Group 1 Automotive, Inc. (NYSE:GPI) Q2 2023 Earnings Call Transcript

Rajat Gupta: Got it. That’s helpful. And maybe just on capital allocation priorities. Buyback has been a little lighter this year relative to what you did in the last couple of years. Obviously, you’ve spent a little more on M&A here. Curious how you’re thinking about balancing that in the second half? Maybe any comments around just the M&A environment, what kind of deals are flowing into the pipeline? How the multiples are? Just like, how the activity is and willingness for deals to close? That’ll be all. Thanks.

Daryl Kenningham: We believe — we want to deploy capital efficiently. We want to buy the right kind of deals. And if you look at our last five or six deals, that’s really indicative of the kind of purchases we’re looking for. In Toyota, North Austin and our big Chevy deal we did in Florida and the Beck & Masten acquisition here in the Houston and down in South Texas. So those are the type of acquisitions we want to do. And those are the kind we are looking for in growth markets. And we — if we can’t find those, then we will deploy capital towards stock buybacks, which you saw a great example of that last year where we bought a — quite a big company back. So we believe that that’s still an opportunity. But we want to grow the company, and that’s a priority for us. So that comes first but not at any cost.

Operator: [Operator Instructions] Our next question comes from Daniela Haigian from Morgan Stanley. Please go ahead with your question.

Daniela Haigian: Thank you all. So I wanted to ask about rising EV inventory. Do you have any comments around incremental demand for EVs from the start of the year to now? Any sense of change in demand in recent weeks? Or just any commentary on inventory levels rising overall?

Daryl Kenningham: Our EV days supply is 61 days. And — so it’s a little higher. It’s a small universe for us. We have 11,000 roughly units in stock. 700 of those — 740 of those are EVs. So — and it’s hard to draw conclusions about the general trends based on that small of a number. But we have — it’s concentrated in just a few brands. And in some of the brands, there’s a little more support for sales to sell them. And in other brands, there’s a bit of a struggle. But that’s the difference between our EV and our ICE inventory levels at this point.

Daniela Haigian: Thank you.

Operator: And ladies and gentlemen, with that, we will be ending today’s question-and-answer session as well as today’s presentation. We thank everyone for joining today’s conference call. You may now disconnect your lines.