Asbury Automotive Group Reports First Quarter Financial Results
- Reports a 30% Increase in Net Income from Continuing Operations -
- Total Revenues Rise 14%; Gross Profit Increases 12% -
NEW YORK, April 13 -- Asbury Automotive Group, Inc. , one of the largest automotive retail and service companies in the U.S., today reported financial results for the quarter ended March 31, 2004.
Net income from continuing operations increased 30 percent to $10.7 million, or $0.33 per share, compared with $8.2 million, or $0.25 per share, for the first quarter of 2003. Net income increased 46 percent for the first quarter of 2004 to $10.4 million, or $0.32 per share, up from $7.1 million, or $0.21 per share, in the prior year period.
Other financial highlights for the first quarter of 2004, as compared to the prior year period, included:
* Total revenues for the quarter were approximately $1.2 billion, up
14.5 percent. Total gross profit was $191.0 million, up 12.1 percent.
* Same-store retail revenue (excluding fleet and wholesale business)
increased 3.8 percent to $1.0 billion, while same-store retail gross
profit rose 2.8 percent to $174.4 million.
* New vehicle retail revenue increased 16.2 percent (5.9 percent same-
store), and unit sales increased 9.7 percent (flat on a same-store
basis). New vehicle retail gross profit increased 14.7 percent
(2.5 percent same-store).
* Used vehicle retail revenue increased 6.9 percent (down 3.3 percent
same-store), and unit sales increased 7.0 percent (down 1.4 percent
same-store).
* Parts, service and collision repair revenues and gross profit increased
15.7 percent and 13.6 percent (5.3 and 3.5 percent same-store),
respectively.
* Net finance and insurance (F&I) revenue rose 15.1 percent (7.7 percent
same-store). F&I per vehicle retailed (PVR) increased 6.1 percent to
$837, and at the platform level rose 3.4 percent to $816.
* Selling, general and administrative (SG&A) expenses for the quarter,
which include $1.2 million of expenses associated with management
changes made in the previous year, were flat as a percentage of gross
profit.
* The Company's effective tax rate for the quarter was 37.5 percent
compared to 39.8 percent in the prior year period.
President and CEO Kenneth B. Gilman commented, "We are pleased to have exceeded earnings expectations for the first quarter. While January was somewhat difficult, our continued focus on the basics of automotive retailing in each element of our business model produced improving trends in February and March, leading to record first quarter sales and gross profit results."
Mr. Gilman continued, "More specifically, we were particularly pleased with the sales and gross profit trends in our used car business. Despite a continued challenging environment, our results are beginning to reflect the Company's intensified focus on used vehicles, as our used car teams at the platform level have become increasingly effective.
"At the platform level, a key highlight during the quarter was a significant improvement in results at both our Arkansas and Oregon platforms," Mr. Gilman noted. "In Arkansas, operating income for the first quarter was more than double the prior year, with same-store unit sales increases well into the double digits for both new and used vehicles. As for Oregon, with the new management team's recovery plan in place, we are beginning to see increased revenues, particularly in used vehicles, and also reported an operating profit for the quarter. Significant progress has been made in adjusting the platform's cost structure, as we were able to reduce Oregon's SG&A expenses as a percentage of gross profit by over 200 basis points, when compared to the prior year quarter."
Mr. Gilman added, "With the exception of Texas, where our results were somewhat below expectations, the majority of our platforms were essentially in-line with anticipated results for the quarter. The results in our Texas platform were adversely impacted by a competitive local Honda market, dealership construction, as well as the continued adjustment to recent management changes made in last year's second half."
The Company noted that in the first quarter of 2004 it had completed the acquisition of three franchises, representing $170 million in annualized revenues. In addition, the Company noted that it had executed contracts to acquire four additional franchises with annual revenues of approximately $210 million. These pending transactions are subject in all cases to manufacturer consent.
About Asbury Automotive Group
Asbury Automotive Group, Inc., headquartered in New York City, is one of the largest automobile retailers in the U.S., with 2003 revenues of $4.8 billion. Built through a combination of organic growth and a series of strategic acquisitions, Asbury now operates through nine geographically concentrated, individually branded "platforms." These platforms currently operate 100 retail auto stores, encompassing 140 franchises for the sale and servicing of 35 different brands of American, European and Asian automobiles. Asbury believes that its product mix contains a higher proportion of the more desirable luxury and mid-line import brands than most 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.
ASBURY AUTOMOTIVE GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
For the Three Months Ended
March 31, March 31,
2004 2003
REVENUES:
New vehicle $725,278 $625,035
Used vehicle 317,411 287,228
Parts, service and collision repair 147,345 127,379
Finance and insurance, net 33,194 28,830
Total revenues 1,223,228 1,068,472
COST OF SALES:
New vehicle 671,822 578,198
Used vehicle 289,277 259,650
Parts, service and collision repair 71,088 60,224
Total cost of sales 1,032,187 898,072
GROSS PROFIT 191,041 170,400
OPERATING EXPENSES:
Selling, general and administrative 153,579 136,987
Depreciation and amortization 5,139 4,739
Income from operations 32,323 28,674
OTHER INCOME (EXPENSE):
Floor plan interest expense (4,989) (4,418)
Other interest expense (10,322) (9,954)
Interest income 275 180
Other income (expense) (204) (840)
Total other expense, net (15,240) (15,032)
Income from continuing operations before
income taxes and discontinued operations 17,083 13,642
INCOME TAX EXPENSE 6,406 5,430
Net income from continuing operations 10,677 8,212
DISCONTINUED OPERATIONS, net of tax (313) (1,115)
Net income $10,364 $7,097
BASIC EARNINGS PER COMMON SHARE:
Continuing operations $0.33 $0.25
Discontinued operations (0.01) (0.04)
Net income $0.32 $0.21
DILUTED EARNINGS PER COMMON SHARE:
Continuing operations $0.33 $0.25
Discontinued operations (0.01) (0.04)
Net income $0.32 $0.21
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic 32,435 33,052
Diluted 32,721 33,053
ASBURY AUTOMOTIVE GROUP, INC.
SELECTED DATA
(In thousands, except vehicle and per vehicle data)
(Unaudited)
As Reported
For the Three Months Ended March 31,
2004 2003
RETAIL VEHICLES SOLD:
New units 23,869 60.2% 21,767 59.6%
Used units 15,782 39.8% 14,750 40.4%
Total units 39,651 100.0% 36,517 100.0%
REVENUE:
New retail $710,411 58.1% $611,600 57.2%
Used retail 239,130 19.6% 223,638 20.9%
Parts, service and
collision repair 147,345 12.0% 127,379 11.9%
Finance and insurance, net 33,194 2.7% 28,830 2.7%
Total retail revenue 1,130,080 991,447
Fleet 14,867 1.2% 13,435 1.3%
Wholesale 78,281 6.4% 63,590 6.0%
Total revenue $1,223,228 100.0% $1,068,472 100.0%
GROSS PROFIT:
New retail $47,245 24.7% $41,185 24.2%
Used retail 28,641 15.0% 27,292 16.0%
Parts, service and
collision repair 76,257 39.9% 67,155 39.4%
Finance and insurance, net 33,194 17.4% 28,830 16.9%
Floor plan interest credits 5,837 3.1% 5,300 3.1%
Total retail gross profit 191,174 169,762
Fleet 374 0.2% 352 0.2%
Wholesale (507) (0.3%) 286 0.2%
Total gross profit $191,041 100.0% $170,400 100.0%
Sales, general and
administrative (SG&A) expense $153,579 $136,987
SG&A as a percent
of gross profit 80.4% 80.4%
GROSS PROFIT PER VEHICLE RETAILED:
New retail (including floor
plan interest credits) $2,224 $2,136
Used retail 1,815 1,850
Finance and insurance, net 837 789
Platform finance
and insurance, net 816 789
Same Store
For the Three Months Ended March 31,
2004 2003
RETAIL VEHICLES SOLD:
New units 21,796 60.0% 21,767 59.6%
Used units 14,540 40.0% 14,750 40.4%
Total units 36,336 100.0% 36,517 100.0%
REVENUE:
New retail $647,696 58.1% $611,600 57.2%
Used retail 216,357 19.4% 223,638 20.9%
Parts, service and
collision repair 134,105 12.0% 127,379 11.9%
Finance and insurance, net 31,037 2.8% 28,830 2.7%
Total retail revenue 1,029,195 991,447
Fleet 14,867 1.3% 13,435 1.3%
Wholesale 71,213 6.4% 63,590 6.0%
Total revenue $1,115,275 100.0% $1,068,472 100.0%
GROSS PROFIT:
New retail $42,204 24.2% $41,185 24.2%
Used retail 26,160 15.0% 27,292 16.0%
Parts, service and
collision repair 69,482 39.9% 67,155 39.4%
Finance and insurance, net 31,037 17.8% 28,830 16.9%
Floor plan interest credits 5,559 3.2% 5,300 3.1%
Total retail gross profit 174,442 169,762
Fleet 374 0.2% 352 0.2%
Wholesale (442) (0.3%) 286 0.2%
Total gross profit $174,374 100.0% $170,400 100.0%
Sales, general and
administrative (SG&A) expense $140,734 $136,987
SG&A as a percent of gross profit 80.7% 80.4%
GROSS PROFIT PER VEHICLE RETAILED:
New retail (including floor
plan interest credits) $2,191 $2,136
Used retail 1,799 1,850
Finance and insurance, net 854 789
Platform finance
and insurance, net 831 789
As of As of
March 31, December 31,
2004 2003
BALANCE SHEET HIGHLIGHTS:
Cash and cash equivalents $45,986 $106,711
Inventories 707,513 650,397
Total current assets 1,068,956 1,041,542
Floor plan notes payable 625,153 602,167
Total current liabilities 836,585 781,758
CAPITALIZATION:
Long-term debt (including current portion) $591,939 $592,378
Shareholders' equity 442,860 433,707
Total $1,034,799 $ 1,026,085
ASBURY AUTOMOTIVE GROUP, INC.
SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION
(In thousands, except vehicle data)
(Unaudited)
We evaluate our finance and insurance gross profit performance on a per vehicle retailed basis by dividing our total finance and insurance gross profit by the number of retail vehicles sold. During 2003, we renegotiated a contract with one of our third party finance and insurance product providers, which resulted in the recognition of income that was not attributable to retail vehicles sold during the year. We believe that platform finance and insurance, which excludes the additional revenue derived from contracts negotiated by our corporate office, provides a more accurate measure of our finance and insurance operating performance. The following table reconciles finance and insurance gross profit to platform finance and insurance gross profit, and provides necessary components to calculate platform finance and insurance gross profit per vehicle retailed.
As Reported Same Store
For the Three For the Three
Months Ended March 31, Months Ended March 31,
2004 2003 2004 2003
RECONCILIATION OF
FINANCE AND INSURANCE
GROSS PROFIT TO
PLATFORM FINANCE
AND INSURANCE:
Finance and insurance, net $33,194 $28,830 $31,037 $28,830
Less: corporate finance
and insurance (839) -- (839) --
Platform finance and
insurance, net $32,355 $28,830 $30,198 $28,830
RETAIL VEHICLES SOLD:
New retail units 23,869 21,767 21,796 21,767
Used retail units 15,782 14,750 14,540 14,750
Total units 39,651 36,517 36,336 36,517
We define adjusted EBITDA as net income before other interest expense, income tax expense and depreciation and amortization expense. This definition of adjusted EBITDA may not be comparable to similarly titled measures of other companies. Adjusted EBITDA is not a measure of financial performance under accounting principles generally accepted in the United States. We believe adjusted EBITDA provides a basis to measure our operating performance, apart from the expenses associated with our physical plant or capital structure. Adjusted EBITDA should not be considered in isolation or as a substitute for operating income, cash flow from operating activities or other measures of performance defined by accounting principles generally accepted in the United States. A reconciliation of adjusted EBITDA is presented below.
As Reported For the Three
Months Ended March 31,
2004 2003
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA:
Net income $10,364 $7,097
Add:
Other interest expense 10,322 9,954
Income tax expense 6,406 5,430
Depreciation and amortization 5,139 4,739
Adjusted EBITDA $32,231 $27,220