-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DDL1+AbQsQrLtHe8VsEyVePIUHbhtWbSbEhTYMlbyApXacHaCyidrZ9819OvwgOn lpiZnVb+nE4Zfxk4V/8u1w== 0001144980-03-000011.txt : 20030731 0001144980-03-000011.hdr.sgml : 20030731 20030731080549 ACCESSION NUMBER: 0001144980-03-000011 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030630 ITEM INFORMATION: Other events FILED AS OF DATE: 20030731 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ASBURY AUTOMOTIVE GROUP INC CENTRAL INDEX KEY: 0001144980 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-AUTO DEALERS & GASOLINE STATIONS [5500] IRS NUMBER: 010609375 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-31262 FILM NUMBER: 03813014 BUSINESS ADDRESS: STREET 1: 3 LANDMARK SQ STREET 2: STE 500 CITY: STAMFORD STATE: CT ZIP: 06901 BUSINESS PHONE: 2033564400 MAIL ADDRESS: STREET 1: 3 LANDMARK SQ STREET 2: STE 500 CITY: STAMFORD STATE: CT ZIP: 06901 8-K 1 form8kjuly312003earnings.txt FORM 8-K 2ND QUARTER EARNINGS RELEASE SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): July 31, 2003 ------------------------------------------------- Asbury Automotive Group, Inc. --------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware ---------------------------------------------------------- (State or other jurisdiction of incorporation) 5511 01-0609375 - ----------------------- ----------------------------------- (Commission File Number) (IRS Employer Identification No.) Three Landmark Square, Suite 500, Stamford, CT 06901 -------------------------------------------------------------- ------------------ (Address of principal executive offices) (Zip Code) (203) 356-4400 ------------------------------------------------------------- (Registrant's telephone number, including area code) None ------------------------------------------------------------------------ (Former name or former address, if changed since last report) Item 7. Financial Statements and Exhibits. (c) Exhibits Exhibit No. Description 99.1 Press Release dated July 31, 2003 Item 9. Regulation FD Disclosure. The registrant issued a press release on July 31, 2003, announcing its earnings for the second quarter and six months ended June 30, 2003, which press release is attached hereto as exhibit 99.1. This earnings release is also being furnished to the Commission under new Item 12 of Form 8-K. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. ASBURY AUTOMOTIVE GROUP, INC. Date: July 31, 2003 By: /s/ Kenneth B. Gilman ----------------------------- Name: Kenneth B. Gilman Title: Chief Executive Officer EXHIBIT INDEX Exhibit No. Description 99.1 Press Release dated July 31, 2003 EX-99.1 3 ex99_1earningsreljuly2003.txt EXHIBIT 99 2ND QUARTER 2003 PRESS RELEASE Contact Information: Stacey Yonkus Asbury Automotive 203-356-4424 investor@asburyauto.com ASBURY AUTOMOTIVE GROUP REPORTS SECOND QUARTER FINANCIAL RESULTS -- Reports Net Income from Continuing Operations of $0.44 Per Share -- STAMFORD, Conn. - July 31, 2003 - 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 second quarter and six months ended June 30, 2003. Net income from continuing operations for the second quarter was $14.3 million compared with $14.9 million in the corresponding period a year ago. Basic and diluted earnings per share from continuing operations were $0.44 per share in both periods. Net income for the second quarter was $12.3 million compared with $12.8 million a year ago. Net income includes the results of discontinued operations, the majority of which ($0.05 per share) consists of certain now closed non-core businesses including the Company's Price 1 pilot program as well as its six `Thomason Select' used car stores. Basic earnings per share, including discontinued operations, were $0.38 in both periods, while diluted earnings per share were $0.38 for 2003 versus $0.37 for 2002. Financial highlights for the second quarter of 2003 included: o The Company's total revenues were approximately $1.2 billion, up 11.0 percent from a year ago. On a same-store basis, retail sales (excluding fleet and wholesale business) were up 7.8 percent. o Total gross profit dollars rose 7.6 percent, while same-store retail gross profit was up 3.5 percent. o New vehicle retail unit sales increased 7.7 percent (4.2 percent same- store), while the related gross profit was up 0.5 percent (down 3.3 percent same-store). o Used vehicle retail unit sales increased 4.3 percent (1.3 percent same-store), while the related gross profit was essentially flat (down 2.4 percent same-store). o Parts and service revenues increased 11.3 percent (7.1 percent same-store), with the related gross profits increasing 11.1 percent (6.0 percent same-store). o Net finance and insurance (F&I) income was up 18.8 percent from a year ago (15.9 percent same-store), while F&I per vehicle retailed (PVR) rose 11.6 percent to $815. Commenting on its expense reduction initiatives, the Company reported that for the second quarter of 2003, selling, general and administrative (SG&A) expenses were 11.9 percent of revenues versus 12.0 percent a year ago. As a percentage of gross profit, SG&A expenses in the quarter were 77.4 percent, a notable improvement from 80.6 percent in the first quarter but still higher than a year ago (76.0 percent). In addition, during the quarter the Company incurred $1.2 million of severance expenses related to management changes at its Oregon platform, and approximately $1 million of increased legal fees associated with litigation and acquisition activity. President and CEO Kenneth B. Gilman commented, "Directionally, our expense trends are positive. We initiated our expense reduction program in the first quarter, achieved traction in the second quarter and anticipate a fully implemented program by the third quarter. This should allow us to convert increased gross profit dollars in the second half of this year into higher profit levels when compared to prior periods." For the first six months of 2003, net income from continuing operations was $22.4 million, or $0.68 per basic and diluted share; for the corresponding period last year, the Company's pro forma net income from continuing operations was $26.7 million, or $0.78 per diluted share. Net income for the six months was $19.4 million or $0.59 per basic and diluted share as compared to $17.9 million, or $0.56 per basic and diluted share from a year ago. (A reconciliation of pro forma net income from continuing operations to GAAP net income from continuing operations is provided on the Consolidated Statement of Income accompanying this release.) The pro forma results for the prior-year period exclude a non-recurring deferred income tax provision required by SFAS 109 related to Asbury's change in tax status from a limited liability company to a "C" corporation in conjunction with its March 2002 initial public offering, and assume that the Company was a publicly traded "C" corporation for the entire period. Mr. Gilman continued, "We are pleased with the improving trends that are apparent in Asbury's financial results for the second quarter, particularly our ability to generate meaningful increases in gross profit on a comparable store basis. Earnings from continuing operations were essentially flat to a year ago because of higher expense rates, which while now declining are still elevated relative to historical levels. Thanks to the expense reduction initiatives implemented in the first half of the year, our year-over-year increases in operating expenses were much better aligned with our rate of revenue and gross profit growth than in either the first quarter of this year or the fourth quarter of last year. As a result, Asbury's earnings per share from continuing operations were flat to a year ago - a notable improvement from the 30 percent decline for the first quarter. "In terms of both new and used vehicle sales, Asbury continued to outperform the industry during the second quarter. Our 4 percent same-store increase in new retail unit sales was much stronger than the industry's slight decline; similarly, we experienced a same-store increase in used retail unit sales while the overall performance of franchised dealers was down for the quarter. Tactically, as noted previously, we remained focused during the quarter on sustaining unit sales - partly to strengthen our relationships with our manufacturers, and partly in the knowledge that increased unit sales have a very profitable carryover effect on other key segments of Asbury's business." Mr. Gilman concluded, "The key to the quarter was getting back to basics - focusing on the core elements of our business that make our model successful. To that end, we made several difficult decisions during the quarter that allowed us to maintain that focus, including closing certain non-core businesses. We believe this is one of the reasons we were able to continue growing our higher margin businesses. Specifically, during the quarter, our F&I income per vehicle retailed grew 12 percent, for our sixth consecutive quarter of double-digit increases, while our parts and service gross profit was up 11 percent. We intend to maintain this focus so that our core businesses continue to perform well, demonstrating to investors that our diversified automotive retail and services business model is working very much as planned." The Company has revised its earnings per share guidance for 2003 slightly, primarily to reflect the discontinuation of the Price 1 pilot program, to a range of $1.55 to $1.60. The assumptions underlying this guidance range continue to include new U.S. light vehicle sales of approximately 16 million units. Potential acquisitions that may be completed in the second half of 2003 are not included in this range. Asbury will host a conference call to discuss its 2003 second 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 (888) 855-5428; international callers, please dial (719) 457-2665; no access code is required. A conference call replay will be available one hour following the call for 14 days and can be accessed by calling (888) 203-1112 (domestic), or (719) 457-0820 (international); access code 749849. About Asbury Automotive Group Asbury Automotive Group, Inc., headquartered in Stamford, Connecticut, is one of the largest automobile retailers in the U.S., with 2002 revenues of $4.5 billion. Built through a combination of organic growth and a series of strategic acquisitions, Asbury now operates through nine geographically concentrated, individually branded "platforms." These platforms currently operate 92 retail auto stores, encompassing 132 franchises for the sale and servicing of 35 different brands of American, European and Asian automobiles. Asbury believes that its product mix includes one of the highest proportions of luxury and mid-line import brands among leading public U.S. 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, risks associated with the Company's substantial indebtedness, risks related to pending and potential future acquisitions, 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. (Tables Follow) ASBURY AUTOMOTIVE GROUP, INC. CONSOLIDATED STATEMENTS OF INCOME (dollars in thousands except per share data) (unaudited)
For the Three Months Ended For the Six Months Ended -------------------------------------------- ---------------------------- June 30, 2002 June 30, 2002 June 30, 2003 June 30, 2002 June 30, 2003 Pro Forma (a) Actual ------------- ------------- ------------- ------------- ------------- REVENUES: New vehicle $ 765,271 $ 666,859 $ 1,398,791 $ 1,284,401 $ 1,284,401 Used vehicle 308,363 302,280 596,817 581,214 581,214 Parts, service and collision repair 139,078 124,947 268,826 245,512 245,512 Finance and insurance, net 33,990 28,609 63,131 54,432 54,432 ----------- ----------- ----------- ----------- ----------- Total revenues 1,246,702 1,122,695 2,327,565 2,165,559 2,165,559 COST OF SALES: New vehicle 708,964 610,842 1,295,179 1,177,094 1,177,094 Used vehicle 281,002 275,370 541,687 527,527 527,527 Parts, service and collision repair 65,730 58,951 127,238 115,559 115,559 ----------- ----------- ----------- ----------- ----------- Total cost of sales 1,055,696 945,163 1,964,104 1,820,180 1,820,180 ----------- ----------- ----------- ----------- ----------- GROSS PROFIT 191,006 177,532 363,461 345,379 345,379 OPERATING EXPENSES: Selling, general and administrative 147,825 134,931 286,860 264,136 264,136 Depreciation and amortization 5,055 4,859 9,866 9,731 9,731 Income from operations 38,126 37,742 66,735 71,512 71,512 OTHER INCOME (EXPENSE): Floor plan interest expense (5,122) (4,500) (9,630) (8,691) (8,691) Other interest expense (9,997) (8,926) (19,951) (18,674) (18,674) Interest income 81 348 262 662 662 Net losses from unconsolidated entities -- -- -- (100) (100) Other income (expense) 592 54 (270) (341) (341) ----------- ----------- ----------- ----------- ----------- Total other expense, net (14,446) (13,024) (29,589) (27,144) (27,144) ----------- ----------- ----------- ----------- ----------- Income before income taxes and discontinued operations 23,680 24,718 37,146 44,368 44,368 INCOME TAX PROVISION: Income tax expense 9,425 9,810 14,784 17,658 12,037 Tax adjustment upon conversion from an L.L.C. to a corporation -- -- -- -- 11,553 ----------- ----------- ----------- ----------- ----------- Income before discontinued operations 14,255 14,908 22,362 26,710 20,778 DISCONTINUED OPERATIONS, net of tax (1,982) (2,128) (2,992) (2,837) (2,837) ----------- ----------- ----------- ----------- ----------- Net income $ 12,273 $ 12,780 $ 19,370 $ 23,873 $ 17,941 =========== =========== =========== =========== =========== EARNINGS PER COMMON SHARE: Basic Income from continuing operations $ 0.44 $ 0.44 $ 0.68 $ 0.79 $ 0.65 =========== =========== =========== =========== =========== Net income $ 0.38 $ 0.38 $ 0.59 $ 0.70 $ 0.56 =========== =========== =========== =========== =========== Diluted Income from continuing operations $ 0.44 $ 0.44 $ 0.68 $ 0.78 $ 0.64 =========== =========== =========== =========== =========== Net income $ 0.38 $ 0.37 $ 0.59 $ 0.70 $ 0.56 =========== =========== =========== =========== =========== WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING Basic 32,701 34,000 32,876 34,000 32,210 =========== =========== =========== =========== =========== Diluted 32,714 34,084 32,881 34,084 32,258 =========== =========== =========== =========== ===========
(a) Pro forma column includes a tax provision as if the Company were a "C" corporation for the entire period as well as assumes that all shares were outstanding for the full period. This column excludes a one-time charge to establish a net deferred tax liability upon the Company's conversion to a "C" corporation as required by SFAS 109. (b) Reconciliation of GAAP net income from continuing operations to pro forma net income from continuing operations: GAAP net income from continuing operations $20,778 Tax adjustment upon conversion from an L.L.C. to a corporation 11,553 Pro forma income tax charge (c) (5,621) ------- Pro forma net income from continuing operations $26,710 ======= (c) Represents the pro forma tax charge from continuing operations for the time during the period that the Company was an L.L.C. ASBURY AUTOMOTIVE GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) December 31, ASSETS June 30, 2003 2002 ------------- ------------ (unaudited) CURRENT ASSETS: Cash and cash equivalents $ 24,575 $ 22,613 Contracts-in-transit 102,573 91,190 Accounts receivable, net 113,877 96,090 Inventories 642,375 604,791 Prepaid and other current assets 46,413 47,857 ---------- ---------- Total current assets 929,813 862,541 PROPERTY AND EQUIPMENT, net 258,602 274,172 GOODWILL, net 434,596 402,133 OTHER ASSETS 68,241 66,798 ---------- ---------- Total assets $1,691,252 $1,605,644 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Floor plan notes payable $ 585,768 $ 540,419 Current maturities of long-term debt 30,369 36,412 Accounts payable and accrued liabilities 126,456 117,445 ---------- ---------- Total current liabilities 742,593 694,276 LONG-TERM DEBT 468,894 438,740 OTHER LIABILITIES 41,760 45,677 STOCKHOLDERS' EQUITY 438,005 426,951 ---------- ---------- Total liabilities and stockholders' equity $1,691,252 $1,605,644 ========== ========== ASBURY AUTOMOTIVE GROUP, INC. CONSOLIDATED STATEMENTS OF INCOME (dollars in thousands except per share data) (unaudited)
Same Store Results for GAAP Results for Same Store Results for GAAP Results For the Three the Three Months Ended the Six Months the Six Months Ended Months Ended June 30, June 30, Ended June 30, June 30, -------------------------- ------------------------ ---------------------- ----------------------- 2003 2002 2003 2002 2003 2002 2003 2002 ----------- ----------- ----------- ---------- ---------- ---------- ---------- ---------- RETAIL UNITS: New 26,133 24,265 25,260 24,253 48,274 46,317 47,041 46,305 Used 15,552 14,914 15,096 14,898 30,371 29,360 29,492 29,344 ----------- ----------- ----------- ---------- ---------- ---------- ---------- ---------- Total 41,685 39,179 40,356 39,151 78,645 75,677 76,533 75,649 =========== =========== =========== ========== ========== ========== ========== ========== REVENUE: New retail $ 749,041 $ 655,892 $ 721,257 $ 655,582 $1,369,103 $1,262,258 $1,331,002 $1,261,948 Used retail 239,146 229,435 231,096 229,167 463,746 445,446 449,820 445,178 Parts, service and collision repair 139,078 124,947 133,730 124,860 268,826 245,512 260,210 245,424 Finance and insurance, net 33,990 28,609 33,136 28,589 63,131 54,432 61,637 54,412 Fleet 16,230 10,967 16,238 10,967 29,688 22,143 29,689 22,143 Wholesale 69,217 72,845 67,023 72,843 133,071 135,768 128,985 135,767 ----------- ----------- ----------- ---------- ---------- ---------- ---------- ---------- Total $ 1,246,702 $ 1,122,695 $ 1,202,480 $1,122,008 $2,327,565 $2,165,559 $2,261,343 $2,164,872 =========== =========== =========== ========== ========== ========== ========== ========== GROSS PROFIT: New retail $ 49,993 $ 49,731 $ 48,080 $ 49,711 $ 91,581 $ 95,440 $ 89,100 $ 95,421 Used retail 27,551 27,557 26,860 27,525 54,983 53,887 53,562 53,855 Parts, service and collision repair 73,348 65,996 69,908 65,938 141,588 129,953 136,044 129,894 Finance and Insurance, net 33,990 28,609 33,136 28,589 63,131 54,432 61,637 54,412 Fleet 227 359 234 359 576 619 577 619 Wholesale (190) (647) (176) (647) 147 (200) 224 (200) Floor plan interest credits 6,087 5,927 5,983 5,927 11,455 11,248 11,241 11,248 ----------- ----------- ----------- ---------- ---------- ---------- ---------- ---------- Total $ 191,006 $ 177,532 $ 184,025 $ 177,402 $ 363,461 $ 345,379 $ 352,385 $ 345,249 =========== =========== =========== ========== ========== ========== ========== ========== GROSS MARGIN %: New retail (including floor plan interest credits) 7.5% 8.5% 7.5% 8.5% 7.5% 8.5% 7.5% 8.5% Used retail 11.5% 12.0% 11.6% 12.0% 11.9% 12.1% 11.9% 12.1% Parts, service and collision repair 52.7% 52.8% 52.3% 52.8% 52.7% 52.9% 52.3% 52.9% Finance and insurance, net 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% ----------- ----------- ----------- ---------- ---------- ---------- ---------- ---------- Total 15.3% 15.8% 15.3% 15.8% 15.6% 15.9% 15.6% 15.9% =========== =========== =========== ========== ========== ========== ========== ========== GROSS PROFIT PER UNIT: New retail (including floor plan interest credits) $ 2,146 $ 2,294 $ 2,140 $ 2,294 $ 2,134 $ 2,303 $ 2,133 $ 2,304 Used retail 1,772 1,848 1,779 1,848 1,810 1,835 1,816 1,835 ----------- ----------- ----------- ---------- ---------- ---------- ---------- ---------- Weighted average $ 2,006 $ 2,124 $ 2,005 $ 2,124 $ 2,009 $ 2,122 $ 2,011 $ 2,122 =========== =========== =========== ========== ========== ========== ========== ========== F&I PVR $ 815 $ 730 $ 821 $ 730 $ 803 $ 719 $ 805 $ 719 EBITDA (a) $ 38,732 $ 38,503 $ 37,787 $ 38,549 $ 66,963 $ 72,873 $ 66,139 $ 72,918 EBITDA % 3.1% 3.4% 3.1% 3.4% 2.9% 3.4% 2.9% 3.4% OPERATING INCOME % 3.1% 3.4% 3.1% 3.4% 2.9% 3.3% 2.9% 3.3% FREE CASH FLOW (b): Net cash provided by operating activities $ 31,997 $ 33,973 Capital expenditure (24,613) (23,623) Financed capital expenditure 6,803 5,447 Sales/leaseback proceeds paid directly to the Company's lenders 5,726 -- --------- --------- Free cash flow $ 19,913 $ 15,797 ========= =========
June 30, December 31, 2003 2002 ---------- ----------- CAPITALIZATION: Long-term debt (including current portion) $499,263 $475,152 Stockholders' equity 438,005 426,951 -------- -------- Total $937,268 $902,103 (a) EBITDA is defined as earnings before income taxes, discontinued operations, other interest expense, depreciation and amortization and net losses from unconsolidated affiliates. (b) Free cash flow is defined as net cash provided by operating activities less capital expenditures plus proceeds from financing activities associated with the related period's capital projects. -----END PRIVACY-ENHANCED MESSAGE-----