Company: GPI
Filing Date: 2025-07-24
Form Type: 10-Q
Source: 0001031203-25-000049
Chunk: 121

Company: GROUP 1 AUTOMOTIVE INC
Filing Date: 2025-07-24
Form: 10-Q
Item: Part I, Item 2
Chunk 121
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Our floorplan interest expense fluctuates with changes in our outstanding borrowings and associated interest rates, which are based on SOFR, the U.S. prime rate or other benchmark rates. Outstanding borrowings largely fluctuate based on our levels of new and used vehicle inventory. To mitigate the impact of interest rate fluctuations, we employ an interest rate hedging strategy, whereby we swap variable interest rate exposure on a portion of our borrowings for a fixed interest rate.

Total floorplan interest expense during the Current Quarter increased $1.8 million, or 7.1%, as compared to the Prior Year Quarter. For the Current Year, floorplan interest expense increased $8.1 million, or 18.0%, as compared to the Prior Year. The increase in floorplan interest expense during the Current Quarter and Current Year was driven primarily by an increase in used vehicle inventories.

Refer to Note 7. Financial Instruments and Fair Value Measurements within our Notes to Condensed Consolidated Financial Statements for additional discussion of interest rate swaps.

Other Interest Expense, Net

Other interest expense, net consists of interest charges primarily on our 4.00% Senior Notes, 6.375% Senior Notes, real estate related debt and other debt, partially offset by interest income.

Other interest expense, net during the Current Quarter, increased $9.3 million, or 27.9%, as compared to the Prior Year Quarter. For the Current Year, other interest expense, net, increased $19.8 million, or 31.5%, as compared to the Prior Year. The increase in other interest expense, net during the Current Quarter and Current Year was primarily attributable to interest expense associated with the 6.375% Senior Notes issued in 2024, as well as additional interest expense attributable to other debt. Refer to Note 9. Debt within our Notes to Condensed Consolidated Financial Statements for additional discussion of our debt. 

Provision for Income Taxes

Provision for income taxes of $44.0 million during the Current Quarter decreased by $1.1 million, or 2.5%, as compared to the Prior Year Quarter. For the Current Year, our provision for income taxes of $83.8 million decreased by $7.2 million, or 8.0%, as compared to the Prior Year. The tax expense decrease and the tax rate decrease in the Current Quarter and Current Year, as compared to the Prior Year Quarter and Prior Year, were primarily due to lower taxable gains on asset dispositions.