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Asbury Automotive Group Announces Record First Quarter 2021 Financial Results

·11-min read

First quarter EPS of $4.78 per diluted share, up 373% over prior year EPS

First quarter adjusted EPS of $4.68 per diluted share (a non-GAAP measure), up 160% over prior year adjusted EPS

First quarter revenue increased 36% and gross profit increased 40% over prior year quarter

Asbury Automotive Group, Inc. (NYSE: ABG), one of the largest automotive retail and service companies in the U.S., reported net income for the first quarter 2021 of $92.8 million ($4.78 per diluted share). This compares to net income of $19.5 million ($1.01 per diluted share) in the prior year quarter.

The financial measures discussed below include both GAAP and adjusted (non-GAAP) financial measures. Please see reconciliations for our non-GAAP metrics included in the accompanying financial tables.

"The first quarter of 2021 was very active for us. In addition to posting record performance, we successfully launched our online car buying platform, Clicklane, across our entire store base. Although we are only one quarter into our five-year plan, we feel more confident than ever in our strategic direction and the future growth of Asbury," said David Hult, Asbury’s President and Chief Executive Officer.

The Company reported adjusted net income (a non-GAAP measure) for the first quarter 2021 of $90.7 million ($4.68 per diluted share) compared to $34.7 million ($1.80 per diluted share) in the prior year quarter.

Net income for the first quarter 2021 was adjusted for the following pre-tax items: gain on legal settlements of $3.5 million ($0.14 per diluted share), gain on sale of real estate of $1.1 million ($0.03 per diluted share) and other real estate related charges of $1.8 million ($0.07 per diluted share).

Net income for the first quarter 2020 was adjusted for the following pre-tax items: gain on dealership divestitures of $33.7 million ($1.30 per diluted share), legal settlement gain of $0.9 million ($0.03 per diluted share), gain on the sale of vacant property of $0.3 million or ($0.01 per diluted share), franchise rights impairment of $23.0 million ($0.89 per diluted share), loss on debt extinguishment of $20.7 million ($0.79 per diluted share), and Park Place deal termination costs of $11.6 million ($0.45 per diluted share).

The Company reported total revenue for the first quarter of $2.2 billion, up 36% from the prior year period; total revenue on a same-store basis was up 18% from the prior year period.

First Quarter 2021 Operational Summary

Total company:

  • Total revenue increased 36%; total gross profit increased 40%

  • New vehicle unit volume increased 24%; used vehicle retail unit volume increased 16%

  • Finance and insurance revenue and gross profit increased 25%

  • Parts and service revenue increased 18% and gross profit increased 21%

  • SG&A as a percentage of gross profit decreased 880 basis points to 62.7%

  • Adjusted operating margin of 6.1%, up 180 bps

  • Adjusted EPS increased 160%

  • Strong balance sheet, ending the quarter with $551 million of available liquidity (including cash, floor plan offsets, used line and revolver) and pro forma adjusted net leverage of 1.7x

Same store:

  • Total revenue increased 18%; gross profit increased 21%

  • New vehicle revenue increased 22%; gross profit increased 60%

  • Used vehicle retail revenue increased 20%; gross profit increased 36%

  • Finance and insurance revenue and gross profit increased 20%

  • Parts and service revenue and gross profit increased 1%

Additional commentary regarding the first quarter results will be provided during the earnings conference call on April 27, 2021 at 10:00 a.m. The conference call will be simulcast live on the internet and can be accessed at www.asburyauto.com. A replay will be available at these sites for 30 days.

In addition, live audio of the call will be accessible to the public by calling (800) 353-6461 (domestic), or (334) 323-0501 (international); passcode – 8517555. 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 – 8517555.

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 91 dealerships, consisting of 112 franchises, representing 31 domestic and foreign brands of vehicles. Asbury also operates 25 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 and the shortage of semi-conductor chips and rubber-based products, 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.

ASBURY AUTOMOTIVE GROUP, INC.

CONSOLIDATED STATEMENTS OF INCOME (In millions, except per share data)

(Unaudited)

For the Three Months
Ended March 31,

Increase

(Decrease)

%
Change

2021

2020

REVENUE:

New vehicle

$

1,151.7

$

822.1

$

329.6

40

%

Used vehicle:

Retail

607.5

446.0

161.5

36

%

Wholesale

83.4

47.2

36.2

77

%

Total used vehicle

690.9

493.2

197.7

40

%

Parts and service

262.0

221.6

40.4

18

%

Finance and insurance, net

88.3

70.4

17.9

25

%

TOTAL REVENUE

2,192.9

1,607.3

585.6

36

%

GROSS PROFIT:

New vehicle

75.5

36.4

39.1

107

%

Used vehicle:

Retail

47.5

31.2

16.3

52

%

Wholesale

8.3

(0.5)

8.8

NM

Total used vehicle

55.8

30.7

25.1

82

%

Parts and service

163.1

134.9

28.2

21

%

Finance and insurance, net

88.3

70.4

17.9

25

%

TOTAL GROSS PROFIT

382.7

272.4

110.3

40

%

OPERATING EXPENSES:

Selling, general and administrative

239.8

194.7

45.1

23

%

Depreciation and amortization

9.8

9.5

0.3

3

%

Franchise rights impairment

23.0

(23.0)

(100)

%

Other operating (income) expense, net

(3.2)

10.2

(13.4)

(131)

%

INCOME FROM OPERATIONS

136.3

35.0

101.3

289

%

OTHER EXPENSES (INCOME):

Floor plan interest expense

2.9

7.0

(4.1)

(59)

%

Other interest expense, net

14.0

17.0

(3.0)

(18)

%

Loss on extinguishment of long-term debt, net

20.6

(20.6)

(100)

%

Gain on dealership divestitures, net

(33.7)

33.7

100

%

Total other expenses, net

16.9

10.9

6.0

55

%

INCOME BEFORE INCOME TAXES

119.4

24.1

95.3

395

%

Income tax expense

26.6

4.6

22.0

478

%

NET INCOME

$

92.8

$

19.5

$

73.3

376

%

EARNINGS PER COMMON SHARE:

Basic—

Net income

$

4.81

$

1.02

$

3.79

372

%

Diluted—

Net income

$

4.78

$

1.01

$

3.77

373

%

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

Basic

19.3

19.1

0.2

Restricted stock

0.1

0.1

Performance share units

0.1

(0.1)

Diluted

19.4

19.3

0.1

______________________________

NMNot Meaningful

ASBURY AUTOMOTIVE GROUP, INC.

KEY OPERATING HIGHLIGHTS (In millions, except per unit data)

(Unaudited)

For the Three Months
Ended March 31,

Increase

(Decrease)

%

Change

2021

2020

Unit sales

New vehicle:

Luxury

8,511

4,992

3,519

70

%

Import

14,377

12,458

1,919

15

%

Domestic

4,371

4,527

(156)

(3)

%

Total new vehicle

27,259

21,977

5,282

24

%

Used vehicle retail

23,519

20,287

3,232

16

%

Used to new ratio

86.3

%

92.3

%

(600) bps

Average selling price

New vehicle

$

42,250

$

37,407

$

4,843

13

%

Used vehicle retail

25,830

21,985

3,845

17

%

Average gross profit per unit

New vehicle:

Luxury

$

5,252

$

3,385

$

1,867

55

%

Import

1,259

851

408

48

%

Domestic

2,906

1,966

940

48

%

Total new vehicle

2,770

1,656

1,114

67

%

Used vehicle retail

2,020

1,538

482

31

%

Finance and insurance, net

1,739

1,666

73

4

%

Front end yield (1)

4,161

3,265

896

27

%

Gross margin

New vehicle:

Luxury

8.6

%

6.1

%

250 bps

Import

4.1

%

3.0

%

110 bps

Domestic

6.5

%

4.7

%

180 bps

Total new vehicle

6.6

%

4.4

%

220 bps

Used vehicle retail

7.8

%

7.0

%

80 bps

Parts and service

62.3

%

60.9

%

140 bps

Total gross profit margin

17.5

%

16.9

%

60 bps

SG&A metrics

Rent expense

$

11.2

$

6.8

$

4.4

65

%

SG&A as a percentage of gross profit

62.7

%

71.5

%

(880) bps

SG&A, excluding rent expense as a percentage of gross profit

59.7

%

69.0

%

(930) bps

Operating metrics

Income from operations as a percentage of revenue

6.2

%

2.2

%

400

bps

Income from operations as a percentage of gross profit

35.6

%

12.8

%

2,280

bps

Adjusted income from operations as a percentage of revenue

6.1

%

4.3

%

180

bps

Adjusted income from operations as a percentage of gross profit

34.9

%

25.1

%

980 bps

Revenue mix

New vehicle

52.5

%

51.1

%

Used vehicle retail

27.8

%

27.8

%

Used vehicle wholesale

3.8

%

2.9

%

Parts and service

11.9

%

13.8

%

Finance and insurance

4.0

%

4.4

%

Total revenue

100.0

%

100.0

%

Gross profit mix

New vehicle

19.7

%

13.4

%

Used vehicle retail

12.4

%

11.5

%

Used vehicle wholesale

2.2

%

(0.2)

%

Parts and service

42.6

%

49.5

%

Finance and insurance

23.1

%

25.8

%

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.

ASBURY AUTOMOTIVE GROUP, INC.

SAME STORE OPERATING HIGHLIGHTS (In millions)

(Unaudited)

For the Three Months Ended
March 31,

Increase

(Decrease)

%
Change

2021

2020

Revenue

New vehicle:

Luxury

$

322.2

$

267.2

$

55.0

21

%

Import

438.1

342.5

95.6

28

%

Domestic

189.5

171.4

18.1

11

%

Total new vehicle

949.8

781.1

168.7

22

%

Used Vehicle:

Retail

499.9

416.9

83.0

20

%

Wholesale

57.3

44.8

12.5

28

%

Total used vehicle

557.2

461.7

95.5

21

%

Parts and service

212.4

211.1

1.3

1

%

Finance and insurance, net

80.7

67.2

13.5

20

%

Total revenue

$

1,800.1

$

1,521.1

$

279.0

18

%

Gross profit

New vehicle:

Luxury

$

24.7

$

16.3

$

8.4

52

%

Import

18.4

10.2

8.2

80

%

Domestic

12.4

8.2

4.2

51

%

Total new vehicle

55.5

34.7

20.8

60

%

Used Vehicle:

Retail

40.3

29.6

10.7

36

%

Wholesale

6.4

(0.4)

6.8

NM

Total used vehicle

46.7

29.2

17.5

60

%

Parts and service:

Customer pay

77.1

74.8

2.3

3

%

Warranty

18.3

21.1

(2.8)

(13)

%

Wholesale parts

5.8

4.7

1.1

23

%

Parts and service, excluding reconditioning and preparation

101.2

100.6

0.6

1

%

Reconditioning and preparation

29.3

28.0

1.3

5

%

Total parts and service

130.5

128.6

1.9

1

%

Finance and insurance

80.7

67.2

13.5

20

%

Total gross profit

$

313.4

$

259.7

$

53.7

21

%

SG&A expense

$

199.8

$

185.1

$

14.7

8

%

SG&A expense as a percentage of gross profit

63.8

%

71.3

%

(750) 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.

ASBURY AUTOMOTIVE GROUP, INC.

SAME STORE OPERATING HIGHLIGHTS (Continued)

(Unaudited)

For the Three Months Ended
March 31,

Increase

(Decrease)

%
Change

2021

2020

Unit sales

New vehicle:

Luxury

5,526

4,820

706

15

%

Import

14,351

11,955

2,396

20

%

Domestic

4,270

4,158

112

3

%

Total new vehicle

24,147

20,933

3,214

15

%

Used vehicle retail

20,740

18,979

1,761

9

%

Used to new ratio

85.9

%

90.7

%

(480) bps

Average selling price

New vehicle

$

39,334

$

37,314

$

2,020

5

%

Used vehicle retail

24,103

21,966

2,137

10

%

Average gross profit per unit

New vehicle:

Luxury

$

4,470

$

3,382

$

1,088

32

%

Import

1,282

853

429

50

%

Domestic

2,904

1,972

932

47

%

Total new vehicle

2,298

1,658

640

39

%

Used vehicle retail

1,943

1,560

383

25

%

Finance and insurance, net

1,798

1,684

114

7

%

Front end yield (1)

3,932

3,295

637

19

%

Gross margin

New vehicle:

Luxury

7.7

%

6.1

%

160 bps

Import

4.2

%

3.0

%

120 bps

Domestic

6.5

%

4.8

%

170 bps

Total new vehicle

5.8

%

4.4

%

140 bps

Used vehicle retail

8.1

%

7.1

%

100 bps

Parts and service:

Parts and service, excluding reconditioning and preparation

47.6

%

47.7

%

(10) bps

Parts and service, including reconditioning and preparation

61.4

%

60.9

%

50 bps

Total gross profit margin

17.4

%

17.1

%

30 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.

ASBURY AUTOMOTIVE GROUP, INC.

Additional Disclosures (In millions)

(Unaudited)

March 31,
2021

December 31,
2020

Increase
(Decrease)

% Change

SELECTED BALANCE SHEET DATA

Cash and cash equivalents

$

27.8

$

1.4

$

26.4

NM

New vehicle inventory (a)

527.5

640.0

(112.5)

(18)

%

Used vehicle inventory (b)

193.5

188.5

5.0

3

%

Parts inventory (c)

48.6

46.7

1.9

4

%

Total current assets

1,317.6

1,405.7

(88.1)

(6)

%

Floor plan notes payable (d)

526.8

702.2

(175.4)

(25)

%

Total current liabilities

1,048.7

1,223.4

(174.7)

(14)

%

CAPITALIZATION:

Long-term debt (including current portion) (e)

$

1,194.1

$

1,201.8

$

(7.7)

(1)

%

Shareholders' equity

998.0

905.5

92.5

10

%

Total

$

2,192.1

$

2,107.3

$

84.8

4

%

_____________________________

NMNot Meaningful

(a)

Excluding $1.6 million of new vehicle inventory classified as Assets held for sale as of March 31, 2021

(b)

Excluding $0.9 million of used vehicle inventory classified as Assets held for sale as of March 31, 2021

(c)

Excluding $0.4 million of parts inventory classified as Assets held for sale as of March 31, 2021

(d)

Excluding $2.8 million of Floor plan notes payable classified as Liabilities associated with assets held for sale as of March 31, 2021

(e)

Excluding $2.3 million and $8.9 million of Long-term debt classified as Liabilities associated with assets held for sale as of March 31, 2021 and December 31, 2020, respectively

March 31, 2021

December 31, 2020

March 31, 2020

DAYS SUPPLY

New vehicle inventory

34

40

105

Used vehicle inventory

27

31

42

_____________________________

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.

Brand Mix - New Vehicle Revenue by Brand-

For the Three Months Ended
March 31,

2021

2020

Luxury:

Mercedes-Benz

12

%

8

%

Lexus

12

%

7

%

BMW

5

%

6

%

Acura

4

%

4

%

Range Rover

3

%

1

%

Audi

2

%

2

%

Porsche

2

%

%

Other luxury

5

%

6

%

Total luxury

45

%

34

%

Imports:

Honda

15

%

17

%

Toyota

12

%

13

%

Nissan

5

%

7

%

Other imports

6

%

6

%

Total imports

38

%

43

%

Domestic:

Ford

6

%

10

%

Chevrolet

4

%

6

%

Dodge

4

%

4

%

Other domestics

3

%

3

%

Total domestic

17

%

23

%

Total New Vehicle Revenue

100

%

100

%

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 "Pro forma adjusted leverage ratio," "Adjusted income from operations," "Adjusted net income," " Adjusted operating margins," and "Adjusted diluted earnings per share ("EPS")." 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.

The following tables provide reconciliations for our non-GAAP metrics:

For the Twelve Months Ended

March 31, 2021

December 31, 2020

(Dollars in millions)

Adjusted leverage ratio:

Long-term debt (including current portion)

$

1,194.1

$

1,201.8

Debt included in Liabilities held for sale

2.3

8.9

Cash and floor plan offset

(173.2)

(86.8)

Availability under our used vehicle revolving floor plan facility

(138.8)

(137.8)

Adjusted long-term net debt

$

884.4

$

986.1

Calculation of earnings before interest, taxes, depreciation and amortization ("EBITDA"):

Net Income

$

327.6

$

254.4

Depreciation and amortization

38.8

38.5

Income tax expense

105.9

83.7

Swap and other interest expense

54.2

57.6

Earnings before interest, taxes, depreciation and amortization ("EBITDA")

$

526.5

$

434.2

Non-core items - expense (income):

Gain on dealership divestitures

$

(28.6)

$

(62.3)

Legal settlements

(4.7)

(2.1)

Gain on sale of real estate

(1.1)

(0.3)

Park Place related costs

1.3

12.9

Real estate-related charges

2.5

0.7

Franchise rights impairment

23.0

Loss on debt extinguishment

20.7

Total non-core items

(30.6)

(7.4)

Adjusted EBITDA

$

495.9

$

426.8

Pro forma impact of acquisitions and divestitures on EBITDA

$

29.9

$

53.1

Pro forma Adjusted EBITDA

$

525.8

$

479.9

Pro forma Adjusted net leverage ratio

1.7

2.1

For the Three Months
Ended March 31,

2021

2020

(In millions, except per share data)

Adjusted income from operations:

Income from operations

$

136.3

$

35.0

Legal settlements

(3.5)

(0.9)

Gain on sale of real estate

(1.1)

(0.3)

Real estate related charges

1.8

Park Place related costs

11.6

Franchise rights impairment

23.0

Adjusted income from operations

$

133.5

$

68.4

Adjusted net income:

Net income

$

92.8

$

19.5

Non-core items - (income) expense:

Legal settlements

(3.5)

(0.9)

Gain on sale of real estate

(1.1)

(0.3)

Real estate related charges

1.8

Gain on dealership divestitures

(33.7)

Loss on extinguishment of debt

20.7

Franchise rights impairment

23.0

Park Place related costs

11.6

Income tax effect on non-core items above

0.7

(5.2)

Total non-core items

(2.1)

15.2

Adjusted net income

$

90.7

$

34.7

Adjusted diluted earnings per share (EPS):

Diluted EPS

$

4.78

$

1.01

Total non-core items

(0.10)

0.79

Adjusted diluted EPS

$

4.68

$

1.80

Weighted average common shares outstanding - diluted

19.4

19.3

View source version on businesswire.com: https://www.businesswire.com/news/home/20210427005242/en/

Contacts

Karen Reid
VP & Treasurer
(770) 418-8211
ir@asburyauto.com

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