Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - ASBURY AUTOMOTIVE GROUP INC | a2017q38-k.htm |
Exhibit 99.1
Investors & Reporters May Contact:
Matt Pettoni
VP & Treasurer
(770) 418-8219
ir@asburyauto.com
ASBURY AUTOMOTIVE GROUP ANNOUNCES
THIRD QUARTER 2017 FINANCIAL RESULTS
Duluth, GA, October 24, 2017 - Asbury Automotive Group, Inc. (NYSE: 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.
1
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.
2
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 | )% | ||||||||
3
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. |
4
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.
5
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. |
6
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: | ||||||||||||||
Basic | 20.8 | 22.8 | (2.0 | ) | (9 | )% | ||||||||
Restricted stock | 0.1 | — | 0.1 | — | % | |||||||||
Performance share units | 0.1 | 0.1 | — | — | % | |||||||||
Diluted | 21.0 | 22.9 | (1.9 | ) | (8 | )% | ||||||||
7
ASBURY AUTOMOTIVE GROUP, INC.
KEY OPERATING HIGHLIGHTS (In millions, except per unit data)
(Unaudited)
For the Nine Months Ended September 30, | Increase (Decrease) | % Change | ||||||||||||
2017 | 2016 | |||||||||||||
Unit sales | ||||||||||||||
New vehicle: | ||||||||||||||
Luxury | 16,117 | 17,469 | (1,352 | ) | (8 | )% | ||||||||
Import | 43,504 | 43,814 | (310 | ) | (1 | )% | ||||||||
Domestic | 14,163 | 15,326 | (1,163 | ) | (8 | )% | ||||||||
Total new vehicle | 73,784 | 76,609 | (2,825 | ) | (4 | )% | ||||||||
Used vehicle retail | 59,107 | 59,378 | (271 | ) | — | % | ||||||||
Used to new ratio | 80.1 | % | 77.5 | % | 260 bps | |||||||||
Average selling price | ||||||||||||||
New vehicle | $ | 35,197 | $ | 34,935 | $ | 262 | 1 | % | ||||||
Used vehicle retail | 21,075 | 21,131 | (56 | ) | — | % | ||||||||
Average gross profit per unit | ||||||||||||||
New vehicle: | ||||||||||||||
Luxury | $ | 3,394 | $ | 3,515 | $ | (121 | ) | (3 | )% | |||||
Import | 984 | 1,207 | (223 | ) | (18 | )% | ||||||||
Domestic | 1,758 | 1,657 | 101 | 6 | % | |||||||||
Total new vehicle | 1,659 | 1,824 | (165 | ) | (9 | )% | ||||||||
Used vehicle | 1,597 | 1,708 | (111 | ) | (6 | )% | ||||||||
Finance and insurance, net | 1,524 | 1,416 | 108 | 8 | % | |||||||||
Front end yield (1) | 3,155 | 3,189 | (34 | ) | (1 | )% | ||||||||
Gross margin | ||||||||||||||
New vehicle: | ||||||||||||||
Luxury | 6.4 | % | 6.7 | % | (30) bps | |||||||||
Import | 3.5 | % | 4.4 | % | (90) bps | |||||||||
Domestic | 4.6 | % | 4.5 | % | 10 bps | |||||||||
Total new vehicle | 4.7 | % | 5.2 | % | (50) bps | |||||||||
Used vehicle retail | 7.6 | % | 8.1 | % | (50) bps | |||||||||
Parts and service | 62.3 | % | 61.9 | % | 40 bps | |||||||||
Total gross profit margin | 16.5 | % | 16.3 | % | 20 bps | |||||||||
SG&A metrics | ||||||||||||||
Rent expense | $ | 20.2 | $ | 23.0 | $ | (2.8 | ) | (12 | )% | |||||
Total SG&A as a percentage of gross profit | 69.7 | % | 69.2 | % | 50 bps | |||||||||
SG&A, excluding rent expense as a percentage of gross profit | 67.2 | % | 66.3 | % | 90 bps | |||||||||
Operating metrics | ||||||||||||||
Income from operations as a percentage of revenue | 4.5 | % | 4.5 | % | — | |||||||||
Income from operations as a percentage of gross profit | 27.1 | % | 27.4 | % | (30) 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 | 27.3 | % | 28.1 | % | (80) bps | |||||||||
Revenue mix | ||||||||||||||
New vehicle | 54.3 | % | 55.1 | % | ||||||||||
Used vehicle retail | 26.0 | % | 25.8 | % | ||||||||||
Used vehicle wholesale | 3.2 | % | 3.1 | % | ||||||||||
Parts and service | 12.3 | % | 12.0 | % | ||||||||||
Finance and insurance | 4.2 | % | 4.0 | % | ||||||||||
Total revenue | 100.0 | % | 100.0 | % | ||||||||||
Gross profit mix | ||||||||||||||
New vehicle | 15.5 | % | 17.6 | % | ||||||||||
Used vehicle retail | 12.1 | % | 12.7 | % | ||||||||||
Used vehicle wholesale | 0.1 | % | (0.2 | )% | ||||||||||
Parts and service | 46.6 | % | 45.6 | % | ||||||||||
Finance and insurance | 25.7 | % | 24.3 | % | ||||||||||
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. |
8
ASBURY AUTOMOTIVE GROUP, INC.
SAME STORE OPERATING HIGHLIGHTS (In millions)
(Unaudited)
For the Nine Months Ended September 30, | Increase (Decrease) | % Change | ||||||||||||
2017 | 2016 | |||||||||||||
Revenue | ||||||||||||||
New vehicle: | ||||||||||||||
Luxury | $ | 852.3 | $ | 889.9 | $ | (37.6 | ) | (4 | )% | |||||
Import | 1,186.8 | 1,154.7 | 32.1 | 3 | % | |||||||||
Domestic | 487.2 | 524.1 | (36.9 | ) | (7 | )% | ||||||||
Total new vehicle | 2,526.3 | 2,568.7 | (42.4 | ) | (2 | )% | ||||||||
Used Vehicle: | ||||||||||||||
Retail | 1,200.9 | 1,170.5 | 30.4 | 3 | % | |||||||||
Wholesale | 144.8 | 145.2 | (0.4 | ) | — | % | ||||||||
Total used vehicle | 1,345.7 | 1,315.7 | 30.0 | 2 | % | |||||||||
Parts and service | 579.6 | 556.1 | 23.5 | 4 | % | |||||||||
Finance and insurance | 196.2 | 182.5 | 13.7 | 8 | % | |||||||||
Total revenue | $ | 4,647.8 | $ | 4,623.0 | $ | 24.8 | 1 | % | ||||||
Gross profit | ||||||||||||||
New vehicle: | ||||||||||||||
Luxury | $ | 54.8 | $ | 59.9 | $ | (5.1 | ) | (9 | )% | |||||
Import | 42.5 | 51.3 | (8.8 | ) | (17 | )% | ||||||||
Domestic | 21.6 | 23.8 | (2.2 | ) | (9 | )% | ||||||||
Total new vehicle | 118.9 | 135.0 | (16.1 | ) | (12 | )% | ||||||||
Used Vehicle: | ||||||||||||||
Retail | 90.0 | 94.7 | (4.7 | ) | (5 | )% | ||||||||
Wholesale | 1.2 | (1.4 | ) | 2.6 | NM | |||||||||
Total used vehicle | 91.2 | 93.3 | (2.1 | ) | (2 | )% | ||||||||
Parts and service: | ||||||||||||||
Customer pay | 199.9 | 192.4 | 7.5 | 4 | % | |||||||||
Warranty | 60.8 | 52.5 | 8.3 | 16 | % | |||||||||
Wholesale parts | 15.6 | 14.5 | 1.1 | 8 | % | |||||||||
Parts and service, excluding reconditioning and preparation | 276.3 | 259.4 | 16.9 | 7 | % | |||||||||
Reconditioning and preparation | 84.1 | 85.6 | (1.5 | ) | (2 | )% | ||||||||
Total parts and service | 360.4 | 345.0 | 15.4 | 4 | % | |||||||||
Finance and insurance | 196.2 | 182.5 | 13.7 | 8 | % | |||||||||
Total gross profit | $ | 766.7 | $ | 755.8 | $ | 10.9 | 1 | % | ||||||
SG&A expense | $ | 533.2 | $ | 521.0 | $ | 12.2 | 2 | % | ||||||
SG&A expense as a percentage of gross profit | 69.5 | % | 68.9 | % | 60 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.
NM—Not Meaningful
9
ASBURY AUTOMOTIVE GROUP, INC.
SAME STORE OPERATING HIGHLIGHTS (Continued)
(Unaudited)
For the Nine Months Ended September 30, | Increase (Decrease) | % Change | ||||||||||||
2017 | 2016 | |||||||||||||
Unit sales | ||||||||||||||
New vehicle: | ||||||||||||||
Luxury | 16,117 | 17,102 | (985 | ) | (6 | )% | ||||||||
Import | 42,891 | 42,049 | 842 | 2 | % | |||||||||
Domestic | 12,677 | 14,256 | (1,579 | ) | (11 | )% | ||||||||
Total new vehicle | 71,685 | 73,407 | (1,722 | ) | (2 | )% | ||||||||
Used vehicle retail | 56,623 | 54,674 | 1,949 | 4 | % | |||||||||
Used to new ratio | 79.0 | % | 74.5 | % | 450 bps | |||||||||
Average selling price | ||||||||||||||
New vehicle | $ | 35,242 | $ | 34,993 | $ | 249 | 1 | % | ||||||
Used vehicle retail | 21,209 | 21,409 | (200 | ) | (1 | )% | ||||||||
Average gross profit per unit | ||||||||||||||
New vehicle: | ||||||||||||||
Luxury | $ | 3,400 | $ | 3,503 | $ | (103 | ) | (3 | )% | |||||
Import | 991 | 1,220 | (229 | ) | (19 | )% | ||||||||
Domestic | 1,704 | 1,669 | 35 | 2 | % | |||||||||
Total new vehicle | 1,659 | 1,839 | (180 | ) | (10 | )% | ||||||||
Used vehicle retail | 1,589 | 1,732 | (143 | ) | (8 | )% | ||||||||
Finance and insurance, net | 1,529 | 1,425 | 104 | 7 | % | |||||||||
Front end yield (1) | 3,157 | 3,218 | (61 | ) | (2 | )% | ||||||||
Gross margin | ||||||||||||||
New vehicle: | ||||||||||||||
Luxury | 6.4 | % | 6.7 | % | (30) bps | |||||||||
Import | 3.6 | % | 4.4 | % | (80) bps | |||||||||
Domestic | 4.4 | % | 4.5 | % | (10) bps | |||||||||
Total new vehicle | 4.7 | % | 5.3 | % | (60) bps | |||||||||
Used vehicle retail | 7.5 | % | 8.1 | % | (60) bps | |||||||||
Parts and service: | ||||||||||||||
Parts and service, excluding reconditioning and preparation | 47.7 | % | 46.6 | % | 110 bps | |||||||||
Parts and service, including reconditioning and preparation | 62.2 | % | 62.0 | % | 20 bps | |||||||||
Total gross profit margin | 16.5 | % | 16.3 | % | 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. |
10
ASBURY AUTOMOTIVE GROUP, INC.
Additional Disclosures (In millions)
(Unaudited)
September 30, 2017 | December 31, 2016 | Increase (Decrease) | % Change | |||||||||||
SELECTED BALANCE SHEET DATA | ||||||||||||||
Cash and cash equivalents | $ | 2.8 | $ | 3.4 | $ | (0.6 | ) | (18 | )% | |||||
New vehicle inventory | 673.7 | 720.6 | (46.9 | ) | (7 | )% | ||||||||
Used vehicle inventory | 128.2 | 132.7 | (4.5 | ) | (3 | )% | ||||||||
Parts inventory | 41.6 | 41.6 | — | — | % | |||||||||
Total current assets | 1,220.7 | 1,332.4 | (111.7 | ) | (8 | )% | ||||||||
Floor plan notes payable | 688.3 | 781.8 | (93.5 | ) | (12 | )% | ||||||||
Total current liabilities | 980.4 | 1,104.9 | (124.5 | ) | (11 | )% | ||||||||
CAPITALIZATION: | ||||||||||||||
Long-term debt (including current portion) | $ | 915.7 | $ | 926.7 | $ | (11.0 | ) | (1 | )% | |||||
Shareholders' equity | 347.3 | 279.7 | 67.6 | 24 | % | |||||||||
Total | $ | 1,263.0 | $ | 1,206.4 | $ | 56.6 | 5 | % | ||||||
September 30, 2017 | December 31, 2016 | ||||
DAYS SUPPLY | |||||
New vehicle inventory | 72 | 61 | |||
Used vehicle inventory | 35 | 30 | |||
_____________________________
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.
11
Brand Mix - New Vehicle Revenue by Brand-
For the Nine Months Ended September 30, | |||||
2017 | 2016 | ||||
Luxury: | |||||
Mercedes-Benz | 7 | % | 7 | % | |
Lexus | 7 | % | 7 | % | |
BMW | 5 | % | 6 | % | |
Acura | 4 | % | 4 | % | |
Infiniti | 3 | % | 3 | % | |
Other luxury | 7 | % | 7 | % | |
Total luxury | 33 | % | 34 | % | |
Imports: | |||||
Honda | 18 | % | 17 | % | |
Nissan | 12 | % | 11 | % | |
Toyota | 12 | % | 12 | % | |
Other imports | 4 | % | 5 | % | |
Total imports | 46 | % | 45 | % | |
Domestic: | |||||
Ford | 11 | % | 13 | % | |
Chevrolet | 4 | % | 2 | % | |
Dodge | 3 | % | 2 | % | |
Other domestics | 3 | % | 4 | % | |
Total domestic | 21 | % | 21 | % | |
Total New Vehicle Revenue | 100 | % | 100 | % | |
12
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 income from continuing operations," " Adjusted operating margins," and "Adjusted diluted earnings per share ("EPS") from continuing operations." 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.
13
The following tables provide reconciliations for our non-GAAP metrics:
For the Twelve Months Ended | |||||||
September 30, 2017 | June 30, 2017 | ||||||
(Dollars in millions) | |||||||
Adjusted leverage ratio: | |||||||
Long-term debt (including current portion) | $ | 915.7 | $ | 919.4 | |||
Calculation of earnings before interest, taxes, depreciation and amortization ("EBITDA"): | |||||||
Income from operations | $ | 163.7 | $ | 165.4 | |||
Add: | |||||||
Depreciation and amortization | 31.7 | 31.5 | |||||
Income tax expense | 97.8 | 97.8 | |||||
Swap and other interest expense | 55.8 | 55.9 | |||||
Earnings before interest, taxes, depreciation and amortization ("EBITDA") | $ | 349.0 | $ | 350.6 | |||
Non-core items - (income) expense: | |||||||
Legal settlements | $ | (7.5 | ) | $ | (7.5 | ) | |
Real estate-related charges | 3.4 | 5.2 | |||||
Gain on divestitures | (45.5 | ) | (45.5 | ) | |||
Investment income | (0.8 | ) | (0.8 | ) | |||
Total non-core items | (50.4 | ) | (48.6 | ) | |||
Adjusted EBITDA | $ | 298.6 | $ | 302.0 | |||
Adjusted leverage ratio | 3.1 | 3.0 | |||||
14
For the Three Months Ended September 30, | |||||||
2017 | 2016 | ||||||
(In millions, except per share data) | |||||||
Adjusted income from operations: | |||||||
Income from operations | $ | 69.7 | $ | 70.7 | |||
Real estate-related charges | — | 1.8 | |||||
Adjusted income from operations | $ | 69.7 | $ | 72.5 | |||
Adjusted net income: | |||||||
Net income | $ | 30.7 | $ | 32.4 | |||
Non-core items - (income) expense: | |||||||
Real estate-related charges | — | 1.8 | |||||
Income tax (benefit) expense on non-core items above | — | (0.7 | ) | ||||
Total non-core items | — | 1.1 | |||||
Adjusted net income | $ | 30.7 | $ | 33.5 | |||
Adjusted diluted earnings per share (EPS) from operations: | |||||||
Net income | $ | 1.48 | $ | 1.47 | |||
Total non-core items | — | 0.05 | |||||
Adjusted diluted EPS from operations | $ | 1.48 | $ | 1.52 | |||
Weighted average common shares outstanding - diluted | 20.8 | 22.1 | |||||
15
For the Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
(In millions, except per share data) | |||||||
Adjusted income from operations: | |||||||
Income from operations | $ | 213.6 | $ | 217.7 | |||
Real estate-related charges | 2.9 | 5.2 | |||||
Investment income | (0.8 | ) | — | ||||
Legal settlements | (0.9 | ) | — | ||||
Adjusted income from operations | $ | 214.8 | $ | 222.9 | |||
Adjusted net income: | |||||||
Net income | $ | 96.6 | $ | 100.1 | |||
Non-core items - (income) expense: | |||||||
Real estate-related charges | 2.9 | 5.2 | |||||
Investment income | (0.8 | ) | — | ||||
Legal settlements | (0.9 | ) | — | ||||
Income tax (benefit) expense on non-core items above | (0.5 | ) | (2.0 | ) | |||
Total non-core items | 0.7 | 3.2 | |||||
Adjusted net income | $ | 97.3 | $ | 103.3 | |||
Adjusted diluted earnings per share (EPS) from operations: | |||||||
Net income | $ | 4.60 | $ | 4.37 | |||
Total non-core items | 0.03 | 0.14 | |||||
Adjusted diluted EPS from operations | $ | 4.63 | $ | 4.51 | |||
Weighted average common shares outstanding - diluted | 21.0 | 22.9 | |||||
16