VALUE DRIVEN Fourth-Quarter and Full-Year Financial Results and Overview. Copyright 2012 Group 1 Automotive, Inc. All rights reserved.

Transcription

1 VALUE DRIVEN 2012 Fourth-Quarter and Full-Year Financial Results and Overview Copyright 2012 Group 1 Automotive, Inc. All rights reserved. February 19, 2013

2 Safe Harbor This presentation contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, which are statements related to future, not past, events and are based on our current expectations and assumptions regarding our business, the economy and other future conditions. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. In this context, the forward-looking statements often include statements regarding our goals, plans, projections and guidance regarding our financial position, results of operations, market position, pending and potential future acquisitions and business strategy, and often contain words such as expects, anticipates, intends, plans, believes, seeks, should, foresee, may or will and similar expressions. Any such forward-looking statements are not assurances of future performance and involve risks and uncertainties that may cause actual results to differ materially from those set forth in the statements. These risks and uncertainties include, among other things, (a) general economic and business conditions, (b) the level of manufacturer incentives, (c) the future regulatory environment, (d) our ability to obtain an inventory of desirable new and used vehicles, (e) our relationship with our automobile manufacturers and the willingness of manufacturers to approve future acquisitions, (f) our cost of financing and the availability of credit for consumers, (g) our ability to complete acquisitions and dispositions and the risks associated therewith, (h) foreign exchange controls and currency fluctuations, and (i) our ability to retain key personnel. For additional information regarding known material factors that could cause our actual results to differ from our projected results, please see our filings with SEC, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise. Group 1 Automotive, Inc. 2 RS_12Q4_v1.pptx

3 2012: A Record Year Revenues: $7.5 Billion Gross Profit: $1.1 Billion Finance and Insurance Gross Profit PRU: $1,215 Net Income (1) : $108.2 Million Diluted Earnings Per Common Share (1) : $4.53 (1) See Appendix for GAAP reconciliation Financial data is from continuing operations Group 1 Automotive, Inc. 3 RS_12Q4_v1.pptx

4 Company Overview

5 What Sets Group 1 Apart? Fortune 500 company with Market Cap of $1.5 Billion Fourth largest dealership group in the U.S. retailing 128,550 new units in 2012 Committed management team with more than 100 years of automotive retailing and OEM experience West Region 61% New Vehicle Unit Sales Owned by independent shareholders with no large controlling owner Well positioned for growth Geographic and brand mix positioned for future market share East Region 33% New Vehicle Unit Sales U.K. 6% New Vehicle Unit Sales New Hampshire (3) Boston Metro (7) Long Island (4) Freehold (3) Atlantic City (4) Folsom Lake (1) Kansas City (4) Annapolis (2) U.K. (10) Los Angeles Metro (7) San Diego (3) Amarillo (1) Lubbock (5) El Paso (3) Austin (3) San Antonio (2) Tulsa (3) Oklahoma City (9) Dallas (5) Beaumont (6) Houston Metro (13) Gulfport (3) Atlanta (3) Columbus(1) Mobile (2) Pensacola / Panama City (3) New Orleans (4) Rock Hill (1) Columbia (2) Augusta (1) Hilton Head (1) Tampa Bay Metro (1) 2 U.S. Regions 15 States U.K. / England 120 Dealerships 156 Franchises 31 Brands Note: New Vehicle Unit Sales for year ended 12/31/2012; Dealership, Franchise and Brand counts as of 2/19/2013 Group 1 Automotive, Inc. 5 RS_12Q4_v1.pptx

6 Well-Balanced Portfolio 2012 KS 1% AL 1% SC 2% FL 1% MD 1% MS 2% LA 2% NY 3% NH 3% GA 4% NJ 5% U.K. 6% Geographic & Brand Diversity (New Vehicle Unit Sales) TX 37% Chrysler 5% Daimler 5% GM 6% VW/ Audi/ Porsche 7% Hyundai/ Kia 3% Other 2% Toyota/ Scion/ Lexus 30% OK 8% MA 9% CA 15% Brand Mix (New Vehicle Unit Sales) 28% 54% 18% Ford 9% BMW/ MINI 11% Honda/ Acura 11% Nissan/ Infiniti 11% FY12 FY05 17% 47% 36% Financial data is from continuing operations Luxury Import Domestic Group 1 Automotive, Inc. 6 RS_12Q4_v1.pptx

7 Stable Business Mix 4% 12% 27% 16% of Revenues Generate 65% of Gross Profit 23% 42% $120 $100 $80 $60 Total Parts & Service Gross Profit 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 57% 13% 22% Parts & Service Gross Profit Covers 85% - 95% of Total Company Fixed Costs and Parts & Service Selling Expenses Revenues Gross Profit Finance & Insurance Parts & Service $7,476 $1,117 Used Vehicles Full Year 2012 New Vehicles ($ in millions) Group 1 Automotive, Inc. 7 RS_12Q4_v1.pptx

8 Used Vehicles Driving higher-profit retail sales Continued progress in Used Vehicle technology will drive retail sales Retailed 85,366 Used Vehicles in 2012 $2,400,000 Wholesale Revenues Retail Revenues $1,989 $2,015 $2,100,000 $1,813 14% $1,767 $1,710 $1,800,000 86% 15% $1,500, % 22% 85% $1,200,000 Gross Profit per Retail Unit $900,000 73% 78% 14% 86% $113 $83 $600,000 $56 $300,000 $0 Used Retail-to New Ratio: ($69) ($81) Wholesale Gain (Loss) per Unit Financial data is from continuing operations Group 1 Automotive, Inc. 8 RS_12Q4_v1.pptx

9 Parts & Service Stable Business 2012 Repair Orders (external) Up 10% YoY to 1.8 million Revenue Mix 13% 11% 12% 12% 12% 21% 22% 20% 22% 21% Using Customer Management Software (CMS) and technology to improve efficiencies and closing rates Enhancing customer touch points to improve retention Leveraging scale Parts management focus 21% 19% 19% 19% 19% P&S Gross Margin FY % 53.9% 48.2% 52.4% 45% 48% 49% 47% 48% 15.5% Customer Pay Wholesale Warranty Collision (incl. Parts) Customer Pay Warranty Wholesale Collision Total P&S* (incl. Parts) Financial data is from continuing operations *Includes internals at 100% gross margin Group 1 Automotive, Inc. 9 RS_12Q4_v1.pptx

10 Finance & Insurance Focus F&I Penetration Rates Finance 70% 69% 67% 70% 71% VSC 36% 34% 33% 36% 37% Gap Ins. 27% 25% 21% 22% 22% Maintenance 9% 8% 10% 8% 8% Sealant 22% 4% 11% 13% 14% Gross Profit PRU $ 952 $ 1,045 $ 994 $ 1,135 $ 1,215 F&I Gross Profit Per Retail Unit $1,215 $1,135 $1,045 $952 $ Consumer financing at pre-recession availability Sub-prime financing improving Leveraging scale Consolidating lender base Enhancing compliance, training and benchmarking Consistent and transparent menu-driven processes Financial data is from continuing operations Group 1 Automotive, Inc. 10 RS_12Q4_v1.pptx

11 Financial Overview

12 Consolidated Financial Results Record Year for Revenues - Gross Profit - Net Income - Diluted EPCS ($ in millions, except per share amounts) 4Q12 4Q11 Change FY2012 FY2011 Change Revenues $ 1,939.0 $ 1, % $ 7,476.1 $ 6, % Gross Profit $ $ % $ 1,117.3 $ % Adj. SG&A as a % of Gross Profit (1) 76.7% 76.1% 60 bps 75.4% 76.4% (100) bps Adusted Operating Margin (1) 2.9% 3.2% (30) bps 3.2% 3.3% (10) bps Adjusted EBITDA (1) $ 65.5 $ 58.9 $ 6.6 $ $ $ 48.0 Total Interest Expense (2) $ 18.0 $ 16.4 $ 1.6 $ 69.3 $ 61.4 $ 7.9 Adjusted Net Income (1) $ 24.0 $ % $ $ % Adjusted Diluted EPCS (1) $ 0.99 $ % $ 4.53 $ % (1) See appendix for GAAP reconciliation. (2) Includes non-cash interest expense of $2.6 million incurred in 4Q12, $2.4 million incurred in 4Q11, $9.9 million incurred in FY12 and $9.1 million incurred in FY11 related to the Company's 2.25% and 3.00% convertible notes. Group 1 Automotive, Inc. 12 RS_12Q4_v1.pptx

13 Same-Store Financial Results Three Months Ended Twelve Months Ended 12/31/ /31/2011 Change 12/31/ /31/2011 Change Revenues: New vehicle retail sales $ 1,075,585 $ 928, % $ 3,932,266 $ 3,381, % Used vehicle retail sales 389, , % 1,618,272 1,409, % Used vehicle wholesale sales 61,465 58, % 254, , % Total used $ 451,140 $ 415, % $ 1,872,324 $ 1,658, % Parts and service 210, , % 826, , % Finance and insurance 63,935 52, % 242, , % Total $ 1,801,232 $ 1,599, % $ 6,873,415 $ 6,044, % Gross Profit $ 262,087 $ 242, % $ 1,035,951 $ 955, % ($ in thousands) Group 1 Automotive, Inc. 13 RS_12Q4_v1.pptx

14 Demonstrating Leverage 2012 / 2011 % Change NV Unit Sales 13% Revenues 23% EPS (1) 25% % % 80.6% 80.0% 78.6% 76.4% $ % $5.9 $6.3 $ $5.5 $6.1 $4.5 $ % $3.59 $ % 2.7% 2.9% 2.9% $2.59 $ % 3.2% $1.78 $ Revenues ($Bil) EPCS (1) Operating Margin (1) SG&A as a % of Gross Profit (1) NV Unit Sales (Mil) (1) These amounts have been adjusted to exclude the impact of certain items. See appendix for GAAP reconciliation. Financial data is from continuing operations New Vehicle Unit Sales: Automotive News Data Center Group 1 Automotive, Inc. 14 RS_12Q4_v1.pptx

15 Operating Cash Flow 4Q12 4Q11 FY2012 FY2011 FY2010 FY2009 Net Income (Loss) $ 17,132 $ 20,855 $ 100,209 $ 82,394 $ 50,304 $ 34,845 Depreciation and Amortization Expense 8,460 7,182 31,534 27,063 26,455 25,828 Asset Impairments 6, ,276 4,805 10,840 20,887 (Gain) Loss on Bonds ,872 (8,211) Stock-based Compensation 2,988 2,586 11,931 10,919 9,942 8,869 (Gain) Loss on Sale of Assets (2,810) 6 (4,941) (961) Debt Issue Costs Amortization 3,331 3,119 12,990 11,990 10,322 7,030 Deferred Tax Impact 2,527 8,544 13,282 24,824 23,274 29,646 Other Items , (402) Working Capital Adjustments (48,421) (9,010) (14,177) (9,057) (13,927) (1,771) Adjusted Operating Cash Flow (1) $ (9,310) $ 34,371 $ 159,194 $ 152,254 $ 122,754 $ 116,969 (1) See appendix for GAAP reconciliation for adjusted operating cash flow. ($ in thousands) Group 1 Automotive, Inc. 15 RS_12Q4_v1.pptx

16 Balance Sheet

17 Summary Balance Sheet As of As of 12/31/ /31/2011 Cash and cash equivalents (1) $ 4,650 $ 14,895 Contracts In Transit and vehicle receivables, net $ 204,396 $ 167,507 Inventories, net $ 1,194,288 $ 867,470 Total current assets $ 1,566,181 $ 1,175,584 Total assets $ 3,023,015 $ 2,476,343 Floorplan notes payable $ 1,180,924 $ 874,925 Offset account related to credit facility (1) $ (112,261) $ (109,207) Other current liabilities $ 326,915 $ 279,229 Total current liabilities $ 1,395,578 $ 1,044,947 Long-Term Debt, net of current maturities $ 555,016 $ 482,601 Temporary Equity $ 32,505 $ - Total stockholder's equity $ 860,284 $ 807,100 Debt-to-Cap ratio (3) 39.3% 38.1% Total Adjusted Leverage ratio (2) (1) (2) (3) Available cash of $117.0 million is total of cash and cash equivalents plus offset account related to floorplan credit facility. Offset account is amount of excess cash that is used to paydow n floorplan credit facility but can be immediately redraw n against inventory. Total Adjusted Leverage ratio is calculated under the amended credit facility dated July 1, 2011, for both periods and is rent adjusted Debt-To-Cap ratio includes both permanent and temporary equity in the capital component of the ratio and excludes $8.7 million of short-term financing in the debt component. ($ in thousands) Group 1 Automotive, Inc. 17 RS_12Q4_v1.pptx

18 Debt Maturity (in millions) Maturity Date As of Dec. 31, 2012 Available Actual Liquidity Funding Capacity Cash and cash equivalents $ 4.7 $ 4.7 Short-Term Debt Inventory Financing (1) 2016 $ $ $ 1,250.0 Other Vehicles Financing (2) Current Maturities - LTD and Short-term Financing 31.4 $ 1,100.0 $ $ 1,250.0 Available Cash $ (4) Long-Term Debt (1,3) Acquisition Line of Credit (1,3) % Convertible Notes (Face: $115.0 Million) 2.25% Convertible Notes (Face: $182.8 Million) Mortgage Facility Real Estate Other 4.2 Total Long-Term Debt $ Total Debt $ 1,655.0 $ $ 1, ) 2) 3) 4) The capacity under the floorplan and acquisition tranches of our credit facility can be redesignated w ithin the overall $1.35 billion commitment. Further, the borrow ings under the acquisition tranche may be limited from time to time based upon certain debt covenants. Borrow ings w ith manufacturer affiliates for rental vehicle financing and foreign inventories not associated w ith any of the Company s domestic credit facilities. The available liquidity balance at Dec. 31, 2012, considers the $29.3 million of letters of credit outstanding. Available cash of $117.0 million is total of cash and cash equivalents plus offset account related to floorplan credit facility. Offset account is amount of excess cash that is used to paydow n floorplan credit facility but can be immediately redraw n against inventory. Group 1 Automotive, Inc. 18 RS_12Q4_v1.pptx

19 Cash Prioritization Acquisitions that clear return hurdles (15% - 20% pretax discounted cash flow) Return cash to stockholders Quarterly Cash Dividend is $0.15 per share Share Repurchases: 4Q12: no repurchases made FY12: 241,991 common shares repurchased at an average price of $46.75 $50 Million remaining on Board-authorized share repurchase program at December 31, 2012 Group 1 Automotive, Inc. 19 RS_12Q4_v1.pptx

20 Growth Outlook

21 Factors Driving Auto Sales Growth Pent-up demand has increased and consumers still intend to buy Age of car park exceeds 10 years above trend Oldest since WWII; 10-year-old vehicles have a 60% probability of being scrapped Scrappage rates near 10-year low Number of licensed drivers is on the rise Population of aged 16+ projected to increase 10 million by 2015 Financing is back to pre-recession levels Aggressive loan to value; approval rates for prime and near prime customers rising Used vehicle prices remain robust Helps consumers in terms of trade-in values; allows for more aggressive leasing Group 1 Automotive, Inc. 21 RS_12Q4_v1.pptx

22 2013 Initiatives Business Support Center Consolidation of U.S. transactional accounting Complete by end of December 2013 Anticipate annualized savings of ~$1 million beginning in 2014 Customer Relationship Management Conversion to common system in U.S. Complete by end of October 2013 In-bound Service Call Handling Conversion to new call-handling process in U.S. Complete by end of summer 2013 Significant improvement in live answer rate Key Enablers for Driving Improved Sales Volumes, Customer Satisfaction, and Operating Efficiency Longer Term Group 1 Automotive, Inc. 22 RS_12Q4_v1.pptx

23 Capital Expenditures 2013 CapEx projected to be less than $70 mil Working with our manufacturer partners to $70 Maintenance CapEx Capital Expenditures Depreciation & Amortization Expense limit spending $62 $53 $40 $29 $16 $20 $22 $22 $23 $ Group 1 Automotive, Inc. 23 RS_12Q4_v1.pptx

24 External Growth Opportunities Plentiful acquisition opportunities Aging franchise ownership looking for exit strategy Very large and extremely fragmented market $1 trillion market (1) Top 10 groups represent approximately 8% of the market (2) 22, GPI IPO 22,250 21,640 5,000 Fewer Dealerships (3) Top 10 New Vehicle Dealers Unit Sales (2) 8% 21,495 21,200 20,770 20,010 18,460 17,700 17, ) Source: CNW Marketing Research 2) Source: Based on Automotive News Data 3) NADA Other 92% Group 1 Automotive, Inc. 24 RS_12Q4_v1.pptx

25 External Growth Opportunities Continue to look for acquisitions that will augment portfolio and provide 15% - 20% return on capital Cost savings / Economies of scale Projections Group 1 is well positioned to take advantage of acquisition opportunities Grow scale in existing U.S. markets, United Kingdom and Brazil Acquisitions (Estimated Annual Revenues) ($ in millions) Q $49 $45 1Q $70 $25 $50 $55 2Q $190 $275 2Q 3Q 4Q $52 $34 $30 $45 $70 $65 3Q 4Q $5 $110 $44 $29 $35 $563 Million $715 Million Note: Group 1 disposed of: 2 franchises with TTM revenues of $4 million in 2011; 6 franchises with TTM revenues of $128 million in 2012; and, 1 franchise with TTM revenues of $35 million in 2013 Group 1 Automotive, Inc. 25 RS_12Q4_v1.pptx

26 Conclusion

27 Proving The Model Works! Well-balanced portfolio (geography, business mix and brands) Profitability of different business units through the cycle Streamlined business -- generating cash Strong balance sheet Operational leverage to take advantage of the auto-retailing rebound Opportunities exist to grow all areas of the business Market conditions becoming more favorable Experienced, successful and driven management team >> Proven business model should drive future expansion << Group 1 Automotive, Inc. 27 RS_12Q4_v1.pptx

28 CORE VALUES Integrity we conduct ourselves with the highest level of ethics both personally and professionally when we sell to and perform service for our customers without compromising our honesty Transparency we promote open and honest communication between each other and our customers Professionalism we set our standards high so that we can exceed expectations and strive for perfection in everything we do Teamwork we put the interest of the group first, before our individual interests, as we know that success only comes when we work together Visit:

29 Appendix

30 Operating Management Team - Corporate Earl J. Hesterberg President and Chief Executive Officer and Director (April 2005) 35+ Years Industry Experience Manufacturer and Automotive Retailing Experience: Ford Motor Company; Ford of Europe; Gulf States Toyota; Nissan Motor Corporation in U.S.A.; Nissan Europe John C. Rickel Senior Vice President and Chief Financial Officer (December 2005) 25+ Years Industry Experience Manufacturer and Automotive Retailing Experience: Ford Motor Company; Ford Europe Darryl M. Burman Vice President and General Counsel (December 2006) 20+ Years Industry Experience Automotive-related Experience: Mergers and Acquisitions; Corporate Finance; Employment and Securities Law Epstein Becker Green Wickliff & Hall, P.C.; Fant & Burman, L.L.P. Peter C. DeLongchamps Vice President, Financial Services and Manufacturer Relations (July 2004) 30+ Years Industry Experience Manufacturer and Automotive Retailing Experience: General Motors Corporation; BMW of North America; Advantage BMW in Houston Wade D. Hubbard Vice President, Fixed Operations (May 2006) 35 Years Industry Experience Automotive Industry Experience: Gulf States Toyota; BMW North America; DaimlerChrysler Corp./Mercedes-Benz; Nissan Motor Corporation USA; Ford Motor Company Mark Iuppenlatz Vice President, Corporate Development (January 2010) 15 Years Industry Experience Automotive-related Experience: Corporate and Real Estate Development; Construction -Sonic Automotive; REIT J. Brooks O Hara Vice President, Human Resources (February 2000) 30+ Years Industry Experience Automotive Industry Experience: Gulf States Toyota Group 1 Automotive, Inc. 30 RS_12Q4_v1.pptx

31 Operating Management Team - Field Frank Grese Jr. Regional Vice President, West Region (December 2004) 35+ Years Industry Experience Manufacturer and Automotive Retailing Experience: Ford Motor Company; Nissan Motor Corporation in U.S.A.; AutoNation; Van Tuyl Daryl Kenningham Regional Vice President, East Region (July 2011) 20+ Years Industry Experience Manufacturer and Automotive Retailing Experience: Gulf States Toyota; Nissan Motor Corporation; Ascent Automotive Ian Twinley Vice President, U.K. Operations (March 2007) 30+ Years Industry Experience Manufacturer and Automotive Retailing Experience: Chandlers Garage Holdings Ltd.; John Grose Group; Ford Motor Company Group 1 Automotive, Inc. 31 RS_12Q4_v1.pptx

32 SAAR: Retail is What Matters 16.0 SAAR Total Retail Sales Source: J.D. Power/LMC Automotive (New vehicle units in millions) Group 1 Automotive, Inc. 32 RS_12Q4_v1.pptx

33 Floorplan Interest Floorplan Interest Exp. Manufacturer Assistance Interest Rate* 6.5% 7.0% 5.7% 6.0% 4.9% 5.0% 3.9% 4.0% 3.5% $36,840 $34,120 $46,822 $37,171 $32,345 $20,039 $27,687 $26,144 $31,796 $33, % 2.0% 1.0% Manufacturer Assistance as % of Floorplan Int. Expense: 92.6% 79.4% 62.0% 94.4% 106.7% 0.0% * Rate adjusted for impact of interest rate swaps Financial data is from continuing operations ($ in thousands) Group 1 Automotive, Inc. 33 RS_12Q4_v1.pptx

34 SWAPS: Interest Expense Impact INTEREST RATE SWAP LAYERS $'s in millions Q12 2Q12 3Q12 4Q12 Old Layers New Layer - Total Total $ 350 $ 300 $ 275 $ 425 $ 425 $ 450 $ 450 $ 550 $ 550 $ 600 $ 350 $ 200 Average Swap Balance $ 333 $ 300 $ 275 $ 317 $ 408 $ 450 $ 450 $ 550 $ 550 $ 600 $ 350 $ 200 Interest Expense (assumes 0.25% libor)- QTD $ 3.35 $ 3.03 $ 2.87 $ 2.68 $ 2.73 $ YTD $ YTD $ $ Average Interest Rate (current layers) 4.20% 4.26% 4.37% 3.58% 2.73% 2.63% 2.63% 2.56% 2.76% 2.69% 2.77% 2.52% YTD % Group 1 Automotive, Inc. 34 RS_12Q4_v1.pptx

35 Credit Facility Highlights $1.35 Billion syndicated revolving credit facility Five-year term facility, through June 2016, comprised of 17 financial institutions and 5 captive finance companies $250 Million acquisition line available for acquisitions, working capital and general corporate purposes Acquisition borrowings bear interest at LIBOR bps (no change) $1.1 Billion in floorplan financing capacity New vehicles may be 100% financed at LIBOR bps (was 87.5 bps) Used vehicles may be 80% financed at LIBOR bps (was 97.5 bps) Facility may be increased to $1.6 billion with lender approval $150 Million Ford floorplan silo One-year term, providing floorplan financing for Ford and Lincoln-Mercury new vehicles Floorplan borrowings bear interest at Prime bps less certain incentives Group 1 Automotive, Inc. 35 RS_12Q4_v1.pptx

36 Convertibles & Reconciliations See following page(s) for information relating to convertible debt and reconciliations of items noted in slides that are contained in this presentation. Group 1 Automotive, Inc. 36 RS_12Q4_v1.pptx

37 Stock price 3.00% Convertible Notes Dilution Quarter Strike Price $ Conversion Price $ Warrant Price $ Put Date: September 15, 2019 (Shares in thousands) Average Stock Price Dilutive Shares Impact on EPS 2010 Q Q Q (0.00) 2011 Q (0.00) 2011 Q (0.01) 2011 Q (0.02) 2012 Q (0.04) 2012 Q (0.04) 2012 Q (0.06) 2012 Q ,467 (0.06) If converted Historical Dilution of 3.00% Notes Potential Future Dilution of 3.00% Notes Net (Shares in thousands) shares Lower Call Warrant Net Shares Issuable Accounting Dilution $ $ $ $ $ , (178) $ , (347) $ , (497) $ , (632) $ , (753) $ , (862) $ , (962) $ ,053 1,053 (1,053) ,167 $ ,053 1,136 (1,136) ,372 $ ,053 1,213 (1,213) ,562 $ ,053 1,284 (1,284) ,737 $ ,053 1,349 (1,349) ,898 $ ,053 1,410 (1,410) ,049 $ ,053 1,467 (1,467) ,189 $ ,053 1,519 (1,519) ,319 $ ,053 1,569 (1,569) ,441 $ ,053 1,615 (1,615) ,556 $ ,053 1,659 (1,659) 1,005 1,005 2,664 $ ,053 1,700 (1,700) 1,065 1,065 2,765 $ ,053 1,739 (1,739) 1,122 1,122 2,861 $ ,053 1,775 (1,775) 1,175 1,175 2,950 $ ,053 1,810 (1,810) 1,226 1,226 3,036 $ ,053 1,842 (1,842) 1,274 1,274 3,116 $ ,053 1,873 (1,873) 1,320 1,320 3,193 $ ,053 1,903 (1,903) 1,363 1,363 3,266 $ ,053 1,931 (1,931) 1,404 1,404 3,335 $ ,053 1,958 (1,958) 1,443 1,443 3,401 $ ,053 1,983 (1,983) 1,481 1,481 3,464 $ ,053 2,007 (2,007) 1,517 1,517 3,524 $ ,053 2,031 (2,031) 1,551 1,551 3,582 $ ,053 2,053 (2,053) 1,583 1,583 3,636 $ ,053 2,074 (2,074) 1,615 1,615 3,689 (1) As a result of a conversion triggering event on December 31, 2012, the notes are convertible at the holders' option during the three months ended March 31, 2013.

38 Stock Quarter 2.25% Convertible Notes Dilution Strike Price $ Conversion Price $ Warrant Price $ Put Date: June 15, 2016 Historical Dilution of 2.25% Notes Average Stock Price (Shares in thousands) Dilutive Impact on Shares EPS 2010 Q Q Q Q Q Q Q Q Q Q Potential Future Dilution of 2.25% Notes (Shares in thousands) price If converted Net shares Lower Call Warrant Net Shares Issuable Accounting Dilution $ $ ,077 5 (5) $ , (129) $ , (243) $ , (349) $ , (447) $ , (539) $ , (624) $ , (703) $ , (778) $ , (848) $ , (914) ,068 $ , (976) ,214 $ ,077 1,035 (1,035) ,352 $ ,077 1,090 (1,090) ,482 $ ,077 1,143 (1,143) ,606 $ ,077 1,193 (1,193) ,724 $ ,077 1,240 (1,240) ,835 $ ,077 1,285 (1,285) ,941 $ ,077 1,328 (1,328) ,041 $ ,077 1,369 (1,369) ,138 $ ,077 1,408 (1,408) ,229 $ ,077 1,445 (1,445) ,317 $ ,077 1,481 (1,481) ,401 $ ,077 1,515 (1,515) ,481 $ ,077 1,547 (1,547) 1,010 1,010 2,557 $ ,077 1,579 (1,579) 1,052 1,052 2,631 $ ,077 1,609 (1,609) 1,093 1,093 2,702 $ ,077 1,638 (1,638) 1,132 1,132 2,770 $ ,077 1,666 (1,666) 1,170 1,170 2,836 $ ,077 1,692 (1,692) 1,206 1,206 2,898 $ ,077 1,718 (1,718) 1,241 1,241 2,959 $ ,077 1,743 (1,743) 1,274 1,274 3,017 $ ,077 1,767 (1,767) 1,306 1,306 3,073 $ ,077 1,790 (1,790) 1,338 1,338 3,128 $ ,077 1,812 (1,812) 1,368 1,368 3,180

39 Group 1 Automotive, Inc. Calculation of Earnings Per Share (In thousands, except per share amounts) Year Ended December 31, (In thousands, except per share amounts) Weighted average basic common shares outstanding... 21,620 22,157 22,767 Dilutive effect of contingently convertible notes and warrants... 1, Dilutive effect of stock options, net of assumed repurchase of treasury stock Dilutive effect of employee stock purchases, net of assumed repurchase of treasury stock Weighted average dilutive common shares outstanding... 22,688 22,409 22,788 Basic: Net Income... $ 100,209 $ 82,394 $ 50,304 Less: Earnings allocated to participating securities... 5,269 4,765 2,675 Earnings available to basic common shares... $ 94,940 $ 77,629 $ 47,629 Basic earnings per common share... $ 4.39 $ 3.50 $ 2.09 Diluted: Net Income... $ 100,209 $ 82,394 $ 50,304 Less: Earnings allocated to participating securities... 5,062 4,721 2,673 Earnings available to diluted common shares... $ 95,147 $ 77,673 $ 47,631 Diluted earnings per common share... $ 4.19 $ 3.47 $ 2.09

40 Group 1 Automotive, Inc. Reconciliation of Certain Non-GAAP Financial Measures (Unaudited) (Dollars in thousands, except per share amounts) Three Months Ended December 31, NET INCOME RECONCILIATION: % Change As reported $ 17,132 $ 20,855 (17.9) After-tax adjustments: Non-cash asset impairment charges (2) 4, Net gain on dealership and real estate transactions (3) (276) - Severance costs (4) Insurance deductibles for Hurricane Sandy damage (5) 1,219 - Deal costs (6) 1,111 - Accrual for pending legal matters (7) Adjusted net income (1) $ 24,011 $ 21, ADJUSTED NET INCOME ATTRIBUTABLE TO DILUTED COMMON SHARES RECONCILIATION: Adjusted net income $ 24,011 $ 21, Less: Adjusted earnings allocated to participating securities 1,066 1,182 (9.8) Adjusted net income available to diluted common shares $ 22,945 $ 20, DILUTED INCOME PER COMMON SHARE RECONCILIATION: As reported $ 0.70 $ 0.90 (22.2) After-tax adjustments: Non-cash asset impairment charges Net gain on dealership and real estate transactions (0.01) - Severance costs Insurance deductibles for Hurricane Sandy damage Deal costs Accrual for pending legal matters Adjusted diluted income per share (1) $ 0.99 $ SG&A RECONCILIATION: As reported $ 218,925 $ 188, Pre-tax adjustments: Accrual for pending legal matters - (1,000) Net gain on dealership and real estate transactions Severance costs (774) - Insurance deductibles for Hurricane Sandy damage (1,916) - Deal costs (1,777) - Adjusted SG&A (1) $ 214,895 $ 187, SG&A AS % REVENUES: Unadjusted Adjusted (1) SG&A AS % OF GROSS PROFIT: Unadjusted Adjusted (1)

41 OPERATING MARGIN %: Unadjusted Adjusted (1), (9) PRETAX MARGIN %: Unadjusted Adjusted (1), (9) SAME STORE SG&A RECONCILIATION: As reported Pre-tax adjustments: $ 201,930 $ 184, Accrual for pending legal matters - (1,000) Net gain on dealership and real estate transactions Severance costs (336) - Insurance deductibles for Hurricane Sandy damage (1,916) - Deal costs (1,777) - Adjusted Same Store SG&A (1) $ 198,054 $ 183, SAME STORE SG&A AS % REVENUES: Unadjusted Adjusted (1) SAME STORE SG&A AS % OF GROSS PROFIT: Unadjusted Adjusted (1) SAME STORE OPERATING MARGIN %: Unadjusted Adjusted (1), (10) CASH FLOWS FROM OPERATING ACTIVITIES RECONCILIATION: Net cash used in operating activities $ (68,031) $ (101,802) (33.2) Change in floorplan notes payable-credit facility, excluding floorplan offset account and net acquisition and disposition related activity 69, ,307 Change in floorplan notes payable-manufacturer affiliates associated with net acquisition and disposition related activity (11,028) (7,134) Adjusted net cash provided by (used in) operating activities (1) $ (9,310) $ 34,371 (127.1) Twelve Months Ended December 31, NET INCOME RECONCILIATION: % Change As reported $ 100,209 $ 82, After-tax adjustments: Non-cash asset impairment charges (2) 4,392 2,994 Net gain on dealership and real estate transactions (3) (935) - Severance costs (4) Insurance deductibles for Hurricane Sandy damage (5) 1,219 - Deal costs (6) 1,111 - Accrual for pending legal matters (7) Hail storm insurance deductible (8) 1,658 -

42 Adjusted net income (1) $ 108,202 $ 86, ADJUSTED NET INCOME ATTRIBUTABLE TO DILUTED COMMON SHARES RECONCILIATION: Adjusted net income $ 108,202 $ 86, Less: Adjusted earnings allocated to participating securities 5,469 4, Adjusted net income available to diluted common shares $ 102,733 $ 81, DILUTED INCOME PER COMMON SHARE RECONCILIATION: As reported $ 4.19 $ After-tax adjustments: Non-cash asset impairment charges Net gain on dealership and real estate transactions (0.04) - Severance costs Insurance deductibles for Hurricane Sandy damage Deal costs Accrual for pending legal matters Hail storm insurance deductible Adjusted diluted income per share (1) $ 4.53 $ SG&A RECONCILIATION: As reported $ 848,446 $ 735, Pre-tax adjustments: Accrual for pending legal matters - (1,000) Net gain on dealership and real estate transactions 1,508 - Severance costs (774) - Insurance deductibles for Hurricane Sandy damage (1,916) - Deal costs (1,777) - Hail storm insurance deductible (2,650) - Adjusted SG&A (1) $ 842,837 $ 734, SG&A AS % REVENUES: Unadjusted Adjusted (1) SG&A AS % OF GROSS PROFIT: Unadjusted Adjusted (1) OPERATING MARGIN %: Unadjusted Adjusted (1), (9) PRETAX MARGIN %: Unadjusted Adjusted (1), (9)

43 SAME STORE SG&A RECONCILIATION: As reported Pre-tax adjustments: $ 783,702 $ 731, Accrual for pending legal matters - (1,000) Net gain on dealership and real estate transactions (351) - Severance costs (336) - Insurance deductibles for Hurricane Sandy damage (1,916) - Deal costs (1,777) - Hail storm insurance deductible (2,650) - Adjusted Same Store SG&A (1) $ 776,672 $ 730, SAME STORE SG&A AS % REVENUES: Unadjusted Adjusted (1) SAME STORE SG&A AS % OF GROSS PROFIT: Unadjusted Adjusted (1) SAME STORE OPERATING MARGIN %: Unadjusted Adjusted (1), (10) CASH FLOWS FROM OPERATING ACTIVITIES RECONCILIATION: Net cash provided by (used in) operating activities $ (75,322) $ 199,316 (137.8) Change in floorplan notes payable-credit facility, excluding floorplan offset account and net acquisition and disposition related activity 245,544 (13,350) Change in floorplan notes payable-manufacturer affiliates associated with net acquisition and disposition related activity (11,028) (33,712) Adjusted net cash provided by operating activities (1) $ 159,194 $ 152, (1) (2) (3) (4) (5) (6) (7) (8) We have included certain non-gaap financial measures as defined under SEC rules, which exclude certain items. These adjusted measures are not measures of financial performance under GAAP. As required by SEC rules, we provide reconciliations of these adjusted measures to the most directly comparable GAAP measures. We believe that these adjusted financial measures are relevant and useful to investors because they improve the transparency of our disclosure, provide a meaningful presentation of results from our core business operations and improve period-to-period comparability of our results from our core business operations. Adjustment is net of tax benefit of $2,711 and $2,783 for the three and twelve months ended December 31, 2012, respectively, and net of tax benefit of $336 and $1,811 for the three and twelve months ended December 31, 2011, respectively, calculated utilizing the applicable federal and state tax rates for the adjustment. Adjustment is net of tax provision of $161 and $573 for the three and twelve months ended December 31, 2012, respectively, calculated utilizing the applicable federal and state tax rates for the adjustment. Adjustment is net of tax benefit of $226 for the three and twelve months ended December 31, 2012, respectively, calculated utilizing the applicable federal and state tax rates for the adjustment. Adjustment is net of tax benefit of $697 for the three and twelve months ended December 31, 2012, respectively, calculated utilizing the applicable federal and state tax rates for the adjustment. Adjustment is net of tax benefit of $666 for the three and twelve months ended December 31, 2012, respectively, calculated utilizing the applicable federal and state tax rates for the adjustment. Adjustment is net of tax benefit of $359 for the three and twelve months ended December 31, 2011, calculated utilizing the applicable federal and state tax rates for the adjustment. Adjustment is net of tax benefit of $992 for the twelve months ended December 31, 2012, calculated utilizing the applicable federal and state tax rates for the adjustment. (9) Excludes the impact of SG&A reconciling items above, as well as asset impairments. (10) Excludes the impact of Same Store SG&A reconciling items, as well as Same Store asset impairments. Adjusted Same Store Operating Income was $56,081, $51,448, $229,354, and $198,548 for the periods presented respectively.

44 Group 1 Automotive, Inc. Reconciliation of Certain Non-GAAP Financial Measures (Unaudited, in millions) EBITDA RECONCILIATION: 4Q12 4Q11 FY2012 FY2011 Net Income $ 17.1 $ 20.9 $ $ 82.4 Total Interest Expense (1) Depreciation and Amortization Expense Non-cash Asset Impairments Net gain on dealership and real estate transactions (0.4) - (1.5) - Insurance deductibles for Hurricane Sandy damage Hail storm insurance deductible Severance Costs Deal Costs Accrual for pending legal matter Income Tax Expense Adjusted EBITDA (2) $ 65.5 $ 58.9 $ $ (1) Includes Floorplan interest expense and Other interest expense, net (2) Adjusted EBITDA is defined as income (loss) plus floorplan interest expense, other interest expense, net, depreciation and amortization expense, non-cash asset impairments, mortgage debt refinancing expense, loss (less gain) on dealership dispositions, loss (less gain) on debt redemptions, lease terminations and income tax expense (less income tax benefit). While Adjusted EBITDA should not be construed as a substitute for net income or as a better measure of liquidity than net cash provided by operating activities, which are determined in accordance with accounting principles generally accepted in the United States of America ( GAAP ), it is included in our discussion of earnings to provide additional information regarding the amount of cash our business is generating with respect to our ability to meet future debt services, capital expenditures and working capital requirements. Adjusted EBITDA should not be used as an indicator of our operating performance. Consistent with industry practices, our management utilizes Adjusted EBITDA when valuing dealership operations. This measure may not be comparable to similarly titled measures reported by other companies. The table above shows the calculation of Adjusted EBITDA and reconciles Adjusted EBITDA to the GAAP measurement income (loss) for the periods presented in the table. May not foot due to rounding

45 SG&A RECONCILIATION: Group 1 Automotive, Inc. Reconciliation of Certain Non-GAAP Financial Measures (Unaudited, $ in thousands) Twelve Months Ended: SG&A Expenses - As Reported $ 717,786 $ 758,877 $ 739,430 $ 621,048 $ 693,635 $ 735,229 $ 848,446 Pre-tax Adjustments Lease termination charges - (4,307) (1,091) Severance costs (562) - (774) Net gain (loss) on dealership and/or real estate transactions (299) (3,753) - 1,508 Accrual for pending legal matter (1,000) - Insurance deductibles for Hurricane Sandy damage (1,916) Hail storm insurance deductible (2,650) Deal costs (1,777) SG&A Expenses - As Adjusted (1) $ 717,786 $ 754,570 $ 738,339 $ 620,749 $ 689,320 $ 734,229 $ 842,837 Gross Profit $ 939,304 $ 974,466 $ 915,661 $ 775,837 $ 877,033 $ 960,600 $ 1,117,252 SG&A as a % of Gross Profit As Reported 76.4% 77.9% 80.8% 80.0% 79.1% 76.5% 75.9% As Adjusted (1) 76.4% 77.4% 80.6% 80.0% 78.6% 76.4% 75.4% (1) We believe that these adjusted financial measures are relevant and useful to investors because they provide additional information regarding the performance of our operations and improve period-to-period comparability. These measures are n measures of financial performance under GAAP. Accordingly, they should not be considered as substitutes for their unadjusted counterparts, which are prepared in accordance with GAAP. Although we find these non-gaap results useful in evaluating the performance of our business, our reliance on these measures is limited because the adjustments often have a material impact on our financial statements calculated in accordance with GAAP. Therefore, we typically use these adjusted numbers in conjunction with our GAAP results to address these limitations. Financial Data is from Continuing Operations

46 INCOME FROM OPERATIONS RECONCILIATION: Income from Operations - As Reported $ 201,586 $ 178,368 $ (12,444) $ 108,074 $ 146,103 $ 193,503 $ 229,996 Pre-tax Adjustments Non-Cash asset impairment charges 2,241 16, ,023 20,792 10,840 4,805 7,175 Lease termination charges - 4,307 1, Severance costs Net gain (loss) on dealership and/or real estate transactions ,753 - (1,508) Accrual for pending legal matter ,000 - Insurance deductibles for Hurricane Sandy damage ,916 Hail storm insurance deductible ,650 Deal costs ,777 Income from Operations - As Adjusted (1) $ 203,827 $ 199,459 $ 151,670 $ 129,165 $ 161,258 $ 199,308 $ 242,780 Revenue $ 5,940,730 $ 6,260,217 $ 5,654,087 $ 4,525,707 $ 5,509,169 $ 6,079,765 $ 7,476,100 Operating Margin As Reported 3.4% 2.8% -0.2% 2.4% 2.7% 3.2% 3.1% As Adjusted (1) 3.4% 3.2% 2.7% 2.9% 2.9% 3.3% 3.2% (1) Group 1 Automotive, Inc. Reconciliation of Certain Non-GAAP Financial Measures (Unaudited, $ in thousands) Twelve Months Ended: We believe that these adjusted financial measures are relevant and useful to investors because they provide additional information regarding the performance of our operations and improve period-to-period comparability. These measures are not measures of financial performance under GAAP. Accordingly, they should not be considered as substitutes for their unadjusted counterparts, which are prepared in accordance with GAAP. Although we find these non-gaap results useful in evaluating the performance of our business, our reliance on these measures is limited because the adjustments often have a material impact on our financial statements calculated in accordance with GAAP. Therefore, we typically use these adjusted numbers in conjunction with our GAAP results to address these limitations. Financial Data is from Continuing Operations

47 Group 1 Automotive, Inc. Reconciliation of Certain Non-GAAP Financial Measures (Unaudited, in thousands except per share amounts) INCOME FROM CONTINUING OPERATIONS RECONCILIATION: Twelve Months Ended: Income from Continuing Operations - As Reported $ 87,092 $ 64,547 $ (46,010) $ 34,845 $ 50,304 $ 82,394 $ 100,209 After-tax Adjustments (2) Non-Cash asset impairment charges 1,421 10,797 97,397 13,283 6,930 2,994 4,392 Lease termination charges - 2, Loss (gain) on debt redemption 310 1,028 (9,852) (5,299) 2, Mortgage debt refinance charges Severance costs Income tax benefit related to tax elections for prior periods (1,604) (810) - - Net gain (loss) on dealership and/or real estate transactions ,937 - (935) Accrual for pending legal matter Insurance deductibles for Hurricane Sandy damage ,219 Hail storm insurance deductible ,658 Deal costs ,111 Income from Continuing Operations - As Adjusted (1) $ 88,823 $ 79,132 $ 42,205 $ 41,756 $ 62,224 $ 86,029 $ 108,202 Weighted Average Diluted Shares Outstanding 24,363 23,339 22,532 22,906 22,788 22,409 22,688 Diluted Earnings Per Common Share from Continuing Operations As Reported $ 3.52 $ 2.68 $ (1.57) $ 1.43 $ 2.09 $ 3.47 $ 4.19 As Adjusted (1) $ 3.59 $ 3.29 $ 1.78 $ 1.72 $ 2.59 $ 3.62 $ 4.53 (1) We believe that these adjusted financial measures are relevant and useful to investors because they provide additional information regarding the performance of our operations and improve period-to-period comparability. These measures are not measures of financial performance under GAAP. Accordingly, they should not be considered as substitutes for their unadjusted counterparts, which are prepared in accordance with GAAP. Although we find these non-gaap results useful in evaluating the performance of our business, our reliance on these measures is limited because the adjustments often have a material impact on our financial statements calculated in accordance with GAAP. Therefore, we typically use these adjusted numbers in conjunction with our GAAP results to address these limitations. (2) Refer to separate reconciliations of certain non-gaap financial measures within the respective quarterly earnings release schedules for specific tax benefit or tax provision information. Financial Data is from Continuing Operations

48 Group 1 Automotive, Inc. Reconciliation of Certain Non-GAAP Financial Measures (Unaudited, in thousands) OPERATING CASH FLOW RECONCILIATION: 4Q12 4Q11 FY2012 FY2011 FY2010 FY2009 Reported operating cash flow $ (68,031) $ (101,802) $ (75,322) $ 199,316 $ (68,466) $ 354,674 Adjustments Change in floorplan notes payable-credit facility, excluding floorplan offset account and net acquisition and disposition related activity 69, , ,544 (13,350) 193,430 (242,622) Change in floorplan notes payablemanufacturer affiliates associated with net acquisition and disposition related activity (11,028) (7,134) (11,028) (33,712) (2,210) 4,917 Adjusted operating cash flow (1) $ (9,310) $ 34,371 $ 159,194 $ 152,254 $ 122,754 $ 116,969 (1) Adjusted operating cash flow means cash flow from operating activities plus the adjustments noted above. We use adjusted operating cash flow in our evaluation of the performance of the company, as we believe that it provides additional information regarding the performance of our operations and improve period-to-period comparability. These measures are not measures of financial performance under GAAP. Accordingly, they should not be considered as substitutes for their unadjusted counterparts, which are prepared in accordance with GAAP. Although we find these non-gaap results useful in evaluating the performance of our business, our reliance on these measures is limited because the adjustments often have a material impact on our financial statements calculated in accordance with GAAP. Therefore, we typically use these adjusted numbers in conjunction with our GAAP results to address these limitations.