Sign in
G1

GROUP 1 AUTOMOTIVE INC (GPI)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 delivered $5.51B revenue (+23.1% y/y) and adjusted diluted EPS from continuing ops of $10.17; consolidated gross margin was 16.2% as mix shifted toward the U.K. and aftersales .
  • Results beat S&P Global consensus: revenue $5.51B vs $5.44B* and adjusted EPS $10.17 vs $9.67* (driven by record U.K. volumes and strong aftersales, partially offset by lower GPUs and higher interest expense). Bolded are beats: Revenue: $5.51B vs $5.44B*; EPS: $10.17 vs $9.67* (both beats)* (Values retrieved from S&P Global).
  • U.K. integration outperformed: record U.K. revenue ($1.58B) and gross profit ($217M), SG&A/GP back to pre-acquisition levels; management targets “10% headcount reduction and >£30m savings in 2025, most in 1H” .
  • Aftersales momentum (P&S gross profit +21.7% y/y) and F&I PRU resilience helped offset lower new/used GPUs; U.S. SG&A saw early-quarter creep now being addressed .
  • Capital returns remain active: repurchased 287k shares in Q1 ($123M) plus ~101k in April; $353.3M authorization remains; dividend lifted to $2.00 annualized for 2025 ($0.50/qtr) .

What Went Well and What Went Wrong

What Went Well

  • Record U.K. performance and integration progress: “Record U.K. results… back to pre-acquisition SG&A/GP levels… on track to take out 10% of headcount and save north of £30m this year, most in 1H” .
  • Aftersales strength: P&S gross profit rose to $381.0M (+21.7% y/y) with margin +70 bps to 55.1%; warranty work robust (notably Toyota Tundra recall) .
  • Active capital allocation: 286,731 shares repurchased in Q1 (~$122.8M) with additional ~100,918 in April; $353.3M buyback capacity remaining; quarterly dividend declared at $0.50 .

What Went Wrong

  • GPU compression despite volume: new PRU $3,381 (-6.1% y/y), used PRU $1,569 (-6.0% y/y), consolidated gross margin down 40 bps y/y to 16.2% .
  • SG&A deleverage and U.S. cost creep: SG&A/GP 69.2% (+510 bps y/y), with variable comp and outside services elevated in Jan–Feb; actions underway to realign .
  • Higher interest burden: floorplan interest $26.9M (+31% y/y), net floorplan expense $6.5M (vs $2.2M), other interest $39.8M (+35.7% y/y), pressuring pretax margin to 3.0% .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($B)$5.22 $5.55 $5.51
GAAP Diluted EPS – Cont. Ops ($)$8.68 $7.08 $9.64
Adjusted Diluted EPS – Cont. Ops ($)$9.90 $10.02 $10.17
Total Gross Margin (%)16.3% 15.9% 16.2%
SG&A as % of Gross Profit (%)69.4% 69.9% 69.2%
Operating Margin (%)4.4% 3.6% 4.4%

Vs. S&P Global consensus – Q1 2025:

MetricActualConsensusDelta
Revenue ($B)$5.51 $5.44*+$0.06B / +1.2%*
Adjusted Diluted EPS – Cont. Ops ($)$10.17 $9.67*+$0.50 / +5%*

Values with asterisks (*) are from S&P Global (Values retrieved from S&P Global).

Segment breakdown (U.S. vs U.K.) – Q1 2025 vs Q1 2024:

MetricQ1 2024Q1 2025
U.S. Total Revenues ($B)$3.65 $3.92
U.K. Total Revenues ($B)$0.82 $1.58
U.S. Total Gross Profit ($M)$639.1 $675.0
U.K. Total Gross Profit ($M)$103.5 $217.0
U.S. Total Gross Margin (%)17.5% 17.2%
U.K. Total Gross Margin (%)12.5% 13.7%

KPIs (Consolidated):

KPIQ1 2024Q1 2025
Retail New Units Sold (units)44,302 56,099
Retail Used Units Sold (units)49,183 59,618
New Vehicle GP per Retail Unit ($)$3,601 $3,381
Used Vehicle GP per Retail Unit ($)$1,669 $1,569
F&I PRU ($)$2,020 $1,955
Parts & Service Gross Profit ($M)$313.0 $381.0

Additional operating/financial context:

  • Net floorplan expense $6.5M (vs $2.2M), other interest expense $39.8M (+35.7% y/y) .
  • Consolidated days’ supply at 3/31/25: New 29 days; U.S. new 38 days; U.K. new 16 days .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
U.K. restructuring savingsFY2025Plan initiated in Q4 2024; savings not quantified On track to remove ~10% headcount and save “north of £30m” in 2025 (most in 1H) Raised/quantified
Capex/discretionary spendFY2025Normal cadence (no prior deferral noted)Deferring some discretionary capex by ~6 months; reviewing spend to stay nimble Deferred
DividendFY2025$1.88 annualized in 2024$2.00 annualized in 2025 (+6%); declared $0.50 quarterly dividend (paid 6/16/25) Raised
Share repurchase capacityAs of 12/31/24 vs 3/31/25$476.1M remaining at 12/31/24 $353.3M remaining at 3/31/25 Lower (buybacks executed)
Effective tax rateFY2025n/aQ1 effective tax rate 23.7% (no change indicated) Maintained
Interest rate sensitivityFY2025n/a+100 bps in SOFR ≈ -$1.21 in annual EPS New disclosure

No quantitative revenue or margin guidance provided; management commentary emphasized caution around tariffs/allocations and SG&A discipline .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3’24 and Q4’24)Current Period (Q1’25)Trend
U.K. integration/costsQ3: Major U.K. acquisitions; elevated U.K. SG&A . Q4: DMS conversion hampered ops; $16.7M restructuring charge; plan to complete early 2025 .SG&A/GP back to pre-acquisition levels; record U.K. revenue/GP; >£30m savings targeted in 2025 .Improving
AftersalesQ3: P&S GP +17.0% y/y . Q4: P&S revenue +12.2%, best in 4Q .P&S GP $381.0M (+21.7% y/y); warranty work strong (Toyota/Honda) .Strengthening
Tariffs/macroQ4: Noted trade policy/tariff risks in FLS .Expect tighter inventories and potentially elevated GPUs; cautious stance; incentives to moderate .Heightened focus
Inventory/allocationsQ3/Q4: Consolidated new days supply 43–44 days .New days supply down to 29 (U.S. 38; U.K. 16); Toyota 12 days; some OEM caution on allocations .Tightening
EV economicsLimited prior commentary.EV GPU still ~-$1,000 vs ICE; inventory healthier after active management .Gradual improvement, still drag
Marketing/brandingn/aEarly U.S. rebranding/cluster marketing; pilot recon center in Boston .Early execution
Capital allocationQ3/Q4: Ongoing buybacks; significant M&A .~3% share count reduction since 1/1 including April; remain acquisitive but measured .Consistent

Management Commentary

  • “Our U.S. business performed well… while navigating uncertainty from tariff and trade policy changes… prepared to be nimble” — CEO Daryl Kenningham .
  • “Record U.K. results… back to pre-acquisition levels on SG&A/GP… on track to take out 10% of headcount and save north of £30m this year” — CEO .
  • “Aftersales… customer pay up >6% with nearly 30% increase in warranty revenue; F&I GPU $2,426” — CFO Daniel McHenry .
  • “We saw SG&A creep in the U.S. in Jan–Feb… realigned some of it in March and continue in Q2” — CFO .
  • “We have deferred some capital projects ~6 months… and have contingency plans should the environment change” — CEO .

Q&A Highlights

  • Pre-buy/tariff dynamics: ~5% traffic lift in last 10 days of March; inventories tight (Toyota 12 days, Lexus 5) limiting incremental benefit; April started strong then cooled; OEMs cautious on allocations .
  • SG&A actions: Variable comp/outside services caused early-quarter creep; realigning costs into Q2 .
  • Aftersales sustainability: Warranty strength led by Toyota Tundra engine recall; expected to continue near term .
  • EV profitability: EV GPU still about $1,000 below ICE; inventory levels improved after active management .
  • Capacity and Capex: U.S. technician headcount +8% y/y; shop A/C investment ($25M) improves retention/productivity; deferring some discretionary capex .

Estimates Context

  • Q1 2025: Revenue $5.51B vs S&P Global consensus $5.44B*; Adjusted diluted EPS $10.17 vs $9.67* — both beats (Values retrieved from S&P Global).
  • Forward look (Street): Next quarter (Q2 2025) consensus Revenue ~$5.67B*, EPS ~$10.45*; Q3 2025 consensus Revenue ~$5.67B*, EPS ~$10.73* (Values retrieved from S&P Global).

Key Takeaways for Investors

  • Beat on both revenue and adjusted EPS; narrative supported by U.K. execution, aftersales growth, and F&I resilience despite lower GPUs and higher interest expense .
  • U.K. synergy realization is a near-term catalyst (SG&A back to pre-acquisition levels; >£30m 2025 savings targeted) — watch incremental margin and SG&A/GP in H1 .
  • Aftersales/warranty tailwinds and technician capacity expansion support gross profit durability amid potential inventory-tightening from tariffs .
  • U.S. SG&A discipline is key: management acknowledged early-quarter creep and is taking actions — look for sequential leverage improvement in Q2 .
  • Rate sensitivity matters: +100 bps SOFR ≈ -$1.21 in annual EPS; funding mix ~60% fixed helps partially offset .
  • Capital returns remain robust (buybacks, dividend lift) with ample authorization remaining; continued portfolio optimization expected .
  • Trading setup: Near-term upside from U.K. cost-out and aftersales; watch OEM allocations, incentive moderation, and parts tariffs as potential margin and volume swing factors .

Notes: All company figures sourced from Q1 2025 press release, 8-K and call transcript as cited. Consensus estimates marked with asterisks are from S&P Global (Values retrieved from S&P Global).