Group 1 Automotive Inc.'s net income dropped during the second quarter, weighed down by charges in part related to hail and other catastrophic weather. After adjusting for those charges, profits rose as the dealership group set records in parts and service and finance and insurance.
The Houston retailer Thursday reported net income fell 13 percent to $49.2 million. After adjusting for net after-tax charges — $3 million related to catastrophic weather events, particularly hail damage to vehicles in stock at Texas dealerships, plus $500,000 in noncash asset impairments — earnings climbed 3.9 percent to $52.8 million. Group 1's revenue increased 2.1 percent to $3.01 billion in the period, and gross profit rose 3.7 percent to $454.3 million.
Group 1 CEO Earl Hesterberg said in a conference call with investors that quarter was strong thanks to exceptional results in the U.S. despite soft new-vehicle sales.
"Record Same Store parts and service revenue growth of more than 10 percent and record F&I per retail unit profitability drove Same Store gross profit growth of 8.5 percent," Hesterberg said in a statement. "This performance demonstrates that we can continue to increase profits in a less than optimal new vehicle sales environment."
Sales: Total new-vehicle sales fell 3.2 percent to 42,093 vehicles across the group's dealerships in the U.S., United Kingdom and Brazil. Retail used-vehicle sales rose 4.6 percent to 39,745 vehicles.
Same-store sales: New-vehicle sales in the U.S. were flat on a same-store basis, at 29,588 vehicles. That was better than the 1.7 percent drop in new light-vehicle sales across the U.S. during the second quarter, according to the Automotive News Data Center. Group 1's same-store retail used-vehicle sales in the U.S. increased 7 percent to 29,773 vehicles.
Records: Same-store parts and service revenue growth of 10 percent; F&I gross profit per vehicle retailed of $1,821; adjusted diluted earnings per share of $2.83.
International operations: Same-store retail sales of new vehicles rose 7 percent to 2,301 vehicles in Brazil but fell 11 percent to 9,109 vehicles in the U.K.
Group 1 ranks No. 4 on Automotive News' list of the top 150 dealership groups based in the U.S., with retail sales of 170,517 new vehicles in 2018.
The company's shares closed down 95 cents, or 1.1 percent, at $87.04 on Thursday in New York trading.
