Group 1 Automotive, Inc.

Group 1 reported Q1 2026 revenue of $5.4 billion, gross profit of $878 million, adjusted net income of $104 million, and adjusted diluted EPS of $8.66 from continuing operations. Daryl Kenningham said weather reduced Q1 gross profit by about $7 million, largely in after-sales. In the U.S., new-vehicle GPUs increased sequentially from $3,260 to $3,313; adjusted F&I GPUs were up nearly 4%; same-store customer pay gross profits rose nearly 6%; and customer pay repair order count rose 2.5%. In the U.K., same-store used volumes rose nearly 5%, same-store F&I PRU reached 1,128, and parts/service gross profit rose 20% year over year. Looking ahead, management expects the U.S. cost program to remove about $50 million of annual costs, or about $12.5 million per quarter, while continuing to improve SG&A leverage in both markets; they also said U.K. SG&A as a percent of gross should move closer to the 80% target if execution stays consistent.

Daryl Kenningham emphasized that Group 1 is focused on what it can control and on being a pure-play retailer, saying the company has navigated prior shocks and is again responding quickly when performance misses expectations. He highlighted operating initiatives such as virtual F&I, AI-enabled marketing and inventory tools, technician recruiting, and the U.S. brand rebranding rollout, which is now halfway complete. His tone was constructive and disciplined, with a clear focus on execution, simplification, and long-term productivity rather than chasing volume.

Daniel McHenry said the quarter was solid despite continued pressure on volumes and margins, and he walked through the financial drivers in detail. He noted $714.3 million of liquidity at March 31, including $191 million of accessible cash and $523 million on the acquisition line, plus a rent-adjusted leverage ratio of 3.09x. Year-to-date, adjusted operating cash flow was $147 million and free cash flow was $95 million after $53 million of CapEx, with capital deployed into acquisitions, $72 million of share repurchases at an average price of $353.08, and $7 million of dividends; $306.3 million remained on the repurchase authorization. On costs, he quantified the U.S. savings plan as about $35 million from headcount and about $15 million from contracts/vendor actions.

Analysts focused on the $50 million U.S. cost-savings plan, used-car profitability, negative equity/affordability, the JLR exit, U.K. consumer demand, and the Geely strategy. Management said the 700-role reduction is complete, all in the U.S., and is expected to cut SG&A by about 200 basis points versus Q1 if it had been in place from January 1. On used cars, Daryl Kenningham said tighter supply, fewer trade-ins, and a heavier late-model mix are pressuring margins, but better sourcing discipline and low auction dependence should provide a floor. They also said negative equity is a headwind but not a major limiter, and that U.K. demand has held up into Q2 with strong order intake and healthier used inventory; Geely will open three U.K. dealerships in Q2, in facilities Group 1 already owns.