Dealership giant Group 1 Automotive Inc. reported Wednesday that revenue and net income rose in the second quarter in part on higher new-vehicle profitability and gains from acquisitions.
The Houston-based dealership group said net income rose 2.6 percent to $195.9 million and revenue rose 14 percent to a record $4.15 billion. Net income from continuing operations for the quarter ended June 30 increased 5.6 percent to $199.3 million. That figure includes Group 1's U.S. and U.K. operations but not its Brazilian unit, which was reported as discontinued operations. The company had previously said it would divest its operations in Brazil, and the sale of those dealerships closed in early July.
Group 1 reported its highest-ever revenue and gross profit and attributed its financial performance to the strength of its U.S. business, citing a 34 percent growth in parts and service revenue and a roughly 20 percent increase in finance and insurance revenue. The acquisition of dozens of franchised dealerships, including 28 stores from Prime Automotive Group late last year, contributed to Group 1's revenue gains. On a same-store basis, Group 1's second-quarter revenue dropped 4.3 percent.
"A major contributing factor to our performance was the extreme speed at which we were able to integrate a large number of new acquisitions over the past 18 months which will provide more than $3 billion in expected annual additional revenues in the year ahead," Group 1 CEO Earl Hesterberg said in a statement.
New-vehicle supply continues to be constrained, with no recognizable change in new-vehicle deliveries to Group 1 dealerships, Hesterberg said.
"In the U.S., we continue to see the majority of new vehicles either presold or sold shortly after delivery," he said in the statement. "In the U.K., we continue to maintain a forward order book for new vehicles which extends into 2023."
Group 1 had an 11-day supply of new vehicles in the U.S. at the end of June, which was up from nine at both the end of March and December but down from a 16-day supply a year earlier. Supply of used vehicles in the U.S. rose year over year to 32 days as of June 30, up from 29 days a year earlier and 28 days at the end of March.
Second-quarter revenue: $4.15 billion, up 14 percent from the year earlier
Second-quarter net income: $195.9 million, up 2.6 percent
Second-quarter net income from continuing operations: $199.3 million, up 5.6 percent
Second-quarter vehicle sales: 31,627 new vehicles in the U.S., down 7.1 percent from a year earlier; 38,523 used vehicles, up 13 percent. On a same-store basis, sales of new vehicles in the U.S. fell 26 percent to 24,684, while sales of used vehicles slipped 4.2 percent to 32,071.
Records: Revenue, gross profit, diluted earnings per common share 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.