Good morning, welcome to the 2026 annual meeting of Group 1 Automotive. I am Charles Szews, Non-Executive Chair of the Board, and will preside at today's meeting. Gillian Hobson, Group 1's Senior Vice President, Chief Legal Officer, and Corporate Secretary, will act as secretary for this meeting. This annual meeting is being held in accordance with the provisions of Delaware law and the company's bylaws, and is being conducted virtually on the shareholder meeting website. These proceedings are being recorded and will be available on the meeting website for 12 months. I now call the meeting to order. After some introductory remarks, we will turn to the formal business of today's meeting, which entails shareholder voting on five matters. First, the election of nine directors. Second, an advisory vote to approve executive compensation. Third, ratification of Deloitte & Touche LLP as the company's independent registered public accounting firm.
Fourth, approval of an amendment to the certificate of incorporation to enable the adoption of a shareholder right to call a special meeting of shareholders. Fifth, a shareholder proposal to give shareholders an ability to call for a special shareholder meeting. We will report the preliminary results of such voting and conclude with a brief question-and-answer period. Shareholders may submit questions during this meeting in the space provided on the meeting website. Questions should pertain to the business of the annual meeting. We cannot guarantee immediate answers to all questions. To ensure an orderly and productive meeting, we ask that the shareholders follow the rules of conduct for the meeting, which are available on the meeting website. Unanswered appropriate questions will be addressed on our investor relations website following the meeting. Shareholders are able to vote during this meeting at any time until the polls close.
If you have already voted, either online or by a physical proxy card, you do not need to vote again. If you choose to vote during this meeting, such vote will supersede any earlier vote. Let me take a moment to introduce the current directors and executive officers of Group 1 who are participating in the meeting today. Our directors include Carin Barth, Daryl Kenningham, our President and Chief Executive Officer, Steven Mizell, Lincoln Pereira, Stephen Quinn, Steven Stanbrook, Anne Taylor, MaryAnn Wright, and myself, Charles Szews.
In addition to Daryl, we are joined by members of our Executive Management Team, including Daniel McHenry, Senior Vice President and Chief Financial Officer, Gillian Hobson, Senior Vice President, Chief Legal Officer, and Corporate Secretary, Pete DeLongchamps, Senior Vice President, Manufacturer Relations, Financial Services, and Public Affairs, Melkeya McDuffie, Senior Vice President and Chief Human Resources Officer, and Shelley Washburn, Senior Vice President and Chief Marketing Officer. Also joining us virtually today are Jeff Burr and Jocelyn Lee, representing Deloitte & Touche, our independent registered public accounting firm. The board, the executive management team, and our company's associates are committed to the ongoing success of this enterprise.
Highlights for an exceptional 2025 include all-time record revenues of $22.6 billion, record gross profit of $3.6 billion, and record parts and service gross profit of $1.6 billion, adjusted net income from continuing operations of $524.5 million, and adjusted diluted earnings per share from continuing operations of $40.71. Throughout the year, we remained disciplined in our capital allocation as we focused on deploying capital toward the highest and best use for our shareholders. 2025 was a great example of that strategy. In the U.S., we acquired outstanding brands in growth markets, Lexus and Acura, Fort Myers, Florida, a Mercedes-Benz dealership in Austin, Texas, and a Mercedes-Benz dealership in Atlanta, Georgia. In the U.K., we acquired three Toyota and one Lexus dealership.
We expect these acquisitions to generate approximately $640 million in annual revenue. At the same time, we disposed of 13 dealerships comprising 32 franchises, which had generated approximately $775 million in annualized revenues. We spent $554.8 million through repurchased over 1.3 million shares of common stock, representing approximately 10.1% of outstanding stock, and the company distributed $25.6 million of dividends. Now turning to the formal voting agenda for our shareholders meeting. The shareholder voting process is supervised by an inspector of election. Ms. Hobson, for the record of this meeting, will you kindly report on the appointment of the inspector of election?
Thank you, Charlie. In accordance with the provisions of Delaware law and the company's bylaws, the board of directors has appointed Kathy Blackwell, a representative from CT Hagberg & Associates, as independent inspector of elections firm to act as inspector of election. Ms. Blackwell subscribed the oath of her office, which will be filed with the company's records and is participating in this meeting.
Thank you. Next, Ms. Hobson, for the record, will you please report on the valid proof of notice of this shareholder meeting?
As noted in the notice of annual meeting and proxy statement previously furnished to the shareholders, the record date for voting at the meeting was the close of business on March 18th, 2026. I received an affidavit certifying that on April 2nd, 2026, proxy materials were made available to all shareholders on such date.
Thank you, Gillian. The minutes of this meeting, would you please report on the list of shareholders as of the record date?
As secretary, I have the list of holders of record of common stock of the company at the close of business on March 18th , 2026. For the past 10 days, this list of shareholders has been available for examination at the company's offices during ordinary business hours.
Ms. Hobson, in order to commence shareholder voting, would you confirm for the record that there has been proper notice of this meeting and the Inspector of Election has determined the quorum is present?
On March 18th, 2026, the record date for this annual meeting, there were outstanding and entitled to vote a total of 11,872,577 shares of common stock. The Inspector of Election has determined that a sufficient number of shares entitled to vote at this meeting are present in person or by proxy to constitute a quorum. We may proceed with the voting matters for this meeting.
Thank you, Ms. Hobson. On the basis of the report of the Secretary and the Inspector of Election, I find that proper notice has been given and that a quorum is present. Accordingly, this meeting has been properly convened, and we will proceed with shareholder voting. At this time, I declare the polls open for voting on the matters brought before this meeting. All Group 1 shareholders entitled to vote at this meeting may do so online. If you are a shareholder entitled to vote and have not yet voted, or if you want to change your previously cast vote, please do so via the website used to access this meeting. Please remember that if you have already voted, it is not necessary to vote again.
After voting has been completed on our five agenda items, we will close the polls, and the Inspector of Election will provide our Secretary with a preliminary report of the results. We will now review the proposals. The first proposal to come before the meeting is the election of directors. At this meeting, we will be electing each of the nine directors listed in the proxy statement for a one-year term expiring at the 2027 Annual Meeting of shareholders. The nominees are Carin Barth, Daryl Kenningham, Steven Mizell, Lincoln Pereira , Stephen Quinn, Steven Stanbrook, Anne Taylor, MaryAnn Wright, and myself, Charles Szews. The information concerning our directors' principal occupations, service as Group 1 Automotive board members, skills and qualifications, and other matters are contained in the proxy statement. The board of directors recommends a vote for the election of each of the nominees for director.
During this election cycle, no other nominations were received prior to the deadline established in the company's bylaws. I declare the nominations closed. Proposal 2 asks shareholders to approve an advisory resolution on the fiscal year 2025 compensation of the named executive officers, as described in our proxy statement. Although non-binding, the vote will provide information to our Compensation and Human Resources Committee and our board of directors regarding investor sentiment about our executive compensation philosophy, policies, and practices. Such feedback will be considered when making future executive compensation decisions. The board of directors recommends a vote for the resolution to approve, on an advisory basis, our executive compensation. Proposal 3 asks shareholders to ratify the appointment of Deloitte & Touche as the company's independent registered public accounting firm for the fiscal year ending December 31, 2026.
The board of directors recommends a vote for the ratification of the appointment of Deloitte & Touche to serve as the company's independent registered public accounting firm and to audit the company's financial statements for the fiscal year ending December 31, 2026. Proposal 4 asks shareholders to approve an amendment to the Group 1's Certificate of Incorporation that would enable the adoption of a shareholder right to call a special meeting of shareholders. The board determined that the amendment is advisable and in the best interest of the company and our shareholders and recommends the shareholders vote for the amendment. In accordance with Group 1's bylaws, SEC rules and guidance, and Delaware law, Mr. Chevedden will now have an opportunity to present the Proposal 5 for consideration at this meeting. Mr. Chevedden or his representative will be allowed three minutes to make the proposal presentation.
Please go ahead, Mr. Chevedden or his proxy.
Good morning. Can you hear me okay?
Yes.
Proposal 5. Give shareholders an attainable ability to call for a special shareholder meeting. Sponsored by John Chevedden. Shareholders ask our board of directors to take the steps necessary to amend the governing documents to give the owners of a combined 10% of our outstanding common stock the power to call a special shareholder meeting. Such a special shareholder meeting can be as easy to conduct online as an online shareholder meeting. There shall be no poison pill discriminatory rule to require ownership of shares for a specific period of time in order for shares to participate in calling for a special shareholder meeting. This attainable right for shareholders to call for a special shareholder meeting, Proposal 5, is better than the unattainable right for shareholders to call for a special shareholder meeting, which is Proposal Number 4.
Proposal Number 4 requirement requires 25% of the shares to back calling for a special shareholder meeting is not attainable because shareholders at more than 100 companies have voted on shareholder rights to call for a special shareholder meeting, and not one of those 100 companies ever cited one example of such a meeting ever occurring based on the 25% figure. There is now a big rush of companies adopting the 25% figure because companies are wise and know that 25% figure means a safe haven and a special shareholder meeting will never occur. Proposal 4 could thus be called a placebo right for shareholders to call for a special shareholder meeting. Please vote for the attainable right for shareholders to call for a special shareholder meeting, Proposal Number 5. Thank you.
Okay. Having reviewed the five proposals for this meeting, the polls are about to close. If you have not voted, please do so now. Thank you. I now declare the polls closed. The Inspector of Election will now tabulate the votes and provide the preliminary results to the secretary. Ms. Hobson, will you please provide the preliminary report of the voting?
Mr. Chair, the votes on the five proposals have been tabulated. Based on the Inspector of Election's preliminary report, I am pleased to announce that the nine director nominees were elected. The proposal concerning approval of executive compensation has been approved. The ratification of Deloitte & Touche has been approved. The amendment to the certificate of incorporation to enable the adoption of a shareholder right to call a special meeting of shareholders has been approved. The shareholder proposal has not been approved. The final voting results will be certified, made a part of the record of this annual meeting, and subsequently announced in accordance with the requirements of the Securities and Exchange Commission.
That concludes the formal business portion of this annual meeting. There being no formal business to come before the meeting, I hereby declare this annual meeting of shareholders adjourned. We will now take a few questions from our shareholders. Our first question is one that we have currently been receiving from investors. That is, how is Group 1 assessing the current geopolitical and macroeconomic environment and the potential impact on consumer demand across the U.S. and U.K. markets? Daryl?
We are operating in an environment where affordability remains a key issue for our customers. Interest rates, vehicle prices, gasoline prices, tariffs, trade policy uncertainty, and broader geopolitical factors are all things we are monitoring closely. Those pressures can weigh on new vehicle demand and contribute to continued margin normalization. At the same time, customers may shift toward used vehicles or keeping their current vehicles longer, which can support our used vehicle and parts of service businesses. We're focused on what we can control, staying close to demand, managing our inventories carefully, working with our OEM partners, and protecting profitability.
Thank you, Daryl. Our next question asks, can you provide an update on the company's cost optimization efforts in the U.S. and U.K., including the U.K. restructuring plan, and where management sees the greatest opportunity to improve operating efficiency over the balance of 2026.
Cost optimization remains a priority in both markets. In the U.K., we continue to execute restructuring actions, including workforce realignment, process improvements, system integration, and select site closures. In the U.S., we completed a dealership-by-dealership review and took cost actions in the second quarter. These actions focused on aligning staff with demand, reducing vendor and contract costs, and tightening expense control. The objective is to improve our operating leverage and ensure our cost structure is appropriate for the current demand environment while still investing in areas that strengthen our business.
Thank you, Daryl. We'll now take time for one final question. Parts and service continues to be a significant contributor to profitability and resilience. How much runway does Group 1 still have to grow this business, and what are the key drivers of future growth?
We continue to see strong opportunity in parts and service. Demand is supported by an aging vehicle fleet, increasing vehicle complexity, and customers who keep their vehicles longer. The key enabler is capacity. We're focused on recruiting and retaining technicians, improving productivity, using customer data more effectively, and driving stronger customer retention. Parts and service is central to our business model because it supports profitability even when vehicle sales are under pressure. We will continue investing in this area across both the U.S. and U.K. markets.
Thank you, Daryl. This concludes the question- and- answer session. If you submitted a question that was not addressed, please refer to our company website. I want to thank everyone, especially our shareholders, for their time and participation. On behalf of the board, the executive management team, and the employees of Group 1 Automotive, thank you for your attendance.
This concludes today's call. Thank you for attending. You may now disconnect.