GROUP 1 AUTOMOTIVE INC
For the period ended May 15, 2023. Filed Apr 5, 2024.
View on SEC.govAbout this filing
What shareholders are asked to vote on at a company's meeting. It is where to find what directors and top executives are paid, and who owns the most shares.
May 15, 2023 · Filed Apr 5, 2024
Contents
APPENDIX C:
RECONCILIATION OF GAAP MEASURES TO CORRESPONDING NON-GAAP MEASURES
In addition to evaluating the financial condition and results of our operations in accordance with U.S. GAAP, from time to time our management evaluates and analyzes results and any impact on the Company of strategic decisions and actions relating to, among other things, cost reduction, growth, profitability improvement initiatives, and other events outside of normal, or “core,” business and operations, by considering alternative financial measures not prepared in accordance with U.S. GAAP. In our evaluation of results from time to time, we exclude items that do not arise directly from core operations, such as non-cash asset impairment charges, out-of-period adjustments, legal matters, gains and losses on dealership franchise or real estate transactions, and catastrophic events, such as hailstorms, hurricanes, and snow storms. Because these non-core charges and gains materially affect the Company’s financial condition or results in the specific period in which they are recognized, management also evaluates, and makes resource allocation and performance evaluation decisions based on, the related non-GAAP measures excluding such items. This includes evaluating measures such as adjusted selling, general and administrative expenses, adjusted net income, adjusted diluted earnings per share, and constant currency. These adjusted measures are not measures of financial performance under U.S. GAAP, but are instead considered non-GAAP financial performance measures. Non-GAAP measures do not have definitions under U.S. GAAP and may be defined differently by, and not be comparable to similarly titled measures used by, other companies. As a result, any non-GAAP financial measures considered and evaluated by management are reviewed in conjunction with a review of the most directly comparable measures calculated in accordance with U.S. GAAP. We caution investors not to place undue reliance on such non-GAAP measures, but also to consider them with the most directly comparable U.S. GAAP measures.
In addition to using such non-GAAP measures to evaluate results in a specific period, management believes that such measures may provide more complete and consistent comparisons of operational performance on a period-over-period historical basis and a better indication of expected future trends. Our management also uses these adjusted measures 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. The exclusion of certain expenses in the calculation of non-GAAP financial measures should not be construed as an inference that these costs are unusual or infrequent. We anticipate excluding these expenses in the future presentation of our non-GAAP financial measures.
In addition, 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 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. The Same Store amounts presented include the results of dealerships 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. Same Store results also include the activities of our corporate headquarters.
Certain amounts in the financial statements may not compute due to rounding. All computations have been calculated using unrounded amounts for all periods presented.
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 130
Back to Contents
**Reconciliation of Certain Non-GAAP Financial Measures — Consolidated
(Unaudited)
(In millions, except per share data)
| U.S. GAAP | Non-cash gain on interest rate swaps | Catastrophic events | Dealership and real estate transactions | Acquisition costs | Legal items and other professional fees | Asset impairments and accelerated depreciation | Non- GAAP adjusted | |
|---|---|---|---|---|---|---|---|---|
| SG&A expenses | $1,926.8 | $— | $(3.4) | $22.0 | $(0.9) | $(6.1) | $— | $1,938.4 |
| Depreciation and amortization expense | 92.0 | — | — | — | — | — | (1.2) | 90.8 |
| Asset impairments | 32.9 | — | — | — | — | — | (32.9) | — |
| Income (loss) from operations | 968.6 | — | 3.4 | (22.0) | 0.9 | 6.1 | 34.0 | 991.1 |
| Other interest expense, net | 99.8 | 4.0 | — | — | — | — | — | 103.8 |
| Income (loss) before income taxes | $800.2 | $(4.0) | $3.4 | $(21.9) | $0.9 | $6.1 | $34.0 | $818.7 |
| Less: Provision (benefit) for income taxes | 198.2 | (0.9) | 0.8 | (12.8) | 0.2 | 1.5 | 8.4 | 195.4 |
| Net income (loss) from continuing operations | 602.0 | (3.1) | 2.6 | (9.1) | 0.7 | 4.6 | 25.6 | 623.3 |
| Less: Earnings (loss) allocated to participating securities | 14.8 | (0.1) | 0.1 | (0.2) | — | 0.1 | 0.6 | 15.3 |
| Net income (loss) from continuing operations available to diluted common shares | $587.2 | $(3.0) | $2.5 | $(8.9) | $0.7 | $4.5 | $25.0 | $608.0 |
| Diluted earnings (loss) per common share from continuing operations | $42.75 | $(0.22) | $0.18 | $(0.65) | $0.05 | $0.33 | $1.82 | $44.27 |
| Effective tax rate | 24.8% | 23.9% | ||||||
| SG&A as % gross profit(1) | 63.8% | 64.2% | ||||||
| Operating margin(2) | 5.4% | 5.5% | ||||||
| Pretax margin(3) | 4.5% | 4.6% | ||||||
| Same Store SG&A expenses | $1,845.4 | $— | $(3.4) | $— | $(0.9) | $(6.1) | $— | $1,834.9 |
| Same Store SG&A as % gross profit(1) | 64.6% | 64.2% | ||||||
| Same Store income from operations | $890.4 | $— | $3.4 | $— | $0.9 | $6.1 | $33.8 | $934.6 |
| Same Store operating margin(2) | 5.3% | 5.6% | ||||||
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 131
Back to Contents
| U.S. GAAP | Non-GAAP adjustments | Non-GAAP adjusted | |
|---|---|---|---|
| Net loss from discontinued operations | $(0.4) | $— | $(0.4) |
| Less: Loss allocated to participating securities | — | — | — |
| Net loss from discontinued operations available to diluted common shares | $(0.4) | $— | $(0.4) |
| Net income | $601.6 | $21.3 | $622.9 |
| Less: Earnings allocated to participating securities | 14.8 | 0.5 | 15.3 |
| Net income available to diluted common shares | $586.9 | $20.8 | $607.6 |
| Diluted loss per common share from discontinued operations | $(0.03) | $— | $(0.03) |
| Diluted earnings per common share from continuing operations | 42.75 | 1.51 | 44.27 |
| Diluted earnings per common share | $42.73 | $1.51 | $44.24 |
| (1) | Adjusted SG&A as % of gross profit excludes the impact of SG&A reconciling items above. |
| (2) | Adjusted operating margin excludes the impact of SG&A reconciling items, accelerated depreciation expense and asset impairment charges. |
| (3) | Adjusted pretax margin excludes the impact of SG&A reconciling items, accelerated depreciation expense, asset impairment charges and a non-cash gain on interest rate swaps. |
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 132
Back to Contents
**Reconciliation of Certain Non-GAAP Financial Measures — Consolidated
(Unaudited)
(In millions, except per share data)
| U.S. GAAP | Dealership and real estate transactions | Acquisition costs | Legal matters | Asset impairments | Non-GAAP adjusted | |
|---|---|---|---|---|---|---|
| SG&A expenses | $1,783.3 | $38.8 | $(2.2) | $(0.8) | $— | $1,819.2 |
| Asset impairments | 2.1 | — | — | — | (2.1) | — |
| Income (loss) from operations | 1,091.4 | (38.8) | 2.2 | 0.8 | 2.1 | 1,057.6 |
| Income (loss) before income taxes | $985.3 | $(38.8) | $2.2 | $0.8 | $2.1 | $951.6 |
| Less: Provision (benefit) for income taxes | 231.1 | (9.1) | 0.2 | 0.2 | 0.5 | 222.9 |
| Net income (loss) from continuing operations | 754.2 | (29.7) | 1.9 | 0.6 | 1.6 | 728.7 |
| Less: Earnings (loss) allocated to participating securities | 21.3 | (0.8) | 0.1 | — | — | 20.6 |
| Net income (loss) from continuing operations available to diluted common shares | $733.0 | $(28.9) | $1.9 | $0.6 | $1.6 | $708.2 |
| Diluted earnings (loss) per common share from continuing operations | $47.31 | $(1.86) | $0.12 | $0.04 | $0.10 | $45.71 |
| Effective tax rate | 23.5% | 23.4% | ||||
| SG&A as % gross profit(1) | 60.1% | 61.4% | ||||
| Operating margin(2) | 6.7% | 6.5% | ||||
| Pretax margin(3) | 6.1% | 5.9% | ||||
| Same Store SG&A expenses | $1,771.1 | $— | $(2.2) | $(0.8) | $— | $1,768.2 |
| Same Store SG&A as % gross profit(1) | 61.2% | 61.1% | ||||
| Same Store income from operations | $1,034.6 | $— | $2.2 | $0.8 | $1.4 | $1,038.9 |
| Same Store operating margin(2) | 6.5% | 6.6% | ||||
| U.S. GAAP | Non-GAAP adjustments | Non-GAAP adjusted | |
|---|---|---|---|
| Net (loss) income from discontinued operations | $(2.7) | $5.0 | $2.3 |
| Less: (Loss) earnings allocated to participating securities | (0.1) | 0.1 | 0.1 |
| Net (loss) income from discontinued operations available to diluted common shares | $(2.6) | $4.9 | $2.2 |
| Net income (loss) | $751.5 | $(20.5) | $731.0 |
| Less: Earnings (loss) allocated to participating securities | 21.2 | (0.6) | 20.6 |
| Net income (loss) available to diluted common shares | $730.3 | $(20.0) | $710.4 |
| Diluted (loss) earnings per common share from discontinued operations | $(0.17) | $0.31 | $0.14 |
| Diluted earnings (loss) per common share from continuing operations | 47.31 | (1.60) | 45.71 |
| Diluted earnings (loss) per common share | $47.14 | $(1.29) | $45.85 |
| (1) | Adjusted SG&A as % of gross profit excludes the impact of SG&A reconciling items above. |
| (2) | Adjusted operating margin excludes the impact of SG&A reconciling items above and asset impairment charges. |
| (3) | Adjusted pretax margin excludes the impact of SG&A reconciling items and asset impairment charges. |
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 133
Back to Contents
The following table reconciles cash flows on a U.S. GAAP basis to the corresponding adjusted amounts (in millions):
| Years Ended December 31, | ||
|---|---|---|
| 2023 | 2022 | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||
| Net cash provided by operating activities: | $190.2 | $585.9 |
| Change in Floorplan notes payable — credit facility and other, excluding floorplan offset and net acquisitions and dispositions | 504.6 | 319.7 |
| Change in Floorplan notes payable — manufacturer affiliates associated with net acquisitions and dispositions and floorplan offset activity | 25.2 | 10.1 |
| Adjusted net cash provided by operating activities | $720.0 | $915.7 |
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||
| Net cash used in investing activities: | $(366.1) | $(484.6) |
| Change in cash paid for acquisitions, associated with Floorplan notes payable | 66.3 | 25.3 |
| Change in proceeds from disposition of franchises, property and equipment, associated with Floorplan notes payable | (48.8) | (3.9) |
| Adjusted net cash used in investing activities | $(348.6) | $(463.2) |
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||
| Net cash provided by (used in) financing activities: | $185.2 | $(67.3) |
| Change in Floorplan notes payable, excluding floorplan offset | (547.3) | (351.2) |
| Adjusted net cash used in financing activities | $(362.1) | $(418.6) |
2023 Non-GAAP Free Cash Flow
| Years Ended December 31, | ||
|---|---|---|
| 2023 | 2022 | |
| Adjusted net cash provided by operating activities | $720.0 | $915.7 |
| Non-discretionary capital expenditures(1) | (139.2) | (113.1) |
| Adjusted free cash flow | $580.8 | $802.6 |
| (1) | This amount excludes purchases of real estate associated with existing dealership operations, as these are considered discretionary. |
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 134
Back to Contents
| INTEGRITY We conduct ourselves with the highest level of ethics, both personally and professionally, when we sell to and perform services for our customers, and we never compromise our honesty. | TRANSPARENCY We promote open and honest communication between each other and with our customers. |
|---|---|
| RESPECT We treat everyone, customers, colleagues and other stakeholders alike, with dignity and equality. | |
| TEAMWORK We put the interests of the group first, before our individual interests, as we know that success only comes when we work together. | PROFESSIONALISM We set our standards high, so that we can exceed expectations and strive for perfection in everything we do. |
800 Gessner, Suite 500 | Houston, TX 77024
Back to Contents
Back to Contents
Back to Contents
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.