Group 1 Automotive Board Approves New Share Repurchase Authorization & Declares Quarterly Dividend

Rhea-AI Summary

Group 1 Automotive, Inc. (NYSE: GPI) announced a new share repurchase authorization of $250 million and declared a quarterly dividend. The board increased the repurchase authorization by $161 million to $250 million, repurchasing 205,551 shares year-to-date at an average price of $264.74. The dividend of $0.47 per share will be payable on June 17, 2024. Group 1 owns 203 dealerships in the U.S. and U.K., offering various automotive services and products.

Positive

• Board approval of a new share repurchase authorization and declaration of a quarterly dividend indicate strong financial stability and confidence in the company's future performance.

• The increase in the share repurchase authorization by $161 million to $250 million demonstrates a commitment to returning value to shareholders.

• Repurchase of 205,551 shares at an average price of $264.74 totaling $54 million showcases proactive financial management and capital allocation strategies.

Negative

• While the $0.47 per share dividend is consistent with the Company's announced increase, some investors may view the relatively modest 4% raise as less appealing in comparison to higher dividend hikes by other companies.

• Market conditions and legal requirements may impact the timing and volume of share repurchases, potentially affecting the effectiveness of the buyback program.

Insights

Financial Analyst

The announcement from Group 1 Automotive regarding a new share repurchase authorization and a steady quarterly dividend reflects a confident posture by the company in its financial health and a commitment to return value to shareholders. The $250 million> repurchase program suggests that the company believes its shares are undervalued and represent a good investment. From a shareholder's perspective, this can be seen as a positive signal, often leading to increased investor confidence and potentially a rise in share price. It is also worth noting that the repurchase activity to date includes 205,551 shares at an average price of $264.74>, which will have an effect on the company's earnings per share (EPS) by reducing the number of shares outstanding. Additionally, the consistency of the dividend – with a 4% increase year-over-year – provides a predictable income stream, which is particularly attractive to income-focused investors. The funding of repurchases through cash from operations indicates a healthy cash flow status, which is a important factor in assessing a company's financial stability and growth prospects.

Market Research Analyst

Group 1 Automotive's strategic decision to approve a significant share repurchase authorization and to declare a consistent dividend is indicative of a broader trend among established companies aiming to optimize capital allocation. Share buybacks are often employed by companies who seek to consolidate ownership, enhance shareholder value and signal market confidence. It also reflects a market assessment that the company's stock is potentially undervalued. The automotive retail sector is subject to cyclicality and consumer demand fluctuations, but Group 1's actions suggest it is weathering these challenges effectively. Their multi-brand, multi-national dealership model provides diversification that could mitigate risks associated with market volatility. For investors, the commitment to an increased dividend and share repurchases should be assessed in the context of the company's long-term strategic plans and operational efficiency, as well as the overall health of the automotive sector.

HOUSTON, May 9, 2024 /PRNewswire/ -- Group 1 Automotive, Inc. (NYSE: GPI) ("Group 1" or the "Company"), a Fortune 300 automotive retailer with 203 dealerships located in the U.S. and U.K., today announced its board of directors approved a new share repurchase authorization of $250 million, and also declared a quarterly dividend. 

• Share Repurchase Authorization Increase
  The Company announced that its board of directors increased the Company's common share repurchase authorization by $161 million to $250 million.  Year-to-date 2024, the Company repurchased 205,551 shares at an average price per common share of $264.74, for a total of $54 million.  Purchases may be made from time to time, based on market conditions, legal requirements, and other corporate considerations, in the open market or in privately negotiated transactions.  The Company expects that any repurchase of shares will be funded by cash from operations.  Repurchased shares will be held in treasury.
  
  
• Quarterly Dividend
  Group 1's board of directors also declared a $0.47 dividend per share that will be payable on June 17, 2024, to stockholders of record as of June 3, 2024.  The dividend is consistent with the Company's previously announced increase of 4% in its annualized dividend rate from $1.80 per share in 2023 to $1.88 per share in 2024. 

ABOUT GROUP 1 AUTOMOTIVE, INC.
Group 1 owns and operates 203 automotive dealerships, 265 franchises, and 43 collision centers in the United States and the United Kingdom that offer 35 brands of automobiles. Through its dealerships and omni-channel platform, the Company sells new and used cars and light trucks; arranges related vehicle financing; sells service and insurance contracts; provides automotive maintenance and repair services; and sells vehicle parts.

Group 1 discloses additional information about the Company, its business, and its results of operations at www.group1corp.com, www.group1auto.com, www.group1collision.com, www.acceleride.com, www.facebook.com/group1auto, and www.twitter.com/group1auto.

FORWARD-LOOKING STATEMENTS

This press release 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. In this context, the forward-looking statements often include statements regarding our strategic investments, goals, plans, projections and guidance regarding our financial position, results of operations and business strategy, including the annualized revenues of recently completed acquisitions or dispositions and other benefits of such currently anticipated or recently completed acquisitions or dispositions. These forward-looking statements often contain words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "should," "foresee," "may" or "will" and similar expressions. 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. 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, on a timely basis, if at all and the risks associated therewith, (h) our ability to realize the benefits expected from proposed acquisitions, including any anticipated cost reductions, (i) foreign exchange controls and currency fluctuations, (j) the armed conflicts in Ukraine and the Middle East, (k) the impacts of continued inflation and any potential global recession, (l) our ability to maintain sufficient liquidity to operate, and (m) our ability to successfully integrate recent and future acquisitions. For additional information regarding known material factors that could cause our actual results to differ from our projected results, please see our filings with the Securities and Exchange Commission, 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.

Investor contacts:
Terry Bratton
Manager, Investor Relations
Group 1 Automotive, Inc.
ir@group1auto.com 

Media contacts:
Pete DeLongchamps
Senior Vice President, Manufacturer Relations, Financial Services and Public Affairs
Group 1 Automotive, Inc.
pdelongchamps@group1auto.com
or
Clint Woods
Pierpont Communications, Inc.
713-627-2223
cwoods@piercom.com

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SOURCE Group 1 Automotive, Inc.

FAQ

<p>What is the new share repurchase authorization announced by Group 1 Automotive?</p>

Group 1 Automotive announced a new share repurchase authorization of $250 million, following a $161 million increase by the board of directors.

<p>How many shares has Group 1 Automotive repurchased year-to-date in 2024?</p>

Year-to-date in 2024, Group 1 Automotive repurchased 205,551 shares at an average price per common share of $264.74, totaling $54 million.

<p>When will the quarterly dividend declared by Group 1 Automotive be payable?</p>

The quarterly dividend declared by Group 1 Automotive will be payable on June 17, 2024.

<p>How many dealerships does Group 1 Automotive own in the U.S. and U.K.?</p>

Group 1 Automotive owns 203 dealerships in the U.S. and U.K., offering various automotive services and products.