Segments

9 Months Ended

Sep. 30, 2021

Segment Reporting [Abstract]

Segments

Segments

While we have determined that each individual store is a reporting unit, we have aggregated our reporting units into three reportable segments based on their economic similarities: Domestic, Import and Luxury.

Our Domestic segment is comprised of retail automotive franchises that sell new vehicles manufactured by Chrysler, General Motors and Ford. Our Import segment is comprised of retail automotive franchises that sell new vehicles manufactured primarily by Honda, Toyota, Subaru, Nissan and Volkswagen. Our Luxury segment is comprised of retail automotive franchises that sell new vehicles manufactured primarily by BMW, Mercedes and Lexus. The franchises in each segment also sell used vehicles, parts and automotive services, as well as automotive finance and insurance products.

Corporate and other revenue and income includes the results of operations of our stand-alone body shops offset by unallocated corporate overhead expenses, such as corporate personnel costs, and certain unallocated reserve and elimination adjustments. Additionally, certain internal corporate expense allocations increase income for Corporate and other while decreasing segment income for the reportable segments. These internal corporate expense allocations are used to increase comparability of our dealerships and reflect the capital burden a stand-alone dealership would experience. Examples of these internal allocations include internal rent expense, internal floor plan financing charges, and internal fees charged to offset employees within our corporate headquarters who perform certain dealership functions.

We define our chief operating decision maker (CODM) to be certain members of our executive management group. Historical and forecasted operational performance is evaluated on a store-by-store basis and on a consolidated basis by the CODM. We derive the operating results of the segments directly from our internal management reporting system. The accounting policies used to derive segment results are substantially the same as those used to determine our consolidated results, excepted for the internal allocation within Corporate and other discussed above. Our CODM does not regularly review capital expenditures on a reporting unit level. Performance measurement of each reportable segment by the CODM are based on several metrics, including earnings from operations. The CODM uses these results, in part, to evaluate the performance of and to allocate resources, mainly associated with expected inventory and working capital requirements, to each of the reportable segments.

Certain financial information on a segment basis is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	2021		2020		2021		2020
Revenues:
Domestic
New vehicle retail	$	766.1	$	621.3	$	2,305.3	$	1,591.0
Used vehicle retail	699.7		378.8		1,803.7		1,096.4
Used vehicle wholesale	74.5		31.9		174.4		77.7
Finance and insurance	80.5		53.2		217.7		149.2
Service, body and parts	170.2		118.0		450.0		337.5
Fleet and other	28.2		11.5		67.4		35.1
	1,819.2		1,214.7		5,018.5		3,286.9
Import
New vehicle retail	1,376.9		823.7		3,730.7		1,996.6
Used vehicle retail	847.9		452.2		2,127.8		1,152.8
Used vehicle wholesale	99.5		42.2		247.8		88.7
Finance and insurance	162.9		81.2		408.9		195.1
Service, body and parts	235.3		141.3		596.9		371.4
Fleet and other	4.9		11.1		37.5		28.9
	2,727.4		1,551.7		7,149.6		3,833.5
Luxury
New vehicle retail	750.9		440.0		2,204.1		1,038.2
Used vehicle retail	530.3		261.6		1,309.9		642.2
Used vehicle wholesale	72.8		24.7		171.9		50.2
Finance and insurance	56.1		25.5		145.7		60.1
Service, body and parts	162.8		96.0		434.7		244.8
Fleet and other	22.2		1.9		59.5		14.0
	1,595.1		849.7		4,325.8		2,049.5
	6,141.7		3,616.1		16,493.9		9,169.9
Corporate and other	28.1		4.1		28.3		12.6
	$	6,169.8	$	3,620.2	$	16,522.2	$	9,182.5
Segment income1:
Domestic	$	123.6	$	81.1	$	335.6	$	168.3
Import	255.4		102.6		573.2		176.2
Luxury	108.5		39.2		249.8		53.1
Total segment income for reportable segments	$	487.5	$	222.9	$	1,158.6	$	397.6

1Segment income for each of the segments is a Non-GAAP measure defined as Income from operations before income taxes, depreciation and amortization, other interest expense and other income, net.

Reconciliation of total segment income for reportable segments to our consolidated income before income taxes:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	2021		2020		2021		2020
Total segment income for reportable segments	$	487.5	$	222.9	$	1,158.6	$	397.6
Corporate and other	22.8		33.5		80.1		103.5
Depreciation and amortization	(34.4)		(22.9)		(91.5)		(67.3)
Other interest expense	(28.0)		(16.6)		(79.6)		(50.4)
Other income (expense), net	(25.7)		2.2		(14.6)		8.2
Income before income taxes	$	422.2	$	219.1	$	1,053.0	$	391.6

Total assets by reportable segments is as follows:

(in millions)	September 30, 2021		December 31, 2020
Total assets:
Domestic	$	1,282.1	$	1,262.4
Import	1,634.8		1,654.7
Luxury	1,100.8		1,132.4
Corporate and other	6,186.9		3,852.6
	$	10,204.6	$	7,902.1