Group 1 Automotive, Inc.

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

Thank you, Jamie, 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'll refer to on this call for comparison purposes have been posted to Group 1's 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 call, statements made by management of Group 1 are forward-looking statements that are 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 manufacturer production levels due to component shortages, conditions of market, and adverse developments in the global economy, as well as the public health crisis related to COVID-19. 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 today on the call, Earl Hesterberg, our President and Chief Executive Officer, Darrell Kenningham, President of U.S. Operations, and Daniel McHenry, Senior Vice President and Chief Financial Officer. I'd like to now hand the call over to Earl.

Thank you, Pete, and good morning, everyone. I'm pleased to report that for the quarter, Group 1 generated record adjusted net income of $198 million from continuing operations. This equates to adjusted earnings per share of $12 per diluted share, an increase of 18% over the prior year. Our adjusted results exclude non-core items totaling approximately $2 million of after-tax gains, which primarily resulted from the sale of two franchises in the quarters. These record-setting results were largely due to continued strong new vehicle margins that were able to more than offset weak supply, continued double-digit same-store growth in our after-sales business, impressive cost control, and significant contributions from our recent acquisitions. Consumer demand for vehicles remained strong exiting the second 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. continues to remain strong and new vehicle availability is still constrained. Our new vehicle order bank of 17,000 units represents more than a six-month backlog based on first-half unit sales. We continue to believe that pent-up demand built over the past several years due to both Brexit and the very strict pandemic lockdowns will help drive strong U.K. vehicle demand well into 2023. We're also seeing continued strength in the state of Texas. The market collectively outperformed our total U.S. 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. second quarter performance, I'll now turn the call over to Errol Kenningham.