Group 1 Automotive Reports 2007 Second-Quarter Earnings

HOUSTON--Group 1 Automotive, Inc. , a Fortune 500 automotive retailer, today reported net income for the second quarter ended June 30, 2007, of $24.2 million, or $1.01 per diluted share. This compares with net income of $24.9 million, or $1.00 per diluted share, in the second quarter of 2006. The results for the second quarter of 2007 include $0.9 million of pretax charges related to dealership exit costs. Excluding these charges, net income for the second quarter of 2007 was $1.03 per diluted share.

On a consolidated basis, second-quarter total revenues increased 7.9 percent, to $1.7 billion, from the previous-year quarter, and gross profit improved $14.3 million, or 5.9 percent. Gross margin was 15.4 percent in the second quarter of 2007, down from 15.6 percent in the same period a year ago, as improvements in the parts and service and finance and insurance (F&I) businesses were offset by declines in the new and used vehicle margins.

Consolidated selling, general and administrative expenses (SG&A) increased $13.8 million, or 7.6 percent, from the prior-year quarter to $196.8 million. Included in the 2007 expenses was a $0.5 million pretax charge related to lease termination costs and a $0.5 million pretax charge for DMS conversion costs. These charges were offset by a $0.6 million pretax gain on franchise disposals. Included in the 2006 results were pretax benefits of $6.5 million in hurricane-related insurance adjustments and a $1.2 million gain on disposals, offset by a $4.5 million pretax charge for a lease termination and a $1.1 million pretax charge for employee severance. Excluding these items from both periods, SG&A as a percent of gross profit was 76.1 percent in the second quarter of 2007 compared to 76.0 percent for the second quarter of 2006.

On a same-store basis, revenue declined 2.3 percent reflecting declines in new vehicles of 1.8 percent, retail used vehicles of 4.3 percent and wholesale used vehicles of 15.4 percent, partially offset by a 2.0 percent increase in parts and service and a 7.6 percent increase in F&I revenues. Overall gross margin of 15.6 percent was equal to the prior-year period as declines in new vehicle and used vehicle margins were fully offset by stronger F&I growth.

The new and used retail vehicle sales and margin declines reflect continued weakness in Group 1’s California market, declines in import margins due to normal product aging and improved availability, as well as a return to more normal operating conditions in New Orleans following increased demand experienced in the post-hurricane period one year ago. Used vehicle revenues and margins were adversely affected by weaker truck sales as increased manufacturer incentives, especially in those Group 1 markets where trucks are traditionally strong, affected demand. The increase in parts and service revenues reflects continued growth in the retail and wholesale parts businesses, as well as growth in the customer-pay service business, with reductions in warranty revenue a partial offset. Same-store F&I gross profit per retail unit improved $125, to $1,057, from the second quarter of 2006 as a result of in-sourcing key functions such as training, personnel management and compliance, as well as reducing the total number of finance product suppliers. Group 1 began to implement this initiative during April and anticipates completing the in-sourcing this year.

Also on a same-store basis, second-quarter SG&A declined $2.0 million, or 1.1 percent, from the second quarter of 2006 as a result of declines in both personnel costs and advertising expenses. SG&A as a percent of gross profit increased 120 basis points to 76.5 percent, reflecting the decline in overall gross profit.

New vehicle inventory days’ supply was 58 days at quarter end compared to 62 days for second quarter 2006. Used vehicle inventory days’ supply held at 29 days from the prior-year period. Total floorplan interest expense decreased $1.2 million, or 9.4 percent, to $11.8 million compared to the same period a year ago as weighted average floorplan borrowings declined $40.1 million and the weighted average interest rate decreased 19 basis points. The ratio of floorplan expense covered by manufacturer assistance improved to 84 percent on the basis of the lower inventory levels and the reduced borrowing costs. Other interest expense increased $2.8 million, or 70.9 percent, primarily due to the full-quarter’s effect of interest incurred on the 2.25 percent convertible notes issued in June 2006 and borrowings under the real estate credit facility completed in March 2007.

“Despite a more challenging overall market this year, we continue to implement our strategic plan focusing on leveraging our size, improving operating efficiency and standardizing key processes,” said Earl J. Hesterberg, Group 1’s president and chief executive officer. “Even with pressures on total gross profit margin, the financial benefits of better inventory management and the in-sourcing of key finance and insurance processes were clearly evident in our second-quarter results.”

Share Repurchase

During the second quarter, Group 1 repurchased 321,400 shares of its common stock at an average price of $40.42 under a board authorization in April 2007 to repurchase up to $30.0 million of the company’s common stock.

Acquisition and Disposition Recap

As previously announced, Group 1 expanded its import and luxury offerings by acquiring three franchises in the United States and six franchises in the United Kingdom in the first quarter 2007. These acquisitions are expected to generate an estimated $303.1 million in aggregate annual revenues toward Group 1’s full-year acquisition target of $600 million. The company will focus its acquisitions on import and luxury brands outside of Texas and Oklahoma with a goal of increasing its import and luxury offerings from 74 percent to approximately 80 percent of its new vehicle unit sales by year end.

Group 1 recently disposed of four underperforming franchises in West Texas. The four franchises had combined trailing-twelve-month revenues of $37.6 million. Including these dispositions, Group 1 has divested of 10 franchises with twelve-month revenues of $100.3 million in 2007.

The company will continue to evaluate its dealership portfolio and dispose of underperforming stores. Group 1 anticipates incurring approximately $5 million to $10 million in associated disposition charges in 2007, which includes costs associated with disposition actions previously announced in 2007. Year to date, the company has booked $4.7 million towards this estimate.

2007 Full-Year Guidance

Group 1 reaffirmed its 2007 full-year guidance at $3.75 to $4.05 per diluted share based on its outlook and the following revised assumptions:

• Industry seasonally adjusted annual sales rate (SAAR) of 16.3 million vehicles
• Flat to slightly negative same-store revenue growth
• A 75 basis-point reduction in SG&A as a percent of gross margin from 2006 levels excluding one-time items
• Flat interest rates throughout 2007
• Tax rate of 37 percent
• Estimated average diluted shares outstanding of 23.8 million
• Guidance excludes the impact of future acquisitions, and dispositions with related exit charges estimated at $5 million to $10 million

About Group 1 Automotive, Inc.

Group 1 owns and operates 99 automotive dealerships, 136 franchises, and 28 collision service centers in the United States and three dealerships, six franchises and two collision centers in the United Kingdom that offer 32 brands of automobiles. Through its dealerships, the company sells new and used cars and light trucks; arranges related financing, vehicle service and insurance contracts; provides maintenance and repair services; and sells replacement parts.

Group 1 Automotive can be reached on the Internet at www.group1auto.com.

FINANCIAL TABLES TO FOLLOW

Group 1 Automotive, Inc.
Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
				Three Months Ended June 30,											Six Months Ended June 30,
				2007				2006				% Change			2007				2006				% Change
REVENUES:
New vehicle retail sales				$	1,056,581			$	968,399			9.1	%		$	1,988,675			$	1,828,527			8.8	%
Used vehicle retail sales					306,774				289,760			5.9				596,488				555,680			7.3
Used vehicle wholesale sales					83,412				87,053			(4.2	)			158,056				167,746			(5.8	)
Parts and service					179,335				164,641			8.9				355,174				327,507			8.4
Finance and insurance					53,487				47,193			13.3				103,934				95,151			9.2
	Total revenues				1,679,589				1,557,046			7.9	%			3,202,327				2,974,611			7.7	%
COST OF SALES:
New vehicle retail sales					986,170				898,087			9.8	%			1,853,784				1,693,701			9.5	%
Used vehicle retail sales					270,416				252,632			7.0				523,357				483,512			8.2
Used vehicle wholesale sales					84,057				87,783			(4.2	)			157,532				167,497			(5.9	)
Parts and service					80,972				74,882			8.1				162,523				149,415			8.8
	Total cost of sales				1,421,615				1,313,384			8.2	%			2,697,196				2,494,125			8.1	%
GROSS PROFIT					257,974				243,662			5.9	%			505,131				480,486			5.1	%
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
					196,773				182,944			7.6	%			394,936				363,420			8.7	%
DEPRECIATION AND AMORTIZATION EXPENSE
					5,217				4,372			19.3	%			10,065				8,935			12.6	%
ASSET IMPAIRMENTS					356				-			-	%			356				-			-	%
INCOME FROM OPERATIONS					55,628				56,346			(1.3	)%			99,774				108,131			(7.7	)%
OTHER INCOME (EXPENSE):
Floorplan interest expense				$	(11,802	)			(13,033	)		(9.4	)%			(24,040	)			(24,878	)		(3.4	)%
Other interest expense, net				$	(6,830	)			(3,997	)		70.9				(12,037	)			(7,987	)		50.6
Other income (expense), net				$	97				(271	)		(135.8	)			192				(245	)		(178.4	)
INCOME BEFORE INCOME TAXES					37,093				39,045			(5.0	)%			63,889				75,021			(14.8	)%
PROVISION FOR INCOME TAXES				$	12,877				14,173			(9.1	)%			22,226				27,838			(20.2	)%
NET INCOME				$	24,216			$	24,872			(2.6	)%		$	41,663			$	47,183			(11.7	)%
DILUTED EARNINGS PER SHARE:				$	1.01			$	1.00			1.0	%		$	1.74			$	1.91			(8.9	)%
Weighted average diluted shares outstanding					23,888				24,840			(3.8	)%			23,984				24,647			(2.7	)%

Group 1 Automotive, Inc.
Consolidated Balance Sheets
(Dollars in thousands)
				June 30,				December 31,
				2007				2006				% Change
ASSETS:
CURRENT ASSETS:
	Cash and cash equivalents			$	51,502			$	39,313			31.0	%
	Contracts in transit and vehicle receivables, net				174,260				189,004			(7.8	)
	Accounts and notes receivable, net				83,258				76,793			8.4
	Inventories				861,631				830,628			3.7
	Deferred income taxes				19,032				17,176			10.8
	Prepaid expenses and other current assets				15,025				25,098			(40.1	)
		Total current assets			1,204,708				1,178,012			2.3
PROPERTY AND EQUIPMENT, net					324,166				230,385			40.7
GOODWILL AND OTHER INTANGIBLES					706,210				676,325			4.4
OTHER ASSETS					34,594				29,233			18.3
		Total assets		$	2,269,678			$	2,113,955			7.4	%
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
	Floorplan notes payable - credit facility			$	595,070			$	437,288			36.1	%
	Floorplan notes payable - manufacturer affiliates				134,745				287,978			(53.2	)
	Current maturities of long-term debt				9,191				854			976.2
	Accounts payable				136,424				117,536			16.1
	Accrued expenses				111,326				97,302			14.4
		Total current liabilities			986,756				940,958			4.9
LONG-TERM DEBT, net of current maturities					500,863				428,639			16.8
DEFERRED INCOME TAXES					15,373				2,787			451.6
OTHER LIABILITIES					28,878				27,826			3.8
		Total liabilities before deferred revenues			1,531,870				1,400,210			9.4
DEFERRED REVENUES					18,525				20,905			(11.4	)
STOCKHOLDERS' EQUITY:
	Common stock				253				252			0.4
	Additional paid-in capital				293,683				292,278			0.5
	Retained earnings				483,003				448,115			7.8
	Accumulated other comprehensive income (loss)				2,793				591			372.6
	Treasury stock				(60,449	)			(48,396	)		24.9
		Total stockholders' equity			719,283				692,840			3.8
		Total liabilities and stockholders' equity		$	2,269,678			$	2,113,955			7.4	%
BALANCE SHEET DATA:
	Working capital			$	217,952			$	237,054			(8.1	)%
	Current ratio				1.22				1.25			(2.4	)
	Long-term debt to capitalization				41	%			38	%
	Inventory days supply: (1)
		New vehicle			58				63			(7.7	)%
		Used vehicle			29				31			(7.9	)
(1) Inventory days supply equals units in inventory as of the end of the period, divided by unit sales for the month then ended, times 30 days.

Group 1 Automotive, Inc.
Additional Information - Consolidated
(Unaudited)
				Three Months Ended						Six Months Ended,
				June 30,						June 30,
				2007			2006			2007			2006
NEW VEHICLE UNIT SALES GEOGRAPHIC MIX:
	Region	Geographic Market
	Northeast	Massachusetts		12.2	%		12.8	%		11.7	%		13.0	%
		New Jersey		5.4			2.9			5.4			2.8
		New Hampshire		3.9			4.2			3.7			3.9
		New York		2.5			2.3			2.4			2.4
				24.0			22.2			23.2			22.1
	Southeast	Louisiana		3.9			5.6			3.8			5.9
		Florida		3.5			4.5			3.6			4.9
		Georgia		3.5			3.8			3.5			3.8
		Mississippi		1.5			-			1.6			-
		Alabama		0.9			-			1.0			-
				13.3			13.9			13.5			14.6
	Central	Texas		30.9			34.3			31.0			34.2
		Oklahoma		10.1			11.3			9.7			10.5
		New Mexico		1.7			2.0			1.9			2.1
		Kansas		1.1			-			1.0			-
		Colorado		-			0.4			-			0.4
				43.8			48.0			43.6			47.2
	West	California		17.3			15.9			18.3			16.1
	International	United Kingdom		1.6			-			1.4			-
				100.0	%		100.0	%		100.0	%		100.0	%
NEW VEHICLE UNIT SALES BRAND MIX:
	Toyota/Scion/Lexus			36.2	%		35.6	%		35.6	%		34.6	%
	Ford			12.6			15.9			13.0			16.4
	Nissan/Infiniti			11.8			9.9			12.5			10.2
	Honda/Acura			12.2			10.0			12.0			9.7
	DaimlerChrysler			11.1			13.0			11.1			13.5
	GM			6.3			8.7			6.6			8.4
	BMW/Mini			6.8			3.5			6.2			3.7
	Other			3.0			3.4			3.0			3.5
				100.0	%		100.0	%		100.0	%		100.0	%
NEW VEHICLE UNIT OTHER MIX:
	Import			55.2	%		51.5	%		55.0	%		50.6	%
	Domestic			25.3			31.9			25.5			32.6
	Luxury			19.5			16.6			19.5			16.8
				100.0	%		100.0	%		100.0	%		100.0	%
	Car			54.6	%		51.0	%		53.3	%		49.2	%
	Truck			45.4			49.0			46.7			50.8
				100.0	%		100.0	%		100.0	%		100.0	%

Group 1 Automotive, Inc.
Additional Information - Consolidated
(Unaudited)
(Dollars in thousands, except per unit amounts)
				Three Months Ended June 30,											Six Months Ended June 30,
				2007				2006				% Change			2007				2006				% Change
REVENUES:
	New vehicle retail sales			$	1,056,581			$	968,399			9.1	%		$	1,988,675			$	1,828,527			8.8	%
	Used vehicle retail sales				306,774				289,760			5.9				596,488				555,680			7.3
	Used vehicle wholesale sales				83,412				87,053			(4.2	)			158,056				167,746			(5.8	)
		Total used			390,186				376,813			3.5				754,544				723,426			4.3
	Parts and service				179,335				164,641			8.9				355,174				327,507			8.4
	Finance and insurance				53,487				47,193			13.3				103,934				95,151			9.2
		Total		$	1,679,589			$	1,557,046			7.9	%		$	3,202,327			$	2,974,611			7.7	%
GROSS MARGIN:
	New vehicle retail sales				6.7	%			7.3	%						6.8	%			7.4	%
	Used vehicle retail sales				11.9				12.8							12.3				13.0
	Used vehicle wholesale sales				(0.8	)			(0.8	)						0.3				0.1
		Total used			9.2				9.7							9.8				10.0
	Parts and service				54.8				54.5							54.2				54.4
	Finance and insurance				100.0				100.0							100.0				100.0
		Total			15.4	%			15.6	%						15.8	%			16.2	%
GROSS PROFIT:
	New vehicle retail sales			$	70,411			$	70,312			0.1	%		$	134,891			$	134,826			0.0	%
	Used vehicle retail sales				36,358				37,128			(2.1	)			73,131				72,168			1.3
	Used vehicle wholesale sales				(645	)			(730	)		11.6				524				249			110.4
		Total used			35,713				36,398			(1.9	)			73,655				72,417			1.7
	Parts and service				98,363				89,759			9.6				192,651				178,092			8.2
	Finance and insurance				53,487				47,193			13.3				103,934				95,151			9.2
		Total		$	257,974			$	243,662			5.9	%		$	505,131			$	480,486			5.1	%
UNITS SOLD:
	Retail new vehicles sold				35,313				33,442			5.6	%			66,549				62,411			6.6	%
	Retail used vehicles sold				17,688				17,549			0.8				35,016				33,812			3.6
	Wholesale used vehicles sold				12,467				11,757			6.0				23,239				22,412			3.7
		Total used			30,155				29,306			2.9	%			58,255				56,224			3.6	%
GROSS PROFIT PER UNIT SOLD:
	New vehicle retail sales			$	1,994			$	2,103			(5.2	)%		$	2,027			$	2,160			(6.2	)%
	Used vehicle retail sales				2,056				2,116			(2.8	)			2,089				2,134			(2.1	)
	Used vehicle wholesale sales				(52	)			(62	)		16.1				23				11			109.1
	Total used				1,184				1,242			(4.7	)			1,264				1,288			(1.9	)
	Finance and insurance (per retail unit)				1,009				926			9.0				1,023				989			3.4
OTHER:
	SG&A expenses			$	196,773			$	182,944			7.6	%		$	394,936			$	363,420			8.7	%
	SG&A as % revenues				11.7	%			11.7	%						12.3	%			12.2	%
	SG&A as % gross profit				76.3	%			75.1	%						78.2	%			75.6	%
	Operating margin				3.3	%			3.6	%						3.1	%			3.6	%
	Pretax income margin				2.2	%			2.5	%						2.0	%			2.5	%
	Floorplan interest			$	(11,802	)		$	(13,033	)		(9.4	)%		$	(24,040	)		$	(24,878	)		(3.4	)%
	Floorplan assistance				9,947				9,691			2.6				19,035				18,162			4.8
		Net floorplan (expense) income		$	(1,855	)		$	(3,342	)		(44.5	)%		$	(5,005	)		$	(6,716	)		(25.5	)%

Group 1 Automotive, Inc.
Additional Information - Same Store(1)
(Unaudited)
(Dollars in thousands, except per unit amounts)
				Three Months Ended June 30,											Six Months Ended June 30,
				2007				2006				% Change			2007				2006				% Change
REVENUES:
	New vehicle retail sales			$	932,294			$	949,528			(1.8	)%		$	1,752,311			$	1,788,478			(2.0	)%
	Used vehicle retail sales				265,114				276,936			(4.3	)			521,659				531,095			(1.8	)
	Used vehicle wholesale sales				70,294				83,065			(15.4	)			134,155				160,715			(16.5	)
		Total used			335,408				360,001			(6.8	)			655,814				691,810			(5.2	)
	Parts and service				160,747				157,666			2.0				320,040				312,862			2.3
	Finance and insurance				49,590				46,097			7.6				96,028				92,441			3.9
		Total		$	1,478,039			$	1,513,292			(2.3	)%		$	2,824,193			$	2,885,591			(2.1	)%
GROSS MARGIN:
	New vehicle retail sales				6.6	%			7.3	%						6.7	%			7.4	%
	Used vehicle retail sales				12.1				12.8							12.6				12.9
	Used vehicle wholesale sales				(0.9	)			(0.7	)						0.1				0.3
		Total used			9.4				9.7							10.1				10.0
	Parts and service				54.5				54.8							54.0				54.7
	Finance and insurance				100.0				100.0							100.0				100.0
		Total			15.6	%			15.6	%						16.0	%			16.1	%
GROSS PROFIT:
	New vehicle retail sales			$	61,425			$	68,961			(10.9	)%		$	117,924			$	131,927			(10.6	)%
	Used vehicle retail sales				32,209				35,368			(8.9	)			65,809				68,716			(4.2	)
	Used vehicle wholesale sales				(648	)			(551	)		(17.6	)			113				516			(78.1	)
		Total used			31,561				34,817			(9.4	)			65,922				69,232			(4.8	)
	Parts and service				87,634				86,449			1.4				172,683				171,122			0.9
	Finance and insurance				49,590				46,097			7.6				96,028				92,441			3.9
		Total		$	230,210			$	236,324			(2.6	)%		$	452,557			$	464,722			(2.6	)%
UNITS SOLD:
	Retail new vehicles sold				31,266				32,761			(4.6	)%			58,546				60,961			(4.0	)%
	Retail used vehicles sold				15,636				16,717			(6.5	)			31,144				32,223			(3.3	)
	Wholesale used vehicles sold				10,940				11,252			(2.8	)			20,380				21,475			(5.1	)
		Total used			26,576				27,969			(5.0	)%			51,524				53,698			(4.0	)%
GROSS PROFIT PER UNIT SOLD:
	New vehicle retail sales			$	1,965			$	2,105			(6.7	)%		$	2,014			$	2,164			(6.9	)%
	Used vehicle retail sales				2,060				2,116			(2.6	)			2,113				2,133			(0.9	)
	Used vehicle wholesale sales				(59	)			(49	)		(20.4	)			6				24			(75.0	)
	Total used				1,188				1,245			(4.6	)			1,279				1,289			(0.8	)
	Finance and insurance (per retail unit)				1,057				932			13.4				1,071				992			8.0
OTHER:
	SG&A expenses			$	176,070			$	178,020			(1.1	)%		$	352,541			$	349,819			0.8	%
	SG&A as % revenues				11.9	%			11.8	%						12.5	%			12.1	%
	SG&A as % gross profit				76.5	%			75.3	%						77.9	%			75.3	%
	Operating margin				3.4	%			3.6	%						3.2	%			3.7	%
	Floorplan interest			$	(10,344	)		$	(12,486	)		(17.2	)%		$	(21,216	)		$	(23,784	)		(10.8	)%
	Floorplan assistance				9,151				9,426			(2.9	)			17,357				17,610			(1.4	)
		Net floorplan (expense) income		$	(1,193	)		$	(3,060	)		(61.0	)%		$	(3,859	)		$	(6,174	)		(37.5	)%
(1) Same store amounts include the results for the identical months in each period presented in the comparison, commencing with the first month we owned the dealership and, in the case of dispositions, ending with the last month we owned it. Same store results also include the activities of our corporate office.

Group 1 Automotive, Inc.
Reconciliation of Certain Non-GAAP Financial Measures
(Unaudited)
(Dollars in thousands, except per share amounts)
SG&A RECONCILIATION:
						Three Months Ended June 30,											Six Months Ended June 30,
						2007				2006				% Change			2007				2006				% Change
	As reported					$	196,773			$	182,944			7.6	%		$	394,936			$	363,420			8.7	%
	Adjustments:
		Lease terminations					(500	)			-							(4,307	)			-
		DMS Conversion Costs					(494	)			-							(553	)			-
		Gain on disposal					623				1,208							607				2,508
		Change in vacation policy					-				-							(2,300	)			-
		Hurrican related insurance proceeds
							-				6,527							-				6,527
		Severance costs					-				(1,100	)						-				(1,100	)
		Bohn Dodge settlements					-				(4,500	)						-				(4,500	)
				Adjusted (1)		$	196,402			$	185,079			6.1	%		$	388,383			$	366,855			5.9	%
SG&A AS A % OF GROSS PROFIT
	As reported						76.3	%			75.1	%						78.2	%			75.6	%
	Adjusted						76.1	%			76.0	%						76.9	%			76.4	%
NET INCOME RECONCILIATION:
						Three Months Ended June 30,											Six Months Ended June 30,
						2007				2006				% Change			2007				2006				% Change
	As reported					$	24,216			$	24,872			(2.6	)%		$	41,663			$	47,183			(11.7	)%
	Adjustments:
		Lease Terminations					326				-							2,809				-
		Asset impairments					232				-							232				-
				Adjusted (1)		$	24,774			$	24,872			(0.4	)%		$	44,704			$	47,183			(5.3	)%
DILUTED EARNINGS PER SHARE RECONCILIATION:
						Three Months Ended June 30,											Six Months Ended June 30,
						2007				2006				% Change			2007				2006				% Change
	As reported					$	1.01			$	1.00			1.0	%		$	1.74			$	1.91			(8.9	)%
	Adjustments:
		Lease Terminations					0.01				-							0.12				-
		Asset impairments					0.01				-							0.01				-
				Adjusted (1)		$	1.03			$	1.00			3.0	%		$	1.87			$	1.91			(2.1	)%
(1) Adjusted net income and adjusted diluted earnings per share means net income or diluted earnings per share, as the case may be, plus the adjustments noted above. We use adjusted net income and adjusted diluted earnings per share in our evaluation of the performance of the company, as we believe that they provide additional information regarding the performance of our operations. We believe the presentation of these measures is relevant and useful to investors because they improve period-to-period comparability and are more reflective of our operating performance. Neither of these measures is a measure of financial performance under GAAP. Accordingly, they should not be considered as substitutes for net income or diluted earnings per share prepared in accordance with GAAP. Although we find these non-GAAP results useful in evaluating the performance of our business, our reliance on these measures is limited because the adjustments often have a material impact on our net income and diluted earnings per share calculated in accordance with GAAP.  Therefore, we typically use these adjusted numbers in conjunction with our GAAP results to address these limitations.