ABG - Earnings call 2 2023 | Asbury Automotive Group, Inc.

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Operator

Greetings, and welcome to the Asbury Automotive Group Second Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, George Villasana, Senior Vice President and Chief Legal Officer. Thank you, sir.

You may begin.

George Villasana

good and operator, you, morning. Thank

Earnings call As Officer; posted are results our Dan be Automotive was recorded release on XXXX will Operations; issued David today earlier Vice Clara, up Senior open be Chief and Hult, for website being follow-up will our for noted, Financial Group's of Welch, President Asbury's replay the available is and Vice conclusion quarter Quarter remarks, any Chief Asbury our and today's me and questions. Executive Michael available the to of later Senior and and President Welcome at press President with morning is call At we this second questions The later Call. this our Second detailing Officer. afternoon. for our will investors.asburyauto.com. Participating

you must statements. contain discussion begin, remind the we to that Before likely today forward-looking call the is we during

those statements nature, than Forward-looking are historical include of significant each current subject statements may projections, which to in uncertainties. which are forecasts expectations, and other which are financial

responsibility the our that the ended For the issued certain reports quarterly of and December earnings from today. any XX-Q with our our statements, time, to please from for release statements. risks update earlier information see filings results may expressly cause to SEC subsequently filed time Form to differ regarding any XX-K materially including actual these XXXX, disclaim year on Form forward-looking We

this addition, under rules In SEC may be measures financial call. discussed on certain non-GAAP defined as

the measures of measures rules, applicable such by reconciliations most on non-GAAP comparable to SEC required directly As GAAP any our website. provide financial we

website, investor our updated an quarter highlighting posted investors.asburyauto.com second have presentation on results. also our We

Hult. to the is pleasure David? my CEO, David Now hand call it over to our

David Hult

call. Thank you, everyone. performance in quarter morning, QX. good to proud earnings Welcome George, the second of I'm team's our and

flow our results been from this utilizing our to streams quarter. and cash cost gross work strong opportunistic repurchases. share maximize strong Our also We've discipline profit operations continued for generated strong

the over to alone environment, XXX,XXX $XXX We balance our Within shares profitability in model, million. our second quarter year-to-date, on Star due shares be repurchased well focus North the macro to business our most guest-centric diversified repurchased with strong for our positioned current million sheet, retailer. X and we are of automotive those this

Now I'll turn in for second billion gross We $X.X revenue profit to the margin at our a of XX.X%. consolidated quarter results of delivered XXXX.

XX%, Our of as was generated adjusted margin gross SG&A percentage adjusted a X.X%. of operating profit an

$XXX and EPS was EBITDA adjusted million, adjusted Our $X.XX. was

of in future Looking environment of forward, where an the been. ever operate the years, We automotive highest average is we optimistic XX.X are retail. about the age our it's car

within higher, service are growth still EVs While parts have transition below enables combination they and consistent historical older cars, business. SAAR levels. complexity been levels trending The to of well the new cars and of our

With capital opportunistic robust our buybacks are balance share sheet strong liquidity, through and and we looking to deploy acquisitions.

will We accretive continue acquisitions Asbury. aggressively pursue to to that be

disciplined of We're capital. stewards

our the repurchase We pleased expense recent especially with management. such I'm capital allocation second our with to quarter arise, when opportunities are activity. share regards as strategic the results, Again,

eye and We to have stores while efficiency with strong continue operators been and our from an thoughtful be acquisitions. profitability over XX integrating towards

half thank to my of team would for a you to terrific a Finally, fellow like members I extend first XXXX.

I'll Dan? Dan hand operating to now call performance. the our discuss to over

Dan Clara

like work, to hard to team most all and say members guest-centric automotive David, their dedication thank be everyone. our for you I good the and retailer. to commitment you, Thank morning, also would

TCA otherwise. which dealerships includes performance, Starting vehicles. moving with and to same-store unless new Now stated

brands was models. Our new ended quarter significant a and vehicle XX-day variation million, There inventory among $XXX represents the which at supply.

X% grew vehicle year-over-year. new revenue Our

per $X,XXX. vehicle New was average gross profit

quarter. New this vehicle X.X% gross margin was

gross retail vehicle compared XX% and used were retail quarter. Used to to unit volume down Used for both the was per vehicles. prior profit $X,XXX quarter. revenue Turning year

used vehicle represents which Our XX-day supply. million, ended quarter $XXX a at the inventory

which second decrease of vehicle of $X,XXX, We front-end PVR F&I. our is a $XXX. F&I yield quarter. slight In the quarter, an decrease of was to the total a $XX delivered per Shifting $X,XXX, prior compared year to

Moving to Parts and Service.

and Service expanded pay Our gross business increased X% X%. Parts by quarter. profit revenue X%, grew the and in also revenue we Customer its

As would a years. full we reminder, integration stated X when we the acquired LHM, take

on and We changes are systems significant process degree have now in This an implementing we're change perspective. significant and a effect year from our does operations. of X,

we average per higher dollars over repair the X.Xx RO. EVs saw was order that of the internal the This vehicle quarter, than combustion battery average

ROs our XX% of vehicles. For today, reference, are internal combustion about

cars, of XXXX. smaller sequentially of is proportion we for ROs of the While the much EVs service since QX combustion EVs number increased than internal has

market come. the parts prepares we to EVs, in for feel As position of for to penetration vehicles strong is and growth these a increased service business for accommodate our years

Please of was generated over Clicklane. in powered note the set pleased year. to revenue for second quarter. see and slightly all-store in new over $XXX quarter, which million the we XXXX, of our through tracking to sales in We're to that for were original revenue increase reporting last behind all-time XX% QX best, Clicklane. retail previous now XX% year-over-year and billion were vehicles $X.X that another record sales increase turning quarter XX% estimate in quarter, vehicles by the XX,XXX our second used in approximately and used. Now are X% of and were basis. XX% Clicklane We a on are the Clicklane, We a Clicklane Clicklane for we an new

a score of at require equates quarter. $X,XXX stores. The higher average Total front-end on yield. while approved which total the XXX, received our remaining F&I PVR the of The to XX were miles, from XX% was and score customers Clicklane dealerships to average of instant those was our increase us from of customer credit which were PVR thing. $X,XXX teams right an financing, natural the is western states quarters finance off-line again, constantly thank Clicklane for those customers which credit the than as applied sales that of a and XX% which $X,XXX, the average convenience sales. of to XX% delivery the that lender XX% of some of do drives prior for would assistance. approval, Moving to our us to some were I for has providing high utilize defines a KPIs second Clicklane offer. cash level and like distance service. front-end Once

Michael will I our to to performance. financial Michael? call the hand discuss now over

Michael Welch

would Thank you, for highlights team participants other provide to To members morning. company. analysts, investors, financial on Dan. good call, and I like some our the our

a the losses dealerships gain settlement. quarter. Adjusted on $X.XX on center. quarter, excludes supplement dealership, $X.XX $X.XX. per for financial from a of to in our tax and net of for hail a release excludes excludes or due the press legal net $XX.X the a on second also see was please second share net $X.X by the net income decreased quarter of details to our Adjusted loss million income for For investor for XXXX of and was presentation website. a XXXX and diluted performance and our $XXX our income damage. diluted our additional adjusted related collision financial losses million net million million sale income net Overall, $XX.X the quarter today tax sale gains of million to Adjusted the quarter XXXX related adjusted of EPS million gain of of the items EPS $X.X $XX.X second on These

tax Our our quarter effective tax for rate rate of estimate year XXXX XX.X%, XXXX full for quarter the with was XXXX. of at of We second the same in XX.X%. line the

million $XX on purchases, Excluding capital spent real expenditures estate we year-to-date.

full million, is as planned leased related to made about million to Of of $XX million CapEx expect related pretax we replacement XXXX to year $XXX of be $XXX XXXX CapEx Year-to-date, income. to our We this acquisitions. million properties. roll TCA continue $XX out

the rest on XXXX. still end are by our of the TCA track of deploy stores to We into

a increased in expectations. Due of deferral, for deferral the years larger the of sales income by replaced lower associated lower to generate current our previous in has TCA's $XX in income our with prior to amortization states, million conservatively TCA The pretax XXXX the XXXX. years store above the had from rollouts unit deferral to higher expected we due income

for be million. We $XX income TCA to now for XXXX pretax expect

quarter of robust cash operating adjusted driven model. by the flow, we same business a million XXXX, generated $XXX For

mentioned earlier, David As $XXX quarter. million repurchased we the in XXX,XXX shares for

our BofA for prepaid XXXX $XX mortgage also we June, million. In

pro was use forma shares. net the X.Xx June, Our leverage adjusted at end reflecting repurchase the of to of cash

liquidity, cash of availability strong approximately Our billion the care excluding to plan our auto, cash, quarter revolving accounts and credit balance floor facility. comprised $X.X sheet and we line used on of remains as both offset ended with total

strong delivering members. team Dan your Finally, service remarks. thanking for I and to superior David prepared This Asbury would and dedication by like Thank you concludes our to join our results.

and over take to We questions. your the turn will operator now call Operator? the

Operator

Stephens. Imbro comes Our first Instructions] [Operator with Daniel from line question the of

Daniel Imbro

guys understanding of then remain actually deleverage of And is Maybe side back, on the a done? one about be quarter, as Is leverage? it impressive to the Is down there SG&A thought to just you I was it some sequentially. some what from you will the have stepping SG&A savings growth step the Can taking just what growth, divestitures normalized? still actually in maybe drove optimize really opportunities the expense talk GPU Clicklane? P&L.

David Hult

in bit healthy expense in But pretty we led -- years our of well. for operate it and have try I more for we've we over as as think of the space as can. think which you certainly of lower couple and next We've Thank Daniel. the little we quarter always X, kept part to the We question, we SG&A SG&A, forward, years. peer going maintain a a check do margins, with opportunities lot efficiently now, the

XX bit. for next benefits is tailwinds a of our XX% a But picks consistent up, efficiencies little I growing would sales. there will we're a that with to expense standpoint to as It's be Clicklane for It's growing there's and us an the as pace. think way with little months no on productivity, are our at compensating software there. expense over opportunities really Right bit But now, working from XX improve. the today. there we're Clicklane

Daniel Imbro

Got maybe there quarter? to talk exposure. GPUs side the within you Can the business. you domestic trends any nicely of the just it. were a days, spots And weak but And then despite profitability? the maintained portfolio's GPU maybe new shifting the through notable about built couple of Inventory

David Hult

you, a your would tell what domestic it. of And would day we're car. over back $X,XXX point pretty [ to close normal We're call ] supply vehicles. well to a domestics, on to I still the I we're

all not time any that our back in think talking we're levels. right the we ordering been folks of think ourselves our in going gross 'XX today, the at We near don't into inventory I our in are about great it, to doing to that We see anticipate, certainly go And a really transaction. sit as peers have future. per and maximizing we the stores near future. here continue the job profit to

Daniel Imbro

Perfect. for And Maybe then last the wrapping one sheet, balance up. Michael, on me.

towards then cash is an OEMs. its is appetite there's You I looking guys a there? self-funding deployed does still for cash? M&A. be be infusion what need those a But Or at any not expand to in talk when cash brand more today, it you is own about we of there use going targets, certain for like get to from ops going you're buyback, looking with longer-term TCA from target? And cash. you to sound look to that Are your but know mix to Can

Michael Welch

David a TCA off that income to the the think they I'll and the first set a paid percentage TCA, cash third-party provider. it of dealership and the about if customer acquisition cash question. us let On you rest kept as kept and customer and it in TCA, before take the -- of dealership, we took then the take question to the the

so kind that is of that our funds cash from all And customers. TCA

Part at can taking And into buybacks, the cash use it for level the of we so share we're operating bucket of The TCA. just purposes, dealership goes rest stays from and the customers. it acquisitions. the investment at

we that. to of It's customer-driven. all have So cash there's come no support pocket to that out

David Hult

we the it X that mainly was going acquisitions due where From store. divested market had acquisition market strengthen market. in quarter, to we that store in X to we're We standpoint, logistics. couldn't the that It and a only was find

we So large project that. and store, CapEx in we also that sell avoided decided X doing a to

cash. it So use was we thought the of best

portfolio sit on and we focused very within stores have We're brands states. that management, the which the where

the something We states to are and criteria land we with because aggressively now. that lot. a seen out. able been brands announced conversations in acquisitions you we haven't time We've our together. something Obviously, these that things meets in anything with you play them that our we want. have know, We're as to current and just come take hopeful conversations But will haven't

Operator

of of next Bank question Murphy line with John Our from comes the America.

John Murphy

about on $XXX the I comments million so And just service. recall. wanted just the from took about to your experience It's parts with far. interesting heard ask very what GM they EV charge and call, for the we've Bolt

So for you're be it work saying vehicle. might warranty be the -- it opportunity higher seems on there? I there's you to or EVs, expecting as just like going average Xx ROs versus the IC repair far what are on work

service is do big still people work And a out also that in on needs work they traditional to there? there I investment Is to as doing pent-up think conversely, ready back capital come in more need the for are how just actually that? go finally there a get you and base do to sense, much service mean, then maybe the

Dan Clara

John, Dan. this is

your Just correction, answer was I want [indiscernible] to before EV to the ROs, pay question, correction. the I a [indiscernible] just just ROs X.X% make compared customer so

as Yes, I'll there inside the -- the first that it into also of outside required. question, technician where -- or proper investment in the a tremendous require far local start and of to that amount that the any training with of the equipment. goes market as EV training infrastructure got is technicians cases the go have lot First or and to then but market, OEMs does the

service in a guests a in but term. amount not the we we And acquiring transition, charging that that are also to make stations of our departments whether for or can for need invested of being a tremendous that lack sure pressing delivery the cars, the we're a you while able them service we are vehicles fully imagine, better for see these charging infrastructure as because as to only

demand, As is XX.X far years. as the pent-up parked the car average age see you of our

see also So cars definitely now longer and -- based numbers. keeping we those on some consumers

So the positively will continue that we near feel impact pent-up And future, demand is there. still the in us. to

David Hult

And but presold. just just XX% up at later, where a to our mention still it it now, sales, to sitting are color the I'll come we're some point add may of vehicles

John Murphy

like that and of sort you on there. view that a trending on in of That's -- with and parts it's reasonable back this very mean, just pretty rate same-store sales going assume? this pent-up for with sticky, on I near just service is and basis parts the the that. growth of same-store, But I'm to term is your helpful. curious But demand service it's I sorry, mean, to kind it what's thing I'm sort what mid-single-digit EVs and the seems is think

David Hult

do. really We

and be until up It and for service think XXXX pretty a bumpy strong. was going maybe parts to with beyond quarter us parts I and is service.

out We West, and our have acquisitions with going a all integrating processes. changing software lot on new

you can the certainly your time definitely mid- to So conservative business high are foreseeable that think a become single-digit in very it. But in we of numbers for efficient takes toll period future. that with

John Murphy

lastly, And just great expense. then mean, I on performance obviously, there. interest plan Okay. floor

as guess, growth along you You be the actual what's you rise with, well guys on there are unit rise hedging the going rate instruments. over a recovers. lot time just the explain Can managing you'll with very to and of mitigating of how think the successful I industry

Michael Welch

Yes.

the floor negotiated floor to the on plan of the plan. -- offset to basically plan So of side, floor XXX% put that's ability We the most offset just account.

parked have And against right that balance. cash now plan we so all the floor is excess

hedging, cash it's offset balance. not So of use to it's just the

Operator

comes Rajat JPMorgan. the from Our Gupta with next line Instructions] question of [Operator

Rajat Gupta

that quarter. a were new previous and ] if I to to Curious give EVs do level? gross on could question was normal [ wanted And the GPUs. outsized And car flush how sense is get just it on have the and in a us when that to you unit vehicle expect out mix follow-up. follow there if of IC in a those sales moderation the impact from of And an a impact electric terms to on of more back had your the an today, in I inventory? up we system case, relative both

Dan Clara

question of impact there. does seeing have be Dan. from But remind the -- last you, that the see standpoint pricing we're -- But address I'll might and an biggest level impact I your is then that out this and EVs Rajat, please me. when the tax a the it supply you a that forget if one, with first, available from also from is see Yes, credits what tell and will I standpoint. the the demand. margin support we you

tax that there. not pace. a much when available for as readily inventory the is needed discounting the much is also faster moves And credit the -- are credits for those those When as cars, not need at

-- of pockets question positively remind negatively then please? what impacted operate, different impact. second in you and So was, me and we see your we -- both Can that that

Rajat Gupta

is quantify GPU like there any on impact in inventory the day any electric on your of was the color like ground? way just what supply EVs versus And to IC Just the like vehicles. from today

David Hult

doing does look would Rajat, to close this I you pretty what that brand, we're they're rest a should the vary of some of And similar are midline much Hyundai same what the EVs, say, you we profits with when inventory are see well, gross tables, X gross their but Mercedes PVRs our what the gross brands that you stores with is with profits profits we pretty engine imports, gross with David. the at or pretty with the much scenario, line by profits our profits. and see and nice you feel moving with the in put our that of very and by I in there. the luxury some tell vehicles, turning engine of the they're model, combustible gross It examples are. to combustible as job

Rajat Gupta

it. Got and helpful And parts services. That's it. on then on following up question Got color. John's also

the quarter deceleration in to saw rate. The first quarter, year-over-year second some we

have of way if Because or to You talked that is it was about to any it was impacts about peers some like your deceleration? where that there's the like that irrespective? had like industry you integration driver like some a of operational number specific? land company curious Or Just was higher decelerated like expected there. Was it this why LHM, of specific? think from a

So...

David Hult

doing results. process used probably or has efficiencies getting the we're But a should same It's most an and deceleration takes conversion excellent changing point. I standpoint, in see have the stores We to will. the certainly with the time. software. the used also we DMS and you that back bit out -- in -- to that be and lot it certain performance had we're to cause to folks there, tenured that, at starting from parts similar people foreseeable hardworking It and way. of right see changes change X normal, to When out we and we're after the is a for the that if a through of using then next mean quarter folks things we've service, you hoping be and some new we'd little go effect software, a West, and a which changes software it's

acquisition in brief we whole. the days. think that you almost was our impact doubled time company when Just a company and Miller of size the to Stevinson within and [indiscernible], XX period it a That as significant about between

of transition lot we're going there's through. that So a

things a we through this more and tackle really year year and to where conversions that didn't year chose And a lot Last we is of that. the go was kept really change. sustained

we'll our us stores there our much So probably a there a with implementation little legacy gets to out like with the are. out we more be But efficient of better bit some think folks once change used place software. at everyone in frustrated and are of it,

Operator

Bret [Operator Instructions] with Jordan line of comes from Jefferies. Our next the question

Bret Jordan

in where Your the there comment there level or [ $X,XXX holding does holding is ]. the over XX that around lot inventory ]? domestics? on of I domestic they include mean, highest are Stellantis, dispersion still [ a GPU Is

David Hult

where surprised. it's percent are. very our Bret, see, can similar to as question. our No, really All highest well. domestic. highest a is of good they is you pleasantly We're as day supply their X are It And manufacturers Stellantis, PVRs

X. huge So the any there's no between of disparity

Bret Jordan

Okay. a plan. of question X-year Great. picture big And the then sort on

Looking and you Is lot X-year at the volume the plans for 'XX. or it of challenges supply-demand mean integration plan? risk? it, obviously, integration bucket the a of sort What's how risk of sort to about I talk stores? biggest acquired SAAR do of the

David Hult

based Yes. our the right I would we target. say make $XX sure million it's hit X-year plan threefold, was can to SAAR. finding That a acquisitions on

see may was large for seen as a an Miller on think haven't conversion really smaller to acquisitions well. differs. piece prior because we the little So so that that And were that not for while were was it while. anomaly integrate. We it like much a easier to something take

an grow. of of see we something then issue. big to business. our Clicklane. as risk can to back business a that continues have or and ones. getting we as grow there don't percentage has million build larger It's a I would to we on. It being finding the percent about SAAR. right great a to good acquisitions of to So patient with big think us the become think $XX want opportunity And We We a think consistent to our really and that It's really add that that we see well.

Bret Jordan

XX% percent And said you were of sold were Okay. MSRP? what at Great. just vehicles the us -- tell presold. Could you

David Hult

Lexus, supply. about brands, it, the think or All about when at So from and come those a vehicles think I MSRP. you of luxury Honda. low sold XX% But of will have don't exact the our almost most for you be close very day you we percentage presold that, to about import, the think Toyota when volume have you. Mercedes, And and

vehicles lot are PVRs. So which in high going lines, are you to imagine of those those presold a garner could that

Operator

now for We further like Mr. Hult, I this to at would questions have comments. floor back over you no the closing turn to time.

David Hult

our operator. everyone's look call. next appreciate We a day. great quarter after third to We conversation our you, Thank forward earnings. participation Have today's in

Operator

Ladies and teleconference. today's conclude gentlemen, this does

have this you your participation, You at may Thank a time. day. disconnect wonderful for your lines and

Asbury Automotive (ABG) 25 Jul 232023 Q2 Earnings call transcript