Investors May Contact:
Stacey Yonkus
Director, Investor Relations
(212) 885-2512
investor@asburyauto.com
Reporters May Contact:
Connie Lee
RF|Binder Partners
(212) 994-7542
Connie.Lee@RFBinder.com
Asbury Automotive Group Reports
First Quarter Financial Results
-- Excluding Previously Announced Restructuring Costs,
Income from Continuing Operations Rose 12% --
-- Same-Store Retail Gross Profit Increased 7% --
New York, NY, April 26, 2005 - 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 first quarter ended March 31, 2005.
Income from continuing operations for the first quarter was $9.7 million, or
$0.30 per diluted share, which includes $3.6 million ($2.2 million after-tax) of
costs related to the previously announced regional restructuring. Excluding the
restructuring costs, income from continuing operations increased 12 percent to
$11.9 million, or $0.36 per diluted share, from $10.7 million, or $0.33 per
diluted share, in the prior year period.
Financial highlights for the first quarter of 2005, as compared to the
corresponding prior year period, included:
o Total revenue for the quarter was approximately $1.4 billion, up 14
percent. Total gross profit was $210.5 million, a 13 percent increase.
o Same-store retail revenue and gross profit (excluding fleet and wholesale
revenue) both increased 7 percent.
o New vehicle retail revenue rose 13 percent (6 percent same-store), and unit
sales increased 10 percent (3 percent same-store). New vehicle retail gross
profit increased 7 percent (flat on a same-store basis).
o Used vehicle retail revenue increased 12 percent (7 percent same-store),
and unit sales rose 5 percent (flat on a same-store basis). Used vehicle
retail gross profit increased 11 percent (7 percent same-store).
o Parts, service and collision repair revenue and gross profit both increased
15 percent (10 percent same-store).
o Net finance and insurance (F&I) revenue rose 17 percent (11 percent
same-store). F&I per vehicle retailed (PVR) increased 9 percent to $923,
and platform F&I PVR rose 9 percent to $894.
o As a percentage of gross profit, selling, general and administrative (SG&A)
expenses for the quarter, excluding the restructuring costs and rent
expense, were 74.2 percent, down 120 basis points compared to the prior
year. Rent expense in 2005 is higher due to a sale-leaseback transaction in
July 2004 that had the effect of increasing rent while reducing interest
and depreciation expense.
President and CEO Kenneth B. Gilman said, "Our business model turned in another
well balanced performance during the first quarter. Operationally, the quarter
was solid - with many outstanding aspects, as all four business lines posted
upper single to double-digit same-store sales increases. Results again were
strongest in our service businesses, led by a 10 percent same-store gross profit
increase in our parts and service business, which truly reflects a concerted
effort in this area. About two years ago, we formed a view that new vehicle
margins would be coming under sustained pressure, and therefore set very
aggressive growth goals for our parts and service operations. With a focused
approach to training and investments in equipment and capacity expansion, we're
seeing our efforts pay off.
"The retail side of the business also performed well, as our new vehicle unit
volume outperformed the industry during the quarter. By virtue of our strong
brand mix, focused on luxury and mid-line import brands, we were able to
capitalize on an improved environment at the end of the quarter. We're also
confident that our seven percent increase in same-store used vehicle gross
profit is industry leading as well."
J. Gordon Smith, Senior Vice President and CFO said, "During the quarter we made
significant progress in reorganizing the Company into regions and attaining our
targeted annual cost savings. Consistent with our original estimates, we
continue to expect the restructuring will reduce earnings by approximately $0.02
to $0.04 per share on a net basis this year, and will increase earnings by
approximately $0.10 per share next year."
Mr. Smith continued, "It is important to note, however, that the goal of the
restructuring is not simply cost reduction. We have already begun to reap the
operational benefits of our new structure, and are pleased with the performance
of most of our regional operations during the quarter, especially Florida. Our
Florida management team has done an excellent job of integrating the operations
of our former Jacksonville and Tampa platforms, as well as strengthening the
dealership teams of several of our largest Florida stores."
Mr. Gilman concluded, "While pleased with the quarter's results, we still need
to maintain our sales momentum. In addition, the continued implementation of our
regional structure and a vigilant focus on expense control will be key in
meeting our objectives for the balance of the year."
Commenting on guidance for 2005, the Company noted that it remains comfortable
with estimates for earnings per share from continuing operations between $1.70
and $1.78. This range does not reflect the net costs resulting from the regional
reorganization nor the potential adoption of Statement of Financial Accounting
Standard 123(R).
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 800-357-9448; international callers, please dial
312-461-9409. No access code is required. A conference call replay will be
available approximately two hours following the call for 14 days and can be
accessed by calling 888-203-1112 (domestic), or 719-457-0820 (international);
access code 4704293.
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 2004 revenue of approximately
$5.3 billion. Built through a combination of organic growth and a series of
strategic acquisitions, the Company currently operates 95 retail auto stores,
encompassing 131 franchises for the sale and servicing of 33 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.
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 which could cause,
among other things, acquisitions under contract or letters of intent to fail,
risks associated with the Company's substantial indebtedness, risks related to
pending and potential future acquisitions, risks related to competition in the
automotive retail and service industries, 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.
Asbury Automotive Group, Inc.
Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
For the Three Months Ended
March 31,
--------------------------
2005 2004
----------- -----------
REVENUES:
New vehicle ......................................... $ 806,490 $ 706,759
Used vehicle ........................................ 345,472 306,924
Parts, service and collision repair ................. 161,709 140,856
Finance and insurance, net .......................... 38,290 32,687
----------- -----------
Total revenues ................................. 1,351,961 1,187,226
COST OF SALES
New vehicle ......................................... 750,065 654,053
Used vehicle ........................................ 314,237 279,939
Parts, service and collision repair ................. 77,165 67,349
----------- -----------
Total cost of sales ............................ 1,141,467 1,001,341
----------- -----------
GROSS PROFIT ............................................ 210,494 185,885
OPERATING EXPENSES:
Selling, general and administrative ................. 173,084 148,959
Depreciation and amortization ....................... 5,250 5,071
----------- -----------
Income from operations ......................... 32,160 31,855
OTHER INCOME (EXPENSE):
Floor plan interest expense ......................... (7,412) (4,514)
Other interest expense .............................. (9,490) (10,321)
Interest income ..................................... 258 273
Other expense ....................................... (22) (202)
----------- -----------
Total other expense, net ....................... (16,666) (14,764)
----------- -----------
Income from continuing operations before income taxes 15,494 17,091
INCOME TAX EXPENSE ...................................... 5,810 6,409
----------- -----------
INCOME FROM CONTINUING OPERATIONS ....................... 9,684 10,682
DISCONTINUED OPERATIONS, net of tax ..................... (44) (318)
----------- -----------
Net income ..................................... $ 9,640 $ 10,364
=========== ===========
BASIC EARNINGS PER COMMON SHARE:
Continuing operations ............................... $ 0.30 $ 0.33
Discontinued operations ............................. - (0.01)
----------- -----------
Net income .......................................... $ 0.30 $ 0.32
=========== ===========
DILUTED EARNINGS PER COMMON SHARE:
Continuing operations ............................... $ 0.30 $ 0.33
Discontinued operations ............................. (0.01) (0.01)
----------- -----------
Net income .......................................... $ 0.29 $ 0.32
=========== ===========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic ............................................... 32,588 32,435
=========== ===========
Diluted ............................................. 32,781 32,721
=========== ===========
Asbury Automotive Group, Inc.
Selected Data
(Dollars in thousands except per share data)
(Unaudited)
As Reported for the Same Store for the
Three Months Ended March 31, Three Months Ended March 31,
----------------------------------------- -----------------------------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
RETAIL VEHICLES SOLD:
New units .............................. 25,604 61.7% 23,312 60.6% 23,911 61.1% 23,312 60.6%
Used units ............................. 15,862 38.3% 15,158 39.4% 15,202 38.9% 15,158 39.4%
----------- ------ ----------- ------ ----------- ------ ----------- ------
Total units ....................... 41,466 100.0% 38,470 100.0% 39,113 100.0% 38,470 100.0%
=========== ====== =========== ====== =========== ====== =========== ======
REVENUE:
New retail ............................. $ 779,577 57.7% $ 692,744 58.3% $ 734,111 57.3% $ 692,744 58.3%
Used retail ............................ 258,198 19.1% 230,573 19.4% 247,201 19.3% 230,573 19.4%
Parts, service and collision repair .... 161,709 12.0% 140,856 11.9% 154,622 12.1% 140,856 11.9%
Finance and insurance, net ............. 38,290 2.8% 32,687 2.8% 36,437 2.8% 32,687 2.8%
----------- ----------- ----------- -----------
Total retail revenue .............. 1,237,774 1,096,860 1,172,371 1,096,860
Fleet .................................. 26,913 2.0% 14,015 1.2% 26,640 2.1% 14,016 1.2%
Wholesale .............................. 87,274 6.4% 76,351 6.4% 82,066 6.4% 76,060 6.4%
----------- ------ ----------- ------ ----------- ------ ----------- ------
Total revenue ..................... $ 1,351,961 100.0% $ 1,187,226 100.0% $ 1,281,077 100.0% $ 1,186,936 100.0%
=========== ====== =========== ====== =========== ====== =========== ======
GROSS PROFIT
New retail ............................. $ 55,838 26.5% $ 52,348 28.2% $ 52,608 26.2% $ 52,348 28.2%
Used retail ............................ 30,110 14.3% 27,053 14.5% 28,990 14.5% 27,053 14.5%
Parts, service and collision repair .... 84,544 40.2% 73,507 39.5% 80,906 40.3% 73,507 39.5%
Finance and insurance, net ............. 38,290 18.2% 32,687 17.6% 36,437 18.2% 32,687 17.6%
----------- ----------- ----------- -----------
Total retail gross profit ......... 208,782 185,595 198,941 185,595
Fleet .................................. 587 0.3% 358 0.2% 583 0.3% 358 0.2%
Wholesale .............................. 1,125 0.5% (68) -% 1,083 0.5% (68) -%
----------- ------ ----------- ------ ----------- ------ ----------- ------
Total gross profit ................ $ 210,494 100.0% $ 185,885 100.0% $ 200,607 100.0% $ 185,885 100.0%
=========== ====== =========== ====== =========== ====== =========== ======
SG&A expenses excluding reorganization
costs and rent ....................... 156,101 140,250 147,248 140,250
SG&A (excluding reorganization costs and
rent) as a percent of gross profit ... 74.2% 75.4% 73.4% 75.4%
GROSS PROFIT PER VEHICLE RETAILED:
New retail ............................. $ 2,181 $ 2,246 $ 2,200 $ 2,246
Used retail ............................ 1,898 1,785 1,907 1,785
Finance and insurance, net ............. 923 850 932 850
Platform finance and insurance, net .... 894 817 901 817
As of As of
March 31, 2005 December 31, 2004
-------------- -----------------
BALANCE SHEET HIGHLIGHTS:
Cash and cash equivalents .............. $ 39,253 $ 28,093
Inventories ............................ 800,479 761,557
Total current assets ................... 1,174,008 1,143,506
Floor plan notes payable ............... 690,319 650,948
Total current liabilities .............. 889,628 847,510
CAPITALIZATION:
Long-term debt (including current portion) $ 504,492 $ 526,415
Stockholders' equity ............ 493,608 481,733
---------- ----------
Total ...................... $ 998,100 $1,008,148
========== ==========
ASBURY AUTOMOTIVE GROUP, INC.
SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION
(In thousands, except vehicle data)
(Unaudited)
The Company evaluates finance and insurance gross profit performance on a
per-vehicle retailed basis by dividing total finance and insurance 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 that was not attributable to retail
vehicles sold during the year. The Company believes that platform finance and
insurance, which excludes the additional revenue 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 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 For the Three Same Store For the Three
Months Ended March 31, Months Ended March 31,
------------------------- -------------------------
2005 2004 2005 2004
-------- -------- -------- --------
RECONCILIATION OF FINANCE AND INSURANCE GROSS
PROFIT TO PLATFORM FINANCE AND INSURANCE:
Finance and insurance, net .................... $ 38,290 $ 32,687 $ 36,437 $ 32,687
Less: corporate finance and insurance ........ (1,203) (1,243) (1,203) (1,243)
-------- -------- -------- --------
Platform finance and insurance, net ...... $ 37,087 $ 31,444 $ 35,234 $ 31,444
======== ======== ======== ========
RETAIL VEHICLES SOLD:
New retail units ............................. 25,604 23,312 23,911 23,312
Used retail units ............................ 15,862 15,158 15,202 15,158
-------- -------- -------- --------
Total units ............................. 41,466 38,470 39,113 38,470
======== ======== ======== ========
The Company's operating income was largely impacted by restructuring costs
incurred during the first quarter of 2005 and an incremental rent expense
associated with a sale-leaseback transaction that was entered into in the third
quarter of 2004. The Company believes that excluding the restructuring costs and
rent expense from the selling, general and administrative expenses provides a
more meaningful basis to measure the results of the Company's operations
compared to that of the prior year period. A reconciliation of the Company's
adjusted selling, general and administrative expenses is presented below.
As Reported for the As Reported for the
Three Months Ended Three Months Ended
March 31, 2005 March 31, 2004 Variance
------------------- ------------------- ----------
SG&A expenses ............ $ 173,084 $ 148,959 $ 24,125
Less: Restructuring costs (3,624) -- (3,624)
Rent expense ...... (13,359) (8,709) (4,650)
--------- --------- ---------
Adjusted SG&A expenses ... $ 156,101 $ 140,250 $ 15,851
========= ========= =========
Same Store Results Same Store Results
for the Three for the Three
Months Ended Months Ended
March 31, 2005 March 31, 2004 Variance
------------------- ------------------- ----------
SG&A expenses ............ $ 162,888 $ 148,959 $ 13,929
Less: Restructuring costs (3,624) -- (3,624)
Rent expense ...... (12,016) (8,709) (3,307)
--------- --------- ---------
Adjusted SG&A expenses ... $ 147,248 $ 140,250 $ 6,998
========= ========= =========
The Company defines income from continuing operations as net income less
discontinued operations. We believe that excluding certain items from income
from continuing operations for the three months ended March 31, 2005 provides a
more meaningful basis to measure the results of our operations. A reconciliation
of our net income to adjusted income from continuing operations is presented
below.
For the Three Months
Ended March 31,
--------------------
2005 2004
------- -------
RECONCILIATION OF NET INCOME TO ADJUSTED INCOME FROM CONTINUING OPERATIONS:
Net income ............................................................... $ 9,640 $10,364
Discontinued operations .................................................. 44 318
------- -------
Income from continuing operations ........................................ 9,684 10,682
Tax affected reorganization costs (a) ....................................... 2,265 --
------- -------
Adjusted income from continuing operations .................................. $11,949 $10,682
======= =======
RECONCILIATION OF NET INCOME PER DILUTED COMMON SHARE TO ADJUSTED INCOME FROM
CONTINUING OPERATIONS PER DILUTED COMMON SHARE:
Net income ............................................................... $ 0.29 $ 0.32
Discontinued operations .................................................. 0.01 0.01
Income from continuing operations ........................................ 0.30 0.33
Tax affected reorganization costs (a) .................................... 0.06 --
------- -------
Adjusted income from continuing operations ............................... $ 0.36 $ 0.33
======= =======
Weighted average common shares outstanding (diluted): ....................... 32,781 32,721
======= =======
(a) During the first quarter of 2005, the Company incurred severance costs of
$3,624 ($2,265 net of tax) associated with our previously announced
reorganization.