ABG - Earnings call transcript Q1 2024 | Asbury Automotive Group, Inc.

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Operator

Greetings, and welcome to the Asbury Automotive Group First Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator's Instructions]I would now like to turn the conference over to your host, Chris Reeds, VP of Finance and Investor Relations.

Chris Reeds

Please go ahead. morning. good and operator, Thanks,

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

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

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

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

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

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

call results. to our first updated David? CEO, posted investors.asburyauto.com, also on It now over highlighting my David our quarter an Hult. have is We to pleasure website, hand the presentation our investor

David Hult

efforts quarter I in more Welcome ever our $X by Good of quarter first revenue. to to Thank hard-working of team proud am our everyone. start you, of who members our earnings the morning, delivered call. first saying I than want Chris. billion

on Thank path including reflect our members growth all our strategy, to the be operational platforms our with along all fully team and quarter we parts third from second our that of service release, headwinds the to XXXX. first would integration-related before it said and As of extend business the members, is very fourth much. you forward, our important to there our our XXXX progress and in team powering into improving Koons Group. leaders performance In we new continue quarter quarter of are QX earnings that will

the more expect a of through We This business volume versus the quarter's higher in performance PVRs same-store aggressive X% and shows unit by fourth XXXX. to earnings stance than same-store quarter-over-quarter or preowned digits call, we our to X,XXX more discussed or sourcing. progressing year-end. are and fourth of increased units our In the quarter maintain this portion at quarter mid-single we grow commitment

our first gross of for an profit for In at generated the XX.X%. of was revenue delivered consolidated percentage Now our X.X%. a gross quarter. operating margin as results a We SG&A We in margin $X.X XX.X%. billion profit of

Our and $XXX share earnings $X.XX EBITDA was was our per million.

allocation plan, shares million first for the in capital we multiyear our repurchased quarter. of part As XXX,XXX $XX

divestitures make portfolio the opportunistic be portfolio, prioritizing agreement, and deployment, the opportunities and We the to quarter performance we evaluate capital. other with the to continue We acquisitions to first changes throughout use divested the of year. accretive will our the store monitor per OEM Delaware most We our during of sense. in most making Alexa framework strategic continuously or it capital our makes where

brand factors may are there on ahead, on volumes our like mix to influence near-term headwinds Looking that new lead our and performance.

invite responsibility we used like will efficiently, I'd prioritize you to you that corporate haven't published comes it to and it to when vehicles this quality market read also we tight highlight We month. already. profitable our a in still to are if continue We sourcing growth. report

before Now members strive again team together to want to call to thank we you I the over our retailer. Dan, gas-centric as automotive say to be I hand the most

Dan? discuss will operational Dan Now our performance.

Dan Clara

good and results strong and our driving thanking join David everyone. also best-in-class you, members team morning, I'll Thank and delivering experience. David, our a

Now same-store decreased unless to Same-store market new prior we in performance and performance, was with flat unit new stated X%, pleased vehicles. otherwise. moving Starting to dealerships given Overall, which current includes were PVR our with volume new conditions. TCA year. vehicle revenue

was the new gross average was vehicle per New margin X.X%. vehicle profit and $X,XXX, gross

consistent in the new trend same-store March end day the was compared quarter, industry-wide end supply of XX days fourth XX growth inventory. Our the at of to with a at days

We an to our volume manage brand given cars, new in to and continue appropriate supply day mix.

the appreciate vehicles. Turning mentioned of gross quarter for progress lower the increased sequential while vehicle we retail revenue as and roughly volume down on cost a than retail X% team's per David of used to basis, due Used in a Used Unit quarter year-over-year X% profit fourth sales. such less line gross decreased the earlier. as of challenging was with $X,XXX, on volume, expected in to profit We environment. performance XXXX. the

still continued Our X,XXX payments. challenging F&I. holding On to a delivered $XX was F&I headwind PVR F&I Shifting DSI XXXX. preowned this $X,XXX. throughout TCA of yield $X,XXX. resilient year consumer first the the XXXX be to PVR per year-over-year, XX same-store total an amid was funding pressure acquire vehicle used or quarter, consolidated vehicles we The in in number deferred PVR all-store We contributed until anticipate on the In returns. revenue impactful decrease of to days view supply. We a supply as quarter, headwind was $XX and our our consolidated basis,

and Moving to parts service.

and we margin ahead. in as better X%, of versus in is profit and we an points return mentioned, even earned last of to despite grew encouraging XX.X%, leaders The XXX teammates of and weather the impacted basis and service business off, a hard expansion growth. it gross quarters year quarter parts several fixed gross markets. we our and first integration see several our Our by The prior quarters, of profit were performance operations is our efforts, paying to work expect issues

of through XX,XXX or a overall units same-store XX% about Finally, basis, Clicklane retailed we units. on

New financial vehicle a those making Clicklane first units, are volume recent in the a of first to over with customers Consistent over trends, and customers committed portion to Asbury, Michael? new over to XX% of omnichannel transactions this quarter up remain X,XXX versus XXXX. differentiating vehicles these the discuss now are of quarter we represented hand I XX% last larger and key will of new year, call to increase our performance. Michael tool.

Michael Welch

in was specific analysts, financial press company to highlights at was quarter. profit other non-GAAP provide performance several of in quarter fourth no and adjustments and share-based morning. our expenses the for $XXX.X details compensation. for on like There some or for on to our versus XX.X% as and the our income XXXX our driven namely QX million, costs, a would of income website. for and XXXX, quarter quarter. Thank the came percentage the elevated investors, participants advertising were investor for additional loaner our call service EPS costs, higher good today to net financial our first Overall, in our XX% gross you, team members $X.XX Dan, see on presentation release I financial XXXX. SG&A by net Please supplement our of

was the TCA a of $XX be approximately first anticipate XXs. between basis. year low $XX.X estimate cons our and quarter this of for SG&A be full million million and our rate as gross the across results in year full to For and later pretax quarter, in to to the stores to income for offer a Florida pretax be year. plan year, on remaining in XXXX we $XX TCA percentage million generated the and profit We the Tax rate we XX.X%, tax expect XX%. we

million For operating portion $XXX the flow, of to share which repurchase cash previously of used quarter, a we activity. generated our mentioned was adjusted

in flows we ended and line purchases, We spent credit cash first and quarter, cash cash, accounts, quarter both Free Parada. $XXX capital million quarter. the and of million to to spend on million revolving offset million on estate real comprised facility liquidity, of $XX $XXX with our expenditures the $XXX availability used year million. full of anticipate be for floorplan $XXX we Excluding the total of excluding

continue through activities. to manage costs as rising offset interest levels inventory to will year flat the account the impact of we expense, floor with expect the plan remain floorplan cost relatively more opportunity While we use accretive deploying our of to we to balanced the cash

in pro Our the to March, investment adjusted approach X.Xx across allocation end and at capital and forma our will organic net of share M&A we opportunistic buybacks, be opportunities. leverage continue was

join concludes Thank start like Dan would to valued for our to a I our members leaders year. Finally, thank team as This we you. and remarks. strong prepared quarter and and the David

to over and call your the We for will now Operator? turn operator, thanks the questions.

Operator

John from Murphy [Operator's the question America. Instructions]Our first you. with of of Bank Thank comes line

John Murphy

per was was? how just one Just not or all? Dave, you is the easing quick sold you what can pace the acquisition framework that or are just or pace the as agreement. stronger and guys at question I'm agreements curious on brand framework on acquisition of potentially And morphing that changing discuss sort are maybe if store other

David Hult

David. The my at shot of store best was is it. I'll take store. Sure, the John. Lexus This divested

whether and every in the different. only manufacturer or that's Lexus stores agreement to every we're private. with we limited own X public are you're with framework U.S., We the And brand, limited have is in consistent

between group that has a some captatured store differences if a Xand to X, at time. There's and divestiture a So we're framework extreme agreements include it's lexus whenever buy we in going always we then have within manufacturers. all point

you, it. a changed So But stating I'll while. easy our of haven't tell there's no framework way agreements in

And at have with geographic other the our point to brand the last our we're stores number specifically Lexus Some of of stores updated mix, of not our and than years. in grow we governed upon couple have. locations been this based

John Murphy

Got it.

Okay. a environment then like very seems challenging it's And standpoint. used supply the That's helpful. from

like is do new we've that in XX you the deal X interim event actually the few improving? like even XX? years, potentially X vehicles -- what vehicle to as can a more when or seems past of your in so opposed And supply that expectation with It shortage? that a sold that's to Given

David Hult

pressure in forward, been focused quarter which a to And the of to our put bit. COVID depletion profit vehicles since quarter, Historically, of volume. bring company there's point, sell. X going began that obviously or about X as really of of really XX% to about pivot Last on up fourth little cars kind in is PBR. structure, gross To over said multiple on we've we're millions hit our Generally, your didn't we XX%, purchases a outside years our market. the

now a more I be is to and So that this where believe year, challenging we're going pool in to year year. next

is this think I the year. toughest

and that think companies next But 'XX I get relief into be early potentially year business I would fleet you would from stuff. 'XX. car some some think with rental normalization

John Murphy

last a then actually it. Got It service. And just was comp. up I one somewhat tough parts and against was mean one great. X% on

rest a of you're we even the beyond about that? X% of are think easier. Could the base. the As sales year, going of sort making stores get about and think and the service like the acquired service and progress we into parts in remainder sounds high a single-digit maybe It for that plus comps maybe the same-store year parts comp or potentially bit

Dan Clara

start I progress John, that question over and as we're making we the X% on the through million that we think add target few very integrated the with are this Dan. directly, shown and to Yes, I'll And past answer members your then miss. growth. new can is yes, a as team have David I happy continue quarters acquisition. to XXXX that's the whatever realistic

David Hult

Colorado that this and of up pleased don't year specific. some with XX add. good. anything increase. I as multiple Mountain the half really in to of we almost the Idaho, have quarter, I we for were you XX the those Like just your It's we make stores But to suffered in the have first we're as Utah States fixed easier. weather. into progress I shutdown stated, heavy quarter. Between our would be of days. John, we because the second you everyone No, margin some And certainly else stores, the get days tell think, shut point, to had can't And days is Dan comps and continuing down and

or minimum certainly we of So see X% greater. a should

Operator

comes of question line Rajat with from Our JPMorgan. Gupta next the

Rajat Gupta

Great.

the domestic little curious, It I year? SG&A SG&A a because ratio some was new of maybe business and had for And on in the slower like to in forward in question these follow-up. course levels? weak the But terms from returns service deleveraging the should now first. how that Just to whatever sales think And mid-single-digit have here a you're growth there type and as quarter about GPU embedding moving growth a a unit looks service quick growth of of brand business. expectations still we

Michael Welch

This is Michael.

we'll to be out in On able year. pressure going SG&A the good are vehicle costs point, which the kind return growth later the to unique decline first on the growth in SG&A But percentage fixed can that SG&A. some cut have gross we the then continued new of profit, of We items we're levels quarter and will of low side, XXs for think hold a going forward. your few these to to off the to that put

David Hult

add just I'll Rajat, And to that.

as SG&A cyclical costs PBR, far is volume how like that domestic X,XXX healthy. all as certainly, Brands maintain go. you they And as market. still the I great. are can in extremely While was think not

We Stellantis well. everybody knows, was for Stellantis. change. a certainly have of And mix time quarter we that know as heavy will as us it was a and for over tough But

Rajat Gupta

quarter kind the the or the the like rest what's like of pace first on or... year, GPU And same decline like of for the like assuming you

David Hult

plus/minus a is $XXX quarter, have few quarters. of trend to could of the kind given assumption $XXX quarter our any natural you of next in Yes, kind but the over a

Rajat Gupta

And Got a allocation. on it. just Got it. capital follow-up

first like between for the stock plan today? seeing plant that deals and M&A in in how decision manage think like in your buy buyback current some you're about mentioned using a did back versus Like But those should backdrop you earlier lever here on for offset expenses. pipeline we You the as full what to quarter. the

David Hult

I a that large we would our we that, M&A how and like generally, seems But It's be market our standpoint. been an of we're how shareholders current say think the for that extremely proud a look there's business buybacks. it's well of certainly growth market about think our our is in, us potentially low. lot to from stock never It's our opinion, you we stores the return and our look for margins, at business. we better selective. And operating to multiple we're when on want it and In I the the about and get. returns run really really at

acquisition us for I something that we're at every what's constantly say would from month, standpoint, to for So interesting of it But evaluating would the this really have use and best be an stage. accretive us capital. was

Michael Welch

will the year put over on that of a year, floor in count. expense continue side, floor And will of some increased plan the first the inventory then increase offset the bit the to then and inventory account. into the cash the able to rest cash and the the expense of be We going number through quarter the plan offset think again, rest for little of

Operator

Capital Group. from comes Ryan Craig Our Holland next question the line with Sigdahl of

Ryan Sigdahl

I say want to use the on side.

across you industry. the So that's challenges the vehicle supply on obvious used fairly have

et seasonality industry favorable despite sequentially or down cetera. was peers GPU Your being up,

kind negative pivot. to in you So to positive a early expectations volume relative internal dig from on leaning deeper takeaways, your and metrics, when little of curious I that made bit strategy guess your

David Hult

north When mentioned we're would that Yes. buy we it we because within on percentage-wise, of to vehicle, purchase. it a make say And think we significantly the very still the I in less market. -- we of healthy. and we I we're number a competing vehicle purchase doubled gross We cars vehicle, a have that's we to profit earlier. trade $X,XXX

you to your as past, increased and there benefits, cost service in pick income the the you what know you that healthy still well. really from our and Dan, on maintain balance, business F&I there's the a healthy we sure But have up consider peers think and has make sure I'm don't discussed would to -- have is want would front-end to of any if parts Some margin it reconditioning a be preowned. I add. you

Dan Clara

we know to the and were at goal we cost announced I sequentially end in we in And brings that then operation mean, another from to more we we internal XXXX it in that your David point. dropping, F&I volume PBR out from car back our yes, then to unit XXXX, back more the just putting quarter-over-quarter. made to goes after the going QX obviously, a service, I'll service stated, increased little a just adjustment standpoint, aggressive to we And parts validate road. that believe of color. that I saw think, the X% from used new because bit there standpoint, get and down that a I the profit what sequentially it that from can benefits a we -- add gross But strategy toX,X.XX

Ryan Sigdahl

on some call Southwest, out? Helpful. you know I Anything weather Texas out a impact, -- from else Southeast, called standpoint? anything to but regional

David Hult

would stable. -- a little us, year-over-year full-size hit a performed it But fairly -- extremely I No, for for I the say a well. mean, was We trucks. saw imports us from perspective. bit in of

supply of other well. have is -- them, the headwind in stable pretty quarter. We as Stellantis. us. low well had very for have but In domestic better very day tough X probably could there a done the held the luxury brands for We up

all, in team first market what quarter, with on a what based went we're pleased did upon the in performance So all the from the standpoint. and

Operator

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

Bret Jordan

few is expect new GPUs, it quarter the Is New a for to X,XXX-ish the be you is then -- for to quarters. reasonable what think think XXX you new GPUs? the I level talked next the about base

David Hult

still on low. demand. imports, the the tough now, is incentives Yes. is the it throughout adage supply day really do How is high year. drops of rate demand to It It's the navigate. Right this and Will supply be David. get. Bret, the aggressive

we well. are that holding dramatically see really margins term, don't In near So the changing. up the

So were is pretty back what stores above added holds 'XX we did. going we Even think in we've out mixed that's luxury a profits before, 'XX anticipate do the now of amount well domestic resilient always gross certainly Mountain to pretty that well. market. but And and domestic and up as States, the because healthy. that pretty our will in be well,

There margins is we SG&A in some the which keeping above think us there. significantly edge Our where was it our it's fall be the past, good off down. high. gives really wherever falloff still may into are a But

Bret Jordan

-- on those Okay. you still you in in Is case? to what And Clicklane. those then close are sampling I seeing dealership. that the the usually online past physically the transactions about in talked F&I And transactions? attachment guess,

Dan Clara

this miles. Dan. XX in Yes, is of the Brett, still we distance average QX are seeing was XXXX delivery

So have point QX of XX. miles. in as was what consistent seen 'XX reference a just pretty that in then XX was to we 'XX, And QX

So $XX.XX there. From what to seeing PVR, we at X.X% F&I slightly consistent looking around for a we below and last sequentially which QX with pretty an year. 'XX, we're car, finished X.X% about about below is the are behind

So we're it today, believe this omnichannel, happy Like my we to earlier strongly we in to that with and stated continue is committed going experience. are script the I the numbers. to guest enhance

Bret Jordan

Great. they is up is pretty where you lease or the slip inventory OE that seeing promotions? And what ramping Are could focus lease guess, I are building in I in. stable? more one on lines

Dan Clara

yes, to starting answer your slightly. as a see are obviously, to directly, slight We to OEM increase. But yes, starting we're depends And see, well. question by increasing it

Operator

Morningstar. with Our next line David question comes of from the Whiston

David Whiston

consumers' whereas is volume side. quite to X-part spend. for still volume willingness import doing on bit, question the a First, little well you just luxury noted, was on down as Unit a

F&I volume money not on across they so And any terms getting also option in a there segments years more consumers vehicle then luxury would any your not earlier? hesitation on or way? any all attachment with hesitation of they TCA luxury, of or few is customers And there an is not spending getting of would have have a doing in ago product

David Hult

would sell comes they that tell luxury with presold. point, any you a away, the hot vehicle price It's question. they're new out I right of regardless great

there, enough the the view There's thought luxury numbers luxury as still mix to F&I get the you timing can. and side, stable, But never a is and reaching might well. within our and it you're So you From was perspective, quarter add import a affecting more and more interest resilient. When think affecting good. have extra little we we I customer of then they EVs, domestic, It's actually it's and think as that I are, it's Dan color healthy I and pretty some first with it's SUVs sale. brands price few pretty have to the those of even cost could out a where being rates that's model a balancing of bit. issue. than But the with the point and pretty and transitioning timing, you this

seen it down. You've come

up cost our dramatically unused in the it's side, caught it's down. But only and it's down build high the hasn't yet. so think on coming of I sale at back was $XXX 'XX like of new probably come down a slightly -- to because continuing

So the there margins on side, there's bit still, like The coming higher product and holding is supply but of than the out, a little if well. is else. anything up again, pressure, are demand new import a

think rate us. say, increase think been we far, sustain want little the resilient. for we feel generally X, market, the be has that I pretty another We resilient. I painful been or anything customer to add? So But that would don't base you fairly so speaking, can has would a Dan

Dan Clara

to add. nothing I agree,

David Whiston

Okay.

capital this at Do sheet there's but that reduction buybacks balance some and the you the On there's in the feel point debt normalizing. year? to M&A, need but possibly allocation, reduction, also earnings accelerate

Dan Clara

returns, we need are the we'd to vehicle gross be the with kind down the coming of acquisitions range be good mid-X% but on into X.X% If but -- No. of or buybacks this to in kind don't good, down below get the side. find profit kind and like new But X.X. will I the don't EBITDA share it down coming good a mean X%. stated range allocations, our is of we to anything we

David Hult

bonds, And is are. say the that's you stack stacks market there would have can the significantly the than I out market the in with at big we so away much mortgages it. lower considering And the chip really rates the only of what rates with in XX

tough that taking paying it's to and So justify really X% off capital debt.

David Whiston

And if much. on to cuts rates up we in actually rate going But going handle need is can't for Okay. year? were get -- do feel one better? probably you Or matter mentioned consumer rate the even opinion cut, to your to this we multiple you that

David Hult

Yes. This is just day an opinion. it Obviously, going market park. call no I way a for probably us. is nice of do to what cut for knowing, It standpoint, for would will tailwind rate but the I for or to so. probably don't us X think really, X well needs one rate our a it's But the or cuts from --

Operator

and I would Thank call for back this session. to you. closing question-and-answer turn gentlemen, like to Ladies the the concludes remarks. Hult David

David Hult

quarter. forward Thank you with great of the a end everyone's we're day. to and speaking all the looking you, second concludes appreciate our call This participation, We at today. Have of operator.

Operator

This concludes today's conference.

You may your lines the day. at your of now this Enjoy time. rest disconnect

Asbury Automotive (ABG) 25 Apr 242024 Q1 Earnings call transcript