Asbury Automotive Group Announces Record Second Quarter 2020 Financial Results
Record operating margin of 5.7%
Record low SG&A as a percentage of gross profit of 62.7%
Record 20% of used sales transacted online
DULUTH, Ga., July 28, 2020 /PRNewswire/ -- Asbury Automotive Group, Inc. (NYSE: ABG), one of the largest automotive retail and service companies in the U.S., reported net income for the second quarter 2020 of $49.6 million ($2.57 per diluted share) and adjusted net income (a non-GAAP measure) of $48.7 million ($2.52 per diluted share). This compares to net income of $54.9 million ($2.84 per diluted share) and adjusted net income of $45.9 million ($2.38 per diluted share) in the prior year quarter.
Net income for the second quarter 2020 was adjusted for a $1.2 million ($0.05 per diluted share) legal settlement gain. Net income for the second quarter 2019 was adjusted for an $11.7 million ($0.45 per diluted share) gain on a dealership divestiture and a $0.3 million ($0.01 per diluted share) gain on the sale of real estate.
"We delivered a very strong quarter and proved out the resilience and the flexibility of our business model by delivering a record operating margin of 5.7% and a record low SG&A as a percentage of gross profit of 62.7% in an 11.3 million SAAR environment," said David Hult, Asbury's President and Chief Executive Officer. "Our focus on gross profit combined with our cost restructuring efforts allowed us to remain pro-active and committed to long term growth by moving forward with acquiring 12 Park Place luxury franchises in the Dallas Fort Worth Market under more favorable terms than the prior agreement. This acquisition will add approximately $1.7 billion in expected annualized revenues and transform our total portfolio to 49% luxury stores. With the addition of Park Place, Asbury will be a stronger, more diversified company," Hult continued.
"Finally, I want to thank our teammates across our store network for their unwavering commitment and emphasis on safety during this pandemic; our performance is a direct result of their hard work and service," Hult concluded.
Second Quarter 2020 Highlights
- New gross profit per vehicle up 33% to $1,924
- Used retail gross profit per vehicle up 10% to $1,717
- 20% of used sales transacted online
- SG&A as a percentage of gross profit decreased 530 basis points to 62.7%
- Income from operations as percentage of revenue increased 90 basis points to 5.7%
- Adjusted EPS increased 6%
- Entered into a definitive agreement to acquire Park Place Dealerships, one of the country's largest and most prominent luxury dealer groups
- Ended the quarter with total liquidity of $747 million and a net leverage ratio of 1.5x
Additional commentary regarding the second quarter results will be provided during the earnings conference call on July 28, 2020 at 10:00 a.m. Eastern Time. The conference call will be simulcast live on the internet and can be accessed at www.asburyauto.com/company/investor-relations. A replay will be available at this site for 30 days.
In addition, a live audio of the call will be accessible to the public by calling (866) 248-8441 (domestic), or (323) 347-3612 (international); passcode – 8703938. 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 – 8703938.
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 83 dealerships, consisting of 102 franchises, representing 31 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, the impact of the COVID-19 pandemic, 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 technology initiatives and other operational strategies, Asbury's ability to leverage gains from its dealership portfolio, including its ability to complete and realize the expected benefits of the proposed acquisition of the Park Place dealership group. 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 |
Increase |
% |
|||||||||||||
2020 |
2019 |
||||||||||||||
REVENUE: |
|||||||||||||||
New vehicle |
$ |
761.8 |
$ |
965.2 |
$ |
(203.4) |
(21) |
% |
|||||||
Used vehicle: |
|||||||||||||||
Retail |
412.6 |
486.6 |
(74.0) |
(15) |
% |
||||||||||
Wholesale |
34.9 |
47.0 |
(12.1) |
(26) |
% |
||||||||||
Total used vehicle |
447.5 |
533.6 |
(86.1) |
(16) |
% |
||||||||||
Parts and service |
169.2 |
224.5 |
(55.3) |
(25) |
% |
||||||||||
Finance and insurance, net |
66.6 |
80.2 |
(13.6) |
(17) |
% |
||||||||||
TOTAL REVENUE |
1,445.1 |
1,803.5 |
(358.4) |
(20) |
% |
||||||||||
GROSS PROFIT: |
|||||||||||||||
New vehicle |
38.6 |
38.3 |
0.3 |
1 |
% |
||||||||||
Used vehicle: |
|||||||||||||||
Retail |
31.6 |
34.7 |
(3.1) |
(9) |
% |
||||||||||
Wholesale |
5.5 |
1.2 |
4.3 |
NM |
|||||||||||
Total used vehicle |
37.1 |
35.9 |
1.2 |
3 |
% |
||||||||||
Parts and service |
100.5 |
140.6 |
(40.1) |
(29) |
% |
||||||||||
Finance and insurance, net |
66.6 |
80.2 |
(13.6) |
(17) |
% |
||||||||||
TOTAL GROSS PROFIT |
242.8 |
295.0 |
(52.2) |
(18) |
% |
||||||||||
OPERATING EXPENSES: |
|||||||||||||||
Selling, general and administrative |
152.2 |
200.7 |
(48.5) |
(24) |
% |
||||||||||
Depreciation and amortization |
9.7 |
9.0 |
0.7 |
8 |
% |
||||||||||
Other operating income, net |
(1.3) |
(0.6) |
(0.7) |
(117) |
% |
||||||||||
INCOME FROM OPERATIONS |
82.2 |
85.9 |
(3.7) |
(4) |
% |
||||||||||
OTHER EXPENSES: |
|||||||||||||||
Floor plan interest expense |
4.1 |
10.5 |
(6.4) |
(61) |
% |
||||||||||
Other interest expense, net |
11.8 |
13.6 |
(1.8) |
(13) |
% |
||||||||||
Gain on divestiture |
— |
(11.7) |
11.7 |
100 |
% |
||||||||||
Total other expenses, net |
15.9 |
12.4 |
3.5 |
28 |
% |
||||||||||
INCOME BEFORE INCOME TAXES |
66.3 |
73.5 |
(7.2) |
(10) |
% |
||||||||||
Income tax expense |
16.7 |
18.6 |
(1.9) |
(10) |
% |
||||||||||
NET INCOME |
$ |
49.6 |
$ |
54.9 |
$ |
(5.3) |
(10) |
% |
|||||||
EARNINGS PER COMMON SHARE: |
|||||||||||||||
Basic— |
|||||||||||||||
Net income |
$ |
2.58 |
$ |
2.87 |
$ |
(0.29) |
(10) |
% |
|||||||
Diluted— |
|||||||||||||||
Net income |
$ |
2.57 |
$ |
2.84 |
$ |
(0.27) |
(10) |
% |
|||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: |
|||||||||||||||
Basic |
19.2 |
19.1 |
0.1 |
1 |
% |
||||||||||
Restricted stock |
— |
0.1 |
(0.1) |
(100) |
% |
||||||||||
Performance share units |
0.1 |
0.1 |
— |
— |
% |
||||||||||
Diluted |
19.3 |
19.3 |
— |
— |
% |
||||||||||
______________________________ |
|||||||||||||||
NM—Not Meaningful |
|||||||||||||||
ASBURY AUTOMOTIVE GROUP, INC. |
||||||||||||||
KEY OPERATING HIGHLIGHTS (In millions, except per unit data) |
||||||||||||||
(Unaudited) |
||||||||||||||
For the Three Months |
Increase |
% |
||||||||||||
2020 |
2019 |
|||||||||||||
Unit sales |
||||||||||||||
New vehicle: |
||||||||||||||
Luxury |
4,359 |
5,746 |
(1,387) |
(24) |
% |
|||||||||
Import |
11,610 |
15,256 |
(3,646) |
(24) |
% |
|||||||||
Domestic |
4,091 |
5,447 |
(1,356) |
(25) |
% |
|||||||||
Total new vehicle |
20,060 |
26,449 |
(6,389) |
(24) |
% |
|||||||||
Used vehicle retail |
18,400 |
22,259 |
(3,859) |
(17) |
% |
|||||||||
Used to new ratio |
91.7 |
% |
84.2 |
% |
750 bps |
|||||||||
Average selling price |
||||||||||||||
New vehicle |
$ |
37,976 |
$ |
36,493 |
$ |
1,483 |
4 |
% |
||||||
Used vehicle retail |
22,424 |
21,861 |
563 |
3 |
% |
|||||||||
Average gross profit per unit |
||||||||||||||
New vehicle: |
||||||||||||||
Luxury |
$ |
3,854 |
$ |
3,341 |
$ |
513 |
15 |
% |
||||||
Import |
1,077 |
623 |
454 |
73 |
% |
|||||||||
Domestic |
2,273 |
1,762 |
511 |
29 |
% |
|||||||||
Total new vehicle |
1,924 |
1,448 |
476 |
33 |
% |
|||||||||
Used vehicle retail |
1,717 |
1,559 |
158 |
10 |
% |
|||||||||
Finance and insurance, net |
1,732 |
1,647 |
85 |
5 |
% |
|||||||||
Front end yield (1) |
3,557 |
3,145 |
412 |
13 |
% |
|||||||||
Gross margin |
||||||||||||||
New vehicle: |
||||||||||||||
Luxury |
6.9 |
% |
6.1 |
% |
80 bps |
|||||||||
Import |
3.7 |
% |
2.2 |
% |
150 bps |
|||||||||
Domestic |
5.3 |
% |
4.4 |
% |
90 bps |
|||||||||
Total new vehicle |
5.1 |
% |
4.0 |
% |
110 bps |
|||||||||
Used vehicle retail |
7.7 |
% |
7.1 |
% |
60 bps |
|||||||||
Parts and service |
59.4 |
% |
62.6 |
% |
(320) bps |
|||||||||
Total gross profit margin |
16.8 |
% |
16.4 |
% |
40 bps |
|||||||||
SG&A metrics |
||||||||||||||
Rent expense |
$ |
5.9 |
$ |
6.8 |
$ |
(0.9) |
(13) |
% |
||||||
Total SG&A as a percentage of gross profit |
62.7 |
% |
68.0 |
% |
(530) bps |
|||||||||
SG&A, excluding rent expense as a percentage of gross profit |
60.3 |
% |
65.7 |
% |
(540) bps |
|||||||||
Operating metrics |
||||||||||||||
Income from operations as a percentage of revenue |
5.7 |
% |
4.8 |
% |
90 bps |
|||||||||
Income from operations as a percentage of gross profit |
33.9 |
% |
29.1 |
% |
480 bps |
|||||||||
Adjusted income from operations as a percentage of revenue |
5.6 |
% |
4.7 |
% |
90 bps |
|||||||||
Adjusted income from operations as a percentage of gross profit |
33.4 |
% |
29.0 |
% |
440 bps |
|||||||||
Revenue mix |
||||||||||||||
New vehicle |
52.7 |
% |
53.5 |
% |
||||||||||
Used vehicle retail |
28.6 |
% |
27.1 |
% |
||||||||||
Used vehicle wholesale |
2.4 |
% |
2.6 |
% |
||||||||||
Parts and service |
11.7 |
% |
12.4 |
% |
||||||||||
Finance and insurance |
4.6 |
% |
4.4 |
% |
||||||||||
Total revenue |
100.0 |
% |
100.0 |
% |
||||||||||
Gross profit mix |
||||||||||||||
New vehicle |
15.9 |
% |
13.0 |
% |
||||||||||
Used vehicle retail |
13.0 |
% |
11.7 |
% |
||||||||||
Used vehicle wholesale |
2.3 |
% |
0.4 |
% |
||||||||||
Parts and service |
41.4 |
% |
47.7 |
% |
||||||||||
Finance and insurance |
27.4 |
% |
27.2 |
% |
||||||||||
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), |
ASBURY AUTOMOTIVE GROUP, INC. |
||||||||||||||
SAME STORE OPERATING HIGHLIGHTS (In millions) |
||||||||||||||
(Unaudited) |
||||||||||||||
For the Three Months |
Increase |
% |
||||||||||||
2020 |
2019 |
|||||||||||||
Revenue |
||||||||||||||
New vehicle: |
||||||||||||||
Luxury |
$ |
243.5 |
$ |
315.5 |
$ |
(72.0) |
(23) |
% |
||||||
Import |
319.7 |
392.8 |
(73.1) |
(19) |
% |
|||||||||
Domestic |
158.3 |
200.7 |
(42.4) |
(21) |
% |
|||||||||
Total new vehicle |
721.5 |
909.0 |
(187.5) |
(21) |
% |
|||||||||
Used Vehicle: |
||||||||||||||
Retail |
399.8 |
454.8 |
(55.0) |
(12) |
% |
|||||||||
Wholesale |
34.0 |
45.1 |
(11.1) |
(25) |
% |
|||||||||
Total used vehicle |
433.8 |
499.9 |
(66.1) |
(13) |
% |
|||||||||
Parts and service |
162.4 |
213.1 |
(50.7) |
(24) |
% |
|||||||||
Finance and insurance |
63.8 |
75.3 |
(11.5) |
(15) |
% |
|||||||||
Total revenue |
$ |
1,381.5 |
$ |
1,697.3 |
$ |
(315.8) |
(19) |
% |
||||||
Gross profit |
||||||||||||||
New vehicle: |
||||||||||||||
Luxury |
$ |
16.8 |
$ |
19.2 |
$ |
(2.4) |
(13) |
% |
||||||
Import |
11.3 |
8.7 |
2.6 |
30 |
% |
|||||||||
Domestic |
8.1 |
8.5 |
(0.4) |
(5) |
% |
|||||||||
Total new vehicle |
36.2 |
36.4 |
(0.2) |
(1) |
% |
|||||||||
Used Vehicle: |
||||||||||||||
Retail |
30.0 |
32.9 |
(2.9) |
(9) |
% |
|||||||||
Wholesale |
5.5 |
1.3 |
4.2 |
NM |
||||||||||
Total used vehicle |
35.5 |
34.2 |
1.3 |
4 |
% |
|||||||||
Parts and service: |
||||||||||||||
Customer pay |
52.1 |
76.4 |
(24.3) |
(32) |
% |
|||||||||
Warranty |
16.5 |
21.5 |
(5.0) |
(23) |
% |
|||||||||
Wholesale parts |
4.7 |
5.3 |
(0.6) |
(11) |
% |
|||||||||
Parts and service, excluding reconditioning and preparation |
73.3 |
103.2 |
(29.9) |
(29) |
% |
|||||||||
Reconditioning and preparation |
23.3 |
30.3 |
(7.0) |
(23) |
% |
|||||||||
Total parts and service |
96.6 |
133.5 |
(36.9) |
(28) |
% |
|||||||||
Finance and insurance |
63.8 |
75.3 |
(11.5) |
(15) |
% |
|||||||||
Total gross profit |
$ |
232.1 |
$ |
279.4 |
$ |
(47.3) |
(17) |
% |
||||||
SG&A expense |
$ |
146.8 |
$ |
190.0 |
$ |
(43.2) |
(23) |
% |
||||||
SG&A expense as a percentage of gross profit |
63.2 |
% |
68.0 |
% |
(480) 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 |
Increase |
% |
||||||||||||
2020 |
2019 |
|||||||||||||
Unit sales |
||||||||||||||
New vehicle: |
||||||||||||||
Luxury |
4,359 |
5,731 |
(1,372) |
(24) |
% |
|||||||||
Import |
10,915 |
14,011 |
(3,096) |
(22) |
% |
|||||||||
Domestic |
3,710 |
5,007 |
(1,297) |
(26) |
% |
|||||||||
Total new vehicle |
18,984 |
24,749 |
(5,765) |
(23) |
% |
|||||||||
Used vehicle retail |
17,753 |
20,696 |
(2,943) |
(14) |
% |
|||||||||
Used to new ratio |
93.5 |
% |
83.6 |
% |
990 |
bps |
||||||||
Average selling price |
||||||||||||||
New vehicle |
$ |
38,006 |
$ |
36,729 |
$ |
1,277 |
3 |
% |
||||||
Used vehicle retail |
22,520 |
21,975 |
545 |
2 |
% |
|||||||||
Average gross profit per unit |
||||||||||||||
New vehicle: |
||||||||||||||
Luxury |
$ |
3,854 |
$ |
3,350 |
$ |
504 |
15 |
% |
||||||
Import |
1,035 |
621 |
414 |
67 |
% |
|||||||||
Domestic |
2,183 |
1,698 |
485 |
29 |
% |
|||||||||
Total new vehicle |
1,907 |
1,471 |
436 |
30 |
% |
|||||||||
Used vehicle retail |
1,690 |
1,590 |
100 |
6 |
% |
|||||||||
Finance and insurance, net |
1,737 |
1,657 |
80 |
5 |
% |
|||||||||
Front end yield (1) |
3,539 |
3,182 |
357 |
11 |
% |
|||||||||
Gross margin |
||||||||||||||
New vehicle: |
||||||||||||||
Luxury |
6.9 |
% |
6.1 |
% |
80 |
bps |
||||||||
Import |
3.5 |
% |
2.2 |
% |
130 |
bps |
||||||||
Domestic |
5.1 |
% |
4.2 |
% |
90 |
bps |
||||||||
Total new vehicle |
5.0 |
% |
4.0 |
% |
100 |
bps |
||||||||
Used vehicle retail |
7.5 |
% |
7.2 |
% |
30 |
bps |
||||||||
Parts and service: |
||||||||||||||
Parts and service, excluding reconditioning and preparation |
45.1 |
% |
48.4 |
% |
(330) |
bps |
||||||||
Parts and service, including reconditioning and preparation |
59.5 |
% |
62.6 |
% |
(310) |
bps |
||||||||
Total gross profit margin |
16.8 |
% |
16.5 |
% |
30 |
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), |
ASBURY AUTOMOTIVE GROUP, INC. |
||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME (In millions, except per share data) |
||||||||||||||
(Unaudited) |
||||||||||||||
For the Six Months |
Increase |
% |
||||||||||||
2020 |
2019 |
|||||||||||||
REVENUE: |
||||||||||||||
New vehicle |
$ |
1,583.9 |
$ |
1,837.0 |
$ |
(253.1) |
(14) |
% |
||||||
Used vehicle: |
||||||||||||||
Retail |
858.6 |
944.8 |
(86.2) |
(9) |
% |
|||||||||
Wholesale |
82.1 |
98.7 |
(16.6) |
(17) |
% |
|||||||||
Total used vehicle |
940.7 |
1,043.5 |
(102.8) |
(10) |
% |
|||||||||
Parts and service |
390.8 |
442.1 |
(51.3) |
(12) |
% |
|||||||||
Finance and insurance, net |
137.0 |
151.7 |
(14.7) |
(10) |
% |
|||||||||
TOTAL REVENUE |
3,052.4 |
3,474.3 |
(421.9) |
(12) |
% |
|||||||||
GROSS PROFIT: |
||||||||||||||
New vehicle |
75.0 |
76.2 |
(1.2) |
(2) |
% |
|||||||||
Used vehicle: |
||||||||||||||
Retail |
62.8 |
68.3 |
(5.5) |
(8) |
% |
|||||||||
Wholesale |
5.0 |
2.1 |
2.9 |
138 |
% |
|||||||||
Total used vehicle |
67.8 |
70.4 |
(2.6) |
(4) |
% |
|||||||||
Parts and service |
235.4 |
275.9 |
(40.5) |
(15) |
% |
|||||||||
Finance and insurance, net |
137.0 |
151.7 |
(14.7) |
(10) |
% |
|||||||||
TOTAL GROSS PROFIT |
515.2 |
574.2 |
(59.0) |
(10) |
% |
|||||||||
OPERATING EXPENSES: |
||||||||||||||
Selling, general and administrative |
346.9 |
391.7 |
(44.8) |
(11) |
% |
|||||||||
Depreciation and amortization |
19.2 |
17.6 |
1.6 |
9 |
% |
|||||||||
Franchise rights impairment |
23.0 |
— |
23.0 |
— |
% |
|||||||||
Other operating expense, net |
8.9 |
1.2 |
7.7 |
NM |
||||||||||
INCOME FROM OPERATIONS |
117.2 |
163.7 |
(46.5) |
(28) |
% |
|||||||||
OTHER EXPENSES (INCOME): |
||||||||||||||
Floor plan interest expense |
11.1 |
20.7 |
(9.6) |
(46) |
% |
|||||||||
Other interest expense, net |
28.8 |
27.5 |
1.3 |
5 |
% |
|||||||||
Loss on extinguishment of long-term debt, net |
20.6 |
— |
20.6 |
— |
% |
|||||||||
Gain on dealership divestitures, net |
(33.7) |
(11.7) |
(22.0) |
(188) |
% |
|||||||||
Total other expenses, net |
26.8 |
36.5 |
(9.7) |
(27) |
% |
|||||||||
INCOME BEFORE INCOME TAXES |
90.4 |
127.2 |
(36.8) |
(29) |
% |
|||||||||
Income tax expense |
21.3 |
31.4 |
(10.1) |
(32) |
% |
|||||||||
NET INCOME |
$ |
69.1 |
$ |
95.8 |
$ |
(26.7) |
(28) |
% |
||||||
EARNINGS PER COMMON SHARE: |
||||||||||||||
Basic— |
||||||||||||||
Net income |
$ |
3.60 |
$ |
4.99 |
$ |
(1.39) |
(28) |
% |
||||||
Diluted— |
||||||||||||||
Net income |
$ |
3.58 |
$ |
4.96 |
$ |
(1.38) |
(28) |
% |
||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: |
||||||||||||||
Basic |
19.2 |
19.2 |
— |
— |
% |
|||||||||
Restricted stock |
— |
— |
— |
— |
% |
|||||||||
Performance share units |
0.1 |
0.1 |
— |
— |
% |
|||||||||
Diluted |
19.3 |
19.3 |
— |
— |
% |
|||||||||
______________________________ |
||||||||||||||
NM—Not Meaningful |
||||||||||||||
ASBURY AUTOMOTIVE GROUP, INC. |
||||||||||||||
KEY OPERATING HIGHLIGHTS (In millions, except per unit data) |
||||||||||||||
(Unaudited) |
||||||||||||||
For the Six Months |
Increase |
% |
||||||||||||
2020 |
2019 |
|||||||||||||
Unit sales |
||||||||||||||
New vehicle: |
||||||||||||||
Luxury |
9,351 |
10,908 |
(1,557) |
(14) |
% |
|||||||||
Import |
24,068 |
29,699 |
(5,631) |
(19) |
% |
|||||||||
Domestic |
8,618 |
9,951 |
(1,333) |
(13) |
% |
|||||||||
Total new vehicle |
42,037 |
50,558 |
(8,521) |
(17) |
% |
|||||||||
Used vehicle retail |
38,687 |
43,342 |
(4,655) |
(11) |
% |
|||||||||
Used to new ratio |
92.0 |
% |
85.7 |
% |
630 |
bps |
||||||||
Average selling price |
||||||||||||||
New vehicle |
$ |
37,679 |
$ |
36,335 |
$ |
1,344 |
4 |
% |
||||||
Used vehicle retail |
22,194 |
21,799 |
395 |
2 |
% |
|||||||||
Average gross profit per unit |
||||||||||||||
New vehicle: |
||||||||||||||
Luxury |
$ |
3,604 |
$ |
3,511 |
$ |
93 |
3 |
% |
||||||
Import |
964 |
717 |
247 |
34 |
% |
|||||||||
Domestic |
2,100 |
1,668 |
432 |
26 |
% |
|||||||||
Total new vehicle |
1,784 |
1,507 |
277 |
18 |
% |
|||||||||
Used vehicle retail |
1,623 |
1,576 |
47 |
3 |
% |
|||||||||
Finance and insurance, net |
1,697 |
1,616 |
81 |
5 |
% |
|||||||||
Front end yield (1) |
3,404 |
3,154 |
250 |
8 |
% |
|||||||||
Gross margin |
||||||||||||||
New vehicle: |
||||||||||||||
Luxury |
6.5 |
% |
6.3 |
% |
20 |
bps |
||||||||
Import |
3.3 |
% |
2.6 |
% |
70 |
bps |
||||||||
Domestic |
5.0 |
% |
4.2 |
% |
80 |
bps |
||||||||
Total new vehicle |
4.7 |
% |
4.1 |
% |
60 |
bps |
||||||||
Used vehicle retail |
7.3 |
% |
7.2 |
% |
10 |
bps |
||||||||
Parts and service |
60.2 |
% |
62.4 |
% |
(220) |
bps |
||||||||
Total gross profit margin |
16.9 |
% |
16.5 |
% |
40 |
bps |
||||||||
SG&A metrics |
||||||||||||||
Rent expense |
$ |
12.7 |
$ |
13.6 |
$ |
(0.9) |
(7) |
% |
||||||
Total SG&A as a percentage of gross profit |
67.3 |
% |
68.2 |
% |
(90) |
bps |
||||||||
SG&A, excluding rent expense as a percentage of gross profit |
64.9 |
% |
65.8 |
% |
(90) |
bps |
||||||||
Operating metrics |
||||||||||||||
Income from operations as a percentage of revenue |
3.8 |
% |
4.7 |
% |
(90) |
bps |
||||||||
Income from operations as a percentage of gross profit |
22.7 |
% |
28.5 |
% |
(580) |
bps |
||||||||
Adjusted income from operations as a percentage of revenue |
4.9 |
% |
4.8 |
% |
10 |
bps |
||||||||
Adjusted income from operations as a percentage of gross profit |
29.0 |
% |
28.9 |
% |
10 |
bps |
||||||||
Revenue mix |
||||||||||||||
New vehicle |
51.9 |
% |
52.9 |
% |
||||||||||
Used vehicle retail |
28.1 |
% |
27.2 |
% |
||||||||||
Used vehicle wholesale |
2.7 |
% |
2.8 |
% |
||||||||||
Parts and service |
12.8 |
% |
12.7 |
% |
||||||||||
Finance and insurance |
4.5 |
% |
4.4 |
% |
||||||||||
Total revenue |
100.0 |
% |
100.0 |
% |
||||||||||
Gross profit mix |
||||||||||||||
New vehicle |
14.6 |
% |
13.3 |
% |
||||||||||
Used vehicle retail |
12.1 |
% |
11.9 |
% |
||||||||||
Used vehicle wholesale |
1.0 |
% |
0.4 |
% |
||||||||||
Parts and service |
45.7 |
% |
48.0 |
% |
||||||||||
Finance and insurance |
26.6 |
% |
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), |
ASBURY AUTOMOTIVE GROUP, INC. |
||||||||||||||
SAME STORE OPERATING HIGHLIGHTS (In millions) |
||||||||||||||
(Unaudited) |
||||||||||||||
For the Six Months |
Increase |
% |
||||||||||||
2020 |
2019 |
|||||||||||||
Revenue |
||||||||||||||
New vehicle: |
||||||||||||||
Luxury |
$ |
519.2 |
$ |
603.0 |
$ |
(83.8) |
(14) |
% |
||||||
Import |
643.0 |
752.4 |
(109.4) |
(15) |
% |
|||||||||
Domestic |
304.7 |
356.4 |
(51.7) |
(15) |
% |
|||||||||
Total new vehicle |
1,466.9 |
1,711.8 |
(244.9) |
(14) |
% |
|||||||||
Used Vehicle: |
||||||||||||||
Retail |
804.3 |
881.4 |
(77.1) |
(9) |
% |
|||||||||
Wholesale |
77.4 |
92.3 |
(14.9) |
(16) |
% |
|||||||||
Total used vehicle |
881.7 |
973.7 |
(92.0) |
(9) |
% |
|||||||||
Parts and service |
365.9 |
417.7 |
(51.8) |
(12) |
% |
|||||||||
Finance and insurance, net |
128.2 |
141.5 |
(13.3) |
(9) |
% |
|||||||||
Total revenue |
$ |
2,842.7 |
$ |
3,244.7 |
$ |
(402.0) |
(12) |
% |
||||||
Gross profit |
||||||||||||||
New vehicle: |
||||||||||||||
Luxury |
$ |
33.8 |
$ |
38.3 |
$ |
(4.5) |
(12) |
% |
||||||
Import |
20.6 |
19.1 |
1.5 |
8 |
% |
|||||||||
Domestic |
15.0 |
14.9 |
0.1 |
1 |
% |
|||||||||
Total new vehicle |
69.4 |
72.3 |
(2.9) |
(4) |
% |
|||||||||
Used Vehicle: |
||||||||||||||
Retail |
58.3 |
64.7 |
(6.4) |
(10) |
% |
|||||||||
Wholesale |
5.0 |
2.1 |
2.9 |
138 |
% |
|||||||||
Total used vehicle |
63.3 |
66.8 |
(3.5) |
(5) |
% |
|||||||||
Parts and service: |
||||||||||||||
Customer pay |
124.5 |
149.7 |
(25.2) |
(17) |
% |
|||||||||
Warranty |
36.2 |
42.1 |
(5.9) |
(14) |
% |
|||||||||
Wholesale parts |
9.3 |
10.8 |
(1.5) |
(14) |
% |
|||||||||
Parts and service, excluding reconditioning and preparation |
170.0 |
202.6 |
(32.6) |
(16) |
% |
|||||||||
Reconditioning and preparation |
50.7 |
58.3 |
(7.6) |
(13) |
% |
|||||||||
Total parts and service |
220.7 |
260.9 |
(40.2) |
(15) |
% |
|||||||||
Finance and insurance |
128.2 |
141.5 |
(13.3) |
(9) |
% |
|||||||||
Total gross profit |
$ |
481.6 |
$ |
541.5 |
$ |
(59.9) |
(11) |
% |
||||||
SG&A expense |
$ |
325.3 |
$ |
369.1 |
$ |
(43.8) |
(12) |
% |
||||||
SG&A expense as a percentage of gross profit |
67.5 |
% |
68.2 |
% |
(70) 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 Six Months |
Increase |
% |
||||||||||||
2020 |
2019 |
|||||||||||||
Unit sales |
||||||||||||||
New vehicle: |
||||||||||||||
Luxury |
9,336 |
10,863 |
(1,527) |
(14) |
% |
|||||||||
Import |
22,255 |
26,853 |
(4,598) |
(17) |
% |
|||||||||
Domestic |
7,306 |
8,959 |
(1,653) |
(18) |
% |
|||||||||
Total new vehicle |
38,897 |
46,675 |
(7,778) |
(17) |
% |
|||||||||
Used vehicle retail |
35,983 |
40,206 |
(4,223) |
(11) |
% |
|||||||||
Used to new ratio |
92.5 |
% |
86.1 |
% |
640 bps |
|||||||||
Average selling price |
||||||||||||||
New vehicle |
$ |
37,712 |
$ |
36,675 |
$ |
1,037 |
3 |
% |
||||||
Used vehicle retail |
22,352 |
21,922 |
430 |
2 |
% |
|||||||||
Average gross profit per unit |
||||||||||||||
New vehicle: |
||||||||||||||
Luxury |
$ |
3,620 |
$ |
3,526 |
$ |
94 |
3 |
% |
||||||
Import |
926 |
711 |
215 |
30 |
% |
|||||||||
Domestic |
2,053 |
1,663 |
390 |
23 |
% |
|||||||||
Total new vehicle |
1,784 |
1,549 |
235 |
15 |
% |
|||||||||
Used vehicle retail |
1,620 |
1,609 |
11 |
1 |
% |
|||||||||
Finance and insurance, net |
1,712 |
1,629 |
83 |
5 |
% |
|||||||||
Front end yield (1) |
3,417 |
3,206 |
211 |
7 |
% |
|||||||||
Gross margin |
||||||||||||||
New vehicle: |
||||||||||||||
Luxury |
6.5 |
% |
6.4 |
% |
10 bps |
|||||||||
Import |
3.2 |
% |
2.5 |
% |
70 bps |
|||||||||
Domestic |
4.9 |
% |
4.2 |
% |
70 bps |
|||||||||
Total new vehicle |
4.7 |
% |
4.2 |
% |
50 bps |
|||||||||
Used vehicle retail |
7.2 |
% |
7.3 |
% |
(10) bps |
|||||||||
Parts and service: |
||||||||||||||
Parts and service, excluding reconditioning and preparation |
46.5 |
% |
48.5 |
% |
(200) bps |
|||||||||
Parts and service, including reconditioning and preparation |
60.3 |
% |
62.5 |
% |
(220) bps |
|||||||||
Total gross profit margin |
16.9 |
% |
16.7 |
% |
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), |
ASBURY AUTOMOTIVE GROUP, INC. |
||||||||||||||
Additional Disclosures (In millions) |
||||||||||||||
(Unaudited) |
||||||||||||||
June 30, |
December 31, |
Increase |
% Change |
|||||||||||
SELECTED BALANCE SHEET DATA |
||||||||||||||
Cash and cash equivalents |
$ |
613.2 |
$ |
3.5 |
$ |
609.7 |
17,420 |
% |
||||||
New vehicle inventory |
474.1 |
802.6 |
(a) |
(328.5) |
(41) |
% |
||||||||
Used vehicle inventory |
125.2 |
140.1 |
(b) |
(14.9) |
(11) |
% |
||||||||
Parts inventory |
37.1 |
42.3 |
(c) |
(5.2) |
(12) |
% |
||||||||
Total current assets |
1,591.7 |
1,602.6 |
(10.9) |
(1) |
% |
|||||||||
Floor plan notes payable |
526.2 |
788.0 |
(d) |
(261.8) |
(33) |
% |
||||||||
Total current liabilities |
893.2 |
1,247.0 |
(353.8) |
(28) |
% |
|||||||||
CAPITALIZATION: |
||||||||||||||
Long-term debt (including current portion) |
$ |
1,233.5 |
* |
$ |
939.4 |
(e) |
$ |
294.1 |
31 |
% |
||||
Shareholders' equity |
713.1 |
646.3 |
66.8 |
10 |
% |
|||||||||
Total |
$ |
1,946.6 |
$ |
1,585.7 |
$ |
360.9 |
23 |
% |
||||||
*Includes $237.0 million drawn on the Revolver as of March 31, 2020 |
||||||||||||||
(a) Excluding $56.3 million of new vehicle inventory classified as Assets held for sale as of December 31, 2019 |
||||||||||||||
(b) Excluding $8.6 million of used vehicle inventory classified as Assets held for sale as of December 31, 2019 |
||||||||||||||
(c) Excluding $2.8 million of parts inventory classified as Assets held for sale as of December 31, 2019 |
||||||||||||||
(d) Excluding $62.8 million of Floor plan notes payable classified as Liabilities associated with assets held for sale as of December 31, 2019 |
||||||||||||||
(e) Excluding $28.1 million of Long-term debt classified as Liabilities associated with assets held for sale as of December 31, 2019 |
||||||||||||||
June 30, 2020 |
December 31, 2019 |
||||
DAYS SUPPLY |
|||||
New vehicle inventory |
52 |
66 |
|||
Used vehicle inventory |
26 |
29 |
|||
_____________________________ |
|||||
Days supply of inventory is calculated based on new and used inventory levels at the end of each reporting period and a 30-day historical cost of sales. |
|||||
Brand Mix - New Vehicle Revenue by Brand-
For the Six Months Ended |
|||||
2020 |
2019 |
||||
Luxury: |
|||||
Mercedes-Benz |
8 |
% |
7 |
% |
|
Lexus |
6 |
% |
6 |
% |
|
BMW |
6 |
% |
6 |
% |
|
Acura |
4 |
% |
4 |
% |
|
Infiniti |
2 |
% |
3 |
% |
|
Other luxury |
7 |
% |
7 |
% |
|
Total luxury |
33 |
% |
33 |
% |
|
Imports: |
|||||
Honda |
18 |
% |
19 |
% |
|
Toyota |
13 |
% |
12 |
% |
|
Nissan |
6 |
% |
9 |
% |
|
Other imports |
7 |
% |
5 |
% |
|
Total imports |
44 |
% |
45 |
% |
|
Domestic: |
|||||
Ford |
10 |
% |
10 |
% |
|
Chevrolet |
6 |
% |
6 |
% |
|
Dodge |
4 |
% |
3 |
% |
|
Other domestics |
3 |
% |
3 |
% |
|
Total domestic |
23 |
% |
22 |
% |
|
Total New Vehicle Revenue |
100 |
% |
100 |
% |
|
ASBURY AUTOMOTIVE GROUP INC.
Supplemental Disclosures
(Unaudited)
Non-GAAP Financial Disclosure and Reconciliation
In addition to evaluating the financial condition and results of our operations in accordance with GAAP, from time to time management evaluates and analyzes results and any impact on the Company of strategic decisions and actions relating to, among other things, cost reduction, growth, and profitability improvement initiatives, and other events outside of normal, or "core," business and operations, by considering certain alternative financial measures not prepared in accordance with GAAP. These measures include "Adjusted leverage ratio," "Adjusted income from operations," "Adjusted net income," " Adjusted operating margins," and "Adjusted diluted earnings per share ("EPS")." Further, management assesses the organic growth of our revenue and gross profit on a same store basis. We believe that our assessment on a same store basis represents an important indicator of comparative financial performance and provides relevant information to assess our performance at our existing locations. 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. Non-GAAP measures do not have definitions under GAAP and may be defined differently by and not be comparable to similarly titled measures used by other companies. As a result, any non-GAAP financial measures considered and evaluated by management are reviewed in conjunction with a review of the most directly comparable measures calculated in accordance with GAAP. Management cautions investors not to place undue reliance on such non-GAAP measures, but also to consider them with the most directly comparable GAAP measures. In their evaluation of results from time to time, management excludes items that do not arise directly from core operations, or are otherwise of an unusual or non-recurring nature. Because these non-core, unusual or non-recurring charges and gains materially affect Asbury's financial condition or results in the specific period in which they are recognized, management also evaluates, and makes resource allocation and performance evaluation decisions based on, the related non-GAAP measures excluding such items. In addition to using such non-GAAP measures to evaluate results in a specific period, management believes that such measures may provide more complete and consistent comparisons of operational performance on a period-over-period historical basis and a better indication of expected future trends. Management discloses these non-GAAP measures, and the related reconciliations, because it believes investors use these metrics in evaluating longer-term period-over-period performance, and to allow investors to better understand and evaluate the information used by management to assess operating performance.
The following tables provide reconciliations for our non-GAAP metrics:
For the Twelve Months Ended |
|||||||
June 30, 2020 |
March 31, 2020 |
||||||
(Dollars in millions) |
|||||||
Adjusted leverage ratio: |
|||||||
Long-term debt |
$ |
1,233.5 |
$ |
1,164.9 |
|||
Calculation of earnings before interest, taxes, depreciation and amortization ("EBITDA"): |
|||||||
Net Income |
$ |
157.7 |
$ |
163.0 |
|||
Add: |
|||||||
Depreciation and amortization |
37.7 |
37.1 |
|||||
Income tax expense |
49.5 |
51.5 |
|||||
Swap and other interest expense |
57.0 |
58.5 |
|||||
Earnings before interest, taxes, depreciation and amortization |
$ |
301.9 |
$ |
310.1 |
|||
Non-core items - expense (income): |
|||||||
Gain on dealership divestitures |
$ |
(33.7) |
$ |
(45.4) |
|||
Legal settlements |
(2.7) |
$ |
(1.5) |
||||
Gain on sale of real estate |
(0.3) |
(0.6) |
|||||
Franchise rights impairment |
30.1 |
30.1 |
|||||
Real estate-related charges |
0.6 |
0.6 |
|||||
Park Place deal termination costs |
11.6 |
11.6 |
|||||
Loss on debt extinguishment |
20.7 |
20.7 |
|||||
Total non-core items |
26.3 |
15.5 |
|||||
Adjusted EBITDA |
$ |
328.2 |
$ |
325.6 |
|||
Adjusted leverage ratio |
3.8 |
3.6 |
|||||
For the Three Months Ended |
||||||||||||
2020 |
2019 |
|||||||||||
(In millions, except per |
||||||||||||
Adjusted income from operations: |
||||||||||||
Income from operations |
$ |
82.2 |
$ |
85.9 |
||||||||
Legal settlements |
(1.2) |
— |
||||||||||
Gain on sale of real estate |
— |
(0.3) |
||||||||||
Adjusted income from operations |
$ |
81.0 |
$ |
85.6 |
||||||||
Adjusted net income: |
||||||||||||
Net income |
$ |
49.6 |
$ |
54.9 |
||||||||
Non-core items - (income) expense: |
||||||||||||
Gain on dealership divestiture |
— |
(11.7) |
||||||||||
Legal settlements |
(1.2) |
— |
||||||||||
Gain on sale of real estate |
— |
(0.3) |
||||||||||
Income tax effect on non-core items above |
0.3 |
3.0 |
||||||||||
Total non-core items |
(0.9) |
(9.0) |
||||||||||
Adjusted net income |
$ |
48.7 |
$ |
45.9 |
||||||||
Adjusted diluted earnings per share (EPS): |
||||||||||||
Diluted EPS |
$ |
2.57 |
$ |
2.84 |
||||||||
Total non-core items |
(0.05) |
(0.46) |
||||||||||
Adjusted diluted EPS |
$ |
2.52 |
$ |
2.38 |
||||||||
Weighted average common shares outstanding - diluted |
19.3 |
19.3 |
||||||||||
For the Six Months |
|||||||||||||
2020 |
2019 |
||||||||||||
(In millions, except per |
|||||||||||||
Adjusted income from operations: |
|||||||||||||
Income from operations |
$ |
117.2 |
$ |
163.7 |
|||||||||
Legal settlements |
(2.1) |
— |
|||||||||||
Gain on sale of real estate |
(0.3) |
(0.3) |
|||||||||||
Park Place deal termination costs |
11.6 |
— |
|||||||||||
Franchise rights impairment |
23.0 |
— |
|||||||||||
Fixed assets write-off |
— |
2.4 |
|||||||||||
Adjusted income from operations |
$ |
149.4 |
$ |
165.8 |
|||||||||
Adjusted net income: |
|||||||||||||
Net income |
$ |
69.1 |
$ |
95.8 |
|||||||||
Non-core items - (income) expense: |
|||||||||||||
Gain on dealership divestitures |
(33.7) |
(11.7) |
|||||||||||
Legal settlements |
(2.1) |
— |
|||||||||||
Gain on sale of real estate |
(0.3) |
(0.3) |
|||||||||||
Park Place deal termination costs |
11.6 |
— |
|||||||||||
Loss on extinguishment of debt |
20.7 |
— |
|||||||||||
Franchise rights impairment |
23.0 |
— |
|||||||||||
Fixed assets write-off |
— |
2.4 |
|||||||||||
Income tax effect on non-core items above |
(4.9) |
2.4 |
|||||||||||
Total non-core items |
14.3 |
(7.2) |
|||||||||||
Adjusted net income |
$ |
83.4 |
$ |
88.6 |
|||||||||
Adjusted diluted earnings per share (EPS): |
|||||||||||||
Diluted EPS |
$ |
3.58 |
$ |
4.96 |
|||||||||
Total non-core items |
0.74 |
(0.37) |
|||||||||||
Adjusted diluted EPS |
$ |
4.32 |
$ |
4.59 |
|||||||||
Weighted average common shares outstanding - diluted |
19.3 |
19.3 |
|||||||||||
SOURCE Asbury Automotive Group, Inc.
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