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Asbury Automotive Group Announces 2019 Third Quarter Financial Results

Record third quarter EPS of $2.33 per diluted share, up 7% over prior year EPS and up 5% over prior year adjusted EPS (a non-GAAP measure)

DULUTH, Ga., Oct. 22, 2019 /PRNewswire/ -- Asbury Automotive Group, Inc. (ABG), one of the largest automotive retail and service companies in the U.S., reported net income for the third quarter 2019 of $45.0 million ($2.33 per diluted share).  There were no adjustments in the third quarter. This compares to net income of $44.3 million ($2.18 per diluted share) in the prior year quarter and adjusted net income of $44.9 million ($2.21 per diluted share).

Net income for the third quarter 2018 was adjusted for a 2017 Tax Act adjustment of $0.6 million ($0.03 per diluted share).

"We delivered a very strong quarter. We grew revenue 5%, delivered 9% parts and service gross profit growth, grew F&I gross profit by 10%, and grew adjusted EPS 5%," said David Hult, Asbury's President and Chief Executive Officer. "During the quarter, we expanded our business by acquiring a Toyota store in Indianapolis and a Subaru store in Denver. We expect these stores to generate approximately $175 million in combined annual revenues."

Third Quarter 2019 Operational Summary

Total company:

  • Total revenue increased 5%; gross profit increased 5%
  • Gross margin increased 10 basis points to 15.9%
  • SG&A as a percentage of gross profit increased 100 basis points to 68.9%
  • Adjusted operating margin 4.5%
  • Adjusted EPS from continuing operations increased 5%

Same store:

  • Total revenue increased 2%; gross profit increased 3%
  • Gross margin increased 20 basis points to 16.0%
  • New vehicle revenue decreased 3%; gross profit decreased 12%
  • Used vehicle retail revenue increased 9%; gross profit decreased 1%
  • Finance and insurance revenue and gross profit increased 8%
  • Parts and service revenue increased 8%; gross profit increased 7%

Strategic Highlights:

  • Acquired a Toyota store in the Indianapolis market and a Subaru store in the Colorado market. We expect these stores to generate approximately $175 million in combined annual revenues.
  • Repurchased $4 million of common stock

Additional commentary regarding the third quarter results will be provided during the earnings conference call on October 22, 2019 at 10:00 a.m.  The conference call will be simulcast live on the internet and can be accessed at www.asburyauto.com.  A replay will be available at these sites for 30 days.

In addition, a live audio of the call will be accessible to the public by calling (323) 994-2093 (domestic), or (866) 575-6539 (international); passcode - 3004343.  Callers should dial in approximately 5 to 10 minutes before the call begins.

A conference call replay will be available two hours following the call for seven days, and can be accessed by calling (888) 203-1112 (domestic), or (719) 457-0820 (international); passcode - 3004343.

About Asbury Automotive Group, Inc.

Asbury Automotive Group, Inc. ("Asbury"), a Fortune 500 company headquartered in Duluth, GA, is one of the largest automotive retailers in the U.S.  Asbury currently operates 88 dealerships, consisting of 107 franchises, representing 31 domestic and foreign brands of vehicles.  Asbury also operates 25 collision repair centers.  Asbury offers customers an extensive range of automotive products and services, including new and used vehicle sales and related financing and insurance, vehicle maintenance and repair services, replacement parts and service contracts.

Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements are statements other than historical fact, and may include statements relating to goals, plans, market conditions and projections regarding Asbury's financial position, liquidity, results of operations, market position and dealership portfolio, and other initiatives and future business strategy.  These statements are based on management's current expectations and beliefs and involve significant 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, market factors, Asbury's relationships with, and the financial and operational stability of, vehicle manufacturers and other suppliers, acts of God or other incidents which may adversely impact supply from vehicle manufacturers and/or present retail sales challenges, risks associated with Asbury's indebtedness (including available borrowing capacity, compliance with its financial covenants and ability to refinance or repay such indebtedness, on favorable terms), Asbury's relationships with, and the financial stability of, its lenders and lessors, risks related to competition in the automotive retail and service industries, general economic conditions both nationally and locally, governmental regulations, legislation, adverse results in litigation and other proceedings, and Asbury's ability to execute its IT initiatives and other operational strategies, Asbury's ability to leverage gains from its dealership portfolio, Asbury's ability to capitalize on opportunities to repurchase its debt and equity securities or purchase properties that it currently leases, and Asbury's ability to stay within its targeted range for capital expenditures.  There can be no guarantees that Asbury's plans for future operations will be successfully implemented or that they will prove to be commercially successful.

These and other risk factors that could cause actual results to differ materially from those expressed or implied in our forward-looking statements are and will be discussed in Asbury's filings with the U.S. Securities and Exchange Commission from time to time, including its most recent annual report on Form 10-K and any subsequently filed quarterly reports on Form 10-Q.  We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.

 

ASBURY AUTOMOTIVE GROUP, INC.

CONSOLIDATED STATEMENTS OF INCOME (In millions, except per share data)

(Unaudited)



For the Three Months
Ended September 30,


Increase
(Decrease)


%
Change


2019


2018



REVENUE:








New vehicle

$

986.9



$

980.5



$

6.4



1

%

Used vehicle:








Retail

505.0



448.7



56.3



13

%

Wholesale

41.9



48.8



(6.9)



(14)

%

     Total used vehicle

546.9



497.5



49.4



10

%

Parts and service

227.6



206.1



21.5



10

%

Finance and insurance, net

80.6



73.3



7.3



10

%

TOTAL REVENUE

1,842.0



1,757.4



84.6



5

%

GROSS PROFIT:








New vehicle

38.6



42.1



(3.5)



(8)

%

Used vehicle:








Retail

33.9



32.7



1.2



4

%

Wholesale

(1.5)



0.1



(1.6)



NM


     Total used vehicle

32.4



32.8



(0.4)



(1)

%

Parts and service

141.5



129.8



11.7



9

%

Finance and insurance, net

80.6



73.3



7.3



10

%

TOTAL GROSS PROFIT

293.1



278.0



15.1



5

%

OPERATING EXPENSES:








Selling, general and administrative

202.0



188.8



13.2



7

%

Depreciation and amortization

9.1



8.5



0.6



7

%

Other operating (income) expenses, net

(0.2)



(0.1)



(0.1)



(100)

%

INCOME FROM OPERATIONS

82.2



80.8



1.4



2

%

OTHER EXPENSES (INCOME):








Floor plan interest expense

9.0



8.4



0.6



7

%

Other interest expense, net

13.7



13.2



0.5



4

%

Swap interest expense



0.1



(0.1)



%

Total other expenses, net

22.7



21.7



1.0



5

%

INCOME BEFORE INCOME TAXES

59.5



59.1



0.4



1

%

Income tax expense

14.5



14.8



(0.3)



(2)

%

NET INCOME

$

45.0



$

44.3



$

0.7



2

%

EARNINGS PER COMMON SHARE:








Basic—








Net income

$

2.36



$

2.22



$

0.14



6

%

Diluted—








Net income

$

2.33



$

2.18



$

0.15



7

%

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:








Basic

19.1



20.0



(0.9)



(5)

%

Restricted stock

0.1



0.1





%

Performance share units

0.1



0.2



(0.1)



(50)

%

Diluted

19.3



20.3



(1.0)



(5)

%

______________________________

NMNot Meaningful

 

 

ASBURY AUTOMOTIVE GROUP, INC.

KEY OPERATING HIGHLIGHTS (In millions, except per unit data)

(Unaudited)



For the Three Months
Ended September 30,


Increase
(Decrease)


%
Change


2019


2018



Unit sales








New vehicle:








Luxury

6,025



5,685



340



6

%

Import

15,998



17,046



(1,048)



(6)

%

Domestic

5,055



5,019



36



1

%

     Total new vehicle

27,078



27,750



(672)



(2)

%

Used vehicle retail

22,988



20,824



2,164



10

%

Used to new ratio

84.9

%


75.0

%


990 bps




Average selling price








New vehicle

$

36,447



$

35,333



$

1,114



3

%

Used vehicle retail

21,968



21,547



421



2

%

Average gross profit per unit








New vehicle:








Luxury

$

3,270



$

3,272



$

(2)



%

Import

638



903



(265)



(29)

%

Domestic

1,721



1,614



107



7

%

Total new vehicle

1,426



1,517



(91)



(6)

%

Used vehicle retail

1,475



1,570



(95)



(6)

%

Finance and insurance, net

1,610



1,509



101



7

%

Front end yield (1)

3,058



3,049



9



%

Gross margin








New vehicle:








Luxury

6.1

%


6.2

%


(10) bps




Import

2.2

%


3.2

%


(100) bps




Domestic

4.2

%


4.1

%


10 bps




Total new vehicle

3.9

%


4.3

%


(40) bps




Used vehicle retail

6.7

%


7.3

%


(60) bps




Parts and service

62.2

%


63.0

%


(80) bps




Total gross profit margin

15.9

%


15.8

%


10 bps




SG&A metrics








Rent expense

$

6.7



$

6.4



$

0.3



5

%

Total SG&A as a percentage of gross profit

68.9

%


67.9

%


100 bps




SG&A, excluding rent expense as a percentage of gross profit

66.6

%


65.6

%


100 bps




Operating metrics








Income from operations as a percentage of revenue

4.5

%


4.6

%


(10) bps




Income from operations as a percentage of gross profit

28.0

%


29.1

%


(110) bps




Adjusted income from operations as a percentage of revenue

4.5

%


4.6

%


(10) bps




Adjusted income from operations as a percentage of gross profit

28.0

%


29.1

%


(110) bps




Revenue mix








New vehicle

53.6

%


55.8

%





Used vehicle retail

27.3

%


25.5

%





Used vehicle wholesale

2.3

%


2.8

%





Parts and service

12.4

%


11.7

%





Finance and insurance

4.4

%


4.2

%





     Total revenue

100.0

%


100.0

%





Gross profit mix








New vehicle

13.2

%


15.1

%





Used vehicle retail

11.5

%


11.8

%





Used vehicle wholesale

(0.5)

%


%





Parts and service

48.3

%


46.7

%





Finance and insurance

27.5

%


26.4

%





     Total gross profit

100.0

%


100.0

%





_____________________________

(1)

Front end yield is calculated as gross profit from new vehicles, used retail vehicles and finance and insurance (net), divided by combined new and used retail unit sales.

 

 

ASBURY AUTOMOTIVE GROUP, INC.

SAME STORE OPERATING HIGHLIGHTS (In millions)

(Unaudited)



For the Three Months
Ended September 30,


Increase
(Decrease)


%
Change


2019


2018



Revenue








New vehicle:








Luxury

$

323.1



$

297.8



$

25.3



8

%

Import

450.8



474.0



(23.2)



(5)

%

Domestic

169.2



197.5



(28.3)



(14)

%

     Total new vehicle

943.1



969.3



(26.2)



(3)

%

Used Vehicle:








Retail

481.7



442.4



39.3



9

%

Wholesale

40.5



47.5



(7.0)



(15)

%

     Total used vehicle

522.2



489.9



32.3



7

%

Parts and service

220.8



203.8



17.0



8

%

Finance and insurance

77.8



72.2



5.6



8

%

Total revenue

$

1,763.9



$

1,735.2



$

28.7



2

%









Gross profit








New vehicle:








Luxury

$

19.7



$

18.7



$

1.0



5

%

Import

10.1



14.8



(4.7)



(32)

%

Domestic

6.9



8.1



(1.2)



(15)

%

     Total new vehicle

36.7



41.6



(4.9)



(12)

%

Used Vehicle:








Retail

32.0



32.4



(0.4)



(1)

%

Wholesale

(1.5)



0.2



(1.7)



NM


     Total used vehicle

30.5



32.6



(2.1)



(6)

%

Parts and service:








Customer pay

77.0



72.2



4.8



7

%

Warranty

21.6



19.1



2.5



13

%

Wholesale parts

5.8



5.5



0.3



5

%

     Parts and service, excluding reconditioning and preparation

104.4



96.8



7.6



8

%

Reconditioning and preparation

32.6



31.5



1.1



3

%

Total parts and service

137.0



128.3



8.7



7

%

Finance and insurance

77.8



72.2



5.6



8

%

Total gross profit

$

282.0



$

274.7



$

7.3



3

%









SG&A expense

$

194.6



$

186.2



$

8.4



5

%

SG&A expense as a percentage of gross profit

69.0

%


67.8

%


120 bps




_____________________________

Same store amounts consist of information from dealerships for identical months in each comparative period, commencing with the first month we owned the dealership. Additionally, amounts related to divested dealerships are excluded from each comparative period.

 

 

ASBURY AUTOMOTIVE GROUP, INC.

SAME STORE OPERATING HIGHLIGHTS (Continued)

(Unaudited)



For the Three Months
Ended September 30,


Increase
(Decrease)


%
Change


2019


2018



Unit sales








New vehicle:








Luxury

5,993



5,685



308



5

%

Import

15,828



16,619



(791)



(5)

%

Domestic

4,165



5,019



(854)



(17)

%

     Total new vehicle

25,986



27,323



(1,337)



(5)

%

Used vehicle retail

21,810



20,511



1,299



6

%

Used to new ratio

83.9

%


75.1

%


880 bps












Average selling price








New vehicle

$

36,293



$

35,476



$

817



2

%

Used vehicle retail

22,086



21,569



517



2

%









Average gross profit per unit








New vehicle:








Luxury

$

3,287



$

3,289



$

(2)



%

Import

638



891



(253)



(28)

%

Domestic

1,657



1,614



43



3

%

Total new vehicle

1,412



1,523



(111)



(7)

%

Used vehicle retail

1,467



1,580



(113)



(7)

%

Finance and insurance, net

1,628



1,509



119



8

%

Front end yield (1)

3,065



3,056



9



%









Gross margin








New vehicle:








Luxury

6.1

%


6.3

%


(20) bps




Import

2.2

%


3.1

%


(90) bps




Domestic

4.1

%


4.1

%


—bps




Total new vehicle

3.9

%


4.3

%


(40) bps




Used vehicle retail

6.6

%


7.3

%


(70) bps




Parts and service:








Parts and service, excluding reconditioning and preparation

47.3

%


47.5

%


(20) bps




Parts and service, including reconditioning and preparation

62.0

%


63.0

%


(100) bps




Total gross profit margin

16.0

%


15.8

%


20 bps




_____________________________

Same store amounts consist of information from dealerships for identical months in each comparative period, commencing with the first month we owned the dealership. Additionally, amounts related to divested dealerships are excluded from each comparative period.


(1)  Front end yield is calculated as gross profit from new vehicles, used retail vehicles and finance and insurance (net),

      divided by combined new and used retail unit sales.

 

 

null

ASBURY AUTOMOTIVE GROUP, INC.

CONSOLIDATED STATEMENTS OF INCOME (In millions, except per share data)

(Unaudited)



For the Nine Months
Ended September 30,


Increase
(Decrease)


%
Change


2019


2018



REVENUE:








New vehicle

$

2,823.9



$

2,766.3



$

57.6



2

%

Used vehicle:








Retail

1,449.8



1,355.4



94.4



7

%

Wholesale

140.6



143.6



(3.0)



(2)

%

     Total used vehicle

1,590.4



1,499.0



91.4



6

%

Parts and service

669.7



609.9



59.8



10

%

Finance and insurance, net

232.3



215.0



17.3



8

%

TOTAL REVENUE

5,316.3



5,090.2



226.1



4

%

GROSS PROFIT:








New vehicle

114.8



121.3



(6.5)



(5)

%

Used vehicle:








Retail

102.2



98.5



3.7



4

%

Wholesale

0.6



1.9



(1.3)



(68)

%

     Total used vehicle

102.8



100.4



2.4



2

%

Parts and service

417.4



384.5



32.9



9

%

Finance and insurance, net

232.3



215.0



17.3



8

%

TOTAL GROSS PROFIT

867.3



821.2



46.1



6

%

OPERATING EXPENSES:








Selling, general and administrative

593.7



563.6



30.1



5

%

Depreciation and amortization

26.7



25.2



1.5



6

%

Other operating expense (income), net

1.0



(1.2)



2.2



NM


INCOME FROM OPERATIONS

245.9



233.6



12.3



5

%

OTHER EXPENSES (INCOME):








Floor plan interest expense

29.7



23.0



6.7



29

%

Other interest expense, net

41.2



39.4



1.8



5

%

Swap interest expense



0.5



(0.5)



(100)

%

Gain on divestiture

(11.7)





(11.7)



%

Total other expenses, net

59.2



62.9



(3.7)



(6)

%

INCOME BEFORE INCOME TAXES

186.7



170.7



16.0



9

%

Income tax expense

45.9



43.1



2.8



6

%

NET INCOME

$

140.8



$

127.6



$

13.2



10

%

EARNINGS PER COMMON SHARE:








Basic—








Net income

$

7.37



$

6.29



$

1.08