)%								53.7		%	55.0		%	(1.2		)%
Finance, insurance and other, net	100.0		%	100.0		%	—		%
F&I, net																	100.0		%	100.0		%	—		%
Total gross margin	11.1		%	11.7		%	(0.6		)%								11.0		%	11.2		%	(0.2		)%
Units sold:
Retail new vehicles sold	9,329			9,333			(4		)	—	%						8,894			10,344			(1,450		)	(14.0	)%
Retail used vehicles sold	8,573			8,482			91			1.1	%						8,024			8,431			(407		)	(4.8	)%
Wholesale used vehicles sold	4,894			5,382			(488		)	(9.1	)%						4,584			5,367			(783		)	(14.6	)%
Total used	13,467			13,864			(397		)	(2.9	)%						12,608			13,798			(1,190		)	(8.6	)%
Average sales price per unit sold:
New vehicle retail	$	31,161		$	29,787		$	1,374		4.6	%	$	(1,754	)	10.5	%	$	33,314		$	30,798		$	2,517		8.2	%	$	(1,021	)	11.5	%
Used vehicle retail	$	22,081		$	23,591		$	(1,510	)	(6.4	)%	$	(1,254	)	(1.1	)%	$	23,528		$	24,144		$	(616	)	(2.6	)%	$	(281	)	(1.4	)%
Gross profit per unit sold:
New vehicle retail sales	$	1,297		$	1,618		$	(321	)	(19.8	)%	$	(88	)	(14.4	)%	$	1,356		$	1,621		$	(266	)	(16.4	)%	$	(54	)	(13.0	)%
Used vehicle retail sales	$	1,038		$	1,368		$	(330	)	(24.1	)%	$	(58	)	(19.9	)%	$	1,141		$	983		$	158		16.1	%	$	(17	)	17.8	%
Used vehicle wholesale sales	$	(61	)	$	(149	)	$	88		59.1	%	$	(5	)	56.8	%	$	(7	)	$	(188	)	$	181		96.4	%	$	1		95.8	%
Total used	$	639		$	779		$	(140	)	(18.0	)%	$	(38	)	(13.1	)%	$	724		$	527		$	197		37.3	%	$	(10	)	39.2	%
Finance, insurance and other, net (per retail unit)	$	726		$	690		$	36		5.2	%	$	(40	)	10.9	%
F&I PRU																	$	787		$	810		$	(22	)	(2.8	)%	$	(19	)	(0.4	)%
Other:
SG&A expenses	$	57.5		$	59.7		$	(2.2	)	(3.7	)%	$	(3.4	)	1.9	%	$	59.8		$	59.2		$	0.7		1.1	%	$	(1.0	)	2.8	%
SG&A as % gross profit	88.5		%	86.9		%	1.6		%								92.3		%	82.2		%	10.1		%

Same Store Operating Data - U.K.

(In millions, except unit and per unit amounts)


	Three Months Ended September 30,																Three Months Ended March 31,
	2019			2018			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results			Constant Currency % Change		2020			2019			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results			Constant Currency % Change
Revenues:
New vehicle retail sales	$	274.2		$	266.1		$	8.1		3.0	%	$	(15.4	)	8.8	%	$	270.6		$	306.7		$	(36.1	)	(11.8	)%	$	(8.4	)	(9.0	)%
Used vehicle retail sales	177.5			192.9			(15.4		)	(8.0	)%	(10.0		)	(2.8	)%	174.8			196.4			(21.6		)	(11.0	)%	(2.1		)	(9.9	)%
Used vehicle wholesale sales	33.4			39.9			(6.5		)	(16.3	)%	(1.9		)	(11.6	)%	32.7			43.5			(10.8		)	(24.8	)%	(0.4		)	(23.8	)%
Total used	210.9			232.8			(21.9		)	(9.4	)%	(11.9		)	(4.3	)%	207.6			239.9			(32.3		)	(13.5	)%	(2.5		)	(12.4	)%
Parts and service sales	50.4			49.6			0.8			1.6	%	(2.8		)	7.3	%	49.7			55.1			(5.4		)	(9.8	)%	(0.7		)	(8.5	)%
Finance, insurance and other, net	12.1			11.8			0.3			2.5	%	(0.7		)	8.1	%
F&I, net																	12.1			14.7			(2.6		)	(17.9	)%	(0.3		)	(15.9	)%
Total revenues	$	547.6		$	560.3		$	(12.7	)	(2.3	)%	$	(30.8	)	3.2	%	$	539.9		$	616.4		$	(76.5	)	(12.4	)%	$	(11.9	)	(10.5	)%
Gross profit:
New vehicle retail sales	$	11.3		$	14.7		$	(3.4	)	(23.1	)%	$	(0.8	)	(17.9	)%	$	11.1		$	16.2		$	(5.1	)	(31.6	)%	$	(0.5	)	(28.8	)%
Used vehicle retail sales	8.3			11.1			(2.8		)	(25.2	)%	(0.3		)	(22.1	)%	8.5			8.0			0.5			6.7	%	(0.1		)	8.3	%
Used vehicle wholesale sales	(0.3		)	(0.7		)	0.4			57.1	%	—			57.1	%	—			(0.9		)	0.8			94.7	%	—			94.1	%
Total used	8.0			10.4			(2.4		)	(23.1	)%	(0.3		)	(19.7	)%	8.5			7.1			1.3			18.8	%	(0.1		)	20.6	%
Parts and service sales	28.2			28.4			(0.2		)	(0.7	)%	(1.6		)	4.8	%	26.9			30.5			(3.6		)	(11.9	)%	(0.4		)	(10.6	)%
Finance, insurance and other, net	12.1			11.8			0.3			2.5	%	(0.7		)	8.1	%
F&I, net																	12.1			14.7			(2.6		)	(17.9	)%	(0.3		)	(15.9	)%
Total gross profit	$	59.6		$	65.3		$	(5.7	)	(8.7	)%	$	(3.4	)	(3.6	)%	$	58.5		$	68.6		$	(10.1	)	(14.7	)%	$	(1.3	)	(12.7	)%
Gross margin:
New vehicle retail sales	4.1		%	5.5		%	(1.4		)%								4.1		%	5.3		%	(1.2		)%
Used vehicle retail sales	4.7		%	5.8		%	(1.1		)%								4.9		%	4.1		%	0.8		%
Used vehicle wholesale sales	(0.9		)%	(1.8		)%	0.9		%								(0.1		)%	(2.0		)%	1.8		%
Total used	3.8		%	4.5		%	(0.7		)%								4.1		%	3.0		%	1.1		%
Parts and service sales	56.0		%	57.3		%	(1.3		)%								54.1		%	55.4		%	(1.3		)%
Finance, insurance and other, net	100.0		%	100.0		%	—		%
F&I, net																	100.0		%	100.0		%	—		%
Total gross margin	10.9		%	11.7		%	(0.8		)%								10.8		%	11.1		%	(0.3		)%
Units sold:
Retail new vehicles sold	8,607			8,646			(39		)	(0.5	)%						8,029			9,635			(1,606		)	(16.7	)%
Retail used vehicles sold	7,902			8,128			(226		)	(2.8	)%						7,361			8,117			(756		)	(9.3	)%
Wholesale used vehicles sold	4,603			5,133			(530		)	(10.3	)%						4,180			5,180			(1,000		)	(19.3	)%
Total used	12,505			13,261			(756		)	(5.7	)%						11,541			13,297			(1,756		)	(13.2	)%
Average sales price per unit sold:
New vehicle retail	$	31,858		$	30,777		$	1,081		3.5	%	$	(1,789	)	9.3	%	$	33,699		$	31,834		$	1,865		5.9	%	$	(1,047	)	9.1	%
Used vehicle retail	$	22,463		$	23,733		$	(1,270	)	(5.4	)%	$	(1,270	)	—	%	$	23,749		$	24,195		$	(445	)	(1.8	)%	$	(289	)	(0.6	)%
Gross profit per unit sold:
New vehicle retail sales	$	1,313		$	1,700		$	(387	)	(22.8	)%	$	(87	)	(17.6	)%	$	1,379		$	1,680		$	(301	)	(17.9	)%	$	(57	)	(14.5	)%
Used vehicle retail sales	$	1,050		$	1,366		$	(316	)	(23.1	)%	$	(43	)	(19.8	)%	$	1,157		$	983		$	173		17.6	%	$	(18	)	19.4	%
Used vehicle wholesale sales	$	(65	)	$	(136	)	$	71		52.2	%	$	(3	)	50.2	%	$	(11	)	$	(165	)	$	154		93.4	%	$	1		92.7	%
Total used	$	640		$	784		$	(144	)	(18.4	)%	$	(28	)	(14.8	)%	$	734		$	536		$	198		36.9	%	$	(11	)	38.9	%
Finance, insurance and other, net (per retail unit)	$	733		$	703		$	30		4.3	%	$	(39	)	9.8	%
F&I PRU																	$	786		$	830		$	(44	)	(5.3	)%	$	(19	)	(3.0	)%
Other:
SG&A expenses	$	51.1		$	55.7		$	(4.6	)	(8.3	)%	$	(2.9	)	(3.0	)%	$	52.4		$	55.7		$	(3.3	)	(6.0	)%	$	(0.9	)	(4.4	)%
SG&A as % gross profit	85.7		%	85.3		%	0.4		%								89.5		%	81.3		%	8.2		%

The following discussion of our U.K. operating results is on a same store basis. The difference between reported amounts and same store amounts is related to acquisition and disposition ~~activity.~~activity, as well as new add-point openings. Our U.K. dealership operations have been significantly impacted by the reduced demand caused by the COVID-19 pandemic and the restrictions put in place by the national government to contain the virus.

~~Revenue~~Revenues

Total ~~revenue~~revenues in the U.K. during the three months ended ~~September 30, 2019~~March 31, 2020 decreased ~~$1.3~~$51.5 million, or ~~0.2%~~8.0%, as compared to the same period in ~~2018.~~2019. Total same store ~~revenue~~revenues in the U.K. during the three months ended ~~September 30, 2019~~March 31, 2020 decreased ~~$12.7~~$76.5 million, or ~~2.3%~~12.4%, as compared to the same period in ~~2018.~~2019. On a constant currency basis, total same store ~~revenue increased $18.1 million, or 3.2%~~revenues decreased 10.5%, driven by ~~increases~~decreases in all of our operations due to the COVID-19 pandemic. March is one of the largest new vehicle ~~parts~~selling months of the year with many pre-orders taken weeks in advance. On March 21, 2020, the government mandated the closure of all U.K. dealerships due to the COVID-19 pandemic. Because of these closures and ~~service and F&I revenue, partially offset by~~various travel restrictions, many new vehicles were not delivered. This drove a ~~decrease~~9.0% decline in ~~used vehicle retail revenue. New~~new vehicle retail same store ~~revenue~~revenues on a constant currency basis, ~~increased 8.8%, as~~driven by a ~~0.5%~~16.7% decrease in new vehicle retail same store unit ~~sales was more than offset by a 9.3% increase~~sales. However, we believe most of these delayed new vehicle pre-orders will be delivered during the second quarter of 2020 after the lockdown in ~~average sales price.~~the U.K. is lifted. Used vehicle retail same store ~~revenue~~revenues on a constant currency basis ~~and~~decreased 9.9% as used vehicle retail same store unit sales ~~both~~declined 9.3% and average used retail same store sales price decreased ~~2.8% as shortages in new vehicle inventory resulting from stricter emissions standards imposed~~ by ~~the Worldwide Harmonised Light Vehicle Test Procedure (“WLTP”) resulted in higher used vehicle demand during the third quarter of 2018.~~0.6%. Parts and service same store ~~revenue increased 7.3%~~revenues decreased 8.5% on a constant currency basis as a ~~result of an~~4.3% increase in customer-pay business ~~driven~~was more than offset by ~~our efforts~~declines of 28.3% in warranty, 27.5% in collision and 9.3% in wholesale parts revenues, due to ~~increase our technician headcount through improved hiring methods and improved pay plans.~~the negative impacts of COVID-19. F&I same store ~~revenue~~revenues on a constant currency basis ~~increased 8.1% as a~~decreased 15.9%, driven by the decline in retail unit sales, ~~was more than offset by a 9.8%~~an increase in ~~F&I PRU, a result of increased~~our overall chargeback experience and lower penetration rates inon finance ~~contract and other insurance product offerings.~~fees.

Gross ~~profit~~Profit

Total gross profit in the U.K. during the three months ended ~~September 30, 2019~~March 31, 2020 decreased ~~$3.7~~$7.2 million, or ~~5.4%~~9.9%, as compared to the same period in ~~2018.~~2019. Total same store gross profit in the U.K. during the three months ended ~~September 30, 2019~~March 31, 2020 decreased ~~$5.7~~$10.1 million, or ~~8.7%~~14.7%, as compared to the same period in ~~2018.~~2019. On a constant currency basis, total same store gross profit decreased ~~$2.3 million, or 3.6%~~12.7%, driven by decreases in new ~~and used~~ vehicle retail, parts and service and F&I gross profit, partially offset by ~~increases~~an increase in ~~parts and service and F&I~~used vehicle retail gross profit. New vehicle retail same store gross profit decreased ~~17.9% as~~28.8%, driven by a ~~result of~~16.7% decrease in new vehicle retail same store unit sales and a ~~17.6%~~14.5% decrease in new vehicle gross profit per unit on a constant currency basis. The decline in new vehicle gross profit was directly related to the COVID-19 pandemic. Used vehicle retail same store gross profit ~~also decreased 22.1% as~~increased 8.3%, reflecting a ~~result of a 2.8% decrease~~19.4% increase in used vehicle retail ~~unit sales and a 19.8% decrease in used vehicle retail~~same store gross profit per unit sold on a constant currency ~~basis.~~basis partially offset by a 9.3% decrease in used vehicle retail same store unit sales. The increase in used vehicle retail same store gross profit ~~pressure on~~reflects gross profit PRUs returning to a more normalized level. In 2019, there was a severe decline in used vehicle values after the new ~~and used vehicles was~~vehicle inventory supply shortage, due to the ~~result~~WLTP legislation, concluded in the second half of ~~continued economic pressure as a result of uncertainty around Brexit.~~2018. Parts and service same store gross profit on a constant currency basis ~~increased 4.8% as a result of a 7.3% increase in revenue, partially offset by an increase in technician costs~~decreased 10.6% due to ~~our hiring initiatives, all~~an 8.5% decrease in revenues, as discussed above. F&I same store ~~revenue~~revenues on a constant currency basis ~~increased 8.1%~~decreased 15.9% as previously discussed.

SG&A ~~Expense~~Expenses

Reported Operating Data - ~~U.K.~~Brazil

(In millions, except unit and per unit amounts)


	Nine Months Ended September 30,																Three Months Ended March 31,
	2019			2018			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results			Constant Currency % Change		2020			2019			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results			Constant Currency % Change
Revenues:
New vehicle retail sales	$	911.6		$	971.1		$	(59.5	)	(6.1	)%	$	(56.6	)	(0.3	)%	$	57.5		$	64.2		$	(6.7	)	(10.4	)%	$	(10.2	)	5.4	%
Used vehicle retail sales	586.8			600.7			(13.9		)	(2.3	)%	(35.1		)	3.5	%	19.9			21.2			(1.3		)	(6.1	)%	(3.4		)	10.1	%
Used vehicle wholesale sales	127.1			134.4			(7.3		)	(5.4	)%	(7.5		)	0.2	%	3.8			4.1			(0.2		)	(5.0	)%	(0.6		)	10.0	%
Total used	713.9			735.1			(21.2		)	(2.9	)%	(42.6		)	2.9	%	23.8			25.3			(1.5		)	(5.9	)%	(4.1		)	10.1	%
Parts and service sales	172.5			165.0			7.5			4.5	%	(10.5		)	10.9	%	9.6			12.0			(2.5		)	(20.4	)%	(1.6		)	(7.0	)%
Finance, insurance and other, net	43.2			42.3			0.9			2.1	%	(2.7		)	8.4	%
F&I, net																	1.7			2.0			(0.3		)	(13.4	)%	(0.3		)	1.8	%
Total revenues	$	1,841.2		$	1,913.5		$	(72.3	)	(3.8	)%	$	(112.4	)	2.1	%	$	92.5		$	103.4		$	(10.9	)	(10.5	)%	$	(16.1	)	5.1	%
Gross profit:
New vehicle retail sales	$	39.6		$	49.5		$	(9.9	)	(20.0	)%	$	(2.3	)	(15.4	)%	$	3.5		$	3.8		$	(0.3	)	(7.9	)%	$	(0.6	)	8.2	%
Used vehicle retail sales	25.5			31.3			(5.8		)	(18.5	)%	(1.5		)	(13.7	)%	1.1			1.2			(0.2		)	(15.1	)%	(0.2		)	0.1	%
Used vehicle wholesale sales	(2.6		)	(2.2		)	(0.4		)	(18.2	)%	0.1			(24.8	)%	0.2			0.3			(0.1		)	(31.3	)%	—			(18.7	)%
Total used	22.9			29.1			(6.2		)	(21.3	)%	(1.4		)	(16.5	)%	1.3			1.5			(0.3		)	(18.2	)%	(0.2		)	(3.5	)%
Parts and service sales	95.5			94.1			1.4			1.5	%	(5.7		)	7.6	%	4.2			5.3			(1.1		)	(20.2	)%	(0.7		)	(6.8	)%
Finance, insurance and other, net	43.2			42.3			0.9			2.1	%	(2.7		)	8.4	%
F&I, net																	1.7			2.0			(0.3		)	(13.4	)%	(0.3		)	1.8	%
Total gross profit	$	201.2		$	215.0		$	(13.8	)	(6.4	)%	$	(12.1	)	(0.8	)%	$	10.7		$	12.6		$	(1.9	)	(15.2	)%	$	(1.8	)	(0.5	)%
Gross margin:
New vehicle retail sales	4.3		%	5.1		%	(0.8		)%								6.1		%	5.9		%	0.2		%
Used vehicle retail sales	4.3		%	5.2		%	(0.9		)%								5.3		%	5.8		%	(0.6		)%
Used vehicle wholesale sales	(2.0		)%	(1.6		)%	(0.4		)%								5.3		%	7.3		%	(2.0		)%
Total used	3.2		%	4.0		%	(0.8		)%								5.3		%	6.1		%	(0.8		)%
Parts and service sales	55.4		%	57.0		%	(1.6		)%								43.9		%	43.8		%	0.1		%
Finance, insurance and other, net	100.0		%	100.0		%	—		%
F&I, net																	100.0		%	100.0		%	—		%
Total gross margin	10.9		%	11.2		%	(0.3		)%								11.5		%	12.2		%	(0.6		)%
Units sold:
Retail new vehicles sold	28,939			30,697			(1,758		)	(5.7	)%						1,971			2,140			(169		)	(7.9	)%
Retail used vehicles sold	25,284			24,818			466			1.9	%						1,098			1,088			10			0.9	%
Wholesale used vehicles sold	16,033			16,924			(891		)	(5.3	)%						475			472			3			0.6	%
Total used	41,317			41,742			(425		)	(1.0	)%						1,573			1,560			13			0.8	%
Average sales price per unit sold:
New vehicle retail	$	31,501		$	31,635		$	(134	)	(0.4	)%	$	(1,955	)	5.8	%	$	29,169		$	29,987		$	(817	)	(2.7	)%	$	(5,154	)	14.5	%
Used vehicle retail	$	23,208		$	24,204		$	(996	)	(4.1	)%	$	(1,390	)	1.6	%	$	18,154		$	19,508		$	(1,353	)	(6.9	)%	$	(3,137	)	9.1	%
Gross profit per unit sold:
New vehicle retail sales	$	1,368		$	1,613		$	(245	)	(15.2	)%	$	(79	)	(10.3	)%	$	1,782		$	1,783		$	(1	)	—	%	$	(313	)	17.5	%
Used vehicle retail sales	$	1,009		$	1,261		$	(252	)	(20.0	)%	$	(60	)	(15.2	)%	$	957		$	1,137		$	(181	)	(15.9	)%	$	(172	)	(0.8	)%
Used vehicle wholesale sales	$	(162	)	$	(130	)	$	(32	)	(24.6	)%	$	9		(31.7	)%	$	430		$	629		$	(199	)	(31.7	)%	$	(78	)	(19.2	)%
Total used	$	554		$	697		$	(143	)	(20.5	)%	$	(34	)	(15.7	)%	$	798		$	984		$	(186	)	(18.9	)%	$	(143	)	(4.3	)%
Finance, insurance and other, net (per retail unit)	$	797		$	762		$	35		4.6	%	$	(49	)	11.0	%
F&I PRU																	$	560		$	615		$	(55	)	(8.9	)%	$	(98	)	7.1	%
Other:
SG&A expenses	$	175.8		$	181.6		$	(5.8	)	(3.2	)%	$	(10.7	)	2.7	%	$	10.6		$	12.4		$	(1.8	)	(14.3	)%	$	(1.9	)	1.4	%
SG&A as % gross profit	87.4		%	84.5		%	2.9		%								99.1		%	98.2		%	1.0		%

Same Store Operating Data - ~~U.K.~~Brazil

(In millions, except unit and per unit amounts)


	Nine Months Ended September 30,																Three Months Ended March 31,
	2019			2018			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results			Constant Currency % Change		2020			2019			Increase/ (Decrease)			% Change		Currency Impact on Current Period Results			Constant Currency % Change
Revenues:
New vehicle retail sales	$	853.1		$	923.9		$	(70.8	)	(7.7	)%	$	(53.1	)	(1.9	)%	$	57.5		$	63.2		$	(5.7	)	(9.0	)%	$	(10.2	)	7.1	%
Used vehicle retail sales	546.1			580.2			(34.1		)	(5.9	)%	(32.8		)	(0.2	)%	19.9			19.7			0.3			1.4	%	(3.4		)	18.9	%
Used vehicle wholesale sales	120.6			130.2			(9.6		)	(7.4	)%	(7.1		)	(1.9	)%	3.8			3.5			0.4			10.9	%	(0.6		)	28.4	%
Total used	666.7			710.4			(43.7		)	(6.2	)%	(39.9		)	(0.5	)%	23.8			23.1			0.7			2.8	%	(4.1		)	20.3	%
Parts and service sales	154.7			152.8			1.9			1.2	%	(9.3		)	7.3	%	9.6			11.7			(2.2		)	(18.6	)%	(1.6		)	(4.8	)%
Finance, insurance and other, net	40.4			40.6			(0.2		)	(0.5	)%	(2.4		)	5.3	%
F&I, net																	1.7			2.0			(0.2		)	(11.9	)%	(0.3		)	3.5	%
Total revenues	$	1,714.9		$	1,827.7		$	(112.8	)	(6.2	)%	$	(104.7	)	(0.4	)%	$	92.5		$	100.0		$	(7.4	)	(7.4	)%	$	(16.1	)	8.7	%
Gross profit:
New vehicle retail sales	$	37.3		$	48.0		$	(10.7	)	(22.3	)%	$	(2.2	)	(17.7	)%	$	3.5		$	3.8		$	(0.3	)	(8.4	)%	$	(0.6	)	7.7	%
Used vehicle retail sales	23.4			30.3			(6.9		)	(22.8	)%	(1.4		)	(18.1	)%	1.1			1.4			(0.3		)	(24.9	)%	(0.2		)	(11.6	)%
Used vehicle wholesale sales	(2.3		)	(1.8		)	(0.5		)	(27.8	)%	0.1			(35.9	)%	0.2			0.3			(0.1		)	(26.2	)%	—			(12.8	)%
Total used	21.1			28.5			(7.4		)	(26.0	)%	(1.3		)	(21.5	)%	1.3			1.7			(0.4		)	(25.2	)%	(0.2		)	(11.8	)%
Parts and service sales	86.0			88.0			(2.0		)	(2.3	)%	(5.1		)	3.6	%	4.2			5.1			(0.9		)	(17.6	)%	(0.7		)	(3.8	)%
Finance, insurance and other, net	40.4			40.6			(0.2		)	(0.5	)%	(2.4		)	5.3	%
F&I, net																	1.7			2.0			(0.2		)	(11.9	)%	(0.3		)	3.5	%
Total gross profit	$	184.8		$	205.1		$	(20.3	)	(9.9	)%	$	(11.0	)	(4.6	)%	$	10.7		$	12.6		$	(1.9	)	(14.9	)%	$	(1.8	)	(0.2	)%
Gross margin:
New vehicle retail sales	4.4		%	5.2		%	(0.8		)%								6.1		%	6.1		%	—		%
Used vehicle retail sales	4.3		%	5.2		%	(0.9		)%								5.3		%	7.1		%	(1.8		)%
Used vehicle wholesale sales	(1.9		)%	(1.4		)%	(0.5		)%								5.3		%	8.0		%	(2.7		)%
Total used	3.2		%	4.0		%	(0.8		)%								5.3		%	7.3		%	(2.0		)%
Parts and service sales	55.6		%	57.6		%	(2.0		)%								44.0		%	43.5		%	0.5		%
Finance, insurance and other, net	100.0		%	100.0		%	—		%
F&I, net																	100.0		%	100.0		%	—		%
Total gross margin	10.8		%	11.2		%	(0.4		)%								11.5		%	12.6		%	(1.0		)%
Units sold:
Retail new vehicles sold	26,931			28,593			(1,662		)	(5.8	)%						1,971			2,126			(155		)	(7.3	)%
Retail used vehicles sold	23,245			23,782			(537		)	(2.3	)%						1,098			1,058			40			3.8	%
Wholesale used vehicles sold	15,077			16,342			(1,265		)	(7.7	)%						475			450			25			5.6	%
Total used	38,322			40,124			(1,802		)	(4.5	)%						1,573			1,508			65			4.3	%
Average sales price per unit sold:
New vehicle retail	$	31,677		$	32,312		$	(635	)	(2.0	)%	$	(1,973	)	4.1	%	$	29,169		$	29,709		$	(540	)	(1.8	)%	$	(5,158	)	15.5	%
Used vehicle retail	$	23,493		$	24,397		$	(904	)	(3.7	)%	$	(1,412	)	2.1	%	$	18,154		$	18,584		$	(429	)	(2.3	)%	$	(3,141	)	14.6	%
Gross profit per unit sold:
New vehicle retail sales	$	1,385		$	1,679		$	(294	)	(17.5	)%	$	(82	)	(12.6	)%	$	1,782		$	1,803		$	(21	)	(1.1	)%	$	(312	)	16.2	%
Used vehicle retail sales	$	1,007		$	1,274		$	(267	)	(21.0	)%	$	(60	)	(16.2	)%	$	957		$	1,323		$	(366	)	(27.7	)%	$	(171	)	(14.8	)%
Used vehicle wholesale sales	$	(153	)	$	(110	)	$	(43	)	(39.1	)%	$	9		(47.3	)%	$	430		$	615		$	(185	)	(30.1	)%	$	(78	)	(17.4	)%
Total used	$	551		$	710		$	(159	)	(22.4	)%	$	(32	)	(17.8	)%	$	798		$	1,112		$	(314	)	(28.3	)%	$	(143	)	(15.4	)%
Finance, insurance and other, net (per retail unit)	$	805		$	775		$	30		3.9	%	$	(47	)	10.0	%
F&I PRU																	$	560		$	613		$	(53	)	(8.6	)%	$	(98	)	7.4	%
Other:
SG&A expenses	$	159.6		$	170.8		$	(11.2	)	(6.6	)%	$	(9.6	)	(0.9	)%	$	10.5		$	11.4		$	(0.9	)	(7.7	)%	$	(1.9	)	9.4	%
SG&A as % gross profit	86.4		%	83.3		%	3.1		%								98.7		%	90.9		%	7.8		%

The following discussion of our ~~U.K.~~Brazil operating results is on a same store basis. The difference between reported amounts and same store amounts is related to acquisition and disposition ~~activity.~~activity, as well as new add-point openings. Our Brazil dealership operations have been significantly impacted by the reduced demand caused by the COVID-19 pandemic and the restrictions put in place by local governments to contain the virus.

~~Revenue~~Revenues

Total ~~revenue~~revenues in ~~the U.K.~~Brazil during the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 decreased ~~$72.3~~$10.9 million, or ~~3.8%~~10.5%, as compared to the same period in ~~2018.~~2019. Total same store ~~revenue~~revenues in ~~the U.K.~~Brazil during the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 decreased ~~$112.8~~$7.4 million, or ~~6.2%~~7.4%, as compared to the same period in ~~2018.~~2019. On a constant currency basis, total same store ~~revenue decreased 0.4% as a result of a decline~~revenues increased 8.7% driven by increases in ~~new and used vehicle revenues almost fully offset by an increase in~~all business lines except parts and ~~service and F&I revenue. The market conditions in the U.K. remain challenging, primarily due to the uncertainty surrounding Brexit.~~service. New vehicle retail same store ~~revenue~~revenues on a constant currency basis ~~decreased 1.9%,~~increased 7.1% as a ~~5.8% decrease in new vehicle retail same store unit sales was partially offset by a 4.1%~~15.5% increase in new vehicle retail same store average sales price per unit ~~sold.~~sold more than offset a 7.3% decrease in new vehicle retail same store unit sales. The increase in average sales price was driven by a change in brand mix, which has shifted towards our higher priced luxury brands. The decline in new vehicle same store unit sales was a result of the reduced demand at our dealerships caused by the COVID-19 pandemic. Used vehicle retail same store ~~revenue~~revenues on a constant currency basis ~~decreased 0.2%, as~~increased 18.9% reflecting a ~~2.3% decrease in used vehicle retail same store unit sales was partially offset by a 2.1%~~14.6% increase in used vehicle retail same store average sales price per unit ~~sold.~~sold and a 3.8% increase in used vehicle retail same store unit sales. The increase in used vehicle retail same store average sales price reflects higher luxury sales in 2020 compared with the prior year. The increase in used vehicle retail same store unit sales was driven by an increased focus by management on used sales volume growth. Parts and service same store ~~revenue increased 7.3%~~revenues on a constant currency basis decreased 4.8% driven by ~~increases of 8.5% in customer-pay, 13.1%~~a decline in warranty ~~and 6.6% in wholesale parts,~~revenues, partially offset by ~~a decrease of 14.8% in collision revenue. The~~ increases in customer-pay, collision and ~~warranty revenue are a result of our efforts to increase our technician headcount through improved hiring methods and improved pay plans.~~wholesale revenues. F&I same store ~~revenue~~revenues on a constant currency basis increased ~~5.3% driven by increased penetration rates on finance fees and other insurance product offerings, as well as increased~~3.5% primarily reflecting improvement in income per contract on ~~vehicle service contracts.~~retail finance fees.

Gross ~~profit~~Profit

Total gross profit in ~~the U.K.~~Brazil during the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 decreased ~~$13.8~~$1.9 million, or ~~6.4%~~15.2%, as compared to the same period in ~~2018.~~2019. Total same store gross profit in ~~the U.K.~~Brazil during the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 decreased ~~$20.3~~$1.9 million, or ~~9.9%~~14.9%, as compared to the same period in ~~2018.~~2019. On a constant currency basis, total same store gross profit decreased ~~4.6%~~0.2% as ~~a result of a decline~~declines in ~~new and~~ used vehicle ~~revenues, partially offset by an increase in~~and parts and service were almost fully offset by increases in new vehicle and F&I ~~revenue.~~gross profit. New vehicle retail same store gross profit on a constant currency basis ~~decreased 17.7%~~increased 7.7% driven by ~~a 12.6% decrease~~an increase of 16.2% in new vehicle retail same store average gross profit per unit sold, ~~coupled with the~~partially offset by a 7.3% decline in new vehicle retail same store units ~~discussed above.~~sold. The improvement in new vehicle retail same store gross profit reflects an increase in manufacturer incentives. Used vehicle retail same store gross profit on a constant currency basis decreased ~~18.1% on~~11.6% reflecting a ~~2.3% decrease in used vehicle retail same store unit sales and a 16.2%~~14.8% decrease in used vehicle retail same store average gross profit ~~per~~PRU that was partially offset by a 3.8% increase in used vehicle retail same store unit ~~sold.~~sales. The decline in used vehicle same store gross profit ~~pressures on new and used vehicles are~~PRU was a result of ~~continued economic pressure~~the COVID-19 pandemic as ~~a result of uncertainty around Brexit. In addition~~we sacrificed profit over volume to ~~the economic pressures from Brexit, used vehicle retail gross profit in 2018 was impacted by above average used vehicle values caused by the WLTP related new vehicle shortages.~~reduce inventory levels. Parts and service same store gross profit on a constant currency basis ~~increased 3.6%~~decreased 3.8% as a result of ~~a 7.3% increase~~the 4.8% decrease in ~~revenue discussed above, partially offset by an increase in technician costs as a result of hiring initiatives discussed~~revenues described above. F&I same store gross profit on a constant currency basis increased ~~5.3%~~3.5% as discussed above.

SG&A ~~Expense~~Expenses

~~Reported Operating Data - Brazil~~

~~(In millions, except unit and per unit amounts)~~

Three Months Ended September 30,
2019 2018 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change
Revenues:
New vehicle retail sales $ 69.8
$ 64.9
$ 4.9
7.6 % $ (0.5 ) 8.3 %
Used vehicle retail sales 22.8
20.3
2.5
12.3 % (0.1 ) 12.9 %
Used vehicle wholesale sales 4.4
4.2
0.2
4.8 % —
4.8 %
Total used 27.2
24.5
2.7
11.0 % (0.1 ) 11.7 %
Parts and service sales 12.0
11.4
0.6
5.3 % (0.1 ) 5.9 %
Finance, insurance and other, net 1.9
2.2
(0.3 ) (13.6 )% —
(13.6 )%
Total revenues $ 110.9
$ 103.0
$ 7.9
7.7 % $ (0.7 ) 8.4 %
Gross profit:
New vehicle retail sales $ 4.5
$ 5.2
$ (0.7 ) (13.5 )% $ —
(13.5 )%
Used vehicle retail sales 1.8
1.3
0.5
38.5 % —
38.5 %
Used vehicle wholesale sales 0.3
0.1
0.2
200.0 % 0.1
88.2 %
Total used 2.1
1.4
0.7
50.0 % 0.1
44.3 %
Parts and service sales 5.1
5.1
—
— % —
— %
Finance, insurance and other, net 1.9
2.2
(0.3 ) (13.6 )% —
(13.6 )%
Total gross profit $ 13.6
$ 13.9
$ (0.3 ) (2.2 )% $ 0.1
(1.9 )%
Gross margin:
New vehicle retail sales 6.4 % 8.0 % (1.6 )%
Used vehicle retail sales 7.9 % 6.4 % 1.5 %
Used vehicle wholesale sales 6.8 % 2.4 % 4.4 %
Total used 7.7 % 5.7 % 2.0 %
Parts and service sales 42.5 % 44.7 % (2.2 )%
Finance, insurance and other, net 100.0 % 100.0 % — %
Total gross margin 12.3 % 13.5 % (1.2 )%
Units sold:
Retail new vehicles sold 2,262
2,193
69
3.1 %
Retail used vehicles sold 1,219
1,069
150
14.0 %
Wholesale used vehicles sold 430
402
28
7.0 %
Total used 1,649
1,471
178
12.1 %
Average sales price per unit sold:
New vehicle retail $ 30,858
$ 29,594
$ 1,264
4.3 % $ (210 ) 5.0 %
Used vehicle retail $ 18,704
$ 18,990
$ (286 ) (1.5 )% $ (96 ) (1.0 )%
Gross profit per unit sold:
New vehicle retail sales $ 1,989
$ 2,371
$ (382 ) (16.1 )% $ (6 ) (15.9 )%
Used vehicle retail sales $ 1,477
$ 1,216
$ 261
21.5 % $ 1
21.6 %
Used vehicle wholesale sales $ 698
$ 249
$ 449
180.3 % $ 135
76.0 %
Total used $ 1,273
$ 952
$ 321
33.7 % $ 37
28.7 %
Finance, insurance and other, net (per retail unit) $ 546
$ 674
$ (128 ) (19.0 )% $ (1 ) (19.2 )%
Other:
SG&A expenses $ 11.1
$ 14.9
$ (3.8 ) (25.5 )% $ 0.1
(26.1 )%
SG&A as % gross profit 81.6 % 107.2 % (25.6 )%

~~Same Store Operating Data - Brazil~~

~~(In millions, except unit and per unit amounts)~~

Three Months Ended September 30,
2019 2018 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change
Revenues:
New vehicle retail sales $ 67.4
$ 64.1
$ 3.3
5.1 % $ (0.6 ) 6.1 %
Used vehicle retail sales 22.1
17.4
4.7
27.0 % (0.1 ) 27.5 %
Used vehicle wholesale sales 4.4
3.4
1.0
29.4 % —
29.4 %
Total used 26.5
20.8
5.7
27.4 % (0.1 ) 27.8 %
Parts and service sales 11.7
11.1
0.6
5.4 % —
5.4 %
Finance, insurance and other, net 1.8
2.1
(0.3 ) (14.3 )% 0.1
(17.1 )%
Total revenues $ 107.4
$ 98.1
$ 9.3
9.5 % $ (0.6 ) 10.2 %
Gross profit:
New vehicle retail sales $ 4.3
$ 5.2
$ (0.9 ) (17.3 )% $ (0.1 ) (15.0 )%
Used vehicle retail sales 1.7
1.1
0.6
54.5 % 0.1
45.7 %
Used vehicle wholesale sales 0.3
0.2
0.1
50.0 % (0.1 ) 116.9 %
Total used 2.0
1.3
0.7
53.8 % —
53.8 %
Parts and service sales 5.1
5.0
0.1
2.0 % (0.1 ) 3.3 %
Finance, insurance and other, net 1.8
2.1
(0.3 ) (14.3 )% 0.1
(17.1 )%
Total gross profit $ 13.2
$ 13.6
$ (0.4 ) (2.9 )% $ (0.1 ) (2.0 )%
Gross margin:
New vehicle retail sales 6.4 % 8.1 % (1.7 )%
Used vehicle retail sales 7.7 % 6.3 % 1.4 %
Used vehicle wholesale sales 6.8 % 5.9 % 0.9 %
Total used 7.5 % 6.2 % 1.3 %
Parts and service sales 43.6 % 45.0 % (1.4 )%
Finance, insurance and other, net 100.0 % 100.0 % — %
Total gross margin 12.3 % 13.9 % (1.6 )%
Units sold:
Retail new vehicles sold 2,145
2,173
(28 ) (1.3 )%
Retail used vehicles sold 1,164
1,010
154
15.2 %
Wholesale used vehicles sold 416
373
43
11.5 %
Total used 1,580
1,383
197
14.2 %
Average sales price per unit sold:
New vehicle retail $ 31,422
$ 29,498
$ 1,924
6.5 % $ (286 ) 7.5 %
Used vehicle retail $ 18,986
$ 17,228
$ 1,758
10.2 % $ (76 ) 10.6 %
Gross profit per unit sold:
New vehicle retail sales $ 2,005
$ 2,393
$ (388 ) (16.2 )% $ (59 ) (13.9 )%
Used vehicle retail sales $ 1,460
$ 1,089
$ 371
34.1 % $ 64
26.5 %
Used vehicle wholesale sales $ 721
$ 536
$ 185
34.5 % $ (181 ) 94.5 %
Total used $ 1,266
$ 940
$ 326
34.7 % $ (1 ) 34.4 %
Finance, insurance and other, net (per retail unit) $ 544
$ 660
$ (116 ) (17.6 )% $ 19
(20.2 )%
Other:
SG&A expenses $ 10.8
$ 13.8
$ (3.0 ) (21.7 )% $ (0.1 ) (20.9 )%
SG&A as % gross profit 81.8 % 101.5 % (19.7 )%

~~The following discussion of our Brazil operating results is on a same store basis. The difference between reported amounts and same store amounts is related to acquisition and disposition activity.~~

~~Revenue~~

~~Total revenue~~expenses in Brazil during the three months ended ~~September 30, 2019 increased $7.9~~March 31, 2020 decreased $0.9 million, or 7.7%, as compared to the same period in 2018. Total same store revenue in Brazil during the three months ended September 30, 2019 increased $9.3 million, or 9.5%, as compared to the same period in 2018. On a constant currency basis, total same store revenue increased 10.2% driven by increases in all business lines except F&I. New vehicle retail same store revenue on a constant currency basis increased 6.1% as a 7.5% increase in new vehicle retail same store average sales price per unit sold more than offset a 1.3% decrease in new vehicle retail same store unit sales. The increase in average sales price was driven by a change in brand mix as growth in our higher priced luxury brands outpaced growth in our lower priced import brands. Used vehicle retail same store revenue on a constant currency basis increased 27.5% as a result of a 15.2% increase in used vehicle retail same store unit sales and a 10.6% increase in used vehicle retail same store average sales price per unit sold. This increase was driven by a recently implemented centralized used vehicle purchasing and pricing model which has improved our acquisition of used vehicle inventory and driven the increased used vehicle unit sales. Parts and service same store revenue on a constant currency basis increased 5.4% driven by a 13.5% increase in customer-pay, partially offset by an 18.1% decrease in warranty revenue. The increase in customer-pay reflects management initiatives to enhance the effectiveness of our service sales process and improve efficiency of our parts and service operations. F&I same store revenue on a constant currency basis decreased 17.1% primarily as a result of a decline in fleet business.

~~Gross profit~~

Total gross profit in Brazil during the three months ended September 30, 2019 decreased $0.3 million, or 2.2%, as compared to the same period in 2018. Total same store gross profit in Brazil during the three months ended September 30, 2019 decreased $0.4 million, or 2.9%, as compared to the same period in 2018. On a constant currency basis, total same store gross profit decreased 2.0% as declines in new vehicle and F&I gross profit were partially offset by increases in used vehicle and parts and service gross profit. New vehicle retail same store gross profit on a constant currency basis decreased 15.0% as a result of a decrease of 13.9% in new vehicle retail same store average gross profit per unit sold, coupled with the decline in new vehicle retail units discussed above. The decrease in gross profit per unit reflects execution of strategic initiatives designed to reduce inventory levels. Used vehicle retail same store gross profit on a constant currency basis increased 45.7% on a 15.2% increase in used vehicle retail same store unit sales and a 26.5% increase in used vehicle retail same store average gross profit per unit sold. The recently implemented centralized used vehicle purchasing and pricing model has improved our acquisition of used vehicle inventory and increased our gross profit per unit. Parts and service same store gross profit on a constant currency basis increased 3.3% on a 5.4% increase in revenue as discussed above. F&I same store revenue on a constant currency basis decreased 17.1% primarily as a result of a decline in fleet business.

~~SG&A Expense~~

Our SG&A expense consists primarily of personnel costs, including salaries, commissions and incentive-based compensation, as well as rent and facility costs, advertising and other expenses, which include legal, professional fees and general corporate expenses. Total SG&A expense in Brazil during the three months ended September 30, 2019 decreased $3.8 million, or 25.5%, as compared to the same period in 2018. Total same store SG&A expense in Brazil during the three months ended September 30, 2019 decreased $3.0 million, or 21.7%, as compared to the same period in 2018.2019. On a constant currency basis, total same store SG&A ~~expense decreased 20.9%, while total gross profit decreased 2.0%~~expenses increased 9.4%, resulting in a ~~1,970~~780 basis points ~~decrease~~increase in total same store SG&A as a % of gross ~~profit to 81.8%.~~profit. The ~~decrease~~increase in same store SG&A ~~expense was~~can be more than explained by $0.9 million of severance costs associated with the termination of employees as a result of ~~cost control initiatives implemented by~~ the ~~management team and lower legal expenses. SG&A expense in 2018 included $2.5 million related to accruals for certain legal items not recurring in 2019.~~COVID-19 pandemic.

~~Reported Operating Data - Brazil~~

~~(In millions, except unit and per unit amounts)~~

Nine Months Ended September 30,
2019 2018 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change
Revenues:
New vehicle retail sales $ 208.5
$ 204.2
$ 4.3
2.1 % $ (17.7 ) 10.8 %
Used vehicle retail sales 63.4
66.3
(2.9 ) (4.4 )% (5.6 ) 4.1 %
Used vehicle wholesale sales 13.3
11.5
1.8
15.7 % (0.9 ) 23.6 %
Total used 76.7
77.8
(1.1 ) (1.4 )% (6.5 ) 7.0 %
Parts and service sales 36.1
34.5
1.6
4.6 % (3.0 ) 13.5 %
Finance, insurance and other, net 5.6
6.0
(0.4 ) (6.7 )% (0.4 ) 0.2 %
Total revenues $ 326.9
$ 322.5
$ 4.4
1.4 % $ (27.6 ) 10.0 %
Gross profit:
New vehicle retail sales $ 12.6
$ 13.3
$ (0.7 ) (5.3 )% $ (0.9 ) 1.8 %
Used vehicle retail sales 4.7
4.0
0.7
17.5 % (0.4 ) 26.2 %
Used vehicle wholesale sales 0.9
0.4
0.5
125.0 % (0.1 ) 150.9 %
Total used 5.6
4.4
1.2
27.3 % (0.5 ) 37.0 %
Parts and service sales 15.8
15.5
0.3
1.9 % (1.3 ) 10.6 %
Finance, insurance and other, net 5.6
6.0
(0.4 ) (6.7 )% (0.4 ) 0.2 %
Total gross profit $ 39.6
$ 39.2
$ 0.4
1.0 % $ (3.1 ) 9.0 %
Gross margin:
New vehicle retail sales 6.0 % 6.5 % (0.5 )%
Used vehicle retail sales 7.4 % 6.0 % 1.4 %
Used vehicle wholesale sales 6.8 % 3.5 % 3.3 %
Total used 7.3 % 5.7 % 1.6 %
Parts and service sales 43.8 % 44.9 % (1.1 )%
Finance, insurance and other, net 100.0 % 100.0 % — %
Total gross margin 12.1 % 12.2 % (0.1 )%
Units sold:
Retail new vehicles sold 6,911
6,429
482
7.5 %
Retail used vehicles sold 3,295
3,163
132
4.2 %
Wholesale used vehicles sold 1,386
1,081
305
28.2 %
Total used 4,681
4,244
437
10.3 %
Average sales price per unit sold:
New vehicle retail $ 30,169
$ 31,762
$ (1,593 ) (5.0 )% $ (2,564 ) 3.1 %
Used vehicle retail $ 19,241
$ 20,961
$ (1,720 ) (8.2 )% $ (1,720 ) — %
Gross profit per unit sold:
New vehicle retail sales $ 1,823
$ 2,069
$ (246 ) (11.9 )% $ (137 ) (5.3 )%
Used vehicle retail sales $ 1,426
$ 1,265
$ 161
12.7 % $ (109 ) 21.1 %
Used vehicle wholesale sales $ 649
$ 370
$ 279
75.4 % $ (60 ) 95.7 %
Total used $ 1,196
$ 1,037
$ 159
15.3 % $ (94 ) 24.2 %
Finance, insurance and other, net (per retail unit) $ 549
$ 626
$ (77 ) (12.3 )% $ (40 ) (5.8 )%
Other:
SG&A expenses $ 35.0
$ 38.2
$ (3.2 ) (8.4 )% $ (2.3 ) (2.2 )%
SG&A as % gross profit 88.4 % 97.4 % (9.0 )%

~~Same Store Operating Data - Brazil~~

~~(In millions, except unit and per unit amounts)~~

Nine Months Ended September 30,
2019 2018 Increase/ (Decrease) % Change Currency Impact on Current Period Results Constant Currency % Change
Revenues:
New vehicle retail sales $ 193.6
$ 202.6
$ (9.0 ) (4.4 )% $ (16.7 ) 3.8 %
Used vehicle retail sales 60.2
62.6
(2.4 ) (3.8 )% (5.6 ) 5.2 %
Used vehicle wholesale sales 12.7
10.4
2.3
22.1 % (1.1 ) 32.8 %
Total used 72.9
73.0
(0.1 ) (0.1 )% (6.7 ) 9.1 %
Parts and service sales 34.6
34.2
0.4
1.2 % (2.9 ) 9.8 %
Finance, insurance and other, net 5.1
6.0
(0.9 ) (15.0 )% (0.4 ) (8.6 )%
Total revenues $ 306.2
$ 315.8
$ (9.6 ) (3.0 )% $ (26.7 ) 5.4 %
Gross profit:
New vehicle retail sales $ 11.9
$ 13.2
$ (1.3 ) (9.8 )% $ (0.8 ) (3.7 )%
Used vehicle retail sales 4.3
3.8
0.5
13.2 % (0.4 ) 22.8 %
Used vehicle wholesale sales 0.9
0.4
0.5
125.0 % (0.1 ) 154.6 %
Total used 5.2
4.2
1.0
23.8 % (0.5 ) 34.7 %
Parts and service sales 15.2
15.4
(0.2 ) (1.3 )% (1.4 ) 7.5 %
Finance, insurance and other, net 5.1
6.0
(0.9 ) (15.0 )% (0.4 ) (8.6 )%
Total gross profit $ 37.4
$ 38.8
$ (1.4 ) (3.6 )% $ (3.1 ) 4.1 %
Gross margin:
New vehicle retail sales 6.1 % 6.5 % (0.4 )%
Used vehicle retail sales 7.1 % 6.1 % 1.0 %
Used vehicle wholesale sales 7.1 % 3.8 % 3.3 %
Total used 7.1 % 5.8 % 1.3 %
Parts and service sales 43.9 % 45.0 % (1.1 )%
Finance, insurance and other, net 100.0 % 100.0 % — %
Total gross margin 12.2 % 12.3 % (0.1 )%
Units sold:
Retail new vehicles sold 6,296
6,390
(94 ) (1.5 )%
Retail used vehicles sold 3,083
3,088
(5 ) (0.2 )%
Wholesale used vehicles sold 1,253
1,043
210
20.1 %
Total used 4,336
4,131
205
5.0 %
Average sales price per unit sold:
New vehicle retail $ 30,750
$ 31,706
$ (956 ) (3.0 )% $ (2,657 ) 5.4 %
Used vehicle retail $ 19,526
$ 20,272
$ (746 ) (3.7 )% $ (1,829 ) 5.3 %
Gross profit per unit sold:
New vehicle retail sales $ 1,890
$ 2,066
$ (176 ) (8.5 )% $ (130 ) (2.2 )%
Used vehicle retail sales $ 1,395
$ 1,231
$ 164
13.3 % $ (123 ) 23.0 %
Used vehicle wholesale sales $ 718
$ 384
$ 334
87.0 % $ (75 ) 111.9 %
Total used $ 1,199
$ 1,017
$ 182
17.9 % $ (108 ) 28.3 %
Finance, insurance and other, net (per retail unit) $ 544
$ 633
$ (89 ) (14.1 )% $ (41 ) (7.6 )%
Other:
SG&A expenses $ 33.5
$ 36.8
$ (3.3 ) (9.0 )% $ (2.4 ) (2.5 )%
SG&A as % gross profit 89.6 % 94.8 % (5.2 )%

The following discussion of our ~~Brazil operating~~ results of operations is on a ~~same store basis. The difference between reported amounts and same store amounts is related to acquisition and disposition activity.~~

~~Revenue~~

Total revenue in Brazil during the nine months ended September 30, 2019 increased $4.4 million, or 1.4%, as compared to the same period in 2018. Total same store revenue in Brazil during the nine months ended September 30, 2019 decreased $9.6 million, or 3.0%, as compared to the same period in 2018. On a constant currencyconsolidated basis, total same store revenue increased 5.4% with increases in all revenue lines excluding F&I. New vehicle retail same store revenue on a constant currency basis increased 3.8%, as a 5.4% increase in new vehicle retail same store average sales price per unit sold more than offset a 1.5% decrease in new vehicle retail same store unit sales. The increase in average sales price was driven by a change in brand mix as our higher priced luxury brands outpaced the growth in our lower priced import brands. Used vehicle retail same store revenue on a constant currency basis increased 5.2%, as a 5.3% increase in used vehicle retail same store average sales price per unit sold more than offset a 0.2% decrease in used vehicle retail same store unit sales. The increase was driven by a recently implemented centralized used vehicle purchasing and pricing model which has improved our acquisition of used vehicle inventory and increased the profitability of our used vehicle business. Parts and service same store revenue on a constant currency basis increased 9.8% as a 16.8% increase in customer-pay business was partially offset by an 8.7% decrease in warranty business. The increase in customer-pay reflects management initiatives to enhance the effectiveness of our service sales process and improve efficiency of our parts and service operations. F&I same store revenue on a constant currency basis decreased 8.6% primarily as a result of a decline in fleet business.

~~Gross profit~~

Total gross profit in Brazil during the nine months ended September 30, 2019 increased $0.4 million, or 1.0%, as compared to the same period in 2018. Total same store gross profit in Brazil during the nine months ended September 30, 2019 decreased $1.4 million, or 3.6%, as compared to the same period in 2018. On a constant currency basis total same store gross profit increased 4.1% as growth in used vehicles and parts and service was partially offset by decreases in new vehicle and F&I. New vehicle retail same store gross profit on a constant currency basis decreased 3.7%, driven by a 1.5% decrease in new vehicle retail same store units sold and a 2.2% decrease in new vehicle retail same store average gross profit per unit sold. The decrease in gross profit per unit reflects execution of strategic initiatives designed to reduce inventory levels. Used vehicle retail same store gross profit on a constant currency basis increased 22.8%, as a 23.0% increase in used vehicle retail same store average gross profit per unit sold more than offset a 0.2% decrease in used vehicle retail same store unit sales. This increase was driven by a recently implemented centralized used vehicle purchasing and pricing model which has improved our acquisition of used vehicle inventory and increased the profitability of our used vehicle business. Parts and service same store gross profit increased 7.5% on a constant currency basis, driven by the 9.8% increase in parts and service revenue. F&I same store revenue on a constant currency basis decreased 8.6% driven by a decline in fleet business.

~~SG&A Expense~~

unless otherwise noted.

Depreciation and Amortization ~~Data~~Expense

Our total depreciation and amortization expense increased from ~~$16.9~~$17.0 million to ~~$18.0 million and from $50.0 million to $53.0~~$18.6 million for the three ~~and nine~~ months ended ~~September 30, 2019, respectively,~~March 31, 2020 when compared to the same period in ~~2018.~~2019. This increase is substantially explained by the increase in our U.S. segment, as we continue to strategically add dealership-related real estate to our investment portfolio and make improvements to our existing facilities intended to enhance the profitability of our dealerships and the overall customer experience. ~~We critically evaluate all planned future capital spending, working closely with our manufacturer partners to maximize the return on our investments.~~

~~Impairments~~

The Company evaluates intangible franchise rights and goodwill assets for impairment annually, or more frequently if events or circumstances indicate possible impairment. The Company performs interim reviews of the franchise rights to determine if a dealership is performing below forecasted franchise cash flow. During the three months ended September 30, 2019, as a result of increased uncertainty in the U.K. due to the delayed decision regarding Brexit that could impact our new vehicle business and certain U.S. dealerships identified in our quarterly review, the Company identified circumstances indicating possible impairment of its franchise rights, requiring a quantitative assessment. In calculating fair value, the Company used a direct value method discounted cash flow model, or income approach, specifically the excess earnings method. Based on the results of the Company's assessment, the Company determined that the fair value of the franchise rights on seven of its U.K. dealerships and one of its U.S. dealerships was below its respective carrying values. This resulted in franchise asset impairment charges of $5.6 million in the U.K. segment and $3.0 million in the U.S. segment.

The Company performs interim reviews of its long-lived assets for impairment when evidence exists that the carrying value of an asset may not be recoverable. During the three months ended September 30, 2019, the Company recognized a ROU asset impairment charge of $1.4 million relating to two operating leases in the U.K. segment. In addition to the ROU assets impairment, the Company also recorded $0.3 million of fixed asset impairments.

~~Total impairments during the three months ended September 30, 2019 were $10.3 million.~~

During the nine months ended September 30, 2019, the Company recorded $10.8 million in impairments, comprised of $8.6 million of U.S. and U.K. franchise impairments described above, and $2.2 million of ROU assets and other fixed asset impairments.

During the three and nine months ended September 30, 2018, the Company recorded $23.2 million and $27.4 million, respectively, of asset impairments, primarily related to impairment of franchise rights.

Floorplan Interest Expense

Our floorplan interest expense fluctuates with changes in our borrowings outstanding and interest rates, which are based on the one-month ~~London Interbank Offered Rate (“LIBOR”)~~LIBOR (or Prime rate in some cases), plus a spread in the U.S. and U.K., and a benchmark rate plus a spread in Brazil. To mitigate the impact of interest rate fluctuations, we employ an interest rate hedging strategy, whereby we swap variable interest rate exposure for a fixed interest rate over the term of the variable interest rate ~~debt.~~borrowing.

~~Our~~For the three months ended March 31, 2020, our total floorplan interest expense ~~increased 4.8% for the three months ended September 30, 2019,~~decreased 18.1% as compared to the same period in ~~2018,~~2019, primarily due to ~~higher~~lower weighted average interest rates as a result of a decline in LIBOR and lower inventory levels in the U.S.~~, partially offset by lower interest rate swap expense.~~

For the nine months ended September 30, 2019, our total floorplan interest expense increased 8.5% as compared to the same period in 2018, primarily due to higher inventory levels in the U.S. and higher weighted average interest rates partially offset by lower interest rate swap expense.

Other Interest Expense, ~~net~~Net

Other interest expense, net consists of interest charges primarily on our real estate related debt, working capital lines of credit and other long-term debt, partially offset by interest income. For the three months ended ~~September 30, 2019,~~March 31, 2020, other interest expense, net decreased from ~~$19.1~~$18.9 million to ~~$18.9~~$18.1 million as compared to the same period in ~~2018.~~2019. The decrease was ~~primarily attributable~~mainly attributed to a decrease in the weighted average interest ~~rates corresponding with~~rate as a ~~decrease~~result of a decline in ~~LIBOR. For the nine months ended September 30, 2019, other interest expense, net decreased from $57.4 million~~LIBOR, partially offset by an increase primarily attributed to ~~$55.8 million as compared to the same period in 2018. The decrease was primarily attributable to a decrease in the~~higher weighted average borrowings on our real estate related debt.

Provision for Income Taxes

Our provision for income taxes ~~increased $1.4~~decreased $4.4 million to ~~$11.0~~$9.1 million for the three months ended ~~September 30, 2019,~~March 31, 2020 as compared to the same period in ~~2018,~~2019, primarily due to ~~an increase of pretax~~a decrease in pre-tax book income. For the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, our ~~provision for income taxes~~effective tax rate decreased ~~$0.1 million~~ to ~~$38.5 million~~,23.4% from 25.9% as compared to the same period in ~~2018,~~2019. This decrease was primarily due to ~~a decrease~~higher tax deductions in excess of ~~pretax~~ book ~~income. For the three months ended September 30, 2019, our effective tax rate increased~~expense with respect to ~~22.4% from 21.6%, as compared to the same period~~RSAs that vested in ~~2018. This increase was primarily due to~~2020, offset by changes to valuation allowances provided for net operating losses in certain U.S. states and in Brazil, as well as higher tax deductions in excess of book expense with respect to restricted stock awards that vested in 2018. For the nine months ended September 30, 2019, our effective tax rate of 23.4% was nearly unchanged from 23.3% for the same period in 2018.Brazil.

We expect our effective tax rate for the full-year of ~~2019~~2020 will be between 23.0% and 24.0%. We believe that it is ~~more likely than not~~more-likely-than-not that our deferred tax assets, net of valuation allowances provided, will be realized, based primarily on assumptions of our future taxable income, considering future reversals of existing taxable temporary differences. The anticipated effects of the COVID-19 pandemic should not materially impact our estimated effective tax rate for the full-year of 2020.

Liquidity and Capital Resources

Our liquidity and capital resources are primarily derived from cash on hand, cash temporarily invested as a pay down of our Floorplan Line and FMCC Facility levels (see Part I, “Item 1. Financial Statements,” Note 7,10 “Floorplan Notes Payable” in the Notes to Condensed Consolidated Financial Statements for additional information), cash from operations, borrowings under our credit facilities, which provide vehicle floorplan financing, working capital, dealership and real estate acquisition financing and proceeds from debt and equity offerings. Based on current facts and circumstances, we believe we will have adequate cash flow, coupled with available borrowing capacity, to fund our current operations, capital expenditures and acquisitions for the ~~remainder of 2019.~~next 12 months. If economic and business conditions deteriorate or if our capital expenditures or acquisition plans for ~~2019~~2020 change, we may need to access the private or public capital markets to obtain additional funding. See “Sources and Uses of Liquidity from Investing Activities” below for further discussion of expectations regarding future capital expenditures.

Cash on Hand

As of ~~September 30, 2019,~~March 31, 2020, our total cash on hand was ~~$41.0~~$19.2 million. The balance of cash on hand excludes ~~$25.2~~$82.8 million of immediately available funds used to pay down our Floorplan Line and FMCC Facility ~~and $3.6 million restricted cash~~ as of ~~September 30, 2019.~~March 31, 2020. We use the pay down of our Floorplan Line and FMCC Facility as a channel for the short-term investment of excess cash.

Cash Flows

We utilize various credit facilities to finance the purchase of our new and used vehicle inventory. With respect to all new vehicle floorplan borrowings in the normal course of business, the manufacturers of the vehicles draft our credit facilities directly with no cash flows to or from us. With respect to borrowings for used vehicle financing, we finance up to 85% of the value of our used vehicle inventory in the U.S. and the funds flow directly between us and the lender.

We categorize the cash flows associated with borrowings and repayments on these various credit facilities as Cash Flows from Operating ActivitiesorCash Flows from Financing Activities in our Condensed Consolidated Statements of Cash Flows. All borrowings from, and repayments to, lenders affiliated with our vehicle manufacturers (excluding the cash flows from or to manufacturer-affiliated lenders participating in our syndicated lending group) are presented within Cash Flows from Operating Activities on in the Condensed Consolidated Statements of Cash Flows in conformity with U.S. GAAP. All borrowings from, and repayments to, the Revolving Credit Facility (see Part I, “Item 1. Financial Statements,” Note 7,10 “Floorplan Notes Payable” in the Notes to Condensed Consolidated Financial Statements for additional information) (including the cash flows from or to manufacturer-affiliated lenders participating in the facility) and other credit facilities in the U.K. and Brazil unaffiliated with our manufacturer partners (collectively, “Non-OEM Floorplan Credit Facilities”), are presented within Cash Flows from Financing Activities in conformity with U.S. GAAP. However, the incurrence of all floorplan notes payable represents an activity necessary to acquire inventory for resale, resulting in a trade payable. Our decision to utilize our Revolving Credit Facility does not substantially alter the process by which our vehicle inventory is financed, nor does it significantly impact the economics of our vehicle procurement activities. Therefore, we believe that all floorplan financing of inventory purchases in the normal course of business should correspond with the related inventory activity and be classified as an operating activity. As a result, we use the non-GAAP measure “Adjusted net cash provided byby/used in operating ~~activities,” which makes such reclassification,~~activities” and “Adjusted net cash provided by/used in financing activities” to further evaluate our cash flows. We believe that this classification eliminates excess volatility in our operating cash flows prepared in accordance with U.S. GAAP and avoids the potential to mislead the users of our financial statements.

In addition, for dealership acquisitions and dispositions that are negotiated as asset purchases, we do not assume transfer of liabilities for floorplan financing in the execution of the transactions. Therefore, borrowings and repayments of all floorplan financing associated with dealership acquisition and disposition are characterized as either ~~operating~~Cash Flow from Operating Activities or ~~financing activities~~Cash Flow from Financing Activities in our ~~statement~~Condensed Consolidated Statements of ~~cash flows~~Cash Flows presented in conformity with U.S. GAAP, depending on the relationship described above. However, the floorplan financing activity is so closely related to the inventory acquisition process that we believe the presentation of all acquisition and disposition related floorplan financing activities should be classified as investing activity to correspond with the associated inventory activity, which more closely reflects the cash flows associated with our acquisitions and disposition strategy and eliminates excess volatility in our operating cash flows prepared in accordance with U.S. GAAP. We have made such adjustments in our adjusted operating cash flow presentations.

The following table reconciles cash flows provided by (used in) operating, investing and financing activities on a U.S. GAAP basis to the corresponding adjusted amounts ~~(dollars in~~(in millions):

Nine Months Ended September 30,
2019 2018 % Change
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by (used in) operating activities $ 310.8
$ 357.4
(13.0 )%
Change in floorplan notes payable - credit facilities, excluding floorplan offset account and net acquisition and disposition related activity (69.0 ) (75.3 )
Change in floorplan notes payable - manufacturer affiliates associated with net acquisition and disposition related activity 0.1
(2.0 )
Adjusted net cash provided by (used in) operating activities $ 241.9
$ 280.1
(13.6 )%
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash provided by (used in) investing activities $ (193.5 ) $ (145.5 ) (33.0 )%
Change in cash paid for acquisitions, associated with floorplan notes payable 14.3
16.3

Change in proceeds from disposition of franchises, property and equipment, associated with floorplan notes payable (19.5 ) (24.3 )
Adjusted net cash provided by (used in) investing activities $ (198.7 ) $ (153.5 ) (29.4 )%
CASH FLOWS FROM FINANCING ACTIVITIES:
Net cash provided by (used in) financing activities $ (90.1 ) $ (204.2 ) 55.9 %
Change in net borrowings and repayments on floorplan notes payable - credit facilities, excluding net activity associated with our floorplan offset account 74.1
85.3

Adjusted net cash provided by (used in) provided by financing activities $ (16.0 ) $ (118.9 ) 86.5 %



	Three Months Ended March 31,
	2020			2019			% Change
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by (used in) operating activities:	$	44.1		$	127.9		(65.6	)%
Change in Floorplan notes payable — credit facilities and other, excluding floorplan offset and net acquisition and disposition	11.8			(21.9		)
Change in Floorplan notes payable — manufacturer affiliates associated with net acquisition and disposition and floorplan offset activity	(3.9		)	25.9
Adjusted net cash provided by (used in) operating activities	$	51.9		$	132.0		(60.6	)%
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash provided by (used in) investing activities:	$	(31.1	)	$	(6.8	)	(358.3	)%
Change in proceeds from disposition of franchises, property and equipment, associated with Floorplan notes payable	—			(15.7		)
Adjusted net cash provided by (used in) investing activities	$	(31.1	)	$	(22.5	)	(38.4	)%
CASH FLOWS FROM FINANCING ACTIVITIES:
Net cash provided by (used in) financing activities:	$	(18.5	)	$	(102.5	)	82.0	%
Change in Floorplan notes payable, excluding floorplan offset	(7.9		)	11.7
Adjusted net cash provided by (used in) financing activities	$	(26.4	)	$	(90.8	)	71.0	%

Sources and Uses of Liquidity from Operating Activities

For the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, we generated ~~$310.8~~$44.1 million of net cash flows from operating activities. On an adjusted basis for the same period, we generated ~~$241.9~~$51.9 million in net cash flows from operating activities, primarily consisting of ~~$125.9~~$29.8 million in net income, coupled with non-cash adjustments related to depreciation and amortization of ~~$53.0~~$18.6 million, operating lease assets of ~~$21.2~~$6.4 million and stock-based compensation of $5.1 million. Adjusted net cash flows from operating activities also includes an $8.9 million adjusted net change in operating assets and liabilities, including cash outflows of $125.7 million from an increase in inventory levels, $98.1 million from decreases in accounts payable and accrued expenses and $7.3 million from the decrease in operating lease liabilities. These cash outflows were partially offset by cash inflows of $135.2 million from net decreases in contracts-in-transit and vehicle receivables, $43.8 million from an adjusted net increase of floorplan borrowings and $41.6 million from decreases in accounts and notes receivable

For the three months ended March 31, 2019, we generated $127.9 million of net cash flows from operating activities. On an adjusted basis for the same period, we generated $132.0 million in net cash flows from operating activities, primarily consisting of $38.6 million in net income, coupled with non-cash adjustments related to depreciation and amortization of $17.0 million, operating lease assets of $7.6 million, stock-based compensation of ~~$14.4 million, asset impairments of $10.8~~$6.1 million and deferred income taxes of ~~$3.6~~$4.1 million, partially offset by a ~~$5.9~~$5.8 million gain on the disposition of assets. Adjusted net cash flows from operating activities also includes a ~~$15.1~~$63.1 million adjusted net change in operating assets and liabilities, including cash inflows of ~~$99.1~~$101.6 million from increases in accounts payable and accrued expenses, ~~and $41.7~~$9.2 million from ~~decreases~~the net decrease in ~~inventory levels.~~accounts and notes receivable, $5.1 million from the net decrease in contracts-in-transit and vehicle receivables and $1.5 million from the adjusted net increase in floorplan borrowings. These cash inflows were partially offset by cash outflows of ~~$70.0~~$28.1 million from ~~the adjusted net decrease in floorplan borrowings, $31.6 million from increases in accounts and notes receivable and $21.3 million from the decrease in operating lease liabilities.~~

~~For the nine months ended September 30, 2018, we generated $357.4 million of net cash flow from operating activities. On~~ an adjusted basis for the same period, we generated $280.1 million in net cash flow from operating activities, primarily consisting of $127.1 million in net income, as well as non-cash adjustments related to depreciation and amortization of $50.0 million, stock-based compensation of $14.2 million, deferred income taxes of $4.1 million, asset impairments of $27.4 million and an $81.2 million net change in operating assets and liabilities, partially offset by a $27.0 million gain on sale of assets. Included in the adjusted net changes of operating assets and liabilities were cash inflows of $70.2 million from the net decrease in vehicle receivables and contracts-in-transit; $33.7 million from decreasesincrease in inventory, levels; $35.5 million from increases in accounts payable and accrued expenses; and $28.4 million from the net decrease in accounts and notes receivable. These cash inflows were partially offset by adjusted cash outflows of $63.4 million from the net decrease in floorplan borrowings and $22.4$17.7 million from the net increase in prepaid expenses and other ~~assets.~~

assets and $8.4 million from the decrease in operating lease liabilities.

Working Capital

At ~~September 30, 2019,~~March 31, 2020, we had a ~~$10.8~~$241.0 million deficit of working capital. This represents a decrease of ~~$26.5~~$335.1 million from December 31, ~~2018,~~2019, when we had ~~$15.7~~a $94.0 million surplus of working capital. The decrease is primarily related to the ~~implementation~~reclassification of ~~Topic 842 in which we recognized an incremental current liability, representing~~$297.5 million of our ~~operating lease liability,~~5.25% Senior Notes from Long-term debt to Current maturities of $26.1 million upon transition and utilized the optional transition method whereby balances as of December 31, 2018 were unchanged. See Note 1, “Interim Financial Information” and Note 11, “Leases” in the Notes to Condensed Consolidated Financial Statements for further information.long-term debt. Changes in our working capital are also typically explained by changes in floorplan notes payable outstanding. Borrowings on our new vehicle floorplan notes payable, subject to agreed-upon pay-off terms, are equal to 100% of the factory invoice of the vehicles. Borrowings on our used vehicle floorplan notes payable, subject to agreed-upon pay-off terms, are limited to 85% of the aggregate book value of our used vehicle inventory, except in the U.K. and Brazil. At times, we have made payments on our floorplan notes payable using excess cash flows from operations and the proceeds of debt and equity offerings. As needed, we re-borrow the amounts later, up to the limits on the floorplan notes payable discussed above, for working capital, acquisitions, capital expenditures, or general corporate purposes.

Sources and Uses of Liquidity from Investing Activities

During the ~~nine~~three months ended ~~September 30,~~March 31, 2020, we used $31.1 million in net cash flows from investing activities on both unadjusted and adjusted basis, which represents $31.6 million used for purchases of property and equipment partially offset by cash inflows of $0.5 million related to the disposition of franchises and property and equipment. Of the $31.6 million in property and equipment purchases, $21.2 million was used for non-real estate related capital expenditures, $11.2 million was used for the purchase of real estate associated with existing dealership operations and $0.7 million represents the net increase in the accrual for capital expenditures from year-end.

During the three months ended March 31, 2019, we used ~~$193.5~~$6.8 million in net cash flows from investing activities. On an adjusted basis for the same period, we used ~~$198.7~~$22.5 million in net cash flows from investing activities, representing ~~$139.5~~$41.7 million used for purchases of property and equipment, ~~and $82.7 million used for dealership acquisition activity,~~ partially offset by cash inflows of ~~$23.6~~$19.4 million related to the disposition of franchises and property and equipment. Of the ~~$139.5~~$41.7 million in property and equipment purchases, ~~$70.8~~$23.4 million was used for non-real estate related capital expenditures, ~~$65.1~~$14.1 million was used for the purchase of real estate associated with existing dealership operations and ~~$3.6 million represents the net decrease in the accrual for capital expenditures from year-end.~~

During the nine months ended September 30, 2018, we used $145.5 million in net cash flow for investing activities. On an adjusted basis for the same period, we used $153.5 million in net cash flow for investing activities, primarily consisting of $119.0 million of cash outflows for dealership acquisition activity and $118.3 million for purchases of property and equipment and to construct new, and improve existing facilities, partially offset by cash inflows of $83.4 million related to dispositions of franchises and fixed assets. Within this total of property and equipment purchases, $85.5 million was used for capital expenditures, $30.1 million was used for the purchase of real estate associated with existing dealership operations and $2.7$4.1 million represents the net decrease in the accrual for capital expenditures from year-end.

Capital Expenditures

Our capital expenditures include costs to extend the useful lives of current facilities, as well as to start or expand operations. In general, expenditures relating to the construction or expansion of dealership facilities are driven by dealership acquisition activity, new franchises being granted to us by a manufacturer, significant growth in sales at an existing facility, relocation opportunities or manufacturer imaging programs. We critically evaluate all planned future capital spending, working closely with our manufacturer partners to maximize the return on our investments. We forecast our capital expenditures for the full year of ~~2019~~2020 will be ~~approximately $100~~less than $70 million, which ~~could generally be funded~~represents a reduction from ~~excess cash. This amount excludes real estate purchases associated with dealership acquisitions and lease buy-outs.~~our previous $125 million forecast, following the onset of the COVID-19 pandemic.

Acquisitions

We evaluate the expected return on investment in our consideration of potential business purchases. ~~In general, the purchase price, excluding real estate and floorplan liabilities, is approximately 15% to 20% of the annual revenue.~~ Cash needed to complete our acquisitions ~~normally~~generally comes from excess working capital, operating cash flows of our dealerships and borrowings under our floorplan facilities, term loans and our Acquisition ~~Line (see Note 7, “Floorplan Notes Payable” in the Notes to Condensed Consolidated Financial Statements for additional information).~~Line.

Sources and Uses of Liquidity from Financing Activities

For the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, we used ~~$90.1~~$18.5 million in net cash flows from financing activities. On an adjusted basis for the same period, we used ~~$16.0~~$26.4 million in net cash flows from financing activities, primarily related to cash outflows of ~~$38.0~~$48.9 million ~~in net payments on real estate debt~~related to the repurchase of our common stock and ~~$14.8~~$5.5 million in dividend payments, partially offset by ~~$19.1 million in net borrowings on our Acquisition Line and $15.9~~$20.2 million in net borrowings on our Floorplan Lines (representing the net cash activity in our floorplan offset accounts). and $11.2 million in net borrowings on debt related to real estate.

For the ~~nine~~three months ended ~~September 30, 2018,~~March 31, 2019, we used ~~$204.2~~$102.5 million in net cash ~~flow~~flows from financing activities. On an adjusted basis for the same period, we used ~~$118.9~~$90.8 million in net cash ~~flow~~flows from financing activities, primarily related to cash outflows of ~~$108.6 million to repurchase our Company's common stock, $28.5~~$20.9 million of net payments on real estate debt, ~~and $16.0~~$4.8 million for dividend ~~payments. These outflows were partially offset by cash inflows related to $7.2~~payments, $3.7 million of net ~~borrowings~~repayments on our Acquisition ~~Line, $7.4 million of net borrowings of other debt~~line and ~~$17.2~~$65.0 million in net ~~borrowings~~repayments on our Floorplan ~~Lines~~lines (representing the net cash activity in our floorplan offset accounts). These outflows were partially offset by cash inflows of $4.4 million of net borrowings of other debt.

Credit Facilities, Debt Instruments and Other Financing Arrangements

Our various credit facilities, debt instruments and other financing arrangements are used to finance the purchase of inventory and real estate, provide acquisition funding and provide working capital for general corporate purposes.

The following table summarizes the position of our U.S. credit facilities as of ~~September 30, 2019~~March 31, 2020 (in millions):

U.S. Credit Facilities
Total
Commitment
Outstanding Available
Floorplan Line ⁽¹⁾
$ 1,447.8
$ 1,164.6
$ 283.2
Acquisition Line ⁽²⁾
352.2
73.0
279.2
Total Revolving Credit Facility 1,800.0
1,237.6
562.4
FMCC Facility ⁽³⁾
300.0
166.7
133.3
Total U.S. Credit Facilities ⁽⁴⁾
$ 2,100.0
$ 1,404.3
$ 695.7



	Total Commitment		Outstanding		Available
Floorplan line ⁽¹⁾	$	1,396.0	$	1,125.1	$	270.9
Acquisition line ⁽²⁾	349.0		91.2		257.8
Total Revolving Credit Facility	1,745.0		1,216.3		528.7
FMCC facility ⁽³⁾	300.0		235.4		64.6
Total U.S. credit facilities ⁽⁴⁾	$	2,045.0	$	1,451.7	$	593.3

(1)The available balance at ~~September 30, 2019~~March 31, 2020 includes ~~$25.0~~$82.6 million of immediately available funds. The remaining available balance can be used for inventory financing.

(2)The outstanding balance of ~~$73.0~~$91.2 million is related to outstanding letters of credit of ~~$23.5~~$20.6 million and ~~$49.5~~$70.7 million in borrowings as of ~~September 30, 2019.~~March 31, 2020. The borrowings outstanding under the Acquisition Line represent ~~40.0~~55 million ~~British pound sterling~~GBP loans translated at the spot rate on the day borrowed, solely for the purpose of calculating the outstanding and available borrowings under the Acquisition Line. The available borrowings may be limited from time to time, based on certain debt covenants.

(3)The available balance at ~~September 30, 2019~~March 31, 2020 includes $0.2 million of immediately available funds. The remaining available balance can be used for Ford new vehicle inventory financing.

(4)The outstanding balance excludes ~~$278.8~~$293.0 million of borrowings with manufacturer-affiliates and third-party financial institutions for foreign and ~~non-Revolving Credit Facility~~ rental vehicle ~~financing.~~

~~Revolving Credit Facility~~

~~The Revolving Credit Facility contains a number~~financing not associated with any of ~~significant covenants that, among other things, restrict~~ our ability to make disbursements outside of the ordinary course of business, dispose of assets, incur additional indebtedness, create liens on assets, make investments and engage in mergers or consolidations. We are also required to comply with specified financial tests and ratios defined in the Revolving Credit Facility, such as the fixed charge coverage and total adjusted leverage ratios. Further, the Revolving Credit Facility restricts our ability to make certain payments, such as dividends or other distributions of assets, properties, cash, rights, obligations, or securities (“Restricted Payments”). As of September 30, 2019, the Revolving Credit Facility Restricted Payment Basket totaled $126.6 million and we were in compliance with all our financial covenants.

~~Based upon our current five-year operating and financial projections, we believe that we will remain compliant with such covenants in the future.~~

~~Other Inventory Credit Facilities and Financing Arrangements~~U.S. credit facilities.

We have other credit facilities in the U.S., U.K. and Brazil with third-party financial institutions, most of which are affiliated with the automobile manufacturers that provide financing for portions of our new, used and rental vehicle inventories. In addition, we have outstanding debt instruments, including our 5.00% ~~Notes and 5.25%~~Senior Notes, as well as real estate related and other long-term debt instruments. Our 5.25% Senior Notes were paid in full on April 2, 2020 as discussed further below, and therefore included in current maturities of long-term debt, as of March 31, 2020.

Subsequent 5.25% Senior Notes Redemption and Debt Refinancing

On April 2, 2020, we fully redeemed $300.0 million in aggregate principal amount of our outstanding 5.25% Senior Notes due 2023, at a premium of 102.625%. The total redemption price, consisting of the principal amount of the notes redeemed plus associated premium, amounted to $307.9 million. Additionally, we paid $4.6 million of accrued interest up to the date of redemption. The redemption was funded through a combination of Acquisition Line borrowings, mortgage borrowings, and excess cash. Additional mortgage debt will be funded during the second quarter of 2020 to provide supplemental liquidity. These refinancings are expected to lower our annual interest expense by approximately $8.5 million.

Covenants

Our Revolving Credit Facility, indentures governing our senior notes and certain mortgage term loans contain customary financial and operating covenants that place restrictions on us, including our ability to incur additional indebtedness, create liens or to sell or otherwise dispose of assets, and to merge or consolidate with other entities. Certain of our mortgage agreements contain cross-default provisions that in the event of a default of certain mortgage agreements and of our Revolving Credit Facility, could trigger an uncured default.

As of March 31, 2020, we were in compliance with the requirements of the financial covenants under our debt agreements. We are required to maintain the ratios detailed in the following table:



	As of March 31, 2020
	Required	Actual
Total adjusted leverage ratio	< 5.50	3.31
Fixed charge coverage ratio	> 1.20	2.92

As of March 31, 2020, we had $19.2 million of cash on hand and an additional $82.6 million invested in our floorplan offset account, bringing total cash liquidity to $101.8 million. In addition, we had $257.8 million of additional borrowing capacity on our Acquisition Line, bringing total immediate liquidity to $359.6 million as of March 31, 2020. Based on our position as of March 31, 2020 and our outlook as discussed within “Management's Discussion and Analysis of Financial Condition and Results of Operations,” we have sufficient liquidity currently and do not anticipate any material liquidity constraints or issues with our ability to remain in compliance with our debt covenants.

See Part I, “Item 1. Financial Statements,” Note 7,9 “Debt” and Note 10 “Floorplan Notes Payable” ~~and Note 8, “Debt”~~ in ~~the~~our Notes to Condensed Consolidated Financial Statements for further discussion of our debt instruments, credit facilities, ~~debt instruments~~ and other financing arrangements existing as of ~~September 30, 2019.~~March 31, 2020.

Stock Repurchases and Dividends

~~The~~Our Board of Directors from time to time authorizes the repurchase of shares of our common stock up to a certain monetary limit. During the three months ended March 31, 2020, 597,764 shares were repurchased at an average price of $81.83 per share, for a total of $48.9 million, leaving $77.0 million available under our stock repurchase limit of $100.0 million most recently authorized by our Board of Directors in February 2020.

For the three months ended March 31, 2020, our Board of Directors approved a quarterly cash dividend of $0.30 per share on all shares of our common stock, which resulted in $5.3 million paid to common shareholders and $0.2 million to unvested RSA holders.

Future stock repurchase programs and the payment of any future dividends isare subject to the ~~discretion~~business judgment of our Board of Directors, ~~after considering the~~taking into consideration our historical and projected results of operations, financial condition, cash flows, capital requirements, ~~outlook for~~covenant compliance, current economic environment and other factors considered relevant. On April 7, 2020, due to the adverse impacts of COVID-19 on our business ~~general business conditions,~~activities, as discussed in Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the ~~political~~existing share repurchase program was canceled and ~~legislative environments~~the quarterly dividend was suspended by the Board of Directors.

Supplemental Guarantor Financial Information

In 2014, Group 1 Automotive, Inc. (the “Parent”) issued and ~~other factors.~~

~~Further, we are limited~~registered $550.0 million aggregate principal 5.00% Senior Notes, due June 1, 2022 (“the 5.00% Senior Notes”), with the SEC. Obligations under the ~~terms~~5.00% Senior Notes are fully and unconditionally and jointly and severally guaranteed on a senior unsecured basis by our wholly owned domestic subsidiaries (“Guarantors”). The guarantees rank equally in the right of payment to all of the ~~Revolving Credit Facility, certain mortgage term loans, our 5.00% Notes~~Guarantors’ existing and ~~5.25% Notes, in our~~future subordinated debt. There are no significant restrictions on the ability of the Guarantors to make ~~cash~~distributions to the Parent or on the ability of the Parent or the Guarantors to obtain funds from other Guarantors by dividend ~~payments to our stockholders~~or loan. The Guarantors will be released and ~~to repurchase shares~~discharged of our outstanding common stock. As of September 30, 2019, the restricted payment baskets limited us to $126.6 million in restricted payments. Generally, these restricted payment baskets will increase in the future periods by 50.0% of our future cumulative net income, adjusted to exclude the Company’s foreign operations, non-cash interest expense, non-cash asset impairment charges and non-cash stock-based compensation, plus the net proceeds received fromtheir obligations upon customary events, including the sale, transfer or other disposition of ~~our capital stock,~~all or substantially all of the assets or Capital Stock of that Guarantor (including by way of merger or consolidation) or the designation of a guarantor as an “Unrestricted Subsidiary” under the indenture.

The other subsidiaries of the Company do not guarantee the 5.00% Senior Notes (such subsidiaries are referred to as the “Non-Guarantors”).

The following summarized financial information presents the Parent and ~~decrease by~~Guarantors on a combined basis after 1) the ~~amount~~elimination of ~~future payments for cash dividends~~intercompany transactions between the Parent and ~~share repurchases. For~~Guarantors and 2) the ~~nine months ended September 30,~~elimination of equity in earnings from and investment in subsidiaries of Non-Guarantors.

Summarized balance sheets information is as follows (in millions):



	March 31, 2020		December 31, 2019
Current assets ⁽¹⁾	$	1,956.3	$	2,024.6
Long-term assets	$	2,545.0	$	2,506.5

Current liabilities	$	2,137.5	$	1,874.7
Long-term liabilities	$	1,401.7	$	1,644.9

⁽¹⁾Includes receivables due from Non-Guarantors of $95.5 million and $99.0 million as of March 31, 2020 and December 31, 2019, ~~we paid dividends~~respectively.

Summarized statements of ~~$14.3 million to common stock shareholders and $0.5 million to unvested restricted stock award holders.~~operations information is as follows (in millions):



	Three Months Ended March 31, 2020		Year Ended December 31, 2019
Revenues	$	2,007.6	$	9,184.2
Gross profit	$	340.9	$	1,494.8
Income (loss) from operations	$	70.2	$	354.0
Net income (loss)	$	64.1	$	354.8

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to a variety of market risks, including interest rate risk and foreign currency exchange rate risk. We address interest rate risks primarily through the use of interest rate swaps. We do not currently hedge foreign exchange risk, as discussed further below. The following quantitative and qualitative information is provided regarding our foreign currency exchange rates and financial instruments to which we are a party at ~~September 30, 2019~~March 31, 2020 and from which we may incur future gains or losses from changes in market interest rates and/or foreign currency rates. We do not enter into derivative or other financial instruments for speculative or trading purposes.

Interest Rates

We have interest rate risk inon our variable-rate debt ~~obligations. As~~obligations, primarily consisting of ~~September 30, 2019, we had $1.8 billion of variable-rate borrowings outstanding.~~our Floorplan Line. Based on the ~~average~~ amount of variable-rate borrowings outstanding ~~for the nine months ended September 30,~~of $1,971.1 million and $1,792.8 million as of March 31, 2020 and 2019, ~~and before the impact of our interest rate swaps described above,~~respectively, a 100 basis-point change in interest rates would have resulted in an approximate ~~$18.0~~$19.7 million and $18.4 million change to our annual interest ~~expense. After~~expense, respectively, after consideration of the average interest rate swaps ~~described~~ in effect during the ~~nine months ended September 30, 2019,~~periods.

The majority of our floorplan notes payable, mortgages and other debt are benchmarked to LIBOR. On July 27, 2017, the Chief Executive of the U.K. Financial Conduct Authority, which regulates LIBOR, announced that it intends to stop persuading or requiring banks to submit rates for the calculation of LIBOR after 2021. The use of an alternative rate could result in increased interest expense, in addition to costs to amend the loan agreements and other applicable arrangements to a ~~100 basis-point change would have yielded a net annual change of $9.0 million in annual interest expense.~~new reference rate.

Our exposure to changes in interest rates with respect to our variable-rate floorplan borrowings is partially mitigated by manufacturers’ interest assistance, which ~~historically has been~~in some cases is influenced by changes in ~~market-based~~market based variable interest rates. We reflect interest assistance as a reduction of new vehicle inventory ~~carrying value~~cost until the associated vehicle is sold. During the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019, we recognized ~~$35.6~~$10.6 million and $10.5 million of interest assistance as a reduction of new vehicle cost of ~~sales.~~sales, respectively.

For additional information about the potential impact of LIBOR phase out on our results of operations, see Item 1A. Risk Factors of our 2019 Form 10-K.

Foreign Currency Exchange Rates

The functional currency of our U.K. subsidiaries is the ~~British pound sterling~~GBP and of our Brazil subsidiaries is the ~~Brazilian real.~~BRL. Our exposure to fluctuating exchange rates relates to the effects of translating financial statements of ~~these~~those subsidiaries into our reporting currency, which we do not hedge against based on our investment strategy in these foreign operations. A 10% devaluation in average exchange rates for the ~~British pound sterling~~GBP to the ~~U.S. dollar~~USD would have resulted in a ~~$167.4~~$53.7 million and $58.4 million decrease to our revenues for the ~~nine~~three months ended ~~September 30, 2019.~~March 31, 2020 and 2019, respectively. A 10% devaluation in average exchange rates for the ~~Brazilian real~~BRL to the ~~U.S. dollar~~USD would have resulted in a ~~$29.7~~$8.4 million and $9.4 million decrease to our revenues for the ~~nine~~three months ended ~~September 30, 2019.~~March 31, 2020 and 2019, respectively.

For additional information about our market sensitive financial instruments, ~~please~~ see Part ~~II,~~I, “Item ~~7. Management’s Discussion & Analysis of~~1. Financial ~~Condition~~Statements,” Note 6 “Financial Instruments and ~~Results of Operations”, “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” and Note 4.~~Fair Value Measurements” within our Notes to ~~“Item 8.~~Condensed Consolidated Financial ~~Statements and Supplementary Data” in our 2018 Form 10-K.~~Statements.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we have evaluated, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this quarterly report. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Based upon that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of ~~September 30, 2019~~March 31, 2020 at the reasonable assurance level.

Due to the COVID-19 pandemic, a significant portion of our employees are now working remotely while under shelter-in-place orders or other restrictions. Established business continuity plans were activated in order to mitigate the impact to our control environment, operating procedures, data and internal controls. The design of our processes and controls allow for remote execution with accessibility to secure data.

Our management, including our principal executive officer and our principal financial officer, does not expect that our disclosure controls and procedures can prevent all possible errors or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that objectives of the control system are met. There are inherent limitations in all control systems, including the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes. Additionally, controls can be circumvented by the intentional acts of one or more persons. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events and while our disclosure controls and procedures are designed to be effective under circumstances where they should reasonably be expected to operate effectively, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of the inherent limitations in any control system, misstatements due to possible errors or fraud may occur and not be detected.

Changes in Internal Control over Financial Reporting

There were no changes in our system of internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended ~~September 30, 2019,~~March 31, 2020, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We implemented new internal controls and made changes to existing internal controls to ensure that we adequately evaluated and properly assessed the impact of the new accounting standard related to leases on our financial statements to facilitate its adoption on January 1, 2019 and ongoing compliance. There were no significant changes to our internal control over financial reporting due to the adoption of the new standard.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are not party to any legal proceedings, including class action lawsuits that, individually or in the aggregate, are reasonably expected to have a material adverse effect on our results of operations, financial condition or cash flows. For a discussion of our legal proceedings, see Part I, “Item 1. Financial Statements,” Note 12 “Commitments and Contingencies” within our Notes to Condensed Consolidated Financial ~~Statements, Note 10, “Commitments and Contingencies”.~~Statements.

Item 1A. Risk Factors

~~There have been no material changes~~Except as set forth below, during the period ended ~~September 30, 2019 in our “Risk Factors” as discussed~~March 31, 2020, there were no changes to the Risk Factors disclosed in Item 1A. of“Risk Factors” in our ~~2018~~Annual Report on Form 10-K ~~other than~~for the ~~risks describe below.~~

The U.K.’s withdrawal from the E.U. may have a negative effect on some global economic conditions, financial markets and our business, which could adversely affect our U.K. revenue and results of operations.year ended December 31, 2019.

The ~~U.K. extended the exit with the E.U. to January 31, 2020. However, Brexit could occur earlier if the U.K. and E.U. mutually agree, or later if another extension is granted. The future terms~~recent global outbreak of the U.K.’s relationship with the E.U. remain uncertain. The effects of Brexit will depend on any agreements the U.K. makes to retain access to E.U. markets either during a transitional period or more permanently. Brexit couldCOVID-19 pandemic has materially adversely ~~affect U.K., European~~affected, and worldwide economic and market conditions, could contribute to instability in some global financial and foreign exchange markets, including continued volatility in the value of the British pound sterling or otherwise adversely affect trading agreements or similar cross-border cooperation arrangements (whether economic, tax, legal, regulatory or otherwise) beyond the date of Brexit. More specifically, it could lead to:

a decrease in sales or revenues attributable to increased retail prices of new vehicles as the majority of vehicles sold in the U.K. are imported from other countries in Europe and could be subject to additional tariffs;

an increase in supply chain risk for automotive retailers and manufacturers due to the impact of changes in the U.K.’s access to free trade agreements, resulting in custom checks and tariffs, which could delay delivery of vehicles or parts;

continued volatility in the currencies in which we transact our business. As exchange rates fluctuate, our revenue and results of operations as reported under U.S. GAAP fluctuates. A weakening British pound sterling as compared to the U.S. Dollar negatively impacts our U.S. Dollar reported results of operations. Our U.K. business generated approximately 21% of our total revenue for the nine months ended September 30, 2019.

~~economic risk: the U.K. economy~~ may ~~be negatively impacted, resulting in a decrease to our revenues.~~

~~labor risk: Brexit might impact the hiring and movement of employees and subject companies to local labor laws.~~

regulatory risk: exposure to different laws and regulations might impact businesses. For example, the loss of passporting arrangements that permit U.K. entities to serve E.U. businesses and customers and efforts required to relocate U.K. operations or use E.U. subsidiaries. Also airlines have potential antitrust issues.

~~Any of these effects of Brexit and others we cannot anticipate could~~further materially adversely affect, our business, ~~consolidated financial position,~~ results of operations and cash flows.

The recent global outbreak of the COVID-19 pandemic has materially disrupted, and could continue to significantly disrupt, our operations and adversely affect our financial condition. The measures taken by international, federal, state and local public health and governmental authorities to contain and combat the outbreak and spread of the COVID-19 pandemic, including mandates for many individuals to substantially restrict daily activities and for many businesses to curtail or cease normal operations, have either completely shut down or significantly reduced operating capacity of all of our dealerships in the U.S., the U.K. and Brazil. To date, these measures have significantly reduced our new and used vehicle sales volumes, parts and service revenues and F&I revenues, as well as impacted our vehicle and parts supply chain. If the shutdowns or other travel and business restrictions were to continue in all or any of our primary markets, or additional restrictions were imposed, our business would continue to be adversely impacted. Such business disruptions suffered as a result of the COVID-19 pandemic are not covered by our insurance policies.

In addition, the impacts from the COVID-19 pandemic have caused most vehicle manufacturers and parts suppliers to suspend or limit their ability to produce or distribute new vehicles and parts. This has materially adversely affected, and could continue to materially adversely affect, the financial condition of our vehicle manufacturers and impacts their ability to profitably design, market, produce or distribute new vehicles and parts. This in turn has had, and could continue to have, a material adverse effect on our business, results of operations and financial condition.

The recent deterioration in market conditions due to the COVID-19 pandemic could also make it more difficult for us to raise additional capital in order to supplement our cash flow from operations. If we are unable to raise necessary additional funds on acceptable terms or do not have sufficient cash flow from operations, there could be an adverse impact on our acquisitions and integration strategy. The substantial cost-cutting measures, stockholder dividend and share repurchase cancellations, and other liquidity preserving measures we have taken or may take in the future may not sufficiently reduce the risks associated with our indebtedness, including maintaining our available borrowing capacity and compliance with financial covenants and having the ability to refinance or repay indebtedness on favorable terms. Further, any decrease in liquidity or our share price, tightened credit conditions, reduced access to the capital markets, or reduced operating performance due to the COVID-19 pandemic may adversely affect our financial performance as well as our ability to purchase or sell certain dealerships or re-institute our stockholder dividend.

As the potential impact from the COVID-19 pandemic is difficult to predict, the extent to which it may negatively affect our operating results or the duration of any potential business disruption is uncertain. Any potential impact will depend on future developments and new information that may emerge regarding the severity and duration of the COVID-19 pandemic and the actions taken by authorities to contain it or treat its impact, all of which are beyond our control. Even if the various restrictions on business activity are lifted, there is no guarantee when or if customer demand and workforce availability will return to prior levels, and our operations could be impacted by any restrictions we may have to impose to ensure the ongoing safety of our employees, customers and others. In addition, there is no assurance that our relationship with and the financial and operational capacities of vehicle manufacturers and distributors will remain the same. These potential impacts, while uncertain, could adversely affect our business, financial condition and results of operations.

The impairment of our goodwill and/or indefinite-lived intangibles could have a material adverse effect on our results of operations.

We assess goodwill and other indefinite-lived intangibles for impairment on an annual basis, or more frequently when events or circumstances indicate that an impairment may have occurred. See Part I, “Item 1. Financial Statements,” Note 8 “Intangibles” within our Notes to Condensed Consolidated Financial Statements for further discussion of our impairment model and related assumptions. During the three months ended March 31, 2020, we performed an interim impairment assessment of goodwill and intangible franchise rights to determine if events or changes in circumstances, including the impacts of the COVID-19 pandemic, indicated that it was more-likely-than-not that the assets were impaired. Based on the results of our assessment, it was concluded that it was not more-likely-than-not that our goodwill and intangible franchise rights were impaired as of March 31, 2020, which was mainly attributed to our assumptions that the impacts of the COVID-19 pandemic were temporary in nature. However if our assumptions around the temporary nature of the impacts of the COVID-19 pandemic or strength of recovery change in future periods, this could result in a more-likely-than-not impairment.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Recent Sales of Unregistered Securities

None.

Use of Proceeds

None.

Issuer Purchases of Equity Securities

~~None.~~ The following table sets forth information with respect to shares of common stock repurchased by the Company:



Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ⁽¹⁾	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) ⁽¹⁾
January 1 - January 31, 2020 ⁽²⁾	149,284	$	98.12	149,284	$	58.9
February 1 - February 29, 2020	119,575	$	94.42	119,575	$	100.0
March 1 - March 31, 2020	328,905	$	69.86	328,905	$	77.0
Total	597,764			597,764

⁽¹⁾In February 2020, the Board of Directors authorized an increase of the previously authorized repurchase amount that was remaining under the program to $100.0 million. During the three months ended March 31, 2020, 597,764 shares were repurchased at an average price of $81.83 per share, for a total of $48.9 million. Future repurchases are subject to the discretion of our Board of Directors after considering our results of operations, financial condition, cash flows, capital requirements, existing debt covenants, outlook for our business, general business conditions and other factors. As of March 31, 2020, we had remaining authorization to repurchase $77.0 million in shares of our common stock under the repurchase program.

⁽²⁾Represents shares that were repurchased under the Rule 10b5-1 repurchase plan effective from January 2, 2020 to February 3, 2020.

On April 7, 2020, due to the adverse impacts of the COVID-19 pandemic on our business activities, as discussed in Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the existing share repurchase program was canceled by the Board of Directors.

Item 6. Exhibits

The exhibits required to be filed or furnished by Item 601 of Regulation S-K are listed below.

EXHIBIT INDEX



Exhibit Number		Description

3.1	—	Amended and Restated Certificate of Incorporation of Group 1 Automotive, Inc. (incorporated by reference to Exhibit 3.1 of Group 1 Automotive, Inc.’s Current Report on Form 8-K (File No. 001-13461) filed May 22, 2015)
3.2	—	Third Amended and Restated Bylaws of Group 1 Automotive, Inc. (incorporated by reference to Exhibit 3.1 of Group 1 Automotive, Inc.’s Current Report on Form 8-K (File No. 001-13461) filed April 6, 2017)
22*	—	List of Subsidiary Guarantors
31.1*	—	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	—	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	—	Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*	—	Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*	—	XBRL Instance Document
101.SCH*	—	XBRL Taxonomy Extension Schema Document
101.CAL*	—	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	—	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	—	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	—	XBRL Taxonomy Extension Presentation Linkbase Document
104*	—	Cover Page Interactive Data File (formatted in Inline XBRL and contained in exhibit 101)



*		Filed or furnished herewith
†		~~Management contract or compensatory plan or arrangement~~

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.




			Group 1 Automotive, Inc.

Date:	May 8, 2020	By:	/s/ John C. Rickel
			John C. Rickel
			Senior Vice President and Chief Financial Officer
			(Duly Authorized Officer and Principal Financial and Accounting
			and Accounting Officer)

~~Date:~~ ~~October 30, 2019~~

6749



	Three Months Ended September 30, 2019								Nine Months Ended September 30, 2019
	U.S.		U.K.		Brazil		Total		U.S.		U.K.		Brazil		Total
REVENUES:
New vehicle retail sales	$	1,291.7	$	290.7	$	69.8	$	1,652.2	$	3,512.1	$	911.6	$	208.5	$	4,632.2
Used vehicle retail sales	657.6		189.3		22.8		869.7		1,877.6		586.8		63.4		2,527.8
Used vehicle wholesale sales	45.9		35.0		4.4		85.3		133.0		127.1		13.3		273.4
Total new and used vehicle sales	1,995.2		515.0		97.0		2,607.2		5,522.7		1,625.5		285.2		7,433.4
Parts and service sales ⁽¹⁾	314.9		56.6		12.0		383.5		922.2		172.5		36.1		1,130.8
Finance, insurance and other, net ⁽²⁾	112.7		13.0		1.9		127.6		319.4		43.2		5.6		368.2
Total revenues	$	2,422.8	$	584.6	$	110.9	$	3,118.3	$	6,764.3	$	1,841.2	$	326.9	$	8,932.4



	September 30, 2019			December 31, 2018
Revolving credit facility - floorplan notes payable	$	1,189.8		$	1,251.4
Revolving credit facility - floorplan notes payable offset account	(25.0		)	(33.6		)
Revolving credit facility - floorplan notes payable, net	1,164.8			1,217.8
Other non-manufacturer facilities	35.0			41.1
Floorplan notes payable - credit facility and other, net	$	1,199.8		$	1,258.9

FMCC facility	$	166.9		$	160.8
FMCC facility offset account	(0.2		)	(0.1		)
FMCC facility, net	166.7			160.7
Other manufacturer affiliate facilities	243.8			257.1
Floorplan notes payable - manufacturer affiliates, net	$	410.5		$	417.8



	September 30, 2019			December 31, 2018
5.00% Senior Notes due June 1, 2022 (aggregate principal of $550.0) ⁽¹⁾	$	546.1		$	545.0
5.25% Senior Notes due December 15, 2023 (aggregate principal of $300.0) ⁽¹⁾	297.9			297.5
Acquisition Line	49.2			31.8
Real estate related	382.9			420.8
Finance leases ⁽²⁾	66.1			48.6
Other	34.2			33.6
Total debt	1,376.4			1,377.3
Less: unamortized debt issuance costs	(2.4		)	(2.9		)
Less: current maturities of long-term debt and short-term financing	(66.0		)	(93.0		)
Long-term debt, net of current maturities	$	1,308.0		$	1,281.4



Leases	Balance Sheet Classification	September 30, 2019
Assets:
Operating	Operating lease assets	$	204.7
Finance	Property and equipment, net	59.0
Total		$	263.7
Liabilities:
Current:
Operating	Current operating lease liabilities	$	23.9
Finance	Current maturities of long-term debt	6.4
Noncurrent:
Operating	Operating lease liabilities, net of current portion	195.5
Finance	Long-term debt, net of current maturities	59.7
Total		$	285.5



Lease Expense	Income Statement Classification	Three Months Ended September 30, 2019			Nine Months Ended September 30, 2019
Operating	Selling, general and administrative expenses	$	10.0		$	31.1
Operating	Asset impairments	1.4			1.4
Variable	Selling, general and administrative expenses	0.6			1.6
Sublease income	Selling, general and administrative expenses	(0.4		)	(1.0		)
Finance:
Amortization of lease assets	Depreciation and amortization expense	1.7			4.1
Interest on lease liabilities	Other interest expense, net	1.5			3.5
Net lease expense		$	14.8		$	40.7



	September 30, 2019
Maturities of Lease Liabilities	Operating Leases			Finance Leases
2019 (excluding the nine months ended September 30, 2019)	$	6.8		$	4.6
2020	38.5			8.5
2021	36.7			8.5
2022	32.4			8.4
2023	29.4			7.2
Thereafter	170.0			65.6
Total lease payments	313.8			102.8
Less: Interest	(94.4		)	(36.7		)
Present value of lease liabilities	$	219.4		$	66.1



Other Information	Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	31.1
Operating cash flows from finance leases	$	3.5
Financing cash flows from finance leases	$	2.7
Right-of-use assets obtained in exchange for lease obligations:
Operating leases, initial recognition	$	18.2
Operating leases, modifications and remeasurements	$	(9.5	)
Finance leases, initial recognition	$	14.0
Finance leases, modifications and remeasurements	$	8.2



	September 30, 2019		December 31, 2018
Amounts due from manufacturers	$	111.8	$	105.1
Parts and service receivables	57.0		52.0
Finance and insurance receivables	24.9		26.4
Other	31.0		13.7
Total accounts and notes receivable	224.7		197.2
Less: allowance for doubtful accounts	2.5		3.2
Accounts and notes receivable, net	$	222.2	$	194.0



	Group 1 Automotive, Inc.		Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Elimination			Total Company
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	—	$	4.0		$	37.0	$	—		$	41.0
Contracts-in-transit and vehicle receivables, net	—		185.9			70.3		—			256.2
Accounts and notes receivable, net	0.1		173.8			48.3		—			222.2
Intercompany accounts receivable	49.2		10.3			—		(59.5		)	—
Inventories, net	—		1,466.9			325.8		—			1,792.7
Prepaid expenses and other current assets	0.6		20.6			53.2		—			74.4
TOTAL CURRENT ASSETS	49.9		1,861.5			534.6		(59.5		)	2,386.5
Property and equipment, net of accumulated depreciation of $380.5	—		1,233.2			251.6		—			1,484.8
Operating lease assets	—		118.5			86.2		—			204.7
Goodwill	—		879.7			99.3		—			979.0
Intangible franchise rights	—		224.5			28.4		—			252.9
Investment in subsidiaries	3,282.7		—			—		(3,282.7		)	—
Other assets	—		11.9			9.2		—			21.1
TOTAL ASSETS	$	3,332.6	$	4,329.3		$	1,009.3	$	(3,342.2	)	$	5,329.0

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Floorplan notes payable — credit facility and other, net of offset account of $25.0	$	—	$	1,164.7		$	35.1	$	—		$	1,199.8
Floorplan notes payable — manufacturer affiliates, net of offset account of $0.2	—		279.3			131.2		—			410.5
Current maturities of long-term debt	—		38.0			28.0		—			66.0
Current operating lease liabilities	—		17.2			6.7		—			23.9
Accounts payable	—		211.6			271.7		—			483.3
Intercompany accounts payable	1,253.5		—			75.9		(1,329.4		)	—
Accrued expenses and other current liabilities	—		182.0			31.8		—			213.8
TOTAL CURRENT LIABILITIES	1,253.5		1,892.8			580.4		(1,329.4		)	2,397.3
Long-term debt, net of current maturities	891.4		306.7			109.9		—			1,308.0
Operating lease liabilities, net of current portion	—		109.1			86.4		—			195.5
Deferred income taxes and other liabilities	1.4		236.4			4.1		—			241.9
STOCKHOLDERS’ EQUITY:
Group 1 stockholders’ equity	1,186.3		3,054.2			228.5		(3,282.7		)	1,186.3
Intercompany note receivable	—		(1,269.9		)	—		1,269.9			—
TOTAL STOCKHOLDERS’ EQUITY	1,186.3		1,784.3			228.5		(2,012.8		)	1,186.3
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	3,332.6	$	4,329.3		$	1,009.3	$	(3,342.2	)	$	5,329.0



U.S. Credit Facilities	Total Commitment		Outstanding		Available
Floorplan Line ⁽¹⁾	$	1,447.8	$	1,164.6	$	283.2
Acquisition Line ⁽²⁾	352.2		73.0		279.2
Total Revolving Credit Facility	1,800.0		1,237.6		562.4
FMCC Facility ⁽³⁾	300.0		166.7		133.3
Total U.S. Credit Facilities ⁽⁴⁾	$	2,100.0	$	1,404.3	$	695.7