Group 1 Automotive Inc. said Wednesday that first-quarter net income nearly doubled and revenue soared as dealerships the retailer acquired last year outperformed expectations.
The Houston-based dealership group said revenue in the quarter ended March 31 rose 30 percent to $3.84 billion, led by growth from used vehicles, finance and insurance and parts and service. Group 1 has acquired dozens of franchised dealerships since the end of 2021's first quarter, including 28 stores from Prime Automotive Group late last year. On a same-store basis, Group 1's first-quarter revenue rose 11 percent.
The company's net income rose 99 percent for the quarter to $202.9 million, a figure that includes its operations in Brazil. Group 1 plans to divest the Brazilian operations by the end of June, and that unit is now reported as discontinued operations.
Net income from continuing operations, which includes Group 1's U.S. and United Kingdom operations, rose 99 percent to $201.1 million in the quarter, a record.
"Our record profit performance this quarter was the result of continued strong consumer demand and outstanding operational performance across all business segments in the U.S. and U.K.," Group 1 CEO Earl Hesterberg said in a statement. "Our 2021 acquisitions, especially the Prime Auto Group, performed far above our expectations in the first quarter and our U.K. operations achieved an all-time profit record."
Hesterberg added that he expects Group 1's strong vehicle margins to continue this year in both markets as new-vehicle supply remains constrained for the remainder of 2022.
Group 1 had a nine-day supply of new vehicles in the U.S. at the end of March, which was unchanged from Dec. 31 but down from a 34-day supply as of March 31, 2021. Supply of used vehicles in the U.S. rose year over year to 28 days as of March 31, up from 23 days a year earlier but down from 36 days at the end of 2021.
Group 1 in March acquired Charles Maund Toyota in Austin, Texas, which it renamed Toyota of North Austin. The company said that store should generate $435 million in annualized revenue. Group 1 this month acquired Larry H. Miller Toyota Albuquerque in New Mexico from Asbury Automotive Group Inc. and renamed the store Sandia Toyota. The New Mexico dealership is expected to generate $115 million in annualized revenue
"The acquisition of these two large Toyota dealerships in growing markets where we already operate is a major growth opportunity for our U.S. operations," Daryl Kenningham, Group 1's president of U.S. operations, said in the company's statement.
Group 1 in February sold Ira Honda in West Roxbury and Ira Toyota of Tewksbury, both in Massachusetts, to Terry Taylor's Automotive Management Services Inc. The two stores had generated about $125 million in annualized revenue, Group 1 said.
Q1 revenue: $3.84 billion, up 30 percent from a year earlier
Q1 net income: $202.9 million, up 99 percent
Q1 net income from continuing operations: $201.1 million, up 99 percent
Q1 vehicle sales: 29,498 new vehicles in the U.S., up 1.2 percent; 33,940 used vehicles, up 12 percent. On a same-store basis, sales of new vehicles in the U.S. fell 17 percent to 23,769, while sales of used vehicles slipped 3.8 percent to 28,901
Records: Quarterly revenue; net income from continuing operations
Ranking: Group 1 ranked No. 4 on Automotive News' most recent list of the top 150 dealership groups based in the U.S., with retail sales of 146,072 new vehicles in 2021.