NEW YORK, April 25 /PRNewswire-FirstCall/ -- Asbury Automotive Group, Inc. , one of the largest automotive retail and service companies in the U.S., today reported financial results for the first quarter ended March 31, 2007.
Income from continuing operations for the first quarter was $2.4 million, or $0.07 per diluted share. These results include an after-tax charge of $11.1 million, or $0.33 per diluted share, related to a debt refinancing and after-tax charges of $1.8 million, or $0.05 per diluted share, related to the planned retirement next month of current CEO, Kenneth B. Gilman. Adjusting for these items, income from continuing operations for the first quarter increased 12% to $15.3 million, or $0.45 per diluted share, from $13.7 million, or $0.41 per diluted share, in last year's first quarter.
Summary financial information for the first quarter of 2007, as compared to last year's first quarter, included:
-- Total revenue for the quarter increased 4% to $1.4 billion. Total
gross profit was $224.1 million, up 7%.
-- Same-store retail revenue and gross profit (excluding fleet and
wholesale businesses) increased 4% and 7%, respectively.
-- New vehicle retail revenue and gross profit increased 2% and 4%,
respectively. New retail unit sales were up 1%. Total new unit sales
(including fleet) were up 2%.
-- Used vehicle retail revenue and gross profit both increased 11%. Used
retail unit sales were up 9%.
-- Parts, service and collision repair revenue increased 3%, and gross
profit rose 6%.
-- Net finance and insurance (F&I) revenue increased 10% and dealership-
generated F&I per vehicle retailed rose 9%.
-- Selling, general and administrative (SG&A) expenses as a percentage of
gross profit were 78.7% for the quarter. Adjusted for the charge
related to the retirement of the current CEO, SG&A expenses were 77.4%
of gross profit for the quarter, an 80 basis-point improvement compared
to 78.2% a year ago.
Charles R. Oglesby, who will succeed Mr. Gilman as President and CEO on May 4, said, "The results for the first quarter again demonstrate the strength of Asbury's well-balanced business model. As the numbers reveal, it's the depth and breadth of the performance that's most impressive. All four business lines had record first quarter gross profit results, with two of them, fixed operations and used vehicles, having all-time record quarters. Overall, our gross profit margin improved to 15.8%, the highest in the Company's history. And, equally as important, our strong performance was not confined to any one geographic region, as each of our four regions delivered record first quarter results."
J. Gordon Smith, Senior Vice President and CFO, said, "This quarter was Asbury's tenth in a row of adjusted SG&A expense leverage improvement. That ratio improved another 80 basis points in the first quarter versus the prior year quarter, and we still see additional opportunity to continue to leverage our expense structure."
Mr. Smith continued, "Other highlights of the quarter surrounded the refinancing of our 9% senior subordinated notes. We completed the tender offer for these notes in March, accepting $238.1 million of tendered notes, and refinanced them with a successful private placement of $150 million in 7.625% senior subordinated notes and $115 million in 3% convertible notes. The combination of these transactions is expected to reduce our annual debt service by $6.5 million. In addition, concurrently with the convertible notes offering, we repurchased 1.3 million shares of common stock, fully utilizing the capacity under our stock repurchase program which was designed to off-set dilution related to stock-based compensation."
In light of its strong first quarter results and the positive impact of the debt refinancing and share repurchase on the remaining nine months of the year, the Company raised its full-year 2007 EPS guidance range to between $2.20 to $2.28 per diluted share from continuing operations, which excludes charges incurred in the first quarter associated with the debt refinancing ($0.33 per diluted share) and the charges related to the retirement benefits of Mr. Gilman ($0.05 per diluted share).
Asbury will host a conference call to discuss its first 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 http://www.asburyauto.com or http://www.ccbn.com. In addition, a live audio of the call will be accessible to the public by calling 800-263-8506 (domestic), or 719-457-2681 (international); no access code is necessary. Callers should dial in approximately 5-10 minutes before the call begins.
About Asbury Automotive Group
Asbury Automotive Group, Inc. ("Asbury"), headquartered in New York City, is one of the largest automobile retailers in the U.S. Built through a combination of organic growth and a series of strategic acquisitions, Asbury currently operates 86 retail auto stores, encompassing 113 franchises for the sale and servicing of 33 different brands of American, European and Asian automobiles. 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" as that term is defined in the Private Securities Litigation Reform Act of 1995. The forward- looking statements include statements relating to goals, plans, projections and guidance regarding the Company's financial position, results of operations, market position, potential future acquisitions 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 indebtedness, risks related to potential future acquisitions, risks related to competition in the automotive retail and service industries, general economic conditions both nationally and locally, governmental regulations, legislation and the Company's ability to execute certain operational strategies. There can be no guarantees that the Company's plans for future operations will be successfully implemented or that they will prove to be commercially successful or that the Company will be able to continue paying dividends in the future at the current rate or at all. These and other risk factors are discussed in the Company's annual report on Form 10-K/A and in its other filings with the Securities and Exchange Commission. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.
[Tables Follow]
Asbury Automotive Group, Inc.
Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
For the Three Months Ended March 31,
2007 2006
REVENUES:
New vehicle $824,451 $809,657
Used vehicle 378,147 352,415
Parts, service and collision repair 174,288 168,529
Finance and insurance, net 38,684 35,150
Total revenues 1,415,570 1,365,751
COST OF SALES:
New vehicle 764,914 752,607
Used vehicle 341,978 319,982
Parts, service and collision repair 84,615 84,243
Total cost of sales 1,191,507 1,156,832
GROSS PROFIT 224,063 208,919
OPERATING EXPENSES:
Selling, general and administrative 176,386 163,291
Depreciation and amortization 5,328 4,955
Income from operations 42,349 40,673
OTHER INCOME (EXPENSE):
Floor plan interest expense (11,216) (8,937)
Other interest expense (11,786) (10,903)
Interest income 1,965 727
Loss on extinguishment of long-term debt, net (17,737) -
Other income, net 292 344
Total other expense, net (38,482) (18,769)
Income from continuing operations before
income taxes and discontinued operations 3,867 21,904
INCOME TAX EXPENSE 1,458 8,214
Income from continuing operations 2,409 13,690
DISCONTINUED OPERATIONS, net of tax (1,976) (1,137)
Net income $433 $12,553
BASIC EARNINGS PER COMMON SHARE:
Continuing operations $0.07 $0.42
Discontinued operations(0.06) (0.04)
Net income $0.01 $0.38
DILUTED EARNINGS PER COMMON SHARE:
Continuing operations $0.07 $0.41
Discontinued operations (0.06) (0.04)
Net income $0.01 $0.37
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 33,333 32,922
Diluted 34,161 33,584
Asbury Automotive Group, Inc.
Selected Data
(Dollars in thousands, except per vehicle data)
(Unaudited)
As Reported for the Three
Months Ended March 31, Increase %
(Decrease) Change
2007 2006
RETAIL VEHICLES SOLD:
New retail units 24,292 59.4% 24,123 61.3% 169 0.7%
Used retail units 16,625 40.6% 15,219 38.7% 1,406 9.2%
Total retail units 40,917 100.0% 39,342 100.0% 1,575 4.0%
NEW UNITS SOLD
(INCLUDING FLEET) 27,030 26,558 472 1.8%
REVENUE:
New retail $773,480 54.6% $760,807 55.7% $12,673 1.7%
Used retail 296,516 21.0% 266,367 19.5% 30,149 11.3%
Parts, service and
collision repair 174,288 12.3% 168,529 12.3% 5,759 3.4%
Finance and
insurance, net 38,684 2.7% 35,150 2.6% 3,534 10.1%
Total retail
revenue 1,282,968 1,230,853 52,115 4.2%
Fleet 50,971 3.6% 48,850 3.6% 2,121 4.3%
Wholesale 81,631 5.8% 86,048 6.3% (4,417) (5.1)%
Total revenue $1,415,570 100.0% $1,365,751 100.0% $49,819 3.6%
GROSS PROFIT:
New retail $58,472 26.1% $56,229 26.9% $2,243 4.0%
Used retail 35,653 15.9% 32,033 15.3% 3,620 11.3%
Parts, service
and collision
repair 89,673 40.0% 84,286 40.4% 5,387 6.4%
Finance and
insurance, net 38,684 17.3% 35,150 16.8% 3,534 10.1%
Total retail
gross profit 222,482 $207,698 14,784 7.1%
Fleet 1,065 0.5% 821 0.4% 244 29.7%
Wholesale 516 0.2% 400 0.2% 116 29.0%
Total gross profit $224,063 100.0% $208,919 100.0% $15,144 7.2%
Adjusted SG&A
expenses $173,436 $163,291 $10,145 6.2%
Adjusted SG&A
expenses as a
percentage of gross
profit 77.4% 78.2% (0.8)% (1.0)%
REVENUE PER VEHICLE
RETAILED:
New retail $31,841 $31,539 $302 1.0%
Used retail 17,836 17,502 334 1.9%
GROSS PROFIT PER
VEHICLE RETAILED:
New retail $2,407 $2,331 $ 76 3.3%
Used retail 2,145 2,105 40 1.9%
Finance and
insurance, net 945 893 52 5.8%
Dealership
generated finance
and insurance, net 945 868 77 8.9%
GROSS PROFIT MARGIN:
New retail 7.6% 7.4% 0.2% 2.7%
Used retail 12.0% 12.0% - -
Parts, service and
collision repair 51.5% 50.0% 1.5% 3.0%
Asbury Automotive Group, Inc.
Selected Data
(Dollars in thousands, except per vehicle data)
(Unaudited)
Same Store for the Increase %
Three Months Ended March 31, (Decrease) Change
2007 2006
RETAIL VEHICLES SOLD:
New retail units 24,237 59.4% 24,123 61.3% 114 0.5%
Used retail units 16,568 40.6% 15,219 38.7% 1,349 8.9%
Total retail
units 40,805 100.0% 39,342 100.0% 1,463 3.7%
NEW UNITS SOLD
(INCLUDING FLEET) 26,975 26,558 417 1.6%
REVENUE:
New retail $772,313 54.6% $760,807 55.7% $11,506 1.5%
Used retail 295,794 21.0% 266,367 19.5% 29,427 11.0%
Parts, service
and collision
repair 174,215 12.3%168,529 12.3% 5,686 3.4%
Finance and
insurance, net 38,609 2.7% 35,150 2.6% 3,459 9.8%
Total retail
revenue 1,280,931 1,230,853 50,078 4.1%
Fleet 50,971 3.6% 48,850 3.6% 2,121 4.3%
Wholesale 81,407 5.8% 86,048 6.3% (4,641) (5.4)%
Total revenue $1,413,309 100.0% $1,365,751 100.0% $47,558 3.5%
GROSS PROFIT:
New retail $58,409 26.1% $56,229 26.9% $2,180 3.9%
Used retail 35,576 15.9% 32,033 15.3% 3,543 11.1%
Parts, service
and collision
repair 89,604 40.0% 84,286 40.4% 5,318 6.3%
Finance and
insurance, net 38,609 17.3% 35,150 16.8% 3,459 9.8%
Total retail
gross
profit 222,198 207,698 14,500 7.0%
Fleet 1,065 0.5% 821 0.4% 244 29.7%
Wholesale 494 0.2% 400 0.2% 94 23.5%
Total gross
profit $223,757 100.0% $208,919 100.0% $14,838 7.1%
Adjusted SG&A
expenses $173,167 $163,291 $9,876 6.0%
Adjusted SG&A
expenses as a
percentage of
gross profit 77.4% 78.2% (0.8)% (1.0)%
REVENUE PER
VEHICLE
RETAILED:
New retail $31,865 $31,539 $326 1.0%
Used retail 17,853 17,502 351 2.0%
GROSS PROFIT PER VEHICLE RETAILED:
New retail $2,410 $2,331 $79 3.4%
Used retail 2,147 2,105 42 2.0%
Finance and
insurance, net 946 893 53 5.9%
Dealership
generated
finance and
insurance, net 946 868 78 9.0%
GROSS PROFIT MARGIN:
New retail 7.6% 7.4% 0.2% 2.7%
Used retail 12.0% 12.0% - -
Parts, service
and collision
repair 51.4% 50.0% 1.4% 2.8%
Asbury Automotive Group, Inc.
Selected Data(Dollars in thousands)
(Unaudited)
March 31, 2007 December 31, 2006
BALANCE SHEET HIGHLIGHTS:
Cash and cash equivalents $ 94,497 $129,170
Inventories 780,491 775,313
Total current assets 1,237,668 1,293,064
Floor plan notes payable 671,438 700,777
Total current liabilities 849,927 881,055
CAPITALIZATION:
Long-term debt
(including current portion) $502,721 $477,154
Stockholders' equity 569,358 611,833
Total $ 1,072,079 $ 1,088,987
ASBURY AUTOMOTIVE GROUP, INC.
SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION
(In thousands, except vehicle and per vehicle data)
(Unaudited)
The Company evaluates F&I gross profit performance on a per vehicle retailed ("PVR") basis by dividing total F&I gross profit by the number of retail vehicles sold. During 2003, the Company renegotiated a contract with a third party finance and insurance product provider, which resulted in the recognition of income in 2006 that was not attributable to retail vehicles sold during 2006 (referred to as "corporate generated F&I gross profit"). During the second quarter of 2006, the Company decided to sell its remaining interest in the pool of extended service contracts which had been the source of its corporate generated F&I gross profit, which resulted in the recognition of a $3.4 million gain on the sale. The Company believes that dealership generated F&I PVR, which excludes the additional amounts derived from contracts negotiated by the corporate office, provides a more accurate measure of the Company's finance and insurance operating performance. The following table reconciles F&I gross profit to dealership generated F&I gross profit, and provides the necessary components to calculate dealership generated F&I gross profit PVR.
As Reported for the Three Same Store for the Three
Months Ended March 31, Months Ended March 31,
2007 2006 2007 2006
RECONCILIATION OF
FINANCE AND INSURANCE
GROSS PROFIT TO
DEALERSHIP GENERATED
FINANCE AND INSURANCE
GROSS PROFIT:
F&I gross profit $38,684 $35,150 $38,609 $ 35,150
Less:corporate
generated F&I gross
profit - (993) - (993)
Dealership generated
F&I gross profit $38,684 $34,157 $38,609 $ 34,157
RETAIL VEHICLES SOLD:
New retail units 24,292 24,123 24,237 24,123
Used retail units 16,625 15,219 16,568 15,219
Total retail units 40,917 39,342 40,805 39,342
F&I gross profit PVR $945 $893 $946 $893
Dealership generated
F&I gross profit PVR $945 $868 $946 $868
The Company's operations for the three months ended March 31, 2007 were impacted by expenses related to the retirement benefit of current CEO Kenneth B. Gilman. We believe that a more accurate comparison of selling, general and administrative expenses and income from continuing operations can be made by adjusting for this item.
RECONCILIATION OF ADJUSTED As Reported for the
SG&A EXPENSES AS A Three Months Ended Increase % Change
PERCENTAGE OF GROSS PROFIT March 31, (Decrease)
2007 2006
SG&A expenses $176,386 $163,291 $13,095 8%
Retirement benefits
expense (2,950) -
Adjusted SG&A expenses $173,436 $163,291 $10,145 6%
Gross profit $224,063 $208,919 $15,144 7%
Adjusted SG&A expenses
as a percentage of gross
profit 77.4% 78.2% (0.8)% (1.0)%
RECONCILIATION OF ADJUSTED Same Store for the
SG&A EXPENSES AS A Three Months Ended Increase % Change
PERCENTAGE OF GROSS PROFIT March 31, (Decrease)
2007 2006
SG&A expenses $176,117 $163,291 $12,826 8%
Retirement benefits
expense (2,950) -
Adjusted SG&A expenses $173,167 $163,291 $9,876 6%
Gross profit $223,757 $208,919 $14,838 7%
Adjusted SG&A expenses
as a percentage of gross
profit 77.4% 78.2% (0.8)% (1.0)%
RECONCILIATION OF ADJUSTED As Reported for the
INCOME FROM CONTINUING Three Months Ended Increase % Change
OPERATIONS March31, (Decrease)
2007 2006
Net income $433 $12,553 $(12,120) (97)%
Discontinued operations,
net of tax 1,976 1,137
Income from continuing
operations 2,409 13,690 (11,281) (82)%
Retirement benefits expense,
net of tax 1,838 -
Loss on extinguishment of
long-term debt, net of tax 11,050 -
Adjusted income from
continuing operations $15,297 $13,690 1,607 12%
Net income $0.01 $0.37 $(0.36) (97)%
Discontinued operations,
net of tax 0.06 0.04
Income from continuing
operations 0.07 0.41 (0.34) (83)%
Retirement benefits expense,
net of tax 0.05 -
Loss on extinguishment of
long-term debt, net of tax 0.33 -
Adjusted income from
continuing operations $0.45 $0.41 $0.04 10%
Weighted average common
shares outstanding
(diluted): 34,161 33,584
Investors May Contact:
Stacey Yonkus
Director, Investor Relations
(212) 885-2512
investor@asburyauto.com
Reporters May Contact:
Stephanie Lowenthal
RF|Binder Partners
(212) 994-7619
Stephanie.Lowenthal@RFBinder.com
Asbury Automotive Group, Inc.