Q1 2009 Earning Report of Group 1 Automotive Inc

Company Overviewandand

2009 First-Quarter Results

April 28, 2009

Safe HarborThis presentation contains "forward-looking statements,“ which are statements related to future, not past, events. In this context, the forward-looking statements often include statements regarding our

l l j ti d id di fi i l itigoals, plans, projections and guidance regarding our financial position, results of operations, market position, pending and potential future acquisitions and business strategy, and often contain words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks” or “will.” Any such forward-looking statements are not assurances of future y gperformance and involve risks and uncertainties that may cause 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(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 and the risks associated therewith, (h) foreign exchange controls and currency fluctuations, and (i) our ability to retain key personnel. These factors, as well as additional factors that could affect our forward-looking statements, are described in our Form 10-K under the headings “Business—Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations ” We urge you to carefully consider this information We undertake no

Group 1 Automotive, Inc. 2 RS_09Q1_v1.ppt

Condition and Results of Operations. We urge you to carefully consider this information. We undertake no duty to update our forward-looking statements, including our earnings outlook.

Introduction

July 31, 2007

Group 1 Automotive, Inc.pTop five U.S. dealer group led by management team with more than 100 years of automotive experience Most Group 1 dealerships are larger and more profitable than industry averageMore than 170,000 retail vehicles sold in 2008Revenue run rate of $4.3 billionAssets of $2.0 billionBrand andBrand and geographic diversity

– 3 U.S. Regions + U.K.– 15 States15 States– 99 Dealerships– 133 Franchises– 31 Brands


31 Brands

Note: New Vehicle Unit Sales for quarter ending 03/31/09Financial data is from continuing operations

New Vehicle Unit SalesBrand DiversityBrand Mix

17% 18% 24% 25% 25%Daimler

6%

47%53%

55%

Toyota/ Scion/ Lexus 35%

BMW/

Chrysler 7%

6%

55% 56% 56%

Ford 9%

BMW/ Mini 9%

36%29%

21% 19% 19%

2005 2006 2007 2008 2009 Q1

Honda/ Acura 14%

Nissan/ Infiniti 12%


Q

Domestic Import Luxury 1st Quarter 2009

Financial data is from continuing operations

Business Mix – 1st Quarter 2009

21% of R18%

3%18%Revenues

Generate 70% of Gross Profit Parts & Service Gross Profit

Covers Between 75% and 85% 25%

18% 18%

of Total Company Fixed Costs and Parts & Service Selling Expenses

52%

54%

16%

14% Finance & InsuranceParts & ServiceUsed VehiclesNew Vehicles

$1,020 $183Revenues Gross Profit


($ in millions)Financial data is from continuing operations

Acquisitions / Dispositionsq p2009 Activity

– Acquired a Hyundai franchise that is expected to generate q y p g$36.7 million in annual revenues

– Disposed of a Ford franchise with twelve-month Revenues Acquiredrevenues of $38.9 million

2009 ProjectionsGroup 1 does not anticipate

$732 $702

(in millions)

– Group 1 does not anticipate purchasing any furtherfranchises in 2009We will continue to evaluate

$118 $90 $37– We will continue to evaluate our portfolio and dispose of dealerships that do not provide acceptable returns

$

2005 2006 2007 2008 2009


acceptable returns• Some dispositions may result

in exit charges

Financial Highlightsg g

July 31, 2007

Consolidated Financial ResultsThree Months Ended

3/31/2009 3/31/2008 Change

R $1 019 8 $1 503 3 (32 2)%Revenues $1,019.8 $1,503.3 (32.2)%

Gross Profit $182.7 $247.6 (26.2)%

Gross Margin 17 9% 16 5% 140 bpGross Margin 17.9% 16.5% 140 bp

SG&A as % Gross Profit 83.9% 78.8% 510 bp

Income from continuing operations (1) (1)before adoption of APB 14-1 $5.7 (1) 16.9 (1) (66.4)%

Diluted EPS from continuing operationsbefore adoption of APB 14-1 $0.24 (1) $0.75 (1) (68.0)%

(1) Excludes $9.0 million after-tax, or $0.40 per diluted share, in bond redemption gains and dealership disposition losses incurred in 1Q09; and, excludes $0.3 million after-tax, or $0.01 per diluted share, in bond redemption gains incurred in 1Q08

(See appendix for GAAP reconciliation)


($ in millions, except per share amounts) Financial data is from continuing operations

Financial Highlightsg g

$5 795 $5 941 $6,260 $5 654

Revenues

$ $939 $974 $

Gross Profit / Margin

$5,795 $5,941 $5,654

$1,020

$903 $939 $974 $916

$18315.6% 15.8% 15.6%

16.2%

17.9%

2005 2006 2007 2008 1Q09 2005 2006 2007 2008 1Q09

Gross Profit Gross Margin

O ti I / M i SG&A E

$160 $202 $199

$1523.4% 3.2% 2.2%

Operating Income / Margin

$716 $718 $759 $739

79.4% 77 9%80.8%

83.9%

SG&A Expenses

$232.8% 2.7%

2.2%

2005 2006 2007 2008 1Q09

$15376.4% 77.9%

2005 2006 2007 2008 1Q09


Operating Income Operating MarginSG&A Expenses SG&A as a % of Gross Profit

($ in millions)Financial data is from continuing operations

Profit Contributions

$255 $266 $262

New Vehicles

$126 $135 $128

Total Used Vehicles

$215

$29

7.1% 7.2%6.7% 6.3%

5.4%

$126 $128$111

$26

9.0%9.7%

8.8% 8.3%

9.8%

2005 2006 2007 2008 1Q09


2005 2006 2007 2008 1Q09


$343 $351 $381 $404

Parts & Service

$179 $187 $203 $187

Finance & Insurance

$96

54.0% 54.1% 54.5%53.8%

52.8%

2005 2006 2007 2008 1Q09

$32$951 $975 $1,045 $1,080

$1,034

2005 2006 2007 2008 1Q09


2005 2006 2007 2008 1Q09


2005 2006 2007 2008 1Q09

Gross Profit Gross Profit PRU

($ in millions, except per retail unit amounts)Financial data is from continuing operations

Same Store Financial Results

Three Months Ended3/31/2009 3/31/2008 Change

Revenues:New vehicle retail sales 540.7$ 879.9$ (38.6)%

($ in millions)

Used vehicle retail sales 220.9 300.8 (26.5)%Used vehicle wholesale sales 34.2 66.5 (48.6)% Total used 255.2$ 367.3$ (30.5)%Parts and service 177.8 188.3 (5.6)%Finance and insurance 31 7 52 1 (39 0)%Finance and insurance 31.7 52.1 (39.0)% Total 1,005.4$ 1,487.5$ (32.4)%

Gross Margin 17.9% 16.5% 140 bpg p



Floorplan / Interestp

July 31, 2007

Floorplan Interest

6 7% 7 0%

8.0%$60,000Floorplan Interest Exp. Manufacturer Assistance Interest Rate*

p

5 0%

6.7%6.5%

5.3%5.0%

6.0%

7.0%

$40,000

$50,000

$4

$46

$465.0%

4.0%

5.0%

$30,000

$36,840

45,308

6,822

6,377

$8,962

$34,120

$36,922

$37,171

$28,311

2.0%

3.0%

$10 000

$20,000

$8,962

$4,534

0.0%

1.0%

$0

$10,000

2005 2006 2007 2008 1Q09M f t A i t


Manufacturer Assistance as % of Floorplan Int. Expense: 92.6% 81.5% 79.4% 61.0% 50.6%

($ in thousands)Financial data is from continuing operations* Rate adjusted for impact of interest rate swaps

Impact of Interest RatespIncrease of 100 basis points would have a direct impact of approximately $0.08 per share based on p pp y pvariable debt, net of interest rate swaps and manufacturer assistance

At end of 1Q09 1 Month LIBOR– At end of 1Q09, $550 million at 4.7% average weighted interest rate under

4.4%5.3% 5.3% 5.3%

4.6%3.9%

4.0%5.0%6.0%

1-Month LIBOR

interest rate under a combination of 3-to-5-year swaps 0.4% 0.5%

0.0%1.0%2.0%3.0%4.0%


Source: British Bankers' Association


Balance Sheet

July 31, 2007

Summary Balance SheetAs of As of

3/31/2009 12/31/2008

y

3/31/2009 12/31/2008

Cash and cash equivalents 21,610$ 23,144$ CIT and vehicle receivables, net 85,909$ 102,834$ Inventories 638,358$ 845,944$

Total current assets 851,764$ 1,096,624$

Total assets 2 028 131$ 2 288 114$Total assets 2,028,131$ 2,288,114$

Total current liabilities 752,612$ 1,004,496$

Long-Term Debt, net ofcurrent maturities 514,050$ 536,723$

Total stockholder's equity 671,325$ 662,117$

% Fixed Debt 72 5% 60 1%


% Fixed Debt 72.5% 60.1%

($ in thousands)Financial data is from continuing operations

CapitalizationpMaturity

Date ActualAvailable Liquidity

Funding Capacity

Cash and cash equivalents 21.6$ 21.6$

As of March 31, 2009($ in millions)

Short-Term DebtInventory Financing (1) 2012 548.5$ 62.3$ 1,300.0$ Rental Vehicles Financing (2) 2012 33.3 - - Current Maturities - LTD 13.0 - -

594.8$ 83.9$ 1,300.0$

Long-Term DebtSenior Subordinated 8.25% Notes 2013 73.0

(Moody’s / S&P ratings: B2 / B)

Acquisition Line of Credit (1,3) 2012 60.0 97.8 350.0 2.25% Convertible Notes 2016 136.1 Mortgage Facility 2012 156 4 235 0Mortgage Facility 2012 156.4 235.0 Other Debt 88.5

Total Long-Term Debt 514.0$ Total Debt 1,108.8$

181.7$ 1,885.0$

Stockholders' Equity 671 3Stockholders Equity 671.3 Total Capitalization 1,780.1$

(1) The capacity under the floorplan and acquisition tranches of our credit facility can be redesignated within the overall $1.35 billion commitment. Further, the


( ) p y p q y g $ ,borrowings under the acquisition tranche may be limited from time to time based upon certain debt covenants.

(2) Borrowings with manufacturer affiliates for rental vehicles financing not associated with any of the Company’s credit facilities(3) The available liquidity balance at March 31, 2009, considers the $60 million outstanding and $17.3 million of letters of credit outstanding.


De-Leveraging in Progressg g gDebt (1)

2007 2008 1Q09R l E t t $169 9 $272 0 $257 8Real Estate $169.9 $272.0 $257.8

Floorplan 819.4 822.3 581.8

Acquisition Line 135.0 50.0 60.0q

8.25 Sr. Notes 100.3 73.0 73.0

2.25 Convertible Bonds (face) 287.5 224.5 194.5

TOTAL $1,512.1 $1,441.8 $1,167.1

TOTAL (excluding real estate & floorplan) $522.8 $347.5 $327.5MEMO: Operating lease payments decreased by 6% year over year- from $13.3M to $12.5M in 2009

$20 million of non-real estate debt paid down in 1Q09

p g p y y y y


(1) Debt balances presented include U.K debt, which is excluded from debt covenant calculations.

($ in millions)

Debt Covenant RatiosRatios 2Q08 3Q08 4Q08 1Q09

Sr Secured Leverage < 2 75 1 49 1 41 1 49 1 54Sr. Secured Leverage < 2.75 1.49 1.41 1.49 1.54

Total Leverage* < 4.50 3.80 3.92 3.46 3.35

Fixed Charge Coverage > 1.25 1.45 1.40 1.59 1.68g gCurrent Ratio > 1.15 1.27 1.17 1.18 1.24

8 25% S S b di t d N t8.25% Sr. Subordinated Notes:Consolidated Cash Flow Coverage > 2.00 5.58 4.96 5.53 5.97

In Compliance with ALL Debt Covenants at March 31, 2009


*Total Leverage Ratio not included in Mortgage FacilitySee Appendix for calculation definitions

2009 Outlook and Strategygy

July 31, 2007

2009 Outlook & StrategyProtect the Balance Sheet

C ti t t t i d t l l l

gy

Continue to manage costs to industry sales levels

Scale back capital expenditures

Focus on cash generation

Continue to focus on Used Vehicle Parts and ServiceContinue to focus on Used Vehicle, Parts and Service

and F&I businesses

Complete transition to operating model

Dispose of underperforming dealerships


p p g p

Capital Expendituresp pCapEx projected to be less than $30 million in $90

Maintenance CapExCapital ExpendituresDepreciation & Amortization Expense

2009– No real estate purchases

anticipated$70

$80

$70

anticipated

Maintenance CapEx– Approximates Depreciation

d A ti ti E $40

$50

$60

$44

$37

$53

and Amortization Expense

Working with our manufacturer partners to

$20 $20$20

$30

$40 $37

<$30

plimit spending next year $13 $13

$16$20 $20

$0

$10

2005 2006 2007 2008 2009


2005 2006 2007 2008 2009 Projection

2009 Key Assumptionsy pFull-year Assumptions:

– SAAR of 10.0 to 10.3 million units– SG&A as a percent of gross profit at 80% to 83.5%, excluding any

one-time items, as lower sales revenues are expected to offset cost improvementsp

– Total year-over-year reduction in SG&A expenses of $120 million at 10 million SAAR level

– Tax rate of 40%Tax rate of 40%– Estimated average diluted shares outstanding of 23.2 million– Capital expenditures of $30 million or less

On a same-store level:– Vehicle margins consistent with fourth-quarter 2008 levels– Parts and service revenues 3% to 5% lower


Parts and service revenues 3% to 5% lower– Finance and insurance gross profit at $1,000 to $1,025 per retail

unit

Conclusion

July 31, 2007

ConclusionExceeded cost and new vehicle inventory reduction targetsExecuting well in a very difficult environment – Have improved profitably as we rightsized the business this quarterquarterRemained focused on cash generation and de-leveraging

– Capital Expenditures cut in half – almost equal to D&A

Balance sheet strengthened – Paid down $20 million of non-real estate debt in 2009Acquisitions halted until economic conditions and balance sheet improve


With these actions, we remain comfortable that we can manage through the current economic downturn and protect existing covenants.

Visit: www.Group1Auto.com

July 31, 2007

Appendixpp

July 31, 2007

Reconciliation of Certain Non-GAAP Financial Measures(Unaudited)

(Dollars in thousands, except per share amounts)(Dollars in thousands, except per share amounts)


Debt Covenants as of 3/31/2009Revolving Credit Facility / Mortgage Facility

Senior Secured Leverage Ratio must be < 2.75g– $263.2 mil / $170.6 mil = 1.54

Total Leverage Ratio* must be < 4.50$571 3 mil / $170 6 mil = 3 35– $571.3 mil / $170.6 mil = 3.35

Fixed Charge Coverage Ratio must be > 1.25– $263.9 mil / $156.8 mil = 1.68

Current Ratio must be > 1.15– $935.6 mil /$753.2 mil = 1.24

8.25% Senior Subordinated NotesConsolidated Cash Flow Coverage Ratio must be > 2.0

$168 2 mil / $28 2 mil = 5 97


– $168.2 mil / $28.2 mil = 5.97

*Total Leverage Ratio not included in Mortgage FacilitySee Appendix for calculation definitions

Debt Covenant CalculationsSee following:


Group 1 Automotive, Inc.Debt Covenant Summary

JPM Credit Facility and BofA MORTGAGE FACILITY

1 Senior Secured Leverage Ratio must be < 2.75SECURED DEBT (numerator)

+ Mortgage Facility and other real estate debt PLUS current+ Acquisition Line= TOTAL SECURED DEBT (ex Floorplan)

EBITDA (denominator)+ Pre-Tax Income - trailing 12 months (T12)+ Add back Total Interest Expense (including FP) - T12+ Add back Depreciation & Amortization - T12+ Add back Asset Impairments - T12

+ Add back Other non-cash charges (including asset impairments and stock-based compensation) - T12

= CONSOLIDATED EBITDA- take out Floorplan Interest Expense - T12

= CONSOLIDATED adjusted EBITDA (excludes FP Interest Exp)

+ Add Proforma EBITDA (excluding FP Interest)= CONSOLIDATED adjusted PROFORMA EBITDA

2 Total Leverage Ratio* must be < 4.50TOTAL DEBT (numerator)

+ Mortgage Facility and other real estate debt PLUS current+ Acquisition Line+ Notes Payable (Capital lease obligations)+ 8.25 Sr. Sub Notes+ 2.25 Convert (Face value)= TOTAL DEBT (ex Floorplan)

EBITDA (denominator)+ Pre-Tax Income - trailing 12 months (T12)+ Add back Total Interest Expense (including FP) - T12+ Add back Depreciation & Amortization - T12+ Add back Asset Impairments - T12

+ Add back Other non-cash charges (including asset impairments and stock-based compensation) - T12

= CONSOLIDATED EBITDA- take out Floorplan Interest Expense - T12

= CONSOLIDATED adjusted EBITDA (excludes FP Interest Exp)

+ Add Proforma EBITDA (excluding FP Interest)= CONSOLIDATED adjusted PROFORMA EBITDA

*Total Leverage Ratio not included in Mortgage Facility

3 Fixed Charge Coverage Ratio must be > 1.25EARNINGS available for FIXED CHARGES (numerator)

= CONSOLIDATED EBITDA (see #2 or #3 ratios)+ PLUS Lease Expense - T12- LESS Cash Paid for Taxes - T12= TOTAL EARNINGS available for FIXED CHARGES

FIXED CHARGES (denominator)+ Total Interest Expense (including FP) - T12- LESS Non-cash interest+ PLUS Lease Expense - T12+ PLUS Required Principle Payments - T12+ PLUS Cash paid for Dividends - T12

+ PLUS Maintenance CapEx (calc $50k per dealership per qtr) - T12

= TOTAL FIXED CHARGES

2009-04-28 v8

Group 1 Automotive, Inc.Debt Covenant Summary

4 Current Ratio must be > 1.15TOTAL CURRENT ASSETS (numerator)

+ Total Current Assets+ PLUS Total Revolver Capacity (Total Undrawn Acquisition Line)= TOTAL CURRENT ASSETS

TOTAL CURRENT LIABILITIES (demoninator)

5 Funds Available for Restricted Payments - Minimum Net Worth CalcSTOCKHOLDERS' EQUITY on B/SLESSREQUIRED STOCKHOLDERS' EQUITY (since 1Q07)

+ Minimum Flat $520,000,000+ PLUS 50% of Consolidated Net Income since 1Q07

+ PLUS 100% of Net Proceeds from Issuance of Equity since 1Q07

+ PLUS Asset Impairment, net of tax, since 1Q07= TOTAL REQUIRED STOCKHOLDERS' EQUITY

LESS= CONVERT CALL SPREAD = $35,700,000

EQUALSEXCESS REMAINING FOR RESTRICTED PAYMENTS

8.25% Senior Sub Notes1 Consolidated Cash Flow Coverage Ratio must be > 2.0

CASH FLOW available for FIXED CHARGES (numerator)+ Consolidated Net Income - T12

+/- Adjustment for one time change in accounting principle

+ PLUS (add back) Consolidated Interest Expense (excludes Floorplan Interest Expense)

+ PLUS (add back) Consolidated Income Tax Expense+ PLUS (add back) Depreciation & Amortization

+ PLUS (add back) Other non-cash charges (including asset impairments and stock-based compensation) - T12

= TOTAL CASH FLOW available for FIXED CHARGES - T12CONSOLIDATED FIXED CHARGES (denominator)

= Consolidated Interest Expense (excludes Floorplan Interest Expense) - T12

NOTE: All ratios exclude the UK and discontinued operations and APB 14-1All EBITDA and Fixed Charge items are trailing twelve months

2009-04-28 v8

Economy & Finance

Q1 2009 Earning Report of Group 1 Automotive Inc