Auto Dealer Group - Asbury Automotive Reports Record First-Quarter Financial Results
STAMFORD, Conn.--April 25, 2002--Asbury Automotive Group, Inc. , a specialty retailer and one of the largest automotive retailers in the U.S., today reported record financial results for the first quarter ended March 31, 2002.In Asbury's first reporting period since its initial public offering in mid-March, the company announced net income for the quarter of $11.3 million, or $0.33 per share. The results include a pro forma tax provision as if the company were a public "C" corporation for the full quarter. The results also exclude a non-recurring deferred income tax provision required by FASB 109 related to Asbury's change in tax status from a limited liability company to a "C" corporation. On a GAAP basis, including the non-recurring deferred income tax provision, the company had net income of $5.2 million and earnings per share of $0.17.
"We are pleased to announce results above analysts' original expectations in our first quarterly report as a public company," said Kenneth B. Gilman, President and CEO. "Asbury's operating results were strong, reflecting an overall increase in gross profit to 16.1% of revenues in the first quarter this year from 15.6% last year. The strength and consistency of our business model, as we described during our road show, continues to be reflected in our financial results. Our luxury and mid-line import brand mix, customer focus and strong platform performance all contributed to an excellent quarter."
Financial highlights for the quarter included:
| - | The company's total revenues for the quarter were about $1.1 billion, up 8 percent from a year ago. |
| - | New vehicle retail sales rose 11 percent, and new vehicle retail gross profit increased 14 percent. |
| - | Used vehicle retail sales were up 4 percent, with related gross profit rising 7 percent. |
| - | Parts, service and collision repair revenues increased 8 percent and gross profits increased 9 percent. |
| - | Net finance and insurance (F&I) revenue and gross profit were both up 14 percent from a year ago while F&I per vehicle retailed rose 11 percent to $709. |
| - | Same-store retail sales (excluding fleet and wholesale business) were up 2 percent, while same-store gross profits, the Company's preferred productivity metric, increased 4 percent. |
| - | Income from operations rose to $33.1 million, including $0.5 million of one-time IPO-related compensation expenses and $1.1 million of start-up expenses related to our Price 1 used car pilot program. Also, goodwill amortization in the first quarter of 2001 was $2.5 million, while amortization of goodwill in this year's first quarter was eliminated pursuant to SFAS No. 142. |
| - | Total interest expense for the quarter was 34% lower than last year, reflecting the current lower interest rate environment. |
| - | Earnings before tax grew to $18.8 million, a 55% increase over the first quarter of 2001 (adjusted for the elimination of goodwill amortization). |
| - | Mainly as a result of its IPO last month, the Company reduced its debt by approximately $52 million during the quarter. |
Mr. Gilman also noted that the company is comfortable with the current analysts' consensus estimate range for 2002 net earnings per share of $1.54 - $1.56, as well as the second-quarter consensus estimate of $0.38 per share.
Asbury will host a conference call to discuss the quarterly results later this morning, at 10:00 a.m. Eastern Daylight Time. The conference will be webcast live on the Internet and can be accessed by logging onto www.asburyauto.com. In addition, a live audio of the call will be accessible to the public by calling (800) 811-8830. International callers, please dial (913) 981-4904. Callers should dial in approximately 10 minutes before the call begins. A conference call replay will be available from 1:00 p.m. (EDT), April 25 through midnight, Thursday, May 2 and can be accessed by dialing (888) 203-1112 (domestic) or (719) 457-0820 (international); confirmation code - 547185.
About Asbury Automotive Group
Asbury Automotive Group, Inc. (www.asburyauto.com), headquartered in Stamford, Connecticut, is one of the largest automobile retailers in the U.S., with 2001 revenues of $4.3 billion. Built through a combination of organic growth and a series of strategic acquisitions over the past six years, Asbury now operates through nine geographically concentrated, individually branded "platforms". These platforms operate 91 retail auto stores, encompassing 127 franchises for the sale and servicing of 36 different brands of American, European and Asian automobiles. Asbury believes that its product mix includes one of the highest proportions of luxury and mid-line import brands among leading U.S. public automotive retailers. The company 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" as that term is defined in the Private Securities Litigation Reform Act of 1995. The forward-looking statements include statements relating to goals, plans and projections regarding the company's financial position, results of operations, market position, product development and business strategy. These statements are based on management's current expectations 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, the company's relationships with vehicle manufacturers and other suppliers, risks associated with the company's substantial indebtedness, risks related to pending and potential future acquisitions, general economic conditions both nationally and locally and governmental regulations and legislation. There can be no guarantees the company's plans for future operations will be successfully implemented or that they will prove to be commercially successful. These and other risk factors are discussed in the company's registration statement on Form S-1. 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
FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND 2001
(dollars in thousands except per share data)
(unaudited)
2002 Pro 2002 2001
Forma (a) Actual (b) Actual
----------- ----------- -----------
REVENUES:
New vehicle $ 631,105 $ 631,105 $ 570,270
Used vehicle 285,849 285,849 282,145
Parts, service and
collision repair 125,068 125,068 116,054
Finance and insurance, net 26,563 26,563 23,258
----------- ----------- -----------
Total revenues 1,068,585 1,068,585 991,727
COST OF SALES
New vehicle 578,770 578,770 524,126
Used vehicle 258,388 258,388 257,027
Parts, service and
collision repair 59,452 59,452 55,910
----------- ----------- -----------
Total cost of sales 896,610 896,610 837,063
----------- ----------- -----------
GROSS PROFIT 171,975 171,975 154,664
OPERATING EXPENSES:
Selling, general and
administrative 133,015 133,015 117,221
Depreciation and amortization 5,833 5,833 7,041
----------- ----------- -----------
Income from operations 33,127 33,127 30,402
OTHER INCOME (EXPENSE):
Floor plan interest expense (4,350) (4,350) (8,934)
Other interest expense (9,778) (9,778) (12,441)
Interest income 315 315 1,185
Net losses from
unconsolidated entities (100) (100) (1,000)
Other income (392) (392) 438
----------- ----------- -----------
Total other expense, net (14,305) (14,305) (20,752)
----------- ----------- -----------
Income before income taxes,
minority interest,
extraordinary loss and
discontinued operations 18,822 18,822 9,650
INCOME TAX PROVISION:
Income tax expense 7,493 2,194 1,168
Tax adjustment upon conversion
from an L.L.C. to a corporation - 11,553
MINORITY INTEREST - - 144
----------- ----------- -----------
Income before extraordinary
loss and discontinued
operations 11,329 5,075 8,338
EXTRAORDINARY LOSS ON EARLY
EXTINGUISHMENT OF DEBT - - (1,433)
DISCONTINUED OPERATIONS - 87 (229)
----------- ----------- -----------
Net income $ 11,329 $ 5,162 $ 6,676
=========== =========== ===========
EARNINGS PER COMMON SHARE:
Basic and Diluted
Income before and after
discontinued operations $ 0.33 $ 0.17
=========== ===========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING
Basic 34,000 30,400
=========== ===========
Diluted 34,034 30,434
=========== ===========
(a) Pro forma column includes a tax provision as if the Company were a
"C" corporation for the entire quarter as well as assumes that all
shares were outstanding for the full quarter. This column excludes
a one-time charge to establish a net deferred tax liability upon
the Company's conversion to a "C" corporation as required by SFAS
109.
(b) Reconciliation of GAAP net income to pro forma net income:
GAAP net income $ 5,162
Tax adjustment upon
conversion from an L.L.C.
to a corporation 11,553
Pro forma income tax charge (5,299)(c)
Discontinued operations (87)
-----------
Pro forma net income 11,329
===========
(c) Represents the pro forma tax charge for the time period during the
quarter that the company was an L.L.C.
ASBURY AUTOMOTIVE GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands except per share data)
ASSETS March 31, December 31,
2002 2001
----------- -----------
(unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 78,112 $ 60,506
Contracts-in-transit 86,217 93,044
Accounts receivable, net 84,592 81,347
Inventories 510,799 496,054
Prepaid and other current assets 40,135 26,663
----------- -----------
Total current assets 799,855 757,614
PROPERTY AND EQUIPMENT, net 258,379 256,402
GOODWILL, net 392,287 392,856
OTHER ASSETS 53,851 58,141
----------- -----------
Total assets $ 1,504,372 $ 1,465,013
=========== ===========
LIABILITIES AND STOCKHOLDERS'/MEMBERS' EQUITY
CURRENT LIABILITIES:
Floor plan notes payable $ 451,003 $ 451,375
Short-term debt 10,194 10,000
Current maturities of long-term debt 46,338 35,789
Accounts payable and accrued liabilities 123,892 112,833
----------- -----------
Total current liabilities 631,427 609,997
LONG-TERM DEBT 429,689 492,548
OTHER LIABILITIES 37,443 14,561
STOCKHOLDERS'/MEMBERS' EQUITY 405,813 347,907
----------- -----------
Total liabilities and
stockholders'/members' equity $ 1,504,372 $ 1,465,013
=========== ===========
- -
ASBURY AUTOMOTIVE GROUP, INC.
SELECTED DATA
FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND 2001
(dollars in thousands except per unit data)
(unaudited)
Actual Same Store
----------------------- -----------------------
2002 2001 2002 2001
---- ---- ---- ----
RETAIL UNITS:
New 22,529 21,518 21,103 21,328
Used 14,933 14,773 13,614 14,510
----------- ------------ ---------- -----------
Total 37,462 36,291 34,717 35,838
REVENUE:
New retail $619,929 $560,978 $578,220 $556,898
Used retail 222,229 214,703 201,700 211,314
Parts, service and
collision repair 125,068 116,054 117,082 115,798
Finance and
insurance, net 26,563 23,258 25,316 22,950
Fleet 11,176 9,292 6,909 9,292
Wholesale 63,620 67,442 57,588 66,972
----------- ------------ ---------- -----------
Total 1,068,585 991,727 986,815 983,224
GROSS MARGIN %:
New retail 8.4 8.1
Used retail 12.2 11.8
Parts, service and
collision repair 52.5 51.8
Finance and
insurance, net 100.0 100.0
Total 16.1 15.6
GROSS PROFIT PER UNIT:
New retail $2,311 $2,125
Used retail 1,810 1,709
Weighted average 2,112 1,955
F&I PVR $709 $641
EBITDA (a) $34,533 $30,132
EBITDA % 3.2 3.0
OPERATING INCOME % 3.1 3.1
CAPITAL EXPENDITURES $8,593 $10,326
FREE CASH FLOW (b) 7,807 10,369
March 31, December 31,
2002 2001
---------- ----------
CAPITALIZATION:
Long-term debt $476,027 $528,337
Stockholders'/members'
equity 405,813 347,907
---------- ----------
Total 881,840 876,244
(a) EBITDA is defined as earnings before income taxes, minority
interest, extraordinary loss, discontinued operations, other
interest expense, depreciation and amortization and net losses
from unconsolidated affiliates.
(b) Free cash flow is defined as net cash provided by operating
activities less capital expenditures.
ITEMS TO CONSIDER WHEN READING OUR FINANCIAL INFORMATION
| - | In connection with its initial public offering (IPO) on March 14, 2002, the Company paid down debt of approximately $50 million. |
| - | In connection with the Company's conversion from a limited liability company to a corporation, and in accordance with Statement of Financial Accounting Standards (SFAS) No. 109, the Company recorded a one-time, non-recurring charge of $11.6 million related to the establishment of a net deferred tax liability associated with the difference between the financial statement and tax basis of the assets and liabilities of the Company at the conversion date. In addition, the Company has presented a pro forma tax provision for the quarter ended March 31, 2002 as if it was a corporation for the entire quarter and assumes that all shares were outstanding for the full quarter. |
| - | During the first quarter of 2002, the Company divested of two dealerships (one in Oregon and the other in North Carolina). In accordance with Statement of Financial Accounting Standards (SFAS) No. 144, these dealerships are treated as discontinued operations for each of the periods presented. Included in the discontinued operations line are the results of operations of these dealerships for both periods as well as the net gain on the sales in the current period. |
| - | The provisions of SFAS No. 142 eliminated the amortization of the goodwill component of an acquisition price over the estimated useful life of the acquisition. SFAS No. 142 applied immediately to all acquisitions completed after June 30, 2001 and all remaining goodwill would be amortized until December 31, 2001. The Company's statement of income for the quarter ended March 31, 2001 included approximately $2.5 million of pre-tax goodwill amortization. |
| - | Included in our selling, general and administrative (SG&A) expenses for the quarter ended March 31, 2002 are one-time IPO related compensation expenses of $0.5 million as well as $1.1 million of expenses associated with the start-up of our Price 1 used car pilot program. |
| - | Pro forma earnings per share (EPS) amounts for the quarter ended March 31, 2002 reflect the 4.5 million incremental shares issued in connection with the IPO as if the IPO was consummated on January 1, 2002 as well as the 29.5 million shares issued upon the conversion from a limited liability company to a corporation. Pro forma EPS figures have not been presented for the prior quarter (and are not required) as the Company believes changes in the Company's tax status cause an inequitable comparison. |