Asbury Automotive Group Inc (ABG) Q3 2024 Earnings Call Highlights: Strong Revenue Growth ...

GuruFocus News
4 min read

In This Article:

  • Revenue: $4.2 billion, up 16% year-over-year.

  • Gross Profit: $718 million, up 7%.

  • Gross Profit Margin: 16.9%.

  • Adjusted Earnings Per Share (EPS): $6.35.

  • Adjusted Operating Margin: 5.6%.

  • Adjusted EBITDA: $233 million.

  • Same-Store SG&A as a Percentage of Gross Profit: 63.8%.

  • All-Store SG&A as a Percentage of Gross Profit: 64.4%.

  • New Vehicle Gross Profit Per Vehicle: $3,512.

  • Used Vehicle Gross Profit Per Unit: $1,566.

  • F&I PVR: $2,111.

  • Parts and Service Gross Profit Margin: 56.8%.

  • Adjusted Net Income: $126 million.

  • Share Repurchases: Nearly 400,000 shares for $89 million in the quarter.

  • Store Divestitures: One Chevrolet and one Honda store.

  • Free Cash Flow: $383 million year-to-date.

  • Liquidity: $768 million at the end of the quarter.

  • Transaction Adjusted Net Leverage Ratio: 2.9x at the end of September.

Release Date: October 29, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Asbury Automotive Group Inc (NYSE:ABG) reported a 16% year-over-year increase in revenue, reaching $4.2 billion for the third quarter.

  • The company achieved a gross profit of $718 million, marking a 7% increase compared to the previous year.

  • Adjusted earnings per share were reported at $6.35, with potential for higher earnings excluding impacts from hurricanes and stop-sale orders.

  • The parts and service business showed healthy growth, with a 4% increase in same-store parts and service gross profit.

  • The company successfully repurchased nearly 400,000 shares for $89 million during the quarter, indicating strong capital management.

Negative Points

  • The company faced significant challenges due to Hurricane Helene and Milton, impacting store operations and resulting in temporary closures.

  • Stop-sale orders for certain Toyota, Lexus, and BMW models led to nearly 1,200 fewer new units sold, negatively impacting earnings per share by $0.32 to $0.34.

  • Stellantis locations experienced a 30% year-over-year decline in new volume and a 53% drop in gross profit per vehicle.

  • The used vehicle segment saw a 6% year-over-year decrease in unit volume, reflecting ongoing market challenges.

  • The company anticipates further impacts from Hurricane Milton in the fourth quarter, with more extensive damage compared to Hurricane Helene.

Q & A Highlights

Q: How is Asbury Automotive Group managing the impact of Stellantis on new vehicle gross profit units (GPUs)? A: David Hult, President and CEO, explained that the company faced challenges due to Stellantis' high days supply and coupon incentives, which put Asbury at a competitive disadvantage. However, Stellantis is starting to offer more transactional incentives and special interest rates, which are expected to help improve the situation. The company is optimistic about these changes and believes Stellantis will eventually resolve these issues. (David Hult, President and CEO; Daniel Clara, SVP of Operations)

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