June 2, 2020

HGDCC-Finance

analysis business finance

Group 1 (GPI) Q1 Earnings & Sales Top Estimates, Down Y/Y

Group 1 Automotive, Inc. GPI reported adjusted earnings per share of $1.66 in first-quarter 2020, beating the Zacks Consensus Estimate of $1.05. Higher-than-expected revenues from new and used vehicles led to the outperformance. The bottom line, however, declined from the prior-year quarter’s $2.06 per share. Weak contribution across U.S., U.K. and Brazil segments acted as a dampener.

Revenues of $2.69 billion fell 4.2% year over year. The top line, however, beat the Zacks Consensus Estimate of $2.35 billion.

Group 1 Automotive Inc Price, Consensus and EPS Surprise

 

Group 1 Automotive Inc Price, Consensus and EPS Surprise

Group 1 Automotive Inc price-consensus-eps-surprise-chart | Group 1 Automotive Inc Quote

Q4 Highlights

New-vehicle retail sales declined 5.1% from the prior-year quarter to $1.34 billion. However, the figure surpassed the Zacks Consensus Estimate of $1.18 billion. Used-vehicle sales fell 5% from the year-ago quarter to $865.6 million. However, the metric beat the consensus mark of $775 million. For the Parts and Service business, the top line improved 0.4% from a year ago to $370.6 million. However, revenues from the Finance and Insurance business were down 0.8% from the prior-year period to $112.5 million.

Segments in Detail

Revenues in the U.S. business segment fell 2.7% year over year to $2 billion. The segment’s gross profit also dropped 1.7% year over year to $340.9 million. In the reported quarter, retail new-vehicle, used-vehicle, and wholesale used-vehicle units sold were 24,495, 27,668 and 7,027, respectively.

Revenues declined 8% year over year to $590.7 million for the U.K. business segment. Gross profit was $64.8 million, marking a 9.9% decrease from the first quarter of 2019. In the quarter under review, retail new-vehicle, used-vehicle, and wholesale used-vehicle units sold were 8,894, 8,024 and 4,584, respectively.

Revenues for the Brazil business segment slid 10.5% year over year to $92.5 million. The segment’s gross profit also declined 15.2% year over year to $10.7 million. In the reported quarter, retail new-vehicle, used-vehicle, and wholesale used-vehicle units sold were 1,971, 1,098 and 475, respectively.

Financial Details

Group 1’s cash and cash equivalents fell to $19.2 million as of Mar 31, 2020 from $23.8 million on Dec 31, 2019. Long-term debt was $1,137.7 million as of Mar 31, 2020, marking a decrease from $1,432.1 million recorded on Dec 31, 2019. Long-term debt to capital stands at 49.2%.

Actions Amid COVID-19

Group 1 has implemented a number of actions to boost its cash position and preserve financial flexibility in the face of rising global market uncertainty due to coronavirus-induced crisis. The company has furloughed 4,800, 2,800 and 450 employees in the United States, United Kingdom and Brazil, respectively. Moreover, Group 1 has reduced corporate compensation, with cuts as much as 50% for the firm’s CEO. The company is also putting efforts to trim U.S. marketing costs by more than 75%. To preserve liquidity, the firm has suspended payouts and scrapped the buyback program.

Looking Forward

Amid coronavirus-led uncertainty, Group 1 has refrained from providing any guidance. Depressed demand for vehicles amid weak consumer confidence is expected to reflect on its second-quarter results.The firm expects the service business to recover more quickly than vehicle sales.  

Zacks Rank & Stocks to Consider

Group 1 currently carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the auto space include Modine Manufacturing Company MOD, Unique Fabricating Inc. UFAB and Veoneer Inc. VNE, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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