2. Safe Harbor
This presentation contains quot;forward-looking statements,“ which are
statements related to future, not past, events. In this context, the
forward-looking statements often include statements regarding our
goals, plans, projections and guidance regarding our financial position,
l l j ti d id di fi il iti
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” or “will.”
Any such forward-looking statements are not assurances of future
y g
performance and involve risks and uncertainties that may cause 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
environment
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. These factors, as well as
additional factors that could affect our forward-looking statements, are described in our Form 10-K under
the headings “Business—Risk Factors” and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations ” We urge you to carefully consider this information We undertake no
Operations. information.
duty to update our forward-looking statements, including our earnings outlook.
Group 1 Automotive, Inc. 2 RS_09Q1_v1.ppt
4. Group 1 Automotive, Inc.
p
Top five U.S. dealer group led by management team with more
than 100 years of automotive experience
Most Group 1 dealerships are larger and more profitable than
industry average
More than 170,000 retail vehicles sold in 2008
Revenue run rate of $4.3 billion
Assets of $2.0 billion
Brand and
geographic diversity
3 U.S. Regions + U.K.
–
15 States
–
99 Dealerships
–
133 Franchises
–
31 Brands
–
Financial data is from continuing operations Note: New Vehicle Unit Sales for quarter ending 03/31/09
Group 1 Automotive, Inc. 4 RS_09Q1_v1.ppt
5. New Vehicle Unit Sales
Brand Mix Brand Diversity
17% 18%
24% 25% 25%
Daimler
6%
Toyota/
Scion/
Chrysler
Lexus
7%
47% 35%
53%
BMW/
55% 56% 56%
Mini 9%
Ford 9%
36% Honda/
29%
Acura
Nissan/
21% 19% 19%
14%
Infiniti
12%
2005 2006 2007 2008 2009 Q1
Q
1st Quarter 2009
Domestic Import Luxury
Financial data is from continuing operations
Group 1 Automotive, Inc. 5 RS_09Q1_v1.ppt
6. Business Mix – 1st Quarter 2009
3%
21% of
18%
Revenues
R
18%
Generate
70% of
Gross
Parts & Service Gross Profit
Profit
25%
Covers Between 75% and 85%
of Total Company Fixed Costs
52%
and Parts & Service Selling
Expenses
54% Finance & Insurance
14%
Parts & Service
Used Vehicles
16% New Vehicles
Revenues Gross Profit
$1,020 $183
($ in millions)
Financial data is from continuing operations
Group 1 Automotive, Inc. 6 RS_09Q1_v1.ppt
7. Acquisitions / Dispositions
q p
2009 Activity
Acquired a Hyundai franchise that is expected to g
q y p generate
–
$36.7 million in annual revenues
Disposed of a Ford franchise
–
Revenues Acquired
with twelve-month
(in millions)
revenues of $38.9 million
$732 $702
2009 Projections
Group 1 does not anticipate
–
purchasing any further
franchises in 2009 $118 $90
$37
$
We will continue to evaluate
–
our portfolio and dispose of
2005 2006 2007 2008 2009
dealerships that do not provide
acceptable returns
• Some dispositions may result
in exit charges
Group 1 Automotive, Inc. 7 RS_09Q1_v1.ppt
9. Consolidated Financial Results
Three Months Ended
3/31/2009 3/31/2008 Change
Revenues
R $1,019.8
$1 019 8 $1,503.3
$1 503 3 (32.2)%
(32 2)%
Gross Profit $182.7 $247.6 (26.2)%
Gross Margin 17.9%
17 9% 16.5%
16 5% 140 bp
SG&A as % Gross Profit 83.9% 78.8% 510 bp
Income from continuing operations
(1) (1)
before adoption of APB 14-1 $5.7 16.9 (66.4)%
Diluted EPS from continuing operations
(1) (1)
$0.24 $0.75
before adoption of APB 14-1 (68.0)%
(1) Excludes $9.0 million after-tax, or $0.40 per diluted share, in bond redemption gains and dealership disposition losses incurred in 1Q09; and, excludes $0.3 million after-tax, or
$0.01 per diluted share, in bond redemption gains incurred in 1Q08
(See appendix for GAAP reconciliation)
Financial data is from continuing operations
($ in millions, except per share amounts)
Group 1 Automotive, Inc. 9 RS_09Q1_v1.ppt
10. Financial Highlights
gg
Gross Profit / Margin
Revenues
$6,260
$5 941
$5,941 $5 654
$5,654
$5 795
$5,795 $974
$939
$
$903 $
$916
17.9%
16.2%
15.8%
15.6% 15.6%
$183
$1,020
2005 2006 2007 2008 1Q09 2005 2006 2007 2008 1Q09
Gross Profit Gross Margin
SG&A E
Expenses
Operating Income / M
O ti I Margin
i
$759 $739
$202 $718
$716
$199
$160 83.9%
$152
80.8%
3.4% 79.4%
3.2% 2.2% 77 9%
77.9%
2.8% 76.4%
2.7%
$153
$23
2005 2006 2007 2008 1Q09 2005 2006 2007 2008 1Q09
Operating Income Operating Margin
SG&A Expenses SG&A as a % of Gross Profit
($ in millions)
Financial data is from continuing operations
Group 1 Automotive, Inc. 10 RS_09Q1_v1.ppt
11. Profit Contributions
New Vehicles Total Used Vehicles
$266 $262
$255 $135 $128
$126
$215 $111
7.2%
7.1%
6.7% 9.8%
9.7%
6.3%
9.0% 8.8%
5.4% 8.3%
$26
$29
2005 2006 2007 2008 1Q09
2005 2006 2007 2008 1Q09
Gross Profit Gross Margin Gross Profit Gross Margin
Finance & Insurance
Parts & Service
$404
$381
$351 $203
$343 $187 $187
$179
$1,034
52.8%
54.5%
54.1%
54.0% 53.8% $1,045 $1,080
$32
$975
$951
$96
2005 2006 2007 2008 1Q09 2005 2006 2007 2008 1Q09
Gross Profit Gross Margin Gross Profit Gross Profit PRU
Financial data is from continuing operations ($ in millions, except per retail unit amounts)
Group 1 Automotive, Inc. 11 RS_09Q1_v1.ppt
12. Same Store Financial Results
Three Months Ended
3/31/2009 3/31/2008 Change
($ in millions)
Revenues:
New vehicle retail sales $ 540.7 $ 879.9 (38.6)%
Used vehicle retail sales 220.9 300.8 (26.5)%
Used vehicle wholesale sales 34.2 66.5 (48.6)%
Total used $ 255.2 $ 367.3 (30.5)%
Parts and service 177.8 188.3 (5.6)%
Finance and insurance 31.7
31 7 52.1
52 1 (39.0)%
(39 0)%
Total $ 1,005.4 $ 1,487.5 (32.4)%
Gross Margin
g 17.9% 16.5% 140 bp
p
Financial data is from continuing operations
Group 1 Automotive, Inc. 12 RS_09Q1_v1.ppt
14. Floorplan Interest
p
Floorplan Interest Exp. Manufacturer Assistance Interest Rate*
$60,000 8.0%
6.7%
6 7% 7.0%
7 0%
6.5%
$50,000
6.0%
5.3%
5.0%
$40,000 5.0%
5 0%
5.0%
$30,000 4.0%
$46
$46
$4
45,308
6,822
6,377
3.0%
$37,171
$36,922
$36,840
$34,120
$20,000
$28,311
2.0%
$8,962
$10 000
$10,000
1.0%
$4,534
$0 0.0%
2005 2006 2007 2008 1Q09
Manufacturer A i t
M ft Assistance
as % of Floorplan Int. Expense: 92.6% 81.5% 79.4% 61.0% 50.6%
* Rate adjusted for impact of interest rate swaps
Financial data is from continuing operations ($ in thousands)
Group 1 Automotive, Inc. 14 RS_09Q1_v1.ppt
15. Impact of Interest Rates
p
Increase of 100 basis points would have a direct
impact of approximately $0.08 per share based on
p pp y p
variable debt, net of interest rate swaps and
manufacturer assistance
At end of 1Q09
1Q09, 1-Month
1 Month LIBOR
–
$550 million at 4.7% 5.3% 5.3% 5.3%
6.0%
average weighted 4.6%
4.4%
5.0% 3.9%
interest rate under 4.0%
3.0%
a combination of 2.0%
3-to-5-year swaps 0.4% 0.5%
1.0%
0.0%
Source: British Bankers' Association
Financial data is from continuing operations
Group 1 Automotive, Inc. 15 RS_09Q1_v1.ppt
17. Summary Balance Sheet
y
As of As of
3/31/2009 12/31/2008
Cash and cash equivalents $ 21,610 $ 23,144
CIT and vehicle receivables, net $ 85,909 $ 102,834
Inventories $ 638,358 $ 845,944
Total current assets $ 851,764 $ 1,096,624
Total assets $ 2,028,131
2 028 131 $ 2,288,114
2 288 114
Total current liabilities $ 752,612 $ 1,004,496
Long-Term Debt, net of
current maturities $ 514,050 $ 536,723
Total stockholder's equity $ 671,325 $ 662,117
% Fixed Debt 72.5%
72 5% 60.1%
60 1%
Financial data is from continuing operations ($ in thousands)
Group 1 Automotive, Inc. 17 RS_09Q1_v1.ppt
18. Capitalization
p
As of March 31, 2009
Maturity Available Funding
($ in millions)
Date Liquidity Capacity
Actual
Cash and cash equivalents $ 21.6 $ 21.6
Short-Term Debt
Inventory Financing (1) 2012 $ 548.5 $ 62.3 $ 1,300.0
Rental Vehicles Financing (2) 2012 33.3 - -
Current Maturities - LTD 13.0 - -
$ 594.8 $ 83.9 $ 1,300.0
Long-Term Debt
Senior Subordinated 8.25% Notes 2013 73.0
(Moody’s / S&P ratings: B2 / B)
Acquisition Line of Credit (1,3) 2012 60.0 97.8 350.0
2.25% Convertible Notes 2016 136.1
Mortgage Facility 2012 156.4
156 4 235.0
235 0
Other Debt 88.5
Total Long-Term Debt $ 514.0
Total Debt $ 1,108.8
$ 181.7 $ 1,885.0
Stockholders
Stockholders' Equity 671.3
671 3
Total Capitalization $ 1,780.1
()
(1) The capacity under the floorplan and acquisition tranches of our credit facility can be redesignated within the overall $1.35 billion commitment. Further, the
p y p q y g $ ,
borrowings under the acquisition tranche may be limited from time to time based upon certain debt covenants.
(2) Borrowings with manufacturer affiliates for rental vehicles financing not associated with any of the Company’s credit facilities
(3) The available liquidity balance at March 31, 2009, considers the $60 million outstanding and $17.3 million of letters of credit outstanding.
Financial data is from continuing operations
Group 1 Automotive, Inc. 18 RS_09Q1_v1.ppt
19. De-Leveraging in Progress
gg g
Debt (1)
2007 2008 1Q09
Real E t t
R l Estate $169.9
$169 9 $272.0
$272 0 $257.8
$257 8
Floorplan 819.4 822.3 581.8
Acquisition Line
q 135.0 50.0 60.0
8.25 Sr. Notes 100.3 73.0 73.0
2.25 Convertible Bonds (face) 287.5 224.5 194.5
TOTAL $1,512.1 $1,441.8 $1,167.1
TOTAL (excluding real estate & floorplan) $522.8 $347.5 $327.5
MEMO: Operating lease payments decreased by 6% year over y
year- from $13.3M to $12.5M in 2009
p g py y y
$20 million of non-real estate debt paid down in 1Q09
(1) Debt balances presented include U.K debt, which is excluded from debt covenant calculations.
($ in millions)
Group 1 Automotive, Inc. 19 RS_09Q1_v1.ppt
20. Debt Covenant Ratios
Ratios 2Q08 3Q08 4Q08 1Q09
Sr.
Sr Secured Leverage < 2 75 1.49
1 49 1.41
1 41 1.49
1 49 1.54
1 54
2.75
Total Leverage* < 4.50 3.80 3.92 3.46 3.35
Fixed Charge Coverage > 1.25
g g 1.45 1.40 1.59 1.68
Current Ratio > 1.15 1.27 1.17 1.18 1.24
8.25% Sr. Subordinated N t
8 25% S S b di t d Notes:
Consolidated Cash Flow Coverage > 2.00 5.58 4.96 5.53 5.97
In Compliance with ALL Debt Covenants at March 31, 2009
*Total Leverage Ratio not included in Mortgage Facility
See Appendix for calculation definitions
Group 1 Automotive, Inc. 20 RS_09Q1_v1.ppt
22. 2009 Outlook & Strategy
gy
Protect the Balance Sheet
Continue t manage costs t i d t sales levels
C ti to t to industry l l l
Scale back capital expenditures
Focus on cash generation
Continue to focus on Used Vehicle, Parts and Service
Vehicle
and F&I businesses
Complete transition to operating model
Dispose of underperforming dealerships
p p g p
Group 1 Automotive, Inc. 22 RS_09Q1_v1.ppt
23. Capital Expenditures
p p
Maintenance CapEx
CapEx projected to be Capital Expenditures
$90
less than $30 million in Depreciation & Amortization Expense
2009 $80
$70
No real estate purchases $70
–
anticipated $60
$53
Maintenance CapEx $50
Approximates Depreciation $44
–
$40
and A
d Amortization E
ti ti Expense $37
<$30
Working with our $30
manufacturer partners to
p $20
$20 $20
limit spending next year $16
$10 $13
$13
$0
2005 2006 2007 2008 2009
Projection
Group 1 Automotive, Inc. 23 RS_09Q1_v1.ppt
24. 2009 Key Assumptions
y p
Full-year Assumptions:
SAAR of 10.0 to 10.3 million units
–
SG&A as a percent of gross profit at 80% to 83.5%, excluding any
–
one-time items, as lower sales revenues are expected to offset cost
improvements
p
Total year-over-year reduction in SG&A expenses of $120 million at
–
10 million SAAR level
Tax rate of 40%
–
Estimated average diluted shares outstanding of 23.2 million
–
Capital expenditures of $30 million or less
–
On a same-store level:
– Vehicle margins consistent with fourth-quarter 2008 levels
– Parts and service revenues 3% to 5% lower
– Finance and insurance gross profit at $1,000 to $1,025 per retail
unit
Group 1 Automotive, Inc. 24 RS_09Q1_v1.ppt
26. Conclusion
Exceeded cost and new vehicle inventory reduction
targets
Executing well in a very difficult environment – Have
improved profitably as we rightsized the business this
quarter
Remained focused on cash generation and
de-leveraging
Capital Expenditures cut in half – almost equal to D&A
–
Balance sheet strengthened – Paid down $20 million of non-
real estate debt in 2009
Acquisitions halted until economic conditions and
balance sheet improve
With these actions, we remain comfortable that we can manage through
the current economic downturn and protect existing covenants.
Group 1 Automotive, Inc. 26 RS_09Q1_v1.ppt
29. Reconciliation of Certain Non-GAAP Financial Measures
(Unaudited)
(Dollars in thousands, except per share amounts)
Group 1 Automotive, Inc. 29 RS_09Q1_v1.ppt
30. Debt Covenants as of 3/31/2009
Revolving Credit Facility / Mortgage Facility
Senior Secured Leverage Ratio must be < 2.75
g
– $263.2 mil / $170.6 mil = 1.54
Total Leverage Ratio* must be < 4.50
– $571 3 mil / $170 6 mil = 3 35
$571.3 $170.6 3.35
Fixed Charge Coverage Ratio must be > 1.25
– $263.9 mil / $156.8 mil = 1.68
Current Ratio must be > 1.15
– $935.6 mil /$753.2 mil = 1.24
8.25% Senior Subordinated Notes
Consolidated Cash Flow Coverage Ratio must be > 2.0
– $168 2 mil / $28 2 mil = 5 97
$168.2 $28.2 5.97
*Total Leverage Ratio not included in Mortgage Facility
See Appendix for calculation definitions
Group 1 Automotive, Inc. 30 RS_09Q1_v1.ppt
32. Group 1 Automotive, Inc.
Debt Covenant Summary
JPM Credit Facility and BofA MORTGAGE FACILITY
1 Senior Secured Leverage Ratio must be < 2.75
SECURED DEBT (numerator)
+ Mortgage Facility and other real estate debt PLUS current
+ Acquisition Line
= TOTAL SECURED DEBT (ex Floorplan)
EBITDA (denominator)
+ Pre-Tax Income - trailing 12 months (T12)
+ Add back Total Interest Expense (including FP) - T12
+ Add back Depreciation & Amortization - T12
+ Add back Asset Impairments - T12
Add back Other non-cash charges (including asset impairments
+
and stock-based compensation) - T12
= CONSOLIDATED EBITDA
- take out Floorplan Interest Expense - T12
= CONSOLIDATED adjusted EBITDA (excludes FP Interest Exp)
+ Add Proforma EBITDA (excluding FP Interest)
= CONSOLIDATED adjusted PROFORMA EBITDA
2 Total Leverage Ratio* must be < 4.50
TOTAL DEBT (numerator)
+ Mortgage Facility and other real estate debt PLUS current
+ Acquisition Line
+ Notes Payable (Capital lease obligations)
+ 8.25 Sr. Sub Notes
+ 2.25 Convert (Face value)
= TOTAL DEBT (ex Floorplan)
EBITDA (denominator)
+ Pre-Tax Income - trailing 12 months (T12)
+ Add back Total Interest Expense (including FP) - T12
+ Add back Depreciation & Amortization - T12
+ Add back Asset Impairments - T12
Add back Other non-cash charges (including asset impairments
+
and stock-based compensation) - T12
= CONSOLIDATED EBITDA
- take out Floorplan Interest Expense - T12
= CONSOLIDATED adjusted EBITDA (excludes FP Interest Exp)
+ Add Proforma EBITDA (excluding FP Interest)
= CONSOLIDATED adjusted PROFORMA EBITDA
*Total Leverage Ratio not included in Mortgage Facility
3 Fixed Charge Coverage Ratio must be > 1.25
EARNINGS available for FIXED CHARGES (numerator)
= CONSOLIDATED EBITDA (see #2 or #3 ratios)
+ PLUS Lease Expense - T12
- LESS Cash Paid for Taxes - T12
= TOTAL EARNINGS available for FIXED CHARGES
FIXED CHARGES (denominator)
+ Total Interest Expense (including FP) - T12
- LESS Non-cash interest
+ PLUS Lease Expense - T12
+ PLUS Required Principle Payments - T12
+ PLUS Cash paid for Dividends - T12
+ PLUS Maintenance CapEx - T12
(calc $50k per dealership per qtr)
= TOTAL FIXED CHARGES
2009-04-28 v8
33. Group 1 Automotive, Inc.
Debt Covenant Summary
4 Current Ratio must be > 1.15
TOTAL CURRENT ASSETS (numerator)
+ Total Current Assets
+ PLUS Total Revolver Capacity (Total Undrawn Acquisition Line)
= TOTAL CURRENT ASSETS
TOTAL CURRENT LIABILITIES (demoninator)
5 Funds Available for Restricted Payments - Minimum Net Worth Calc
STOCKHOLDERS' EQUITY on B/S
LESS
REQUIRED STOCKHOLDERS' EQUITY (since 1Q07)
+ Minimum Flat $520,000,000
+ PLUS 50% of Consolidated Net Income since 1Q07
PLUS 100% of Net Proceeds from Issuance of Equity since
+
1Q07
+ PLUS Asset Impairment, net of tax, since 1Q07
= TOTAL REQUIRED STOCKHOLDERS' EQUITY
LESS
= CONVERT CALL SPREAD = $35,700,000
EQUALS
EXCESS REMAINING FOR RESTRICTED PAYMENTS
8.25% Senior Sub Notes
1 Consolidated Cash Flow Coverage Ratio must be > 2.0
CASH FLOW available for FIXED CHARGES (numerator)
+ Consolidated Net Income - T12
+/- Adjustment for one time change in accounting principle
PLUS (add back) Consolidated Interest Expense (excludes
+
Floorplan Interest Expense)
+ PLUS (add back) Consolidated Income Tax Expense
+ PLUS (add back) Depreciation & Amortization
PLUS (add back) Other non-cash charges (including asset
+
impairments and stock-based compensation) - T12
= TOTAL CASH FLOW available for FIXED CHARGES - T12
CONSOLIDATED FIXED CHARGES (denominator)
Consolidated Interest Expense (excludes Floorplan Interest
=
Expense) - T12
NOTE:
All ratios exclude the UK and discontinued operations and APB 14-1
All EBITDA and Fixed Charge items are trailing twelve months
2009-04-28 v8
