Asbury automotive group announces record first quarter 2021 financial results
Duluth, ga.--(business wire)--asbury automotive group, inc. (nyse: abg), one of the largest automotive retail and service companies in the u.s., reported net income for the first quarter 2021 of $92.8 million ($4.78 per diluted share). this compares to net income of $19.5 million ($1.01 per diluted share) in the prior year quarter. the financial measures discussed below include both gaap and adjusted (non-gaap) financial measures. please see reconciliations for our non-gaap metrics included in the accompanying financial tables. “the first quarter of 2021 was very active for us. in addition to posting record performance, we successfully launched our online car buying platform, clicklane, across our entire store base. although we are only one quarter into our five-year plan, we feel more confident than ever in our strategic direction and the future growth of asbury,” said david hult, asbury’s president and chief executive officer. the company reported adjusted net income (a non-gaap measure) for the first quarter 2021 of $90.7 million ($4.68 per diluted share) compared to $34.7 million ($1.80 per diluted share) in the prior year quarter. net income for the first quarter 2021 was adjusted for the following pre-tax items: gain on legal settlements of $3.5 million ($0.14 per diluted share), gain on sale of real estate of $1.1 million ($0.03 per diluted share) and other real estate related charges of $1.8 million ($0.07 per diluted share). net income for the first quarter 2020 was adjusted for the following pre-tax items: gain on dealership divestitures of $33.7 million ($1.30 per diluted share), legal settlement gain of $0.9 million ($0.03 per diluted share), gain on the sale of vacant property of $0.3 million or ($0.01 per diluted share), franchise rights impairment of $23.0 million ($0.89 per diluted share), loss on debt extinguishment of $20.7 million ($0.79 per diluted share), and park place deal termination costs of $11.6 million ($0.45 per diluted share). the company reported total revenue for the first quarter of $2.2 billion, up 36% from the prior year period; total revenue on a same-store basis was up 18% from the prior year period. first quarter 2021 operational summary total company: total revenue increased 36%; total gross profit increased 40% new vehicle unit volume increased 24%; used vehicle retail unit volume increased 16% finance and insurance revenue and gross profit increased 25% parts and service revenue increased 18% and gross profit increased 21% sg&a as a percentage of gross profit decreased 880 basis points to 62.7% adjusted operating margin of 6.1%, up 180 bps adjusted eps increased 160% strong balance sheet, ending the quarter with $551 million of available liquidity (including cash, floor plan offsets, used line and revolver) and pro forma adjusted net leverage of 1.7x same store: total revenue increased 18%; gross profit increased 21% new vehicle revenue increased 22%; gross profit increased 60% used vehicle retail revenue increased 20%; gross profit increased 36% finance and insurance revenue and gross profit increased 20% parts and service revenue and gross profit increased 1% additional commentary regarding the first quarter results will be provided during the earnings conference call on april 27, 2021 at 10:00 a.m. the conference call will be simulcast live on the internet and can be accessed at www.asburyauto.com. a replay will be available at these sites for 30 days. in addition, live audio of the call will be accessible to the public by calling (800) 353-6461 (domestic), or (334) 323-0501 (international); passcode – 8517555. 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 – 8517555. 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 91 dealerships, consisting of 112 franchises, representing 31 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 and the shortage of semi-conductor chips and rubber-based products, 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 ended march 31, increase (decrease) % change 2021 2020 revenue: new vehicle $ 1,151.7 $ 822.1 $ 329.6 40 % used vehicle: retail 607.5 446.0 161.5 36 % wholesale 83.4 47.2 36.2 77 % total used vehicle 690.9 493.2 197.7 40 % parts and service 262.0 221.6 40.4 18 % finance and insurance, net 88.3 70.4 17.9 25 % total revenue 2,192.9 1,607.3 585.6 36 % gross profit: new vehicle 75.5 36.4 39.1 107 % used vehicle: retail 47.5 31.2 16.3 52 % wholesale 8.3 (0.5) 8.8 nm total used vehicle 55.8 30.7 25.1 82 % parts and service 163.1 134.9 28.2 21 % finance and insurance, net 88.3 70.4 17.9 25 % total gross profit 382.7 272.4 110.3 40 % operating expenses: selling, general and administrative 239.8 194.7 45.1 23 % depreciation and amortization 9.8 9.5 0.3 3 % franchise rights impairment — 23.0 (23.0) (100) % other operating (income) expense, net (3.2) 10.2 (13.4) (131) % income from operations 136.3 35.0 101.3 289 % other expenses (income): floor plan interest expense 2.9 7.0 (4.1) (59) % other interest expense, net 14.0 17.0 (3.0) (18) % loss on extinguishment of long-term debt, net — 20.6 (20.6) (100) % gain on dealership divestitures, net — (33.7) 33.7 100 % total other expenses, net 16.9 10.9 6.0 55 % income before income taxes 119.4 24.1 95.3 395 % income tax expense 26.6 4.6 22.0 478 % net income $ 92.8 $ 19.5 $ 73.3 376 % earnings per common share: basic— net income $ 4.81 $ 1.02 $ 3.79 372 % diluted— net income $ 4.78 $ 1.01 $ 3.77 373 % weighted average common shares outstanding: basic 19.3 19.1 0.2 restricted stock 0.1 0.1 — performance share units — 0.1 (0.1) diluted 19.4 19.3 0.1 ______________________________ nm—not meaningful asbury automotive group, inc. key operating highlights (in millions, except per unit data) (unaudited) for the three months ended march 31, increase (decrease) % change 2021 2020 unit sales new vehicle: luxury 8,511 4,992 3,519 70 % import 14,377 12,458 1,919 15 % domestic 4,371 4,527 (156) (3) % total new vehicle 27,259 21,977 5,282 24 % used vehicle retail 23,519 20,287 3,232 16 % used to new ratio 86.3 % 92.3 % (600) bps average selling price new vehicle $ 42,250 $ 37,407 $ 4,843 13 % used vehicle retail 25,830 21,985 3,845 17 % average gross profit per unit new vehicle: luxury $ 5,252 $ 3,385 $ 1,867 55 % import 1,259 851 408 48 % domestic 2,906 1,966 940 48 % total new vehicle 2,770 1,656 1,114 67 % used vehicle retail 2,020 1,538 482 31 % finance and insurance, net 1,739 1,666 73 4 % front end yield (1) 4,161 3,265 896 27 % gross margin new vehicle: luxury 8.6 % 6.1 % 250 bps import 4.1 % 3.0 % 110 bps domestic 6.5 % 4.7 % 180 bps total new vehicle 6.6 % 4.4 % 220 bps used vehicle retail 7.8 % 7.0 % 80 bps parts and service 62.3 % 60.9 % 140 bps total gross profit margin 17.5 % 16.9 % 60 bps sg&a metrics rent expense $ 11.2 $ 6.8 $ 4.4 65 % sg&a as a percentage of gross profit 62.7 % 71.5 % (880) bps sg&a, excluding rent expense as a percentage of gross profit 59.7 % 69.0 % (930) bps operating metrics income from operations as a percentage of revenue 6.2 % 2.2 % 400 bps income from operations as a percentage of gross profit 35.6 % 12.8 % 2,280 bps adjusted income from operations as a percentage of revenue 6.1 % 4.3 % 180 bps adjusted income from operations as a percentage of gross profit 34.9 % 25.1 % 980 bps revenue mix new vehicle 52.5 % 51.1 % used vehicle retail 27.8 % 27.8 % used vehicle wholesale 3.8 % 2.9 % parts and service 11.9 % 13.8 % finance and insurance 4.0 % 4.4 % total revenue 100.0 % 100.0 % gross profit mix new vehicle 19.7 % 13.4 % used vehicle retail 12.4 % 11.5 % used vehicle wholesale 2.2 % (0.2) % parts and service 42.6 % 49.5 % finance and insurance 23.1 % 25.8 % 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 ended march 31, increase (decrease) % change 2021 2020 revenue new vehicle: luxury $ 322.2 $ 267.2 $ 55.0 21 % import 438.1 342.5 95.6 28 % domestic 189.5 171.4 18.1 11 % total new vehicle 949.8 781.1 168.7 22 % used vehicle: retail 499.9 416.9 83.0 20 % wholesale 57.3 44.8 12.5 28 % total used vehicle 557.2 461.7 95.5 21 % parts and service 212.4 211.1 1.3 1 % finance and insurance, net 80.7 67.2 13.5 20 % total revenue $ 1,800.1 $ 1,521.1 $ 279.0 18 % gross profit new vehicle: luxury $ 24.7 $ 16.3 $ 8.4 52 % import 18.4 10.2 8.2 80 % domestic 12.4 8.2 4.2 51 % total new vehicle 55.5 34.7 20.8 60 % used vehicle: retail 40.3 29.6 10.7 36 % wholesale 6.4 (0.4) 6.8 nm total used vehicle 46.7 29.2 17.5 60 % parts and service: customer pay 77.1 74.8 2.3 3 % warranty 18.3 21.1 (2.8) (13) % wholesale parts 5.8 4.7 1.1 23 % parts and service, excluding reconditioning and preparation 101.2 100.6 0.6 1 % reconditioning and preparation 29.3 28.0 1.3 5 % total parts and service 130.5 128.6 1.9 1 % finance and insurance 80.7 67.2 13.5 20 % total gross profit $ 313.4 $ 259.7 $ 53.7 21 % sg&a expense $ 199.8 $ 185.1 $ 14.7 8 % sg&a expense as a percentage of gross profit 63.8 % 71.3 % (750) 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 ended march 31, increase (decrease) % change 2021 2020 unit sales new vehicle: luxury 5,526 4,820 706 15 % import 14,351 11,955 2,396 20 % domestic 4,270 4,158 112 3 % total new vehicle 24,147 20,933 3,214 15 % used vehicle retail 20,740 18,979 1,761 9 % used to new ratio 85.9 % 90.7 % (480) bps average selling price new vehicle $ 39,334 $ 37,314 $ 2,020 5 % used vehicle retail 24,103 21,966 2,137 10 % average gross profit per unit new vehicle: luxury $ 4,470 $ 3,382 $ 1,088 32 % import 1,282 853 429 50 % domestic 2,904 1,972 932 47 % total new vehicle 2,298 1,658 640 39 % used vehicle retail 1,943 1,560 383 25 % finance and insurance, net 1,798 1,684 114 7 % front end yield (1) 3,932 3,295 637 19 % gross margin new vehicle: luxury 7.7 % 6.1 % 160 bps import 4.2 % 3.0 % 120 bps domestic 6.5 % 4.8 % 170 bps total new vehicle 5.8 % 4.4 % 140 bps used vehicle retail 8.1 % 7.1 % 100 bps parts and service: parts and service, excluding reconditioning and preparation 47.6 % 47.7 % (10) bps parts and service, including reconditioning and preparation 61.4 % 60.9 % 50 bps total gross profit margin 17.4 % 17.1 % 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) march 31, 2021 december 31, 2020 increase (decrease) % change selected balance sheet data cash and cash equivalents $ 27.8 $ 1.4 $ 26.4 nm new vehicle inventory (a) 527.5 640.0 (112.5) (18) % used vehicle inventory (b) 193.5 188.5 5.0 3 % parts inventory (c) 48.6 46.7 1.9 4 % total current assets 1,317.6 1,405.7 (88.1) (6) % floor plan notes payable (d) 526.8 702.2 (175.4) (25) % total current liabilities 1,048.7 1,223.4 (174.7) (14) % capitalization: long-term debt (including current portion) (e) $ 1,194.1 $ 1,201.8 $ (7.7) (1) % shareholders' equity 998.0 905.5 92.5 10 % total $ 2,192.1 $ 2,107.3 $ 84.8 4 % _____________________________ nm—not meaningful (a) excluding $1.6 million of new vehicle inventory classified as assets held for sale as of march 31, 2021 (b) excluding $0.9 million of used vehicle inventory classified as assets held for sale as of march 31, 2021 (c) excluding $0.4 million of parts inventory classified as assets held for sale as of march 31, 2021 (d) excluding $2.8 million of floor plan notes payable classified as liabilities associated with assets held for sale as of march 31, 2021 (e) excluding $2.3 million and $8.9 million of long-term debt classified as liabilities associated with assets held for sale as of march 31, 2021 and december 31, 2020, respectively march 31, 2021 december 31, 2020 march 31, 2020 days supply new vehicle inventory 34 40 105 used vehicle inventory 27 31 42 _____________________________ 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 three months ended march 31, 2021 2020 luxury: mercedes-benz 12 % 8 % lexus 12 % 7 % bmw 5 % 6 % acura 4 % 4 % range rover 3 % 1 % audi 2 % 2 % porsche 2 % — % other luxury 5 % 6 % total luxury 45 % 34 % imports: honda 15 % 17 % toyota 12 % 13 % nissan 5 % 7 % other imports 6 % 6 % total imports 38 % 43 % domestic: ford 6 % 10 % chevrolet 4 % 6 % dodge 4 % 4 % other domestics 3 % 3 % total domestic 17 % 23 % 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 "pro forma 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 march 31, 2021 december 31, 2020 (dollars in millions) adjusted leverage ratio: long-term debt (including current portion) $ 1,194.1 $ 1,201.8 debt included in liabilities held for sale 2.3 8.9 cash and floor plan offset (173.2) (86.8) availability under our used vehicle revolving floor plan facility (138.8) (137.8) adjusted long-term net debt $ 884.4 $ 986.1 calculation of earnings before interest, taxes, depreciation and amortization ("ebitda"): net income $ 327.6 $ 254.4 depreciation and amortization 38.8 38.5 income tax expense 105.9 83.7 swap and other interest expense 54.2 57.6 earnings before interest, taxes, depreciation and amortization ("ebitda") $ 526.5 $ 434.2 non-core items - expense (income): gain on dealership divestitures $ (28.6) $ (62.3) legal settlements (4.7) (2.1) gain on sale of real estate (1.1) (0.3) park place related costs 1.3 12.9 real estate-related charges 2.5 0.7 franchise rights impairment — 23.0 loss on debt extinguishment — 20.7 total non-core items (30.6) (7.4) adjusted ebitda $ 495.9 $ 426.8 pro forma impact of acquisitions and divestitures on ebitda $ 29.9 $ 53.1 pro forma adjusted ebitda $ 525.8 $ 479.9 pro forma adjusted net leverage ratio 1.7 2.1 for the three months ended march 31, 2021 2020 (in millions, except per share data) adjusted income from operations: income from operations $ 136.3 $ 35.0 legal settlements (3.5) (0.9) gain on sale of real estate (1.1) (0.3) real estate related charges 1.8 — park place related costs — 11.6 franchise rights impairment — 23.0 adjusted income from operations $ 133.5 $ 68.4 adjusted net income: net income $ 92.8 $ 19.5 non-core items - (income) expense: legal settlements (3.5) (0.9) gain on sale of real estate (1.1) (0.3) real estate related charges 1.8 — gain on dealership divestitures — (33.7) loss on extinguishment of debt — 20.7 franchise rights impairment — 23.0 park place related costs — 11.6 income tax effect on non-core items above 0.7 (5.2) total non-core items (2.1) 15.2 adjusted net income $ 90.7 $ 34.7 adjusted diluted earnings per share (eps): diluted eps $ 4.78 $ 1.01 total non-core items (0.10) 0.79 adjusted diluted eps $ 4.68 $ 1.80 weighted average common shares outstanding - diluted 19.4 19.3
