EX-99.1 2 a2018q3ex991.htm EXHIBIT 99.1 Exhibit


Exhibit 99.1
companylogoa18.jpg

Investors & Reporters May Contact:
Matt Pettoni
VP of Finance & Treasurer
(770) 418-8219
ir@asburyauto.com

 
ASBURY AUTOMOTIVE GROUP ANNOUNCES
2018 THIRD QUARTER FINANCIAL RESULTS
Record third quarter EPS of $2.18 per diluted share,
up 47% over prior year EPS

Record third quarter adjusted EPS of $2.21 per diluted share
(a non-GAAP measure), up 49% over prior year adjusted EPS

DULUTH, GA, October 23, 2018 - 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.”





1


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

2


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.



3


ASBURY AUTOMOTIVE GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME (In millions, except per share data)
(Unaudited)
 
For the Three Months Ended September 30,
 
Increase
(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


4


ASBURY AUTOMOTIVE GROUP, INC.
KEY OPERATING HIGHLIGHTS (In millions, except per unit data)
(Unaudited)
 
For the Three Months Ended September 30,
 
Increase
(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.

5


ASBURY AUTOMOTIVE GROUP, INC.
SAME STORE OPERATING HIGHLIGHTS (In millions)
(Unaudited)
 
For the Three Months Ended September 30,
 
Increase
(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.


6


ASBURY AUTOMOTIVE GROUP, INC.
SAME STORE OPERATING HIGHLIGHTS (Continued)
(Unaudited)
 
For the Three Months Ended September 30,
 
Increase
(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.

7


ASBURY AUTOMOTIVE GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME (In millions, except per share data)
(Unaudited)
 
For the Nine Months Ended September 30,
 
Increase
(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



8


ASBURY AUTOMOTIVE GROUP, INC.
KEY OPERATING HIGHLIGHTS (In millions, except per unit data)
(Unaudited)
 
For the Nine Months Ended September 30,
 
Increase
(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.

9


ASBURY AUTOMOTIVE GROUP, INC.
SAME STORE OPERATING HIGHLIGHTS (In millions)
(Unaudited)
 
For the Nine Months Ended September 30,
 
Increase
(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.












10


ASBURY AUTOMOTIVE GROUP, INC.
SAME STORE OPERATING HIGHLIGHTS (Continued)
(Unaudited)
 
For the Nine Months Ended September 30,
 
Increase
(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.


11


ASBURY AUTOMOTIVE GROUP, INC.
Additional Disclosures (In millions)
(Unaudited)
 
 
September 30, 2018
 
December 31, 2017
 
Increase
(Decrease)
 
% Change
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.











12


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
%
 








 

13


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.



















14




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 ("EBITDA")
$
312.5

 
$
303.6

 
 
 
 
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













15


 
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

16


 
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



17