Asbury Automotive Group Announces 2018 Third Quarter Financial Results
DULUTH, Ga., Oct. 23, 2018 /PRNewswire/ -- Asbury Automotive Group, Inc. (NYSE: ABG), one of the largest automotive retail and service companies in the U.S., reported net income for the third quarter 2018 of $44.3 million ($2.18 per diluted share) and adjusted net income (a non-GAAP measure) of $44.9 million ($2.21 per diluted share). This compares to net income of $30.7 million ($1.48 per diluted share) in the prior year quarter. Net income for the third quarter 2018 was adjusted $0.6 million ($0.03 per diluted share) as a result of a discrete tax item associated with the Tax Cuts and Jobs Act from December 2017.
On January 1, 2018, the company adopted ASC 606 for revenue recognition which impacted F&I and parts and service revenue and gross profit. The net impact of adopting ASC 606 in the third quarter was to increase net income by $0.2 million or $0.01 per diluted share.
As a result of tax legislation passed in December 2017, the tax rate in the third quarter of 2018 was 25% compared to 39% in the third quarter of 2017.
"In a slightly declining SAAR environment, we grew revenue 10% and operating profit 16%, thanks to the team's hard work and dedication," said David Hult, Asbury's President and Chief Executive Officer. "This, coupled with the benefit of tax reform, led to the achievement of 49% adjusted EPS growth. In addition, from January 1, 2018 through October 22, we have repurchased approximately 7% of our company's stock and invested $70 million in strategic acquisitions."
Third Quarter 2018 Operational Summary
Total company:
-- Total revenue increased 10%; gross profit increased 7%
-- SG&A as a percentage of gross profit decreased 220 basis points to 67.9%
-- Income from operations as a percentage of revenue was 4.6%, an increase
of 20 basis points from the prior year period
-- Adjusted EPS from operations increased 49%
Same store:
-- Total revenue increased 6%; gross profit increased 4%
-- New vehicle revenue increased 7%; gross profit was flat
-- Used vehicle retail revenue increased 9%; gross profit increased 10%
-- Finance and insurance revenue and gross profit increased 5%
-- Parts and service revenue increased 2%; gross profit increased 3%
Strategic Highlights:
-- In Q3 2018, we repurchased $17 million of common stock
-- In October 2018, the Board reset total share repurchase authorization to
$100 million
-- Omni-channel initiatives helped drive results, reduce costs, and improve
efficiencies
The Company's revenues for the nine-months ended September 30, 2018, totaled $5.1 billion, an increase of 6% compared to $4.8 billion in the prior year period.
For the nine-months ended September 30, 2018, the Company reported net income of $127.6 million, or $6.22 per diluted share, compared to reported net income of $96.6 million, or $4.60 per diluted share in the prior year period. For the nine-months ended September 30, 2018 the Company reported adjusted net income of $127.7 million, or $6.23 per diluted share, compared to $97.3 million, or $4.63 per diluted share, for the prior year period. See attached reconciliation for reported adjustments.
Additional commentary regarding the third quarter results will be provided during the earnings conference call on October 23, 2018 at 10:00 a.m. The conference call will be simulcast live on the internet and can be accessed at www.asburyauto.com or www.ccbn.com. A replay will be available at these sites for 30 days.
In addition, a live audio of the call will be accessible to the public by calling (855) 719-5012 (domestic), or (334) 323-0522 (international); passcode - 1043454. Callers should dial in approximately 5 to 10 minutes before the call begins.
A conference call replay will be available two hours following the call for seven days, and can be accessed by calling (888) 203-1112 (domestic), or (719) 457-0820 (international); passcode - 1043454.
About Asbury Automotive Group, Inc.
Asbury Automotive Group, Inc. ("Asbury"), a Fortune 500 company headquartered in Duluth, GA, is one of the largest automotive retailers in the U.S. Asbury currently operates 83 dealerships, consisting of 97 franchises, representing 29 domestic and foreign brands of vehicles. Asbury also operates 25 collision repair centers. Asbury offers customers an extensive range of automotive products and services, including new and used vehicle sales and related financing and insurance, vehicle maintenance and repair services, replacement parts and service contracts.
Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements other than historical fact, and may include statements relating to goals, plans, market conditions and projections regarding Asbury's financial position, liquidity, results of operations, market position and dealership portfolio, and other initiatives and future business strategy. These statements are based on management's current expectations and beliefs and involve significant risks and uncertainties that may cause results to differ materially from those set forth in the statements. These risks and uncertainties include, among other things, market factors, Asbury's relationships with, and the financial and operational stability of, vehicle manufacturers and other suppliers, acts of God or other incidents which may adversely impact supply from vehicle manufacturers and/or present retail sales challenges, risks associated with Asbury's indebtedness (including available borrowing capacity, compliance with its financial covenants and ability to refinance or repay such indebtedness, on favorable terms), Asbury's relationships with, and the financial stability of, its lenders and lessors, risks related to competition in the automotive retail and service industries, general economic conditions both nationally and locally, governmental regulations, legislation, adverse results in litigation and other proceedings, and Asbury's ability to execute its IT initiatives and other operational strategies, Asbury's ability to leverage gains from its dealership portfolio, Asbury's ability to capitalize on opportunities to repurchase its debt and equity securities or purchase properties that it currently leases, and Asbury's ability to stay within its targeted range for capital expenditures. There can be no guarantees that Asbury's plans for future operations will be successfully implemented or that they will prove to be commercially successful.
These and other risk factors that could cause actual results to differ materially from those expressed or implied in our forward-looking statements are and will be discussed in Asbury's filings with the U.S. Securities and Exchange Commission from time to time, including its most recent annual report on Form 10-K and any subsequently filed quarterly reports on Form 10-Q. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.
ASBURY AUTOMOTIVE GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME (In millions, except per share data)
(Unaudited)
For the Three Months Increase %
Ended September 30, (Decrease) Change
2018 2017
REVENUE:
New vehicle $
980.5 $
881.6 $
98.9 11
%
Used vehicle:
Retail 448.7 400.1 48.6 12
%
Wholesale 48.8 55.5 (6.7) (12)
%
Total used vehicle 497.5 455.6 41.9 9
%
Parts and service 206.1 197.2 8.9 5
%
Finance and insurance, net 73.3 67.7 5.6 8
%
TOTAL REVENUE 1,757.4 1,602.1 155.3 10
%
GROSS PROFIT:
New vehicle 42.1 41.0 1.1 3
%
Used vehicle:
Retail 32.7 28.9 3.8 13
%
Wholesale 0.1 (0.1) 0.2 NM
Total used vehicle 32.8 28.8 4.0 14
%
Parts and service 129.8 122.8 7.0 6
%
Finance and insurance, net 73.3 67.7 5.6 8
%
TOTAL GROSS PROFIT 278.0 260.3 17.7 7
%
OPERATING EXPENSES:
Selling, general and administrative 188.8 182.5 6.3 3
%
Depreciation and amortization 8.5 8.1 0.4 5
%
Other operating (income) expenses, net (0.1) (0.1)
%
INCOME FROM OPERATIONS 80.8 69.7 11.1 16
%
OTHER EXPENSES:
Floor plan interest expense 8.4 5.8 2.6 45
%
Other interest expense, net 13.2 13.4 (0.2) (1)
%
Swap interest expense 0.1 0.4 (0.3) (75)
%
Total other expenses, net 21.7 19.6 2.1 11
%
INCOME BEFORE INCOME TAXES 59.1 50.1 9.0 18
%
Income tax expense 14.8 19.4 (4.6) (24)
%
NET INCOME $
44.3 $
30.7 $
13.6 44
%
EARNINGS PER COMMON SHARE:
Basic-
Net income $
2.22 $
1.49 $
0.73 49
%
Diluted-
Net income $
2.18 $
1.48 $
0.70 47
%
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 20.0 20.6 (0.6) (3)
%
Restricted stock 0.1 0.1
%
Performance share units 0.2 0.1 0.1 100
%
Diluted 20.3 20.8 (0.5) (2)
%
NM-Not Meaningful
ASBURY AUTOMOTIVE GROUP, INC.
KEY OPERATING HIGHLIGHTS (In millions, except per unit data)
(Unaudited)
For the Three Months Increase %
Ended September 30, (Decrease) Change
2018 2017
Unit sales
---
New vehicle:
Luxury 5,685 5,499 186 3
%
Import 17,046 14,997 2,049 14
%
Domestic 5,019 4,691 328 7
%
Total new vehicle 27,750 25,187 2,563 10
%
Used vehicle retail 20,824 18,777 2,047 11
%
Used to new ratio 75.0
% 74.6
% 40 bps
Average selling price
---
New vehicle $
35,333 $
35,002 $
331 1
%
Used vehicle retail 21,547 21,308 239 1
%
Average gross profit per unit
---
New vehicle:
Luxury $
3,272 $
3,364 $
(92) (3)
%
Import 903 960 (57) (6)
%
Domestic 1,614 1,727 (113) (7)
%
Total new vehicle 1,517 1,628 (111) (7)
%
Used vehicle 1,570 1,539 31 2
%
Finance and insurance, net 1,509 1,540 (31) (2)
%
Front end yield (1) 3,049 3,130 (81) (3)
%
Gross margin
---
New vehicle:
Luxury 6.2
% 6.4
% (20) bps
Import 3.2
% 3.5
% (30) bps
Domestic 4.1
% 4.5
% (40) bps
Total new vehicle 4.3
% 4.7
% (40) bps
Used vehicle retail 7.3
% 7.2
% 10 bps
Parts and service 63.0
% 62.3
% 70 bps
Total gross profit margin 15.8
% 16.2
% (40) bps
SG&A metrics
---
Rent expense $
6.4 $
6.5 $
(0.1) (2)
%
Total SG&A as a percentage of gross profit 67.9
% 70.1
% (220) bps
SG&A, excluding rent expense as a percentage of gross profit 65.6
% 67.6
% (200) bps
Operating metrics
---
Income from operations as a percentage of revenue 4.6
% 4.4
% 20 bps
Income from operations as a percentage of gross profit 29.1
% 26.8
% 230 bps
Adjusted income from operations as a percentage of revenue 4.6
% 4.4
% 20 bps
Adjusted income from operations as a percentage of gross profit 29.1
% 26.8
% 230 bps
Revenue mix
---
New vehicle 55.8
% 55.0
%
Used vehicle retail 25.5
% 25.0
%
Used vehicle wholesale 2.8
% 3.5
%
Parts and service 11.7
% 12.3
%
Finance and insurance 4.2
% 4.2
%
Total revenue 100.0
% 100.0
%
Gross profit mix
---
New vehicle 15.1
% 15.8
%
Used vehicle retail 11.8
% 11.0
%
Used vehicle wholesale -
%
%
Parts and service 46.7
% 47.2
%
Finance and insurance 26.4
% 26.0
%
Total gross profit 100.0
% 100.0
%
(1) Front end yield is calculated as gross profit from new vehicles, used retail vehicles and finance and insurance (net), divided by combined new and used retail unit sales.
ASBURY AUTOMOTIVE GROUP, INC.
SAME STORE OPERATING HIGHLIGHTS (In millions)
(Unaudited)
For the Three Months Increase %
Ended September 30, (Decrease) Change
2018 2017
Revenue
---
New vehicle:
Luxury $
297.8 $
288.3 $
9.5 3
%
Import 458.4 414.2 44.2 11
%
Domestic 191.3 179.1 12.2 7
%
Total new vehicle 947.5 881.6 65.9 7
%
Used Vehicle:
Retail 436.0 399.0 37.0 9
%
Wholesale 48.1 55.2 (7.1) (13)
%
Total used vehicle 484.1 454.2 29.9 7
%
Parts and service 201.4 197.2 4.2 2
%
Finance and insurance 71.2 67.6 3.6 5
%
Total revenue $
1,704.2 $
1,600.6 $
103.6 6
%
Gross profit
---
New vehicle:
Luxury $
18.7 $
18.5 $
0.2 1
%
Import 14.3 14.4 (0.1) (1)
%
Domestic 7.9 8.1 (0.2) (2)
%
Total new vehicle 40.9 41.0 (0.1) %
Used Vehicle:
Retail 31.7 28.8 2.9 10
%
Wholesale 0.3 0.3 %
Total used vehicle 32.0 28.8 3.2 11
%
Parts and service:
Customer pay 71.4 68.1 3.3 5
%
Warranty 18.9 20.6 (1.7) (8)
%
Wholesale parts 5.4 5.3 0.1 2
%
Parts and service, excluding reconditioning and preparation 95.7 94.0 1.7 2
%
Reconditioning and preparation 31.3 28.8 2.5 9
%
Total parts and service 127.0 122.8 4.2 3
%
Finance and insurance 71.2 67.6 3.6 5
%
Total gross profit $
271.1 $
260.2 $
10.9 4
%
SG&A expense $
183.7 $
182.0 $
1.7 1
%
SG&A expense as a percentage of gross profit 67.8 69.9
% % (210) bps
Same store amounts consist of information from dealerships for identical months in each comparative period, commencing with the first month we owned the dealership. Additionally, amounts related to divested dealerships are excluded from each comparative period.
ASBURY AUTOMOTIVE GROUP, INC.
SAME STORE OPERATING HIGHLIGHTS (Continued)
(Unaudited)
For the Three Months Increase %
Ended September 30, (Decrease) Change
2018 2017
Unit sales
---
New vehicle:
Luxury 5,685 5,499 186 3
%
Import 16,114 14,997 1,117 7
%
Domestic 4,829 4,691 138 3
%
Total new vehicle 26,628 25,187 1,441 6
%
Used vehicle retail 20,098 18,695 1,403 8
%
Used to new ratio 75.5
% 74.2
% 130 bps
Average selling price
---
New vehicle $
35,583 $
35,002 $
581 2
%
Used vehicle retail 21,694 21,343 351 2
%
Average gross profit per unit
---
New vehicle:
Luxury $
3,289 $
3,364 $
(75) (2)
%
Import 887 960 (73) (8)
%
Domestic 1,636 1,727 (91) (5)
%
Total new vehicle 1,536 1,628 (92) (6)
%
Used vehicle retail 1,577 1,541 36 2
%
Finance and insurance, net 1,524 1,540 (16) (1)
%
Front end yield (1) 3,078 3,131 (53) (2)
%
Gross margin
---
New vehicle:
Luxury 6.3
% 6.4
% (10) bps
Import 3.1
% 3.5
% (40) bps
Domestic 4.1
% 4.5
% (40) bps
Total new vehicle 4.3
% 4.7
% (40) bps
Used vehicle retail 7.3
% 7.2
% 10 bps
Parts and service:
Parts and service, excluding reconditioning and preparation 47.5
% 47.7
% (20) bps
Parts and service, including reconditioning and preparation 63.1
% 62.3
% 80 bps
Total gross profit margin 15.9
% 16.3
% (40) bps
Same store amounts consist of information from dealerships for identical months in each comparative period, commencing with the first month we owned the dealership. Additionally, amounts related to divested dealerships are excluded from each comparative period.
(1) Front end yield is calculated as gross profit from new vehicles, used retail vehicles and finance and insurance (net), divided by combined new and used retail unit sales.
ASBURY AUTOMOTIVE GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME (In millions, except per share data)
(Unaudited)
For the Nine Months Increase %
Ended September 30, (Decrease) Change
2018 2017
REVENUE:
New vehicle $
2,766.3 $
2,597.0 $
169.3 7
%
Used vehicle:
Retail 1,355.4 1,245.7 109.7 9
%
Wholesale 143.6 150.9 (7.3) (5)
%
Total used vehicle 1,499.0 1,396.6 102.4 7
%
Parts and service 609.9 589.5 20.4 3
%
Finance and insurance, net 215.0 202.5 12.5 6
%
TOTAL REVENUE 5,090.2 4,785.6 304.6 6
%
GROSS PROFIT:
New vehicle 121.3 122.4 (1.1) (1)
%
Used vehicle:
Retail 98.5 94.4 4.1 4
%
Wholesale 1.9 1.0 0.9 90
%
Total used vehicle 100.4 95.4 5.0 5
%
Parts and service 384.5 367.2 17.3 5
%
Finance and insurance, net 215.0 202.5 12.5 6
%
TOTAL GROSS PROFIT 821.2 787.5 33.7 4
%
OPERATING EXPENSES:
Selling, general and administrative 563.6 549.2 14.4 3
%
Depreciation and amortization 25.2 24.0 1.2 5
%
Other operating (income) expenses, net (1.2) 0.7 (1.9) NM
INCOME FROM OPERATIONS 233.6 213.6 20.0 9
%
OTHER EXPENSES:
Floor plan interest expense 23.0 17.1 5.9 35
%
Other interest expense, net 39.4 40.2 (0.8) (2)
%
Swap interest expense 0.5 1.6 (1.1) (69)
%
Total other expenses, net 62.9 58.9 4.0 7
%
INCOME BEFORE INCOME TAXES 170.7 154.7 16.0 10
%
Income tax expense 43.1 58.1 (15.0) (26)
%
NET INCOME $
127.6 $
96.6 $
31.0 32
%
EARNINGS PER COMMON SHARE:
Basic-
Net income $
6.29 $
4.64 $
1.65 36
%
Diluted-
Net income $
6.22 $
4.60 $
1.62 35
%
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 20.3 20.8 (0.5) (2)
%
Restricted stock 0.1 0.1 %
Performance share units 0.1 0.1 %
Diluted 20.5 21.0 (0.5) (2)
%
NM-Not Meaningful
ASBURY AUTOMOTIVE GROUP, INC.
KEY OPERATING HIGHLIGHTS (In millions, except per unit data)
(Unaudited)
For the Nine Months Increase %
Ended September 30, (Decrease) Change
2018 2017
Unit sales
---
New vehicle:
Luxury 16,527 16,117 410 3
%
Import 46,545 43,504 3,041 7
%
Domestic 14,406 14,163 243 2
%
Total new vehicle 77,478 73,784 3,694 5
%
Used vehicle retail 63,079 59,107 3,972 7
%
Used to new ratio 81.4
% 80.1
% 130 bps
Average selling price
---
New vehicle $
35,704 $
35,197 $
507 1
%
Used vehicle retail 21,487 21,075 412 2
%
Average gross profit per unit
---
New vehicle:
Luxury $
3,479 $
3,394 $
85 3
%
Import 840 984 (144) (15)
%
Domestic 1,715 1,758 (43) (2)
%
Total new vehicle 1,566 1,659 (93) (6)
%
Used vehicle 1,562 1,597 (35) (2)
%
Finance and insurance, net 1,530 1,524 6
%
Front end yield (1) 3,093 3,155 (62) (2)
%
Gross margin
---
New vehicle:
Luxury 6.5
% 6.4
% 10 bps
Import 3.0
% 3.5
% (50) bps
Domestic 4.4
% 4.6
% (20) bps
Total new vehicle 4.4
% 4.7
% (30) bps
Used vehicle retail 7.3
% 7.6
% (30) bps
Parts and service 63.0
% 62.3
% 70 bps
Total gross profit margin 16.1
% 16.5
% (40) bps
SG&A metrics
---
Rent expense $
19.0 $
20.2 $
(1.2) (6)
%
Total SG&A as a percentage of gross profit 68.6
% 69.7
% (110) bps
SG&A, excluding rent expense as a percentage of gross profit 66.3
% 67.2
% (90) bps
Operating metrics
---
Income from operations as a percentage of revenue 4.6
% 4.5
% 10 bps
Income from operations as a percentage of gross profit 28.4
% 27.1
% 130 bps
Adjusted income from operations as a percentage of revenue 4.6
% 4.5
% 10 bps
Adjusted income from operations as a percentage of gross profit 28.4
% 27.3
% 110 bps
Revenue mix
---
New vehicle 54.3
% 54.3
%
Used vehicle retail 26.7
% 26.0
%
Used vehicle wholesale 2.8
% 3.2
%
Parts and service 12.0
% 12.3
%
Finance and insurance 4.2
% 4.2
%
Total revenue 100.0
% 100.0
%
Gross profit mix
---
New vehicle 14.8
% 15.5
%
Used vehicle retail 12.0
% 12.1
%
Used vehicle wholesale 0.2
% 0.1
%
Parts and service 46.8
% 46.6
%
Finance and insurance 26.2
% 25.7
%
Total gross profit 100.0
% 100.0
%
(1) Front end yield is calculated as gross profit from new vehicles, used retail vehicles and finance and insurance (net), divided by combined new and used retail unit sales.
ASBURY AUTOMOTIVE GROUP, INC.
SAME STORE OPERATING HIGHLIGHTS (In millions)
(Unaudited)
For the Nine Months Increase %
Ended September 30, (Decrease) Change
2018 2017
Revenue
---
New vehicle:
Luxury $
883.8 $
852.3 $
31.5 4
%
Import 1,259.3 1,204.7 54.6 5
%
Domestic 546.7 537.6 9.1 2
%
Total new vehicle 2,689.8 2,594.6 95.2 4
%
Used Vehicle:
Retail 1,321.4 1,235.4 86.0 7
%
Wholesale 141.0 149.8 (8.8) (6)
%
Total used vehicle 1,462.4 1,385.2 77.2 6
%
Parts and service 598.2 589.0 9.2 2
%
Finance and insurance, net 210.1 201.5 8.6 4
%
Total revenue $
4,960.5 $
4,770.3 $
190.2 4
%
Gross profit
---
New vehicle:
Luxury $
57.6 $
54.7 $
2.9 5
%
Import 36.7 42.8 (6.1) (14)
%
Domestic 24.0 24.8 (0.8) (3)
%
Total new vehicle 118.3 122.3 (4.0) (3)
%
Used Vehicle:
Retail 95.8 93.7 2.1 2
%
Wholesale 2.1 1.3 0.8 62
%
Total used vehicle 97.9 95.0 2.9 3
%
Parts and service:
Customer pay 213.8 203.5 10.3 5
%
Warranty 55.6 61.7 (6.1) (10)
%
Wholesale parts 16.5 15.7 0.8 5
%
Parts and service, excluding reconditioning and preparation 285.9 280.9 5.0 2
%
Reconditioning and preparation 91.0 85.7 5.3 6
%
Total parts and service 376.9 366.6 10.3 3
%
Finance and insurance 210.1 201.5 8.6 4
%
Total gross profit $
803.2 $
785.4 $
17.8 2
%
SG&A expense $
550.7 $
546.1 $
4.6 1
%
SG&A expense as a percentage of gross profit 68.6 69.5
% % (90) bps
Same store amounts consist of information from dealerships for identical months in each comparative period, commencing with the first month we owned the dealership. Additionally, amounts related to divested dealerships are excluded from each comparative period.
ASBURY AUTOMOTIVE GROUP, INC.
SAME STORE OPERATING HIGHLIGHTS (Continued)
(Unaudited)
For the Nine Months Increase %
Ended September 30, (Decrease) Change
2018 2017
Unit sales
---
New vehicle:
Luxury 16,527 16,117 410 3
%
Import 44,438 43,467 971 2
%
Domestic 13,923 14,125 (202) (1)
%
Total new vehicle 74,888 73,709 1,179 2
%
Used vehicle retail 61,165 58,463 2,702 5
%
Used to new ratio 81.7
% 79.3
% 240 bps
Average selling price
---
New vehicle $
35,918 $
35,201 $
717 2
%
Used vehicle retail 21,604 21,131 473 2
%
Average gross profit per unit
---
New vehicle:
Luxury $
3,485 $
3,394 $
91 3
%
Import 826 985 (159) (16)
%
Domestic 1,724 1,756 (32) (2)
%
Total new vehicle 1,580 1,659 (79) (5)
%
Used vehicle retail 1,566 1,603 (37) (2)
%
Finance and insurance, net 1,544 1,525 19 1
%
Front end yield (1) 3,118 3,159 (41) (1)
%
Gross margin
---
New vehicle:
Luxury 6.5
% 6.4
% 10 bps
Import 2.9
% 3.6
% (70) bps
Domestic 4.4
% 4.6
% (20) bps
Total new vehicle 4.4
% 4.7
% (30) bps
Used vehicle retail 7.2
% 7.6
% (40) bps
Parts and service:
Parts and service, excluding reconditioning and preparation 47.8
% 47.7
% 10 bps
Parts and service, including reconditioning and preparation 63.0
% 62.2
% 80 bps
Total gross profit margin 16.2
% 16.5
% (30) bps
Same store amounts consist of information from dealerships for identical months in each comparative period, commencing with the first month we owned the dealership. Additionally, amounts related to divested dealerships are excluded from each comparative period.
(1) Front end yield is calculated as gross profit from new vehicles, used retail vehicles and finance and insurance (net), divided by combined new and used retail unit sales.
ASBURY AUTOMOTIVE GROUP, INC.
Additional Disclosures (In millions)
(Unaudited)
September 30, December 31, Increase % Change
2018 2017
(Decrease)
---
SELECTED BALANCE SHEET DATA
Cash and cash equivalents $
6.8 $
4.7 $
2.1 45
%
New vehicle inventory 772.6 646.5 126.1 20
%
Used vehicle inventory 149.9 135.9 14.0 10
%
Parts inventory 40.3 43.6 (3.3) (8)
%
Total current assets 1,375.5 1,302.1 73.4 6
%
Floor plan notes payable 831.1 732.1 99.0 14
%
Total current liabilities 1,135.5 1,058.2 77.3 7
%
CAPITALIZATION:
Long-term debt (including current portion) $
865.2 $
875.5 $
(10.3) (1)
%
Shareholders' equity 481.0 394.2 86.8 22
%
Total $
1,346.2 $
1,269.7 $
76.5 6
%
September 30, 2018
December 31, 2017
---
DAYS SUPPLY
New vehicle inventory 73 53
Used vehicle inventory 35 31
Days supply of inventory is calculated based on new and used inventory levels
at the end of each reporting period and a 30-day historical cost of sales.
Brand Mix - New Vehicle Revenue by Brand-
For the Nine Months
Ended September 30,
2018 2017
Luxury:
Mercedes-Benz 6 7
% %
Lexus 6 7
% %
BMW 5 5
% %
Acura 4 4
% %
Infiniti 3 3
% %
Other luxury 8 7
% %
Total luxury 32 33
% %
Imports:
Honda 20 18
% %
Nissan 11 12
% %
Toyota 12 12
% %
Other imports 5 4
% %
Total imports 48 46
% %
Domestic:
Ford 10 11
% %
Chevrolet 5 4
% %
Dodge 3 3
% %
Other domestics 2 3
% %
Total domestic 20 21
% %
Total New Vehicle Revenue 100 100
% %
ASBURY AUTOMOTIVE GROUP INC.
Supplemental Disclosures
(Unaudited)
Non-GAAP Financial Disclosure and Reconciliation
In addition to evaluating the financial condition and results of our operations in accordance with GAAP, from time to time management evaluates and analyzes results and any impact on the Company of strategic decisions and actions relating to, among other things, cost reduction, growth, and profitability improvement initiatives, and other events outside of normal, or "core," business and operations, by considering certain alternative financial measures not prepared in accordance with GAAP. These measures include "Adjusted leverage ratio," "Adjusted income from operations," "Adjusted net income," " Adjusted operating margins," and "Adjusted diluted earnings per share ("EPS")." Further, management assesses the organic growth of our revenue and gross profit on a same store basis. We believe that our assessment on a same store basis represents an important indicator of comparative financial performance and provides relevant information to assess our performance at our existing locations. Same store amounts consist of information from dealerships for identical months in each comparative period, commencing with the first month we owned the dealership. Additionally, amounts related to divested dealerships are excluded from each comparative period. Non-GAAP measures do not have definitions under GAAP and may be defined differently by and not be comparable to similarly titled measures used by other companies. As a result, any non-GAAP financial measures considered and evaluated by management are reviewed in conjunction with a review of the most directly comparable measures calculated in accordance with GAAP. Management cautions investors not to place undue reliance on such non-GAAP measures, but also to consider them with the most directly comparable GAAP measures. In their evaluation of results from time to time, management excludes items that do not arise directly from core operations, or are otherwise of an unusual or non-recurring nature. Because these non-core, unusual or non-recurring charges and gains materially affect Asbury's financial condition or results in the specific period in which they are recognized, management also evaluates, and makes resource allocation and performance evaluation decisions based on, the related non-GAAP measures excluding such items. In addition to using such non-GAAP measures to evaluate results in a specific period, management believes that such measures may provide more complete and consistent comparisons of operational performance on a period-over-period historical basis and a better indication of expected future trends. Management discloses these non-GAAP measures, and the related reconciliations, because it believes investors use these metrics in evaluating longer-term period-over-period performance, and to allow investors to better understand and evaluate the information used by management to assess operating performance.
The following tables provide reconciliations for our non-GAAP metrics:
For the Twelve Months Ended
September 30, 2018 June 30, 2018
(Dollars in millions)
Adjusted leverage ratio:
---
Long-term debt (including current portion) $
865.2 $
868.7
Calculation of earnings before interest, taxes, depreciation and amortization
("EBITDA"):
Net Income $
170.1 $
156.5
Add:
Depreciation and amortization 33.4 32.9
Income tax expense 54.9 59.5
Swap and other interest expense 54.1 54.7
Earnings before interest, taxes, depreciation and amortization $
312.5 $
303.6
("EBITDA")
Non-core items - expense (income):
Franchise rights impairment $
5.1 $
5.1
Real estate-related charges
Investment income
Legal settlements (0.7) (0.7)
Total non-core items 4.4 4.4
Adjusted EBITDA $
316.9 $
308.0
Adjusted leverage ratio 2.7 2.8
For the Three Months
Ended September 30,
2018 2017
(In millions, except per
share data)
Adjusted net income:
---
Net income $
44.3 $
30.7
Non-core items - (income) expense:
2017 Tax Act Adjustment 0.6
Total non-core items 0.6
Adjusted net income $
44.9 $
30.7
Adjusted diluted earnings per share (EPS):
---
Diluted EPS $
2.18 $
1.48
Total non-core items 0.03
Adjusted diluted EPS $
2.21 $
1.48
Weighted average common shares outstanding - diluted 20.3 20.8
For the Nine Months
Ended September 30,
2018 2017
(In millions, except per
share data)
Adjusted income from operations:
---
Income from operations $
233.6 $
213.6
Real estate-related charges 2.9
Investment income (0.8)
Legal settlements (0.7) (0.9)
Adjusted income from operations $
232.9 $
214.8
Adjusted net income:
---
Net income $
127.6 $
96.6
Non-core items - (income) expense:
2017 Tax Act Adjustment 0.6
Real estate-related charges 2.9
Investment income (0.8)
Legal settlements (0.7) (0.9)
Income tax expense (benefit) on non-core items above 0.2 (0.5)
Total non-core items 0.1 0.7
Adjusted net income $
127.7 $
97.3
Adjusted diluted earnings per share (EPS):
---
Diluted EPS $
6.22 $
4.60
Total non-core items 0.01 0.03
Adjusted diluted EPS $
6.23 $
4.63
Weighted average common shares outstanding - diluted 20.5 21.0
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SOURCE Asbury Automotive Group, Inc.
