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Asbury Automotive Group Announces Third Quarter 2017 Financial Results

DULUTH, Ga., Oct. 24, 2017 /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 2017 of $30.7 million, or $1.48 per diluted share.

During the quarter, we had two non-recurring events that negatively impacted our results.  First, our dealerships in Florida, Georgia, and Houston, Texas had various levels of business interruption due to Hurricanes Irma and Harvey. We believe the net impact of the hurricanes was a reduction in earnings of at least $0.10 per diluted share.  Second, the CEO transition announced in August resulted in an accounting charge of $0.05 per diluted share. We did not adjust our earnings for the above events.

"Our team did an outstanding job managing through the tragic storms that we experienced this quarter.  Due to their efforts we were able to limit the storms' impact on our business," said Craig Monaghan, Asbury's President and Chief Executive Officer.

"Despite the hurricanes, we were able to grow our F&I and parts and service business," said Asbury's Executive Vice President and Chief Operating Officer, David Hult. "This together with strong expense control helped us improve our industry-leading operating margin to 4.4% for the quarter."

For the nine-month period ended September 30, 2017, the Company reported net income of $96.6 million, or $4.60 per diluted share.

Additional commentary regarding the third quarter results will be provided during the earnings conference call on October 24 at 10:00 a.m.  The conference call will be simulcast live on the internet and can be accessed at www.asburyauto.com or www.ccbn.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 (800) 239-9838 (domestic), or (323) 794-2551 (international); passcode - 6516255.  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 - 6516255.

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 80 dealerships, consisting of 94 franchises, representing 29 domestic and foreign brands of vehicles.  Asbury also operates 24 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


2017


2016



REVENUE:








New vehicle

$

881.6



$

940.9



$

(59.3)



(6)

%

Used vehicle:








Retail

400.1



423.3



(23.2)



(5)

%

Wholesale

55.5



53.1



2.4



5

%

     Total used vehicle

455.6



476.4



(20.8)



(4)

%

Parts and service

197.2



200.4



(3.2)



(2)

%

Finance and insurance, net

67.7



65.4



2.3



4

%

TOTAL REVENUE

1,602.1



1,683.1



(81.0)



(5)

%

GROSS PROFIT:








New vehicle

41.0



47.5



(6.5)



(14)

%

Used vehicle:








Retail

28.9



31.9



(3.0)



(9)

%

Wholesale

(0.1)



(2.1)



2.0



95

%

     Total used vehicle

28.8



29.8



(1.0)



(3)

%

Parts and service

122.8



123.0



(0.2)



%

Finance and insurance, net

67.7



65.4



2.3



4

%

TOTAL GROSS PROFIT

260.3



265.7



(5.4)



(2)

%

OPERATING EXPENSES:








Selling, general and administrative

182.5



185.7



(3.2)



(2)

%

Depreciation and amortization

8.1



7.8



0.3



4

%

Other operating expenses, net



1.5



(1.5)



(100)

%

INCOME FROM OPERATIONS

69.7



70.7



(1.0)



(1)

%

OTHER EXPENSES:








Floor plan interest expense

5.8



5.0



0.8



16

%

Other interest expense, net

13.4



13.2



0.2



2

%

Swap interest expense

0.4



0.8



(0.4)



(50)

%

Total other expenses, net

19.6



19.0



0.6



3

%

INCOME BEFORE INCOME TAXES

50.1



51.7



(1.6)



(3)

%

Income tax expense

19.4



19.3



0.1



1

%

NET INCOME

$

30.7



$

32.4



$

(1.7)



(5)

%

EARNINGS PER COMMON SHARE:








Basic—








Net income

$

1.49



$

1.47



$

0.02



1

%

Diluted—








Net income

$

1.48



$

1.47



$

0.01



1

%

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:








Basic

20.6



22.0



(1.4)



(6)

%

Restricted stock

0.1





0.1



%

Performance share units

0.1



0.1





%

Diluted

20.8



22.1



(1.3)



(6)

%

 

 

ASBURY AUTOMOTIVE GROUP, INC.

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

(Unaudited)



For the Three Months Ended
September 30,


Increase
(Decrease)


%
Change


2017


2016



Unit sales








New vehicle:








Luxury

5,499



6,061



(562)



(9)

%

Import

14,997



15,522



(525)



(3)

%

Domestic

4,691



5,232



(541)



(10)

%

     Total new vehicle

25,187



26,815



(1,628)



(6)

%

Used vehicle retail

18,777



20,030



(1,253)



(6)

%

Used to new ratio

74.6

%


74.7

%


(10)

 bps



Average selling price








New vehicle

$

35,002



$

35,089



$

(87)



%

Used vehicle retail

21,308



21,133



175



1

%

Average gross profit per unit








New vehicle:








Luxury

$

3,364



$

3,432



$

(68)



(2)

%

Import

960



1,179



(219)



(19)

%

Domestic

1,727



1,606



121



8

%

Total new vehicle

1,628



1,771



(143)



(8)

%

Used vehicle

1,539



1,593



(54)



(3)

%

Finance and insurance, net

1,540



1,396



144



10

%

Front end yield (1)

3,130



3,091



39



1

%

Gross margin








New vehicle:








Luxury

6.4

%


6.5

%


(10)

bps



Import

3.5

%


4.3

%


(80)

bps



Domestic

4.5

%


4.3

%


20

bps



Total new vehicle

4.7

%


5.0

%


(30)

bps



Used vehicle retail

7.2

%


7.5

%


(30)

bps



Parts and service

62.3

%


61.4

%


90

bps



Total gross profit margin

16.2

%


15.8

%


40

bps



SG&A metrics








Rent expense

$

6.5



$

7.6



$

(1.1)



(14)

%

Total SG&A as a percentage of gross profit

70.1

%


69.9

%


20

bps



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

67.6

%


67.0

%


60

bps



Operating metrics








Income from operations as a percentage of revenue

4.4

%


4.2

%


20

bps



Income from operations as a percentage of gross profit

26.8

%


26.6

%


20

bps



Adjusted income from operations as a percentage of revenue

4.4

%


4.3

%


10

bps



Adjusted income from operations as a percentage of gross profit

26.8

%


27.3

%


(50)

bps



Revenue mix








New vehicle

55.0

%


55.9

%





Used vehicle retail

25.0

%


25.1

%





Used vehicle wholesale

3.5

%


3.2

%





Parts and service

12.3

%


11.9

%





Finance and insurance

4.2

%


3.9

%





     Total revenue

100.0

%


100.0

%





Gross profit mix








New vehicle

15.8

%


17.9

%





Used vehicle retail

11.0

%


12.0

%





Used vehicle wholesale

%


(0.8)

%





Parts and service

47.2

%


46.3

%





Finance and insurance

26.0

%


24.6

%





     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


2017


2016



Revenue








New vehicle:








Luxury

$

288.3



$

310.3



$

(22.0)



(7)

%

Import

406.7



410.8



(4.1)



(1)

%

Domestic

159.1



183.6



(24.5)



(13)

%

     Total new vehicle

854.1



904.7



(50.6)



(6)

%

Used Vehicle:








Retail

386.0



396.9



(10.9)



(3)

%

Wholesale

52.8



50.2



2.6



5

%

     Total used vehicle

438.8



447.1



(8.3)



(2)

%

Parts and service

193.6



191.4



2.2



1

%

Finance and insurance

65.5



62.3



3.2



5

%

Total revenue

$

1,552.0



$

1,605.5



$

(53.5)



(3)

%









Gross profit








New vehicle:








Luxury

$

18.5



$

20.2



$

(1.7)



(8)

%

Import

14.5



17.8



(3.3)



(19)

%

Domestic

6.9



8.0



(1.1)



(14)

%

     Total new vehicle

39.9



46.0



(6.1)



(13)

%

Used Vehicle:








Retail

27.5



30.4



(2.9)



(10)

%

Wholesale



(2.1)



2.1



100

%

     Total used vehicle

27.5



28.3



(0.8)



(3)

%

Parts and service:








Customer pay

66.8



64.2



2.6



4

%

Warranty

20.3



19.3



1.0



5

%

Wholesale parts

5.2



4.8



0.4



8

%

     Parts and service, excluding reconditioning and preparation

92.3



88.3



4.0



5

%

Reconditioning and preparation

28.1



29.3



(1.2)



(4)

%

Total parts and service

120.4



117.6



2.8



2

%

Finance and insurance

65.5



62.3



3.2



5

%

Total gross profit

$

253.3



$

254.2



$

(0.9)



%









SG&A expense

$

177.1



$

176.6



$

0.5



%

SG&A expense as a percentage of gross profit

69.9

%


69.5

%


40

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


2017


2016



Unit sales








New vehicle:








Luxury

5,499



5,913



(414)



(7)

%

Import

14,753



14,969



(216)



(1)

%

Domestic

4,103



4,899



(796)



(16)

%

     Total new vehicle

24,355



25,781



(1,426)



(6)

%

Used vehicle retail

17,993



18,558



(565)



(3)

%

Used to new ratio

73.9

%


72.0

%


190

bps











Average selling price








New vehicle

$

35,069



$

35,092



$

(23)



%

Used vehicle retail

21,453



21,387



66



%









Average gross profit per unit








New vehicle:








Luxury

$

3,364



$

3,416



$

(52)



(2)

%

Import

983



1,189



(206)



(17)

%

Domestic

1,682



1,633



49



3

%

Total new vehicle

1,638



1,784



(146)



(8)

%

Used vehicle retail

1,528



1,638



(110)



(7)

%

Finance and insurance, net

1,547



1,405



142



10

%

Front end yield (1)

3,138



3,128



10



%









Gross margin








New vehicle:








Luxury

6.4

%


6.5

%


(10)

bps



Import

3.6

%


4.3

%


(70)

bps



Domestic

4.3

%


4.4

%


(10)

bps



Total new vehicle

4.7

%


5.1

%


(40)

bps



Used vehicle retail

7.1

%


7.7

%


(60)

bps



Parts and service:








Parts and service, excluding reconditioning and preparation

47.7

%


46.1

%


160

bps



Parts and service, including reconditioning and preparation

62.2

%


61.4

%


80

bps



Total gross profit margin

16.3

%


15.8

%


50

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.


 

 

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


2017


2016



REVENUE:








New vehicle

$

2,597.0



$

2,676.3



$

(79.3)



(3)

%

Used vehicle:








Retail

1,245.7



1,254.7



(9.0)



(1)

%

Wholesale

150.9



152.8



(1.9)



(1)

%

     Total used vehicle

1,396.6



1,407.5



(10.9)



(1)

%

Parts and service

589.5



584.9



4.6



1

%

Finance and insurance, net

202.5



192.6



9.9



5

%

TOTAL REVENUE

4,785.6



4,861.3



(75.7)



(2)

%

GROSS PROFIT:








New vehicle

122.4



139.7



(17.3)



(12)

%

Used vehicle:








Retail

94.4



101.4



(7.0)



(7)

%

Wholesale

1.0



(1.6)



2.6



163

%

     Total used vehicle

95.4



99.8



(4.4)



(4)

%

Parts and service

367.2



362.0



5.2



1

%

Finance and insurance, net

202.5



192.6



9.9



5

%

TOTAL GROSS PROFIT

787.5



794.1



(6.6)



(1)

%

OPERATING EXPENSES:








Selling, general and administrative

549.2



549.2





%

Depreciation and amortization

24.0



23.0



1.0



4

%

Other operating expenses, net

0.7



4.2



(3.5)



(83)

%

INCOME FROM OPERATIONS

213.6



217.7



(4.1)



(2)

%

OTHER EXPENSES:








Floor plan interest expense

17.1



14.4



2.7



19

%

Other interest expense, net

40.2



40.0



0.2



1

%

Swap interest expense

1.6



2.4



(0.8)



(33)

%

Total other expenses, net

58.9



56.8



2.1



4

%

INCOME BEFORE INCOME TAXES

154.7



160.9



(6.2)



(4)

%

Income tax expense

58.1



60.8



(2.7)



(4)

%

NET INCOME

$

96.6



$

100.1



$

(3.5)



(3)

%

EARNINGS PER COMMON SHARE:








Basic—








Net income

$

4.64



$

4.39



$

0.25



6

%

Diluted—








Net income

$

4.60



$

4.37



$

0.23



5

%

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:








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