Group 1 Automotive (GPI) investor relations material

Executive summary

• Q2 2026 results were impacted by affordability challenges, inflationary pressures, and short-term disruption from rebranding, resulting in lower new and used vehicle volumes and profitability.

• Strategic initiatives included a $50 million annualized expense reduction, major cost-cutting, and the acquisition of Hennessy Automobile Companies, expected to add $1.7 billion in annual revenue and be immediately accretive to EPS.

• Portfolio optimization continued with divestitures totaling $900 million in annualized revenue YTD 2026, focusing on higher-return stores.

• U.K. operations remained resilient, with stable gross profit per unit and new vehicle volume growth.

Financial highlights

• Q2 2026 revenue was $5.4 billion, gross profit $860.6 million, adjusted net income $114.9 million, and adjusted diluted EPS $9.61; gross margin declined to 16.0%.

• Diluted EPS for Q2 was $8.62, down from $10.82 in Q2 2025.

• SG&A expenses decreased 3.5% year-over-year, reflecting cost reductions.

• Parts & Service gross margin remained above 56%, with same-store customer pay revenues in the U.S. up 4%.

• Adjusted free cash flow for 2Q26 YTD was $118 million; rent-adjusted leverage at 3.3x as of June 30, 2026.

Outlook and guidance

• Management expects to return to historical same-store sales growth as rebranding effects subside and remains focused on disciplined execution and integration of acquisitions.

• Hennessy acquisition is expected to close by year-end 2026, be immediately accretive to EPS, and improve the luxury mix.

• Plan to return leverage ratio to target by mid to late 2027 through cash generation and portfolio optimization.