Group 1 Automotive, Inc.

Good morning, ladies and gentlemen, and welcome to Group 1 Automotive's 2022 First Quarter Financial Results Conference Call. Please be advised that this call is being recorded. I would now like to turn the call over to Mr. Pete DeLongshaw, Group 1 Senior Vice President of Manufacturer Relations, Financial Services, and Public Affairs. Please go ahead, Mr. DeLongshaw.

Thank you, Chuck, and good morning, everyone, and welcome to today's call. The earnings release we issued this morning and a related slide presentation that include reconciliations related to the adjusted results we will refer to on this call for comparison purposes have been posted to the Group 1 website. Before we begin, I'd like to make some brief remarks about forward-looking statements and the use of non-GAAP financial measures. Except for historical information mentioned during the conference call, statements made by management of Group 1 Automotive are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve both known and unknown risks and uncertainties, which may cause the company's actual results in future periods to differ material from forecast results. Those risks include, but are not limited to, risks associated with pricing, volume, inventory supply due to increased customer demand and reduced manufacturing production levels due to component shortages, conditions of markets and adverse developments in the global economy, as well as the public health crisis related to the COVID-19 virus and resulting impacts on demand for new and used vehicles and related services. Those and other risks are described in the company's filings with the Securities and Exchange Commission. In addition, certain non-GAAP financial measures as defined under SEC rules may be discussed on this call. As required by applicable SEC rules, the company provides reconciliations of any such non-GAAP financial measures to the most directly comparable GAAP measures on its website. Participating with me today, Earl Hesterberg, our President and Chief Executive Officer, Daryl Kenningham, our President of U.S. Operations, Daniel McHenry, Senior Vice President and Chief Financial Officer. I'll now hand the call over to Earl.

Thank you, Pete, and good morning, everyone. Please report that for the quarter, Group 1 generated adjusted net income of $185 million from continuing operations. This equates to adjusted earnings per share of $10.81 per diluted share, an increase of 96% over the prior year, and an all-time quarterly record. Our adjusted results exclude non-core items totaling approximately $16 million of after-tax gains, which resulted from the sale of two franchises in Boston, as well as excess real estate in the UK. These results were largely due to a record-setting UK performance, significant contributions from our recent acquisitions, continued strong vehicle margins that were able to more than offset vehicle supply, continued double-digit growth in our U.S. after-sales business, and impressive cost control. Consumer demand for vehicles remains extremely strong exiting the first quarter, and we continue to sell most units almost immediately after OEM delivery. This dynamic should continue throughout the year. As with the U.S., consumer demand for vehicles in the U.K. is extremely and new vehicle availability is severely constrained. We have a total UK new vehicle order bank of more than seven months right now, with orders for some of our key luxury brand models now extending into 2023. We believe pent-up demand built over the past several years due to both Brexit and the very strict pandemic lockdowns will help drive strong UK vehicle demand into the foreseeable future. We believe our UK exposure, which is focused on major luxury brands such as Audi, BMW, Mercedes, and Land Rover, is a meaningful tailwind for our company. We're also seeing continued strength in the state of Texas. The market collectively outperformed our total US same-store growth in new vehicle sales, used vehicle sales, after sales, and net profitability. Texas demographic trends continue to be a positive tailwind for the company due to population growth, reasonable cost of living, low taxes, and a friendly business environment. We believe this is both a near-term and longer-term advantage for our company. To provide some color on our U.S. first quarter performance, I'll now turn the call over to Daryl Kenningham.