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GROUP 1 AUTOMOTIVE INC (GPI)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 delivered record revenue of $5.78B (+10.8% y/y) and record P&S performance, but GAAP diluted EPS fell to $1.02 on a $123.9M U.K. impairment; adjusted diluted EPS rose to $10.45 (+5.6% y/y) .
  • Versus S&P Global consensus, revenue beat (+2.0%), EBITDA modestly beat, and adjusted EPS slightly missed as higher SG&A and U.K. headwinds offset operating strength (see Estimates Context; values marked with asterisks are from S&P Global).
  • U.S. operations were the engine: used retail, aftersales, and F&I posted record results; F&I PRU rose 5.6% y/y and P&S gross profit hit $407.6M (+11.1% y/y) .
  • U.K. remains the pressure point: BEV-related margin compression, inflation, and restructuring continued; management notified JLR of a plan to exit the brand within 24 months and recorded related impairments; more cost actions underway .
  • Capital allocation remains shareholder-friendly: Q3 buybacks of $82.5M, $226.3M authorization remaining at 9/30; subsequently increased to a new $500M authorization on Nov 11 and maintained a $0.50 quarterly dividend .

What Went Well and What Went Wrong

What Went Well

  • Broad-based U.S. outperformance and record lines: “Used vehicles, aftersales and F&I each achieved record performance” with healthy consumer demand and strong execution in U.S. stores .
  • Aftersales as a durable growth lever: P&S revenues +11.2% y/y to $733.9M; P&S gross profit +11.1% y/y to $407.6M; management continues to expand technician capacity and shop productivity .
  • F&I strength: F&I revenues +12.5% y/y to $240.9M; F&I PRU +5.6% y/y to $2,061; U.S. F&I PRU reached “an all-time quarterly high” near $2,500, underscoring sustained attachment and product penetration .

What Went Wrong

  • EPS optics driven by U.K. impairment: GAAP diluted EPS from continuing ops fell to $1.02 due to $123.9M of impairment in the U.K.; adjusted EPS still rose to $10.45 (+5.6% y/y) .
  • SG&A deleverage: SG&A as a % of gross profit rose 183 bps to 71.2% (adjusted +259 bps to 70.1%) as cost inflation and U.K. inefficiencies persisted .
  • GPU pressure: New and used retail GPUs declined y/y; U.S. new vehicle GPUs were negatively affected (~6%) by higher BEV deliveries at lower GPUs amid expiring tax credits; U.K. used retail GPU fell 20.6% y/y to $1,242 .

Financial Results

Headline results vs prior quarters and estimates

MetricQ1 2025Q2 2025Q3 2025
Revenue ($B)$5.505 $5.704 $5.783
GAAP Diluted EPS – Continuing Ops$9.64 $10.77 $1.02
Adjusted Diluted EPS – Continuing Ops$10.17 $11.52 $10.45
Total Gross Margin %16.2% 16.4% 15.9%
Adjusted Operating Margin %4.4% 4.7% 4.2%
SG&A as % of Gross Profit (reported)69.2% 69.0% 71.2%

Q3 2025 actual vs S&P Global consensus (quarter):

  • Revenue: $5.783B vs $5.671B* (+2.0%)
  • Primary EPS (adj.): $10.45 vs $10.726* (−$0.28)
  • EBITDA: $264.7M* vs $256.6M* (+3.1%)*
    Values retrieved from S&P Global.

Segment mix – Q3 2025

CategoryRevenue ($M)Gross Profit ($M)
New Vehicle Retail2,807.4 186.1
Used Vehicle Retail1,852.1 85.4
Used Vehicle Wholesale148.4 (0.2)
Parts & Service733.9 407.6
Finance & Insurance (net)240.9 240.9
Total5,782.7 919.7

KPIs and operating metrics

KPI (Consolidated)Q1 2025Q2 2025Q3 2025
Retail New Units56,099 55,763 57,269
Retail Used Units59,618 60,240 59,574
New ASP ($)49,861 50,557 50,816
Used ASP ($)29,449 30,713 31,112
New GPU PRU ($)3,381 3,557 3,250
Used GPU PRU ($)1,569 1,600 1,433
F&I PRU ($)1,955 2,050 2,061
Days’ Supply – New (Consol.)29 43 40
Days’ Supply – Used (Consol.)33 35 36

Guidance Changes

MetricPeriodPreviousCurrent UpdateChange
Formal financial guidanceFY/QtrNoneNone providedMaintained
U.K. portfolio/JLR~24 monthsN/AIntent to exit U.K. JLR within 24 months; recorded $123.9M impairment in Q3Strategic exit / impairment
U.K. restructuring2025–2026YTD restructuring $18.7M through Q2Additional $1.6M in Q3 (YTD $20.3M); further plans aheadOngoing cost actions
U.S. SG&A discipline2H25+N/AAdditional store expense actions to save ~$8M (benefit 2026); planned ~10% corporate headcount reductionCost-down trajectory
Share repurchase authorizationAs of 9/30/25$226.3M remainingSubsequent: Board lifted authorization to $500M on Nov 11Raised
Dividend2025Raised to $2.00 annualized in Feb; $0.50/qtr declared Aug$0.50/qtr declared Nov 11 for Dec 15 paymentMaintained

Earnings Call Themes & Trends

TopicQ-2 and Q-1Current Period (Q3 2025)Trend
Aftersales capacity/techniciansQ1: +8% U.S. techs; A/C shops to boost retention/productivity . Q2: record aftersales; same-store CP +13.6%, warranty +31.9% .Record P&S revenue/GP; continued technician adds and shop optimization .Strengthening, structural lever.
F&I disciplineQ1: GPU +$86 y/y to $2,426 . Q2: near record PRU $2,465; broad penetration .F&I PRU +5.6% y/y to $2,061 (consolidated); U.S. all-time PRU near $2,500 .Sustained high attachment.
Tariffs & OEM pricingQ1: Nimble stance; deferred capex; contingency plans . Q2: Expect OEMs to moderate incentives; parts cost watch .Management seeing “very little” direct pricing from tariffs; captives help via leasing/subvented rates .Cautious but manageable.
U.K. restructuring/BEVQ1: back to pre-acq SG&A%; headcount actions; wholesale losses reduced . Q2: SG&A elevated; gov’t wage/NI costs .JLR exit; $123.9M impairments; further restructuring ahead .Continued headwinds/portfolio reshape.
Used acquisition & GPUsQ1: GPUs down y/y; discipline on sourcing/turn . Q2: PRU up; stable acquisition discipline .Consolidated used PRU down 9% y/y; U.K. used GPUs weak; U.S. stable with competitive sourcing .Mixed; U.K. pressure.
New vehicle GPUsQ1: GPUs lower y/y; volumes up . Q2: strong, steady throughout Qtr .U.S. GPUs hit ~6% by more BEV at lower GPUs (tax credit timing) .Normalizing; BEV mix a drag.
Data/tech/AIQ1: move to first-party data; brand clustering pilots . Q2: piloting AI/automation to elevate CX/productivity .U.K. BI rollout; U.S.–U.K. systems integration across ~90 systems .Increasing tech enablement.
Capital allocationQ1: $123M buybacks; ~$1B revenues acquired since 2023 . Q2: $45M buybacks; $330M acquired .Q3: $82.5M buybacks; post-Q3 ~$60.9M more; authorization later to $500M .Consistent repurchases; disciplined M&A.

Management Commentary

  • “Used vehicles, aftersales and F&I each achieved record performance… New and used vehicle sales grew year over year, reflecting healthy consumer demand.” — CEO Daryl Kenningham .
  • “In the third quarter, we formally notified Jaguar Land Rover of our decision to exit this brand in the U.K. within 24 months… As a result, we took a $123.9 million asset impairment in the quarter.” — CEO .
  • “Expiring tax credits lead to increased BEV deliveries in the quarter at lower GPUs, negatively affecting U.S. new vehicle GPUs by approximately 6%.” — CFO Daniel McHenry .
  • “We are taking further actions to reduce our corporate headcount by approximately an additional 10%, and… expense actions to save an expected $8 million in our stores. We will benefit from these savings in 2026.” — CFO .

Q&A Highlights

  • Luxury demand: No clear softening trend yet; Audi challenging, but Lexus and BMW performed well; Q4 is the key tell for German luxury .
  • JLR exit & impairments: $18.1M franchise rights impairment recognized for JLR within the $123.9M total; goodwill impairment applied to the U.K. reporting unit overall .
  • Used vehicle landscape: Competitive sourcing continues; majority of units from trades and customer purchases; ~31-day used supply maintained .
  • Aftersales retention: Customer count up y/y; Group 1 measures retention as two visits per year and cited “68+%” retention, supported by first-party data and propensity modeling .
  • Tariffs/OEM pricing: Little excess pricing beyond normal; OEMs to adjust trims/contenting; strong captives help via leasing/subvented rates .

Estimates Context

  • Q3 2025 vs S&P Global consensus: Revenue $5.783B vs $5.671B* (beat +2.0%); Primary EPS $10.45 vs $10.726* (miss $0.28); EBITDA $264.7M* vs $256.6M* (beat +3.1%)*. Values retrieved from S&P Global.
  • Forward consensus: Q4 2025 Primary EPS $9.687*; Revenue $5.778B*; Q1 2026 Primary EPS $10.078*; Revenue $5.650B*. Values retrieved from S&P Global.

Key Takeaways for Investors

  • Mix matters: P&S and F&I remain durable, high-margin levers offsetting normalization in vehicle GPUs; continue to model mid-single-digit CP growth and robust F&I PRU .
  • U.K. is the swing factor: Impairment, BEV-driven margin pressure, and cost inflation weighed on results; portfolio optimization (incl. JLR exit) and cost actions should gradually improve run-rate .
  • EPS optics vs fundamentals: GAAP EPS was distorted by non-cash impairment; underlying adjusted EPS and EBITDA trends remain healthy on record revenue and strong U.S. operations .
  • Estimate revisions: Expect modest upward tweaks to revenue/EBITDA and slight downward pressure to near-term EPS given SG&A deleverage and U.K. mix; Q3 printed revenue/EBITDA beats but an adj. EPS miss (see Estimates Context). Values retrieved from S&P Global.
  • Capital returns supportive: Ongoing buybacks (new $500M authorization) and steady dividend provide downside support while management remains disciplined on M&A .
  • Watch items into 2026: U.K. restructuring execution/savings capture; U.S. BEV mix impact on GPUs; tariff flow-through to parts/service pricing; SG&A leverage trajectory as volumes and mix evolve .

Appendix: Additional Detail

Balance sheet and liquidity (as of 9/30/25)

  • Cash & equivalents $30.8M; inventories $2.733B; total debt $3.465B; total equity $3.053B .
  • Liquidity ~$1.0B: cash ~$434M and $555M available on acquisition line (as of 9/30/25, per CFO); rent-adjusted leverage 2.9x .

Share repurchases and dividend

  • Q3 buybacks: 185,788 shares for $82.5M; $226.3M remained in authorization at 9/30/25 .
  • Subsequent: ~140k shares repurchased for $60.9M; authorization later lifted to $500M (Nov 11); quarterly dividend $0.50 declared .

U.S./U.K. operational color (Q3 2025)

  • U.S.: Total gross margin 16.7%; P&S GP $313.1M; F&I PRU $2,488; Adjusted SG&A 65.8% of GP .
  • U.K.: Total gross margin 13.6%; P&S GP $94.5M; Used retail GPU $1,242 (−20.6% y/y) .

Estimates footnote: Values retrieved from S&P Global. All other figures are from company filings/press releases/transcripts cited above.