ASBURY AUTOMOTIVE GROUP INC Q3 FY2024 earnings call

• Overall Performance: Generated $4.2 billion in revenue, up 16% year-over-year; had a gross profit of $718 million, up 7%, and a gross profit margin of 16.9%; adjusted earnings per share $6.35. Excluding storm and stop sales impacts, adjusted EPS would be between $6.74 and $6.78 per share.
• Hurricane Impact: Hurricane Helene caused store closures, reduced sales; estimated impact on earnings per share $0.07-$0.09; Hurricane Milton expected to have a greater impact due to larger store footprint impact and extensive damage.
• Stop Sales: Impacted nearly 1,200 new units sold, estimated negative impact on third quarter earnings per share $0.32-$0.34; ongoing stop sales for certain Toyota, Lexus, BMW, and Honda models.
• Parts and Service: Healthy growth despite stop sales, with customer pay operations driving margin expansion.
• Share Buybacks: Repurchased nearly 400,000 shares for $89 million year-to-date; divested one Chevrolet and one Honda store.
• Tekion Pilot: Launched pilot with Tekion in four stores in the shared service center.

New Vehicles

• Same-store revenue flat year-over-year; 30% of new vehicle revenue from Toyota and Lexus; Stellantis locations had 30% year-over-year new volume declines and over 53% gross profit per vehicle decline from Q3 2023; adjusted new average gross profit per vehicle $3,512.

Used Vehicles

• Same-store unit volume decreased 6% year-over-year; used retail gross profit per unit $1,566; prioritizing unit profitability over chasing volume.

F&I

• Earned F&I PVR of $2,111, in line with Q2 2024; total front-end yield per vehicle $4,743.

Parts and Service

• Same-store parts and service gross profit up 4%; customer pay service sales revenue up 11%, parts customer pay revenue up 4%; customer pay gross profit up 8%, warranty up 14%; wholesale parts and collision down; Western stores had 22% growth in service customer pay labor gross profit; retailed ~13,000 sales through Clicklane, 13% increase year-over-year, 20% increase in new units sold through Clicklane.

• EPS: Excluding the impact of the storm and various stop sales, adjusted earnings per share for the third quarter would have been $6.74 to $6.78 per share; full year adjusted tax rate is approximately 25.3%.
• SG&A: Anticipated to be in the mid-60%s for the fourth quarter due to Hurricane Milton and ongoing stop sale activity.
• TCA: Anticipated full year pre-tax income from TCA to be between $70 million and $80 million; plan to offer TCA across the Florida and Koons markets next year.
• Capital Expenditures: Anticipate end of year capital expenditures between $180 million and $200 million.

• Hurricanes: Hurricane Helene and Milton impacted store operations, sales, and earnings; Milton expected to have a greater impact.
• Stop Sales: Continued impact on new vehicle sales and earnings.
• Negative Equity: Concern about consumers in negative equity situations affecting down payments.
• Collision Business: Soft collision demand across the industry.

Q: John Murphy on Stellantis impact, GPU, parts and service A: David Hult and Dan Clara discussed Stellantis volume decline, GPU improvement, and parts and service benefits from stop sales Q: Rajat Gupta on stop sales impact, used car business A: David Hult, Michael Welch, and Dan Clara talked about stop sales impact on sales and used car business recovery Q: Jeff Lick on SG&A, F&I A: Michael Welch and Dan Clara discussed SG&A expectations and F&I PVR impact from TCA Q: Ryan Sigdahl on EV sales, GPU, Hurricane impact A: Dan Clara provided EV sales color and David Hult, Michael Welch discussed GPU and Hurricane impact Q: Bret Jordan on BEV premium, Collision, parts and service A: David Hult and Dan Clara addressed BEV premium sustainability, collision demand, and parts and service traffic/ticket Q: David Whiston on negative equity, leverage A: Dan Clara and Michael Welch discussed negative equity concerns and leverage management