ASBURY AUTOMOTIVE GROUP INC Q1 FY2025 earnings call

• Tariffs: Saw rise in demand in late March due to potential price increases; OEMs working on tariff impact communication; 56% of new vehicle units in Q1 produced in America shielded from tariffs.
• Parts and Service: All-time record in gross profit; same-store gross profit up 5%, customer pay gross higher by 6%; cohort of 2014 stores saw 97% increase in customer pay gross profit over ten years.
• Techion Implementation: Expanded rollout beyond pilot; Koons Group stores transitioning to Techion, early signs of productivity and guest experience improvement.
• Acquisition: Pending acquisition of Herb Chambers Automotive Group; strategic entry into Boston area, expect to close by end of second quarter; focus on reducing leverage post-acquisition.
• Divestitures: Divested a Colorado Nissan store and a South Carolina Global store; evaluating portfolio to optimize brand mix.

New Vehicles

• Same-store revenue up 6% year-over-year, units up 4%, new average gross profit per vehicle $3,449.
• Volume for Stellantis up 3% this quarter compared to national sales down 12%; ~56% of new vehicle units in Q1 produced in America shielded from tariffs.

Used Vehicles

• First-quarter unit volume down 8% year-over-year; used retail gross profit per unit $1,587 (third quarter of sequential growth); same-store used day supply 31 days at end of quarter.

F&I

• Earned F&I PVR of $2,263 (sequential increase); total front-end yield per vehicle $4,854.

Parts and Service

• Same-store parts and service gross profit up 5% in the quarter and 7% in March, driven by warranty; gross profit margin 58.3% (expansion of 170 basis points); customer pay and warranty combined grew 9.1% in gross profit; ClickLane retail sales over 10,500 in Q1, ~47% new units; cohort of stores operated in 2014 saw 97% increase in customer pay gross profit over ten years.

• Adjusted EPS: Adjusted EPS $6.82 for Q1 2025; full-year adjusted tax rate forecast 25.2%.
• CapEx: Anticipate ~$250 million in CapEx spend for 2025 and 2026, dependent on tariff impact.
• Acquisition: Expect to close Herb Chambers acquisition by end of second quarter; financed through credit facility, proceeds from new mortgage, and existing cash.
• Leverage: Anticipate net leverage ratio near higher end of target range by next year; focus on deleveraging over 18-24 months.

• Tariffs: Uncertainty around tariff policies impacting volumes, new GPUs, and overall business performance.
• Weather Impact: Affected parts and service growth in Q1.
• OEM Uncertainty: Varied approaches by OEMs to tariff impacts, lack of clarity on future trends.

Q: On TCA and tariffs impact, how does it affect deferral impact?

A: Michael Welch discussed that tariffs could slow TCA deferral impact, sliding it over a year depending on volume impact.

Q: On Herb Chambers acquisition, details on MAC and breakup fee?

A: David Hult stated asset purchase agreement has no breakup fee for Asbury, has MAC in contract, confident in moving forward with the deal.

Q: On Techion and personnel costs, potential headcount reduction?

A: David Hult discussed productivity gains from Techion leading to potential headcount reduction as efficiency improves