Asbury Automotive Group Reports Third Quarter 2008 Financial Results
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NEW YORK, October 30, 2008: Asbury Automotive Group, Inc. , one of the largest automotive retail and service companies in the U.S., today reported financial results for the third quarter and nine months ended September 30, 2008.
Income from continuing operations for the third quarter was $7.1 million, or $0.22 per diluted share, compared to $19.3 million, or $0.58 per diluted share, a year ago. The results for the third quarter of 2008 included charges associated with terminating a prior credit facility, as well as charges incurred and a favorable tax adjustment related to the Company's corporate restructuring. Collectively, these items reduced earnings by $0.03 per diluted share in this year's third quarter. The quarterly results a year ago included a $0.01 per diluted share increase in the Company's reserves for legal claims arising prior to 2003. Net income for the third quarter totaled $6.0 million, or $0.19 per diluted share, compared with $19.0 million, or $0.57 per diluted share, a year ago, including the non-core items discussed above.
For the first nine months of 2008, income from continuing operations was $29.9 million, or $0.93 per diluted share, compared with $42.7 million, or $1.27 per diluted share, in the corresponding period last year. Non-core items, as disclosed in the attached tables, reduced earnings by $0.07 per diluted share in the first nine months of 2008, and by $0.42 per diluted share in the nine-month period a year ago. Net income for the first nine months of 2008 totaled $27.4 million, or $0.85 per diluted share, compared with $40.0 million, or $1.19 per diluted share, a year ago, including the non-core items discussed above.
President and CEO Charles R. Oglesby said, "The headwinds facing Asbury and the auto retailing industry intensified during the third quarter, as consumer confidence sagged under the weight of further declines in the housing and equity markets. In addition, due to the unprecedented turmoil in the credit markets, many lenders -- both captives and independents -- significantly tightened their standards for automotive financing. Not surprisingly, our retail vehicle sales for the quarter were very soft, especially in our key Florida markets, and we were unable to reduce expenses quickly enough to prevent a significant decline in our bottom line."
Mr. Oglesby continued, "We are making the difficult but necessary decisions to preserve capital, improve liquidity and reduce costs during these exceptionally challenging times. The Board of Directors has elected to suspend the dividend, effective immediately. In addition, we are dramatically reducing our capital expenditures, and will not consider any additional acquisitions until the financial and economic environment has improved significantly."
Mr. Oglesby added, "We have substantially broadened the scope of our ongoing restructuring and cost-reduction programs. We are making progress with the move of Asbury's headquarters from New York to Atlanta, and now expect our corporate restructuring program to produce annualized savings of approximately $4.5 million, up from our previous estimate of $3.5 million. We are consolidating our four regional organizations into two, which is expected to save $8 million annually. In total, we expect to incur $7 million in restructuring costs over the next six months associated with these programs. Finally, we are expanding our store-level productivity initiatives -- reducing personnel and advertising expenses, improving inventory management, and making selected technology investments to enhance our efficiency. Taken together, these restructuring and store-level programs are targeted to deliver annualized savings of $25 million by March of 2009."
As announced last month, the Company's new credit facilities have significantly enhanced its financial flexibility and expanded its borrowing capacity. These facilities, which include a $600 million new vehicle floor plan facility and a $200 million revolver, offer competitive borrowing rates and more favorable covenants compared to the Company's prior credit facility. Furthermore, over the past week, the Company has secured over $100 million in additional inventory-based financing -- $29 million in new floor plan financing and $75 million in used vehicle borrowing facilities.
The Company also announced that it was in compliance with all of its debt covenants as of September 30, 2008.
Mr. Oglesby concluded, "Clearly, there are many uncertainties facing the auto industry in the months ahead and, accordingly, we are not providing guidance for the remainder of 2008. However, we will continue to move aggressively to cut costs, generate cash and use our financial flexibility to manage through the current challenging retail environment."
In connection with the corporate restructuring, the Company announced the appointment of Keith R. Style as Vice President of Finance, and the appointment of Bryan Hanlon as Controller and Chief Accounting Officer, effective November 1, 2008. In his new role, Mr. Hanlon will report to Mr. Style.
Asbury will host a conference call to discuss its third quarter results this morning at 10:00 a.m. Eastern Time. The call will be simulcast live on the Internet and can be accessed by logging onto ASBURY AUTO or CCBN. In addition, a live audio of the call will be accessible to the public by calling (866) 454-4208 (domestic), or (913) 312-0946 (international); passcode - 3769146. Callers should dial in approximately 5 to 10 minutes before the call begins.