Contact Information: Stacey Yonkus
Asbury Automotive
203-356-4424
investor@asburyauto.com
ASBURY AUTOMOTIVE GROUP REPORTS
THIRD QUARTER FINANCIAL RESULTS
-- Reports Net Income from Continuing Operations of $0.53 Per Share --
STAMFORD, Conn. - October 30, 2003 - Asbury Automotive Group, Inc. (NYSE: ABG),
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, 2003.
Net income from continuing operations for the third quarter was $17.2 million,
or $0.53 per share (basic and diluted), compared with $16.1 million, or $0.47
per share, in the corresponding period a year ago. Net income for the quarter,
including a loss from discontinued operations of $922,000, or $0.03 per share,
was $16.2 million, or $0.50 per share, compared with $14.6 million, or $0.43 per
share, in last year's third quarter.
Other financial highlights for the third quarter of 2003, as compared to the
prior year period, were as follows:
o The Company's total revenues were approximately $1.3 billion, up 8.0
percent. On a same-store basis, retail sales (excluding fleet and
wholesale business) increased 3.0 percent.
o Total retail gross profit dollars rose 6.8 percent, while same-store retail
gross profit was up 2.1 percent.
o New vehicle retail unit sales increased 0.4 percent (down 4.3 percent
same-store). Same-store new retail unit sales were flat excluding the
Oregon platform, where the Company has undergone recent management
changes.
o Reflecting significantly higher average selling prices, new vehicle
retail dollar sales rose 9.4 percent (4.1 percent same-store); as
expected, however, new vehicle margins remained under pressure, as the
related gross profit percentage fell 80 basis points overall and 70
basis points on a same-store basis.
o Used vehicle retail unit sales increased 4.3 percent (flat on a
same-store basis). Used vehicle retail dollar sales were up 2.6 percent
(down 2.3 percent same-store), while the related gross profit
percentage was down 50 basis points overall (down 40 basis points
same-store).
o Parts, service and collision repair revenues increased 11.4 percent
(5.6 percent same-store), with the related gross profits increasing
13.9 percent (8.3 percent same-store).
o Net finance and insurance (F&I) income was up 12.2 percent from a year
ago (8.3 percent same-store), while platform F&I per vehicle retailed
(PVR) rose 6.4 percent to $846.
o Results for the quarter included certain expenses incurred in
conjunction with management changes in Oregon, Texas and at the
corporate level, which reduced after-tax income by approximately $1.3
million, or $0.04 per share.
o The Company's expense reduction initiatives reduced ongoing operating
expenses at the platform level. Selling, general and administrative
(SG&A) expenses were 11.7 percent of revenues, the same as in the
comparable quarter a year ago. Excluding the management change related
expenses mentioned above, SG&A expenses were 11.6 percent of revenues
in the third quarter of 2003. As a percentage of gross profit, SG&A
expenses were 76.0 percent as reported and 75.0 percent excluding the
management change related expenses, compared with 75.4 percent in last
year's third quarter.
o For the quarter the Company's effective tax rate was 38 percent,
compared to 39.8 percent in the prior year period. The Company
anticipates that its effective tax rate will fluctuate between 38 and
39 percent based upon its geographic revenue source for any given
period.
President and CEO Kenneth B. Gilman commented, "Asbury's earnings per share from
continuing operations rose 13 percent in the third quarter - but almost 21
percent after adjusting for the management change related expenses noted above.
These positive results reflect the balance and consistency provided by our
business model in terms of its diverse income streams, as well as our successful
implementation of a comprehensive expense reduction program earlier this year.
Our core businesses turned in results that for the most part were consistent
with the trends we saw in the second quarter, where the strength of our service
businesses more than offset a continued challenging environment for retail
vehicle sales. Gross profits from parts, service and collision repair and from
F&I were both up at double-digit rates for the quarter, and again accounted for
well over half of Asbury's overall gross profit."
Mr. Gilman continued, "We are also pleased with the results to date from our
expense reduction initiatives launched at the end of last year. Adjusting for
the management change related expenses outlined above, SG&A as a percentage of
gross profit in the third quarter was below the year-ago level for the first
time this year. Moreover, this improvement was achieved despite sharply higher
insurance premiums, which added more than a full percentage point to our SG&A
rate. While the initial results of our program have been excellent, we are
sharpening our focus on variable costs as we head into the industry's seasonally
slower months, and are working to generate further improvements."
For the first nine months of 2003, net income from continuing operations was
$39.5 million, or $1.21 per share; for the corresponding period last year, the
Company's pro forma net income from continuing operations was $42.8 million, or
$1.26 per share. Net income for the nine months, including discontinued
operations, was $35.6 million, or $1.09 per share, compared to $32.6 million, or
$0.99 per share, a year ago. (A reconciliation of pro forma income from
continuing operations to GAAP income from continuing operations of $36.9
million, or $1.12 per share, is provided on the Consolidated Statement of Income
accompanying this release.) The pro forma results for the prior-year period
exclude a non-recurring deferred income tax provision required by SFAS 109
related to Asbury's change in tax status from a limited liability company to a
"C" corporation in conjunction with its March 2002 initial public offering, and
assume that the Company was a publicly traded "C" corporation for the entire
period.
Mr. Gilman concluded, "Asbury's improving performance over the past few quarters
is a reflection of our continued focus on getting back to the basics of solid
retail execution. We have eliminated non-core businesses, made a number of key
management changes, and significantly reduced operating expenses. Looking ahead,
we continue to target a long-term earnings growth rate of approximately 15
percent - roughly half from organic growth and half from acquisitions."
The Company went on to note that thus far in 2003, it had completed acquisitions
that will add about $330 million in annualized revenues, already within its
targeted annual acquisition range of $300 million to $500 million. In addition,
the Company noted that it had executed contracts to acquire three dealerships
with annual revenues of $175 million and signed letters of intent to acquire
three dealerships with annual revenues of $250 million. These yet to close
transactions are subject in all cases to manufacturer consent and in some cases
to the execution of definitive purchase agreements.
Commenting on its earnings guidance for 2003, the Company anticipates that
earnings from continuing operations should come in around $1.55 per share. The
Company noted that this estimate is based upon the assumption that the
environment for selling new and used vehicles, as experienced at the end of the
third quarter and into October, will continue to be difficult with the
expectation that new and used vehicle same-store retail unit sales will be down
in the mid to upper single digit range, respectively. In addition, there is an
expectation of continued strength in its fixed operations and F&I businesses,
consistent with third quarter results. The Company also noted that managing its
variable costs during the industry's traditionally slow months of November
through February will be a critically important factor in meeting its earnings
expectations. Lastly, this guidance includes acquisitions that have already been
completed, but not those that may be completed during the remainder of the year.
Asbury will host a conference call to discuss its 2003 third quarter results
this afternoon at 2:00 p.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 (877) 234-1973; international callers, please dial (973)
582-2732; no access code is required. A conference call replay will be available
one hour following the call for 14 days and can be accessed by calling (877)
519-4471 (domestic), or (973) 341-3080 (international); access code 4236413.
About Asbury Automotive Group
Asbury Automotive Group, Inc., headquartered in Stamford, Connecticut, is one of
the largest automobile retailers in the U.S., with 2002 revenues of $4.5
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 95 retail
auto stores, encompassing 138 franchises for the sale and servicing of 35
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 public U.S. 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. Additional information is available at the Company's website,
www.asburyauto.com.
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, product development, pending and 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 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
that 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 annual report on Form 10-K 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.
SELECTED DATA
(in thousands except unit data)
(unaudited)
GAAP Results for the Same Store Results for
Three Months Ended the Three Months Ended
September 30, September 30,
--------------------------- ----------------------------
2003 2002 2003 2002
----------- ------------ ------------ ------------
RETAIL UNITS:
New ............................................. 26,867 26,755 25,597 26,755
Used ............................................ 15,774 15,119 15,124 15,119
----------- ------------ ------------ ------------
Total ........................................ 42,641 41,874 40,721 41,874
=========== ============ ============ ============
REVENUE:
New retail ...................................... $ 778,712 $ 712,039 $ 741,220 $ 712,039
Used retail ..................................... 239,812 233,763 228,338 233,763
Parts, service and collision repair ............. 143,032 128,429 135,671 128,429
Finance and insurance, net ...................... 37,366 33,289 36,049 33,289
Fleet ........................................... 7,330 10,812 7,133 10,812
Wholesale ....................................... 79,216 72,270 75,372 72,270
----------- ------------ ------------ ------------
Total ........................................ $ 1,285,468 $ 1,190,602 $ 1,223,783 $ 1,190,602
=========== ============ ============ ============
GROSS PROFIT:
New retail ...................................... $ 49,753 $ 50,263 $ 47,347 $ 50,263
Used retail ........................................ 28,562 28,916 27,434 28,916
Parts, service and collision repair ............. 76,331 66,992 72,525 66,992
Finance and insurance, net ...................... 37,366 33,289 36,049 33,289
Fleet ........................................... 299 361 301 361
Wholesale ....................................... (850) (1,749) (857) (1,749)
Floor plan interest credit ...................... 6,614 6,394 6,433 6,394
----------- ------------ ------------ ------------
Total ........................................ $ 198,075 $ 184,466 $ 189,232 $ 184,466
=========== ============ ============ ============
GROSS MARGIN %:
New retail (including floor plan interest credit) 7.2% 8.0% 7.3% 8.0%
Used retail ..................................... 11.9% 12.4% 12.0% 12.4%
Parts, service and collision repair ............. 53.4% 52.2% 53.5% 52.2%
Finance and insurance, net ...................... 100.0% 100.0% 100.0% 100.0%
----------- ------------ ------------ ------------
Total ........................................ 15.4% 15.5% 15.5% 15.5%
=========== ============ ============ ============
GROSS PROFIT PER UNIT:
New retail (including floor plan interest credit) $ 2,098 $ 2,118 $ 2,101 $ 2,118
Used retail ..................................... 1,811 1,913 1,814 1,913
----------- ------------ ------------ ------------
Weighted average ............................. $ 1,992 $ 2,044 $ 1,994 $ 2,044
=========== ============ ============ ============
PLATFORM F&I PVR ................................... $ 846 $ 795 $ 853 $ 795
EBITDA (a) ......................................... $ 42,897 $ 41,412 $ 41,509 $ 41,412
EBITDA % ........................................... 3.3% 3.5% 3.4% 3.5%
OPERATING INCOME % ................................. 3.3% 3.4% 3.3% 3.4%
GAAP Results for the Same Store Results for
Nine Months Ended the Nine Months Ended
September 30, September 30,
--------------------------- ----------------------------
2003 2002 2003 2002
----------- ------------ ------------ ------------
RETAIL UNITS:
New ............................................. 75,141 73,072 72,638 73,060
Used ............................................ 46,145 44,479 44,616 44,463
----------- ------------ ------------ ------------
Total ........................................ 121,286 117,551 117,254 117,523
=========== ============ ============ ============
REVENUE:
New retail ...................................... $2,147,816 $ 1,974,297 $ 2,072,222 $ 1,973,987
Used retail ..................................... 703,559 679,209 678,158 678,941
Parts, service and collision repair ............. 411,858 373,941 395,882 373,854
Finance and insurance, net ...................... 100,497 87,721 97,685 87,701
Fleet ........................................... 37,017 32,955 36,822 32,955
Wholesale ....................................... 212,286 208,038 204,357 208,036
----------- ------------ ------------ ------------
Total $ 3,613,033 $ 3,356,161 $ 3,485,126 $ 3,355,474
=========== ============ ============ ============
GROSS PROFIT:
New retail ...................................... $ 141,334 $ 145,704 $ 136,447 $ 145,684
Used retail ..................................... 83,545 82,803 80,996 82,771
Parts, service and collision repair ............. 217,919 196,945 208,570 196,888
Finance and insurance, net ...................... 100,497 87,721 97,685 87,701
Fleet ........................................... 875 980 877 980
Wholesale ....................................... (703) (1,949) (632) (1,950)
Floor plan interest credit ...................... 18,069 17,641 17,674 17,641
----------- ------------ ------------ ------------
Total ........................................ $ 561,536 $ 529,845 $ 541,617 $ 529,715
=========== ============ ============ ============
GROSS MARGIN %:
New retail (including floor plan interest credit) 7.4% 8.3% 7.4% 8.3%
Used retail ..................................... 11.9% 12.2% 11.9% 12.2%
Parts, service and collision repair ............. 52.9% 52.7% 52.7% 52.7%
Finance and insurance, net ...................... 100.0% 100.0% 100.0% 100.0%
----------- ------------ ------------ ------------
Total ........................................ 15.5% 15.8% 15.5% 15.8%
=========== ============ ============ ============
GROSS PROFIT PER UNIT:
New retail (including floor plan interest credit) $ 2,121 2,235 2,122 2,235
Used retail ..................................... 1,810 1,862 1,815 1,862
----------- ------------ ------------ ------------
Weighted average ............................. $ 2,003 2,094 2,005 2,094
=========== ============ ============ ============
PLATFORM F&I PVR ................................... $ 818 $ 746 $ 822 $ 746
EBITDA (a) ......................................... $ 109,860 $ 114,285 $ 107,648 $ 114,330
EBITDA % ........................................... 3.0% 3.4% 3.1% 3.4%
OPERATING INCOME % ................................. 3.0% 3.3% 3.1% 3.3%
September 30, December 31,
2003 2002
------------- ------------
CAPITALIZATION:
Long-term debt (including current portion) $535,804 $475,152
Stockholders' equity 454,529 426,951
-------- --------
Total $990,333 $902,103
======== ========
For the Nine Months Ended
September 30,
-------------------------
2003 2002
----------- -----------
FREE CASH FLOW (b):
Net cash provided by operating activities $ 68,064 $ 69,881
Capital expenditure (33,434) (38,102)
Financial capital expenditure 7,172 5,450
Sales/leaseback proceeds paid directly
to the Company's lenders 5,485 -
--------- ---------
Total $ 47,287 $ 37,229
========= =========
(a) EBITDA is defined as earnings before income taxes, 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 plus proceeds from financing activities associated with
the related period's capital projects.
ASBURY AUTOMOTIVE GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands except per share data)
(unaudited)
For the Three Months Ended
September 30,
--------------------------
2003 2002
----------- -----------
REVENUES:
New vehicle ................................. $ 786,042 $ 722,851
Used vehicle ................................ 319,028 306,033
Parts, service and collision repair ......... 143,032 128,429
Finance and insurance, net .................. 37,366 33,289
----------- -----------
Total revenues ............................ 1,285,468 1,190,602
COST OF SALES:
New vehicle ................................. 729,376 665,833
Used vehicle ................................ 291,316 278,866
Parts, service and collision repair ......... 66,701 61,437
----------- -----------
Total cost of sales ....................... 1,087,393 1,006,136
----------- -----------
GROSS PROFIT ................................... 198,075 184,466
OPERATING EXPENSES:
Selling, general and administrative ......... 150,559 139,148
Depreciation and amortization ............... 5,141 4,549
----------- -----------
Income from operations .................... 42,375 40,769
OTHER INCOME (EXPENSE):
Floor plan interest expense ................. (4,633) (4,368)
Other interest expense ...................... (10,087) (10,074)
Interest income ............................. 188 283
Net losses from unconsolidated entities ..... -- --
Other income (expense) ...................... (174) 179
----------- -----------
Total other expense, net .................. (14,706) (13,980)
----------- -----------
Income before income taxes from an L.L.C.
operations ............................ 27,669 26,789
INCOME TAX PROVISION:
Income tax expense .......................... 10,503 10,695
Tax adjustment upon conversion from an L.L.C
to a corporation .......................... -- --
----------- -----------
Income from continuing operations (b) ..... 17,166 16,094
DISCONTINUED OPERATIONS, net of tax ............ (922) (1,450)
----------- -----------
Net income ................................ $ 16,244 $ 14,644
=========== ===========
EARNINGS PER COMMON SHARE:
Basic-
Income from continuing operations ......... $ 0.53 $ 0.47
=========== ===========
Net income ................................ $ 0.50 $ 0.43
=========== ===========
Diluted-
Income from continuing operations ......... $ 0.53 $ 0.47
=========== ===========
Net income ................................ $ 0.50 $ 0.43
=========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Basic ....................................... 32,419 34,000
=========== ===========
Diluted ..................................... 32,612 34,001
=========== ===========
For the Nine Months Ended September 30,
------------------------------------------
2002 Pro
2003 Forma (a) 2002 Actual
------------ ------------ ------------
REVENUES:
New vehicle ............................................ $ 2,184,833 $ 2,007,252 $ 2,007,252
Used vehicle ........................................... 915,845 887,247 887,247
Parts, service and collision repair .................... 411,858 373,941 373,941
Finance and insurance, net ............................. 100,497 87,721 87,721
----------- ----------- -----------
Total revenues ....................................... 3,613,033 3,356,161 3,356,161
COST OF SALES:
New vehicle ............................................ 2,024,555 1,842,927 1,842,927
Used vehicle ........................................... 833,003 806,393 806,393
Parts, service and collision repair .................... 193,939 176,996 176,996
----------- ----------- -----------
Total cost of sales .................................. 3,051,497 2,826,316 2,826,316
----------- ----------- -----------
GROSS PROFIT .............................................. 561,536 529,845 529,845
OPERATING EXPENSES:
Selling, general and administrative .................... 437,419 403,284 403,284
Depreciation and amortization .......................... 15,007 14,280 14,280
----------- ----------- -----------
Income from operations ............................... 109,110 112,281 112,281
OTHER INCOME (EXPENSE);
Floor plan interest expense ............................ (14,263) (13,059) (13,059)
Other interest expense ................................. (30,038) (28,748) (28,748)
Interest income ........................................ 450 945 945
Net losses from unconsolidated entities ................ -- (100) (100)
Other income (expense) ................................. (444) (162) (162)
----------- ----------- -----------
Total other expense, net ............................. (44,295) (41,124) (41,124)
----------- ----------- -----------
Income before income taxes and discontinued operations 64,815 71,157 71,157
INCOME TAX PROVISION:
Income tax expense ..................................... 25,287 28,320 22,732
Tax adjustment upon conversion from an L.L.C
to a corporation ..................................... -- -- 11,553
----------- ----------- -----------
Income from continuing operations (b) ................ 39,528 42,837 36,872
DISCONTINUED OPERATIONS, net of tax ....................... (3,914) (4,286) (4,286)
----------- ----------- -----------
Net income ........................................... $ 35,614 $ 38,551 $ 32,586
=========== =========== ===========
EARNINGS PER COMMON SHARE:
Basic-
Income from continuing operations .................... $ 1.21 $ 1.26 $ 1.12
=========== =========== ===========
Net income ........................................... $ 1.09 $ 1.13 $ 0.99
=========== =========== ===========
Diluted-
Income from continuing operations .................... $ 1.21 $ 1.26 $ 1.12
=========== =========== ===========
Net income ........................................... $ 1.09 $ 1.13 $ 0.99
=========== =========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Basic .................................................. 32,721 34,000 32,813
=========== =========== ===========
Diluted ................................................ 32,761 34,021 32,834
=========== =========== ===========
(a) Pro forma column includes a tax provision as if the Company were a "C"
corporation for the entire period as well as assumes that all shares were
outstanding for the full period. 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 from continuing operations to pro forma
net income from continuing operations:
GAAP net income from continuing operations $36,872
Tax adjustment upon conversion from an L.L.C.
to a corporation 11,553
Pro forma income tax charge (5,588) (c)
--------
Pro forma net income from continuing operations $42,837
=======
(c) Represents the pro forma tax charge from continuing operations for the time
during the period that the company was an L.L.C.
ASBURY AUTOMOTIVE GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, December 31,
ASSETS 2003 2002
------ ------------- ------------
(unaudited)
CURRENT ASSETS:
Cash and cash equivalents ..................... $ 48,804 $ 22,613
Contracts-in-transit .......................... 86,380 91,190
Accounts receivable, net ...................... 112,050 96,090
Inventories ................................... 560,268 591,839
Prepaid and other current assets .............. 47,740 47,857
---------- ----------
Total current assets ....................... 855,242 849,589
PROPERTY AND EQUIPMENT, net ....................... 282,801 265,642
GOODWILL, net ..................................... 464,763 402,133
OTHER ASSETS ...................................... 65,594 66,758
ASSETS HELD FOR SALE .............................. 6,437 21,522
---------- ----------
Total assets ............................... $1,674,837 $1,605,644
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Floor plan notes payable ...................... $ 488,502 $ 528,591
Current maturities of long-term debt .......... 31,855 36,412
Accounts payable and accrued liabilities ...... 132,298 117,445
---------- ----------
Total current liabilities .................. 652,655 682,448
LONG-TERM DEBT .................................... 503,949 438,740
OTHER LIABILITIES ................................. 59,889 45,552
LIABILITIES ASSOCIATED WITH ASSETS HELD FOR SALE .. 3,815 11,953
STOCKHOLDERS' EQUITY .............................. 454,529 426,951
---------- ----------
Total liabilities and stockholders' equity . $1,674,837 $1,605,644
========== ==========