Group 1 (GPI) New Vehicle Retail Unit Outperforms in Q2
Group 1 Automotive GPI reported second-quarter 2023 adjusted earnings per share of $11.73, which beat the Zacks Consensus Estimate of $11. The outperformance can be primarily attributed to higher-than-anticipated revenues from the New Vehicle Retail segment. The bottom line, however, decreased from the prior-year quarter’s $12 per share. The automotive retailer registered net sales of $4,558.5 million, beating the Zacks Consensus Estimate of $4,411 million. Also, the top line rose from the year-ago quarter’s $4,145 million.
GPI has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Group 1 Automotive, Inc. Price, Consensus and EPS Surprise
Group 1 Automotive, Inc. price-consensus-eps-surprise-chart | Group 1 Automotive, Inc. Quote
Quarter Highlights
New-vehicle retail sales increased 21.2% from the prior-year quarter to $2,243.2 million and exceeded our projection of $1,975.4 million on the back of higher-than-expected volumes and average selling prices (ASPs). Total retail new vehicles sold was 44,740 units, surpassing our forecast of 39,942 units on improving inventory levels and robust demand despite high costs of vehicle financing. ASP per unit in the U.S. and UK market came in at $52,201 and $42,416, topping our prediction of $51,680 and $40,947, respectively. The gross profit from the new vehicle retail unit totaled $201.5 million, decreasing 4.2% year over year but exceeding our estimate of $181.4 million owing to revenue outperformance, partially offset by higher-than-expected cost of sales.
Used-vehicle retail sales declined 3.6% from the year-ago period to $1,450.6 million but outpaced our forecast by $48.5 million on higher-than-expected ASP per unit in both the U.S. and UK market. ASP per unit in the United States and United Kingdom came in at $31,397 and $29,708, topping our prediction of $29,905 and $28,616, respectively. The gross profit from the unit was $78.8 million, shrinking 12% year over year but topping our estimate of $63.7 million.
Used-vehicle wholesale sales rose 17.3% year over year to $112 million. The unit recorded a gross profit of $0.9 million, up 10.5% year over year. In the Parts and Service business, the top line rose 11.8% from the year-ago quarter to $562 million and gross profit increased 9.5% year over year to $304.1 million. Revenues from the Finance and Insurance (F&I) business came in at $190.3 million, unchanged from the year-ago period levels.
Segments in Detail
In the reported quarter, revenues in the U.S. business segment climbed 10.5% year over year to $3,799.6 million and crossed our forecast of $3,543.8 million on solid sales in new-vehicle and used vehicle units. The segment’s gross profit slid 1% to $669.7 million but came ahead of our prediction by $34.7 million. During the reported quarter, retail new-vehicle, retail used-vehicle and wholesale used-vehicle units sold were 36,695, 36,306 and 7,436, respectively.
In the reported period, revenues rose 7.2% year over year to $758.9 million for the U.K. business segment, lagging our estimate of $802.1 million due to lower-than-expected sales from new vehicle, used vehicle, parts/services and F&I units. The gross profit was $105.8 million, up 14.9% from the year-ago quarter and missed our projection of $111.6 million. During the reported quarter, the retail new-vehicle, retail used-vehicle and wholesale used-vehicle units sold were 8,045, 10,458 and 3,057, respectively.
Financial Position
Selling, general and administrative expenses were up 4.3% year over year to $479.9 million. Group 1 Automotive had cash and cash equivalents of $22.8 million as of Jun 30, 2023, down from $47.9 million as of 2022-end. Total debt was $2,249.6 million as of Jun 30, 2023, down from $2,082.5 million recorded on Dec 31, 2022.
During the quarter under discussion, GPI repurchased 141,199 shares at an average price of $221.52 per common share for a total of $31.3 million. As of Jun 30, 2023, the company had 14.1 million common shares outstanding. It currently has $97.4 million remaining on its authorized stock buyback program.
Key Releases From the Auto Space
Tesla TSLA reported second-quarter 2023 earnings of 91 cents per share, which rose from the year-ago figure of 76 cents and outpaced the Zacks Consensus Estimate of 83 cents. This marked the 10th consecutive earnings beat for this electric vehicle (EV) behemoth. Record deliveries and revenues, which topped expectations, resulted in this outperformance. Total revenues came in at $24,927 million, witnessing year-over-year growth of 47%. The top line exceeded the consensus mark of $24,884 million.
Tesla had cash and cash equivalents of $23,075 million as of Jun 30, 2023 compared with $22,402 million on Mar 31, 2023. Net cash provided by operating activities amounted to $3,065 million in second-quarter 2023. Capital expenditure totaled $2,060 million in the quarter under review.
Carvana CVNA incurred a loss of 55 cents per share in second-quarter 2023, significantly lower than $2.35 incurred in the year-ago quarter. The loss also came in much narrower than the Zacks Consensus Estimate of a loss of $1.13 a share. The outperformance was primarily led by higher-than-expected gross profit per unit. Revenues of $2,968 million topped the Zacks Consensus Estimate of $2,625 million but fell 23.5% year over year.
Carvana had cash and cash equivalents of $541 million as of Jun 30, 2023, compared with $434 million on Dec 31, 2022. Long-term debt amounted to $6,542 million as of Jun 30, 2023, compared with $6,574 million recorded on Dec 31, 2022.
AutoNation AN reported second-quarter 2023 adjusted earnings of $6.29 per share, which decreased 2.9% year over year but topped the Zacks Consensus Estimate of $5.83. This outperformance can be primarily attributed to higher-than-expected new vehicle revenues and profits. In the reported quarter, revenues amounted to $6,890.1 million, surpassing the Zacks Consensus Estimate of $6,645 million. The company had recorded revenues of $6,869.2 million in the second quarter of 2022.
AutoNation’s cash and cash equivalents were $63.7 million as of Jun 30, 2023, declining from $72.6 million recorded as of Dec 31, 2022. The company’s liquidity was $1.4 billion, including $64 million in cash and nearly $1.3 billion available under its revolving credit facility.
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