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It has been about a month since the last earnings report for Asbury Automotive Group (ABG) . Shares have added about 4.8% in that time frame, underperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is Asbury Automotive due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.How Have Estimates Been Movin ...

Financial Performance - Consolidated revenue for Q1 2025 decreased to $4.15 billion, down from $4.20 billion in the prior year[105]. - Consolidated gross profit for Q1 2025 decreased to $724.2 million, compared to $750.0 million for the prior year[105]. - Total revenue for the three months ended March 31, 2025 decreased by $52.8 million (1%) to $4,148.5 million compared to the same period in 2024, primarily due to a $121.1 million (9%) decrease in used vehicle revenue[109]. - Net income for the three months ended March 31, 2025 decreased by $15.0 million (10%) to $132.1 million, with diluted net income per share falling to $6.71[111]. - Total gross profit decreased by $25.8 million (3%) to $724.2 million, with a notable $19.8 million (12%) decrease in new vehicle gross profit[109]. - Operating income decreased by $28.4 million (11%) to $234.3 million, primarily due to a decrease in gross profit and an increase in asset impairments[110]. - Selling, general, and administrative expenses decreased by $12.2 million (3%) to $456.4 million, contributing to the overall reduction in operating expenses[110]. - Total other expenses, net decreased by $8.0 million (12%), primarily due to a decrease in floor plan interest expense and other interest expense[111]. - Income tax expense decreased by $5.4 million (11%) due to a $20.4 million (10%) decrease in income before income taxes, with an effective tax rate of 24.7% for the three months ended March 31, 2025[135]. Vehicle Sales and Revenue - The decrease in consolidated revenue was primarily due to a decrease in used vehicle units sold, offset by an increase in new vehicle units sold[105]. - New vehicle revenue increased by $73.8 million (4%) to $2,138.1 million, driven by a 2% increase in new vehicle units sold[113]. - Used vehicle revenue decreased by $121.1 million (9%) to $1,235.8 million for the three months ended March 31, 2025, compared to $1,356.9 million in the same period of 2024[116]. - Used vehicle retail revenue fell by $112.5 million (9%) to $1,078.9 million, while wholesale revenue decreased by $8.6 million (5%) to $156.9 million[116]. - Total used vehicle retail unit sales decreased by 10% on an all store basis and by 8% on a same store basis[116]. - The revenue mix for new vehicles increased to 51.5% from 49.1% year-over-year, while used vehicle retail revenue decreased to 26.0% from 28.4%[109]. Gross Profit and Margins - The gross profit margin for new vehicles decreased to 6.7% from 7.9% in the prior year, reflecting a decrease in gross profit per new vehicle sold by $555 (14%) to $3,448[113]. - The gross profit per vehicle sold for both new and used vehicles declined, contributing to the overall decrease in gross profit[105]. - Used vehicle retail gross profit margins decreased from 5.5% to 5.2% for all stores and on a same store basis[117]. - Parts and service gross profit experienced growth, partially offsetting the declines in vehicle gross profit[105]. - Total parts and service gross profit increased by $8.5 million (3%) to $342.7 million, driven by increased customer pay and warranty volume[122]. Acquisitions and Expansion - The company is expected to acquire the Herb Chambers automotive group for approximately $1.34 billion, including $750 million for goodwill[103][104]. - The acquisition includes 33 dealerships, 52 franchises, and three collision centers, anticipated to close in Q2 2025[104]. - The company operates 196 new vehicle franchises across 150 dealership locations, representing 31 brands within 14 states as of March 31, 2025[94]. Economic and Market Conditions - The company’s vehicle sales are influenced by economic conditions, consumer confidence, and availability of desirable vehicles from manufacturers[98]. - The automotive retail industry is facing challenges from macroeconomic factors such as rising interest rates and inflation, which may impact demand[100]. - The seasonally adjusted annual rate (SAAR) for new vehicle sales in the U.S. increased to approximately 16.5 million, up from 15.4 million in the same period last year, indicating higher inventory supply and consumer demand[115]. Cash Flow and Liquidity - Net cash provided by operating activities was $225.0 million for the three months ended March 31, 2025, compared to $177.1 million for the same period in 2024[148]. - Adjusted cash flow provided by operating activities decreased by $21.3 million to $187.4 million for the three months ended March 31, 2025, primarily due to changes in working capital[149]. - For the three months ended March 31, 2025, total available liquidity was $963.7 million, consisting of cash and cash equivalents of $87.4 million, available funds in floor plan offset accounts of $116.7 million, and $485.9 million under the revolving credit facility[136]. Expenses and Impairments - Asset impairment charges recognized during the three months ended March 31, 2025, totaled $14.3 million, compared to no impairment charges in the same period of 2024[130]. - Floor plan interest expense decreased by $2.1 million (9%) to $20.7 million for the three months ended March 31, 2025, primarily due to higher balances in floor plan offset accounts[131]. - Other interest expense decreased by $1.8 million (4%) to $42.3 million, attributed to a $2.1 million decrease in credit facility interest expense due to lower interest rates[132]. Capital Expenditures - Capital expenditures, excluding real estate purchases, were $21.4 million for the three months ended March 31, 2025, down from $25.7 million in the same period of 2024[150]. - The company expects capital expenditures of approximately $260.3 million in 2025 for facility upgrades and technology investments[155].

Core Insights - Asbury Automotive (ABG) reported first-quarter 2025 adjusted earnings per share of $6.82, missing the Zacks Consensus Estimate of $6.84 and down from $7.21 in the previous year [1] - Total revenues for the quarter were $4.15 billion, a decrease of 1.2% year over year, and also below the Zacks Consensus Estimate of $4.4 billion [1] Segment Details - New vehicle revenues increased by 4% year over year to $2.14 billion, but fell short of the Zacks Consensus Estimate of $2.24 billion due to lower unit sales [2] - Retail units sold in the new vehicle segment totaled 41,496, up 2% year over year, but below the consensus mark of 43,854 units [2] - The average selling price (ASP) for new vehicles was $51,525, up 2% year over year, exceeding the consensus estimate of $51,133 [2] - Gross profit from the new vehicle segment was $143.1 million, down 12% from the prior-year quarter and missing the consensus estimate of $151 million [2] Used Vehicle Performance - Used vehicle retail revenues declined by 9% year over year to $1.08 billion, missing the Zacks Consensus Estimate of $1.2 billion due to lower ASP and unit sales [3] - Retail used vehicle units sold totaled 35,415, down 10% year over year, lagging behind the consensus mark of 39,161 units [3] - The ASP for used vehicles was $30,465, up 1% year over year, but missed the consensus estimate of $30,476 [3] - Gross profit from the used vehicle segment was $56.2 million, down 14% year over year and below the consensus estimate of $59 million [3] Other Business Segments - Revenues from the used vehicle wholesale business fell by 5% to $157 million, meeting the consensus mark [4] - Gross profit from the wholesale unit increased by 21% to $8.4 million, surpassing the consensus estimate of $2.75 million [4] - Finance and insurance business net revenues were $187 million, down 1% year over year and below the consensus estimate of $189 million [4] - Gross profit from finance and insurance was $173.9 million, down 4% year over year but exceeding the consensus estimate of $165 million [4] Parts and Service Business - Revenues from the parts and service business were $587.6 million, slightly down from $590.4 million in the previous year and missing the Zacks Consensus Estimate of $630 million [5] - Gross profit from this segment was $342.7 million, which lagged the consensus mark of $359 million but rose 3% year over year [5] Financial Position - As of March 31, 2025, the company had cash and cash equivalents of $124.6 million, up from $69.4 million as of December 31, 2024 [6] - Long-term debt was $3.13 billion, down from $3.14 billion as of December 31, 2024 [6] - The company did not repurchase any shares in the first quarter of 2025 [6]

Financial Performance - First quarter 2025 net income was $132 million ($6.71 per diluted share), a decrease of 10% from $147 million ($7.21 per diluted share) in Q1 2024[2] - Revenue for Q1 2025 was $4.1 billion, a decrease of 1% compared to the same period in 2024[10] - Adjusted net income for Q1 2025 was $134 million ($6.82 per diluted share), down 9% from $147 million ($7.21 per diluted share) in Q1 2024[2] - Gross profit for Q1 2025 was $724 million, a decrease of 3% from the previous year[10] - Total revenue for Q1 2025 was $4,148.5 million, a decrease of 1% compared to $4,201.2 million in Q1 2024[25] - Net income decreased by 10% to $132.1 million, with diluted earnings per share at $6.71, down 7% from $7.21[25] - Adjusted EBITDA for the twelve months ended March 31, 2025, was $963.4 million, down from $982.0 million for the previous year, indicating a decline of 1.7%[39] - The diluted EPS for the three months ended March 31, 2025, was $6.71, compared to $6.82 for the same period in 2024, reflecting a decrease of 1.6%[40] Revenue Breakdown - New vehicle revenue increased by 4% to $2,138.1 million, while total used vehicle revenue decreased by 9% to $1,235.8 million[25] - New vehicle unit volume increased by 2% in Q1 2025, while used vehicle retail unit volume decreased by 10%[10] - The average selling price of new vehicles rose by 2% to $51,525, while the average selling price of used vehicles increased by 1% to $30,465[33] - Total unit sales of new vehicles increased by 2% to 41,496 units compared to 40,677 units in the prior year[33] Expenses and Margins - Operating margin for Q1 2025 was 5.6%, with an adjusted operating margin of 5.8%[10] - Selling, general and administrative expenses decreased by 3% to $456.4 million from $468.6 million year-over-year[33] - The income from operations as a percentage of revenue decreased to 5.6% from 6.3% in the previous year[33] - The gross margin for total new vehicles decreased by 120 basis points to 6.7% from 7.9%[33] - Selling, general and administrative (SG&A) expenses for the three months ended March 31, 2025, were $456.4 million, with SG&A as a percentage of gross profit at 63.0%[40] Liquidity and Debt - As of March 31, 2025, the company had total liquidity of $964 million, including cash and availability under credit lines[9] - Cash and cash equivalents increased by 80% to $124.6 million compared to $69.4 million in Q1 2024[27] - Long-term debt decreased slightly to $3,128.5 million from $3,138.6 million in Q4 2024[27] - The adjusted long-term net debt as of March 31, 2025, was $2,650.7 million, compared to $2,796.9 million as of December 31, 2024, showing a reduction of 5.2%[39] - The transaction adjusted net leverage ratio as of March 31, 2025, was 2.75, slightly down from 2.85 as of December 31, 2024[39] Inventory and Supply Chain - Inventory decreased by 8% to $1,822.4 million from $1,978.8 million in Q1 2024[27] - Days supply of new vehicle inventory improved to 44 days from 49 days in Q4 2024, while used vehicle inventory days supply decreased to 31 days from 37 days[28] Acquisitions and Divestitures - The company completed two divestitures in Q1 2025, contributing estimated annualized revenue of $79 million[2] - The company announced a definitive agreement to acquire The Herb Chambers Automotive Group, which has approximately $3 billion in annual revenue[4] Other Financial Metrics - The company reported a 52% increase in finance and insurance costs, rising to $13.1 million from $8.6 million in Q1 2024[25] - Total non-core items for the twelve months ended March 31, 2025, amounted to $155.4 million, compared to $152.4 million in the previous year[39] - The impact of dealership acquisitions and divestitures on transaction adjusted EBITDA was a negative $1.1 million for the twelve months ended March 31, 2025[39] - Cash provided by operating activities for the three months ended March 31, 2025, was $225.0 million, an increase from $177.1 million in the same period of 2024, representing a growth of 27.0%[40] - Adjusted cash flow provided by operating activities for the three months ended March 31, 2025, was $187.4 million, compared to $208.7 million in the same period of 2024, indicating a decline of 10.6%[40]

Financial Data and Key Metrics Changes - The company generated $4.1 billion in revenue, with a gross profit of $724 million and a gross profit margin of 17.5% [12] - Adjusted operating margin was 5.8%, and adjusted earnings per share (EPS) was $6.82 [12] - Adjusted net income for Q1 2025 was $134 million, excluding certain non-cash items [21] - Adjusted SG&A as a percentage of gross profit was 64% [22] Business Line Data and Key Metrics Changes - Same store revenue for new vehicles was up 6% year over year, with units up 4% [14] - New average gross profit per vehicle was $3,449 [14] - Used vehicle unit volume was down 8% year over year, with used retail gross profit per unit at $15.87 [15] - Parts and service gross profit was up 5% for the quarter, with a gross profit margin of 58.3% [17] Market Data and Key Metrics Changes - Approximately 56% of new vehicle units sold in Q1 were produced in America, insulating them from tariffs [7] - The company experienced a wide range of approaches from OEMs regarding tariff impacts, making predictions challenging [7] Company Strategy and Development Direction - The company is focused on a disciplined growth strategy, highlighted by the pending acquisition of the Herb Chambers Automotive Group [10] - Plans to reduce leverage over the next 18 to 24 months following the acquisition [11] - The implementation of Techeon is expected to improve productivity and guest experience [9] Management's Comments on Operating Environment and Future Outlook - Management noted that the first quarter faced challenges due to weather-related disruptions and tariff uncertainties [42] - The company remains optimistic about long-term growth, particularly in parts and service due to an aging vehicle fleet [19] - Management emphasized the importance of focusing on gross profit rather than volume during uncertain market conditions [42] Other Important Information - The company expects to close the Herb Chambers acquisition by the end of Q2 2025, pending OEM approval [10] - Free cash flow for Q1 2025 was $166 million, with liquidity at $964 million [25] Q&A Session Summary Question: Regarding TCA and tariff impacts - Management indicated that tariffs could slow down deferral impacts, affecting future earnings [30] Question: Integration of Techeon and SG&A savings - The rollout of Techeon is progressing well, with expectations of significant SG&A savings through reduced software costs and improved productivity [32] Question: Gross profit performance compared to peers - Management acknowledged weather impacts and emphasized a focus on maximizing returns rather than chasing volume [42] Question: Impact of tariffs on the Herb Chambers acquisition - The asset purchase agreement does not include a breakup fee for the company, and management sees no reason to walk away from the deal [50] Question: Front end gross outlook - Management believes the company is reaching a floor on front end gross, focusing on profitability rather than volume [56] Question: Parts and service growth outlook - Management maintains a mid-single-digit growth outlook for parts and service, with expectations of increased traffic as weather conditions improve [60] Question: Techeon and revenue opportunities - The integration of Techeon is expected to enhance communication and marketing efficiency, leading to potential revenue growth [66]

A B G | A s b u r y A u t o m o t i v e Investor Relations Presentation 2025 First Quarter Forward-Looking Statements This presentation 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, objectives, beliefs, expectations and assumptions, projections regarding Asbury's financial position, liquidity, results of operations, cas ...

Core Insights - Asbury Automotive Group reported a revenue of $4.15 billion for the quarter ended March 2025, reflecting a decrease of 1.3% year-over-year and falling short of the Zacks Consensus Estimate of $4.4 billion by 5.80% [1] - The company's earnings per share (EPS) was $6.82, down from $7.21 in the same quarter last year, with an EPS surprise of -0.29% against the consensus estimate of $6.84 [1] Financial Performance Metrics - New vehicle unit sales were 41,496, below the average estimate of 43,854 [4] - Used vehicle retail unit sales totaled 35,415, compared to the average estimate of 39,161 [4] - The average selling price for new vehicles was $51.53 billion, exceeding the average estimate of $51.13 billion [4] - Average gross profit per unit for total new vehicles was $3.45 billion, slightly below the average estimate of $3.46 billion [4] - Average gross profit per unit for used vehicle retail was $1.59 billion, surpassing the average estimate of $1.51 billion [4] Revenue Breakdown - Revenues from new vehicles were $2.14 billion, compared to the average estimate of $2.24 billion, representing a year-over-year increase of 3.6% [4] - Revenues from used vehicles were $1.24 billion, below the average estimate of $1.34 billion, showing a year-over-year decline of 8.9% [4] - Parts and service revenues were $587.60 million, compared to the average estimate of $629.90 million, reflecting a year-over-year decrease of 0.5% [4] - Finance and insurance net revenues were $187 million, slightly below the average estimate of $189.02 million, with a year-over-year decline of 1.4% [4] - Retail revenues from used vehicles were $1.08 billion, compared to the average estimate of $1.20 billion, indicating a year-over-year decrease of 9.4% [4] - Wholesale revenues from used vehicles were $156.90 million, slightly below the average estimate of $157.03 million, representing a year-over-year decline of 5.2% [4] Stock Performance - Asbury Automotive shares returned +1.6% over the past month, outperforming the Zacks S&P 500 composite, which declined by -0.8% [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - The company generated $4.1 billion in revenue, with a gross profit of $724 million and a gross profit margin of 17.5% [13] - Adjusted operating margin was 5.8%, and adjusted earnings per share (EPS) was $6.82 [13] - Adjusted SG&A as a percentage of gross profit was 63.9% [13] - Adjusted net income for the first quarter was $134 million, excluding certain non-cash items [21] Business Line Data and Key Metrics Changes - Same store revenue for new vehicles increased by 6% year over year, with units up 4% [15] - New average gross profit per vehicle was $3,449 [15] - Used vehicle unit volume decreased by 8% year over year, with retail gross profit per unit at $15.87 [16] - Parts and service gross profit increased by 5%, with a gross profit margin of 58.3%, an expansion of 170 basis points [18] Market Data and Key Metrics Changes - The company estimates that approximately 56% of new vehicle units in Q1 were produced in America, insulating them from tariff impacts [8] - The Stellantis headwind to the company's performance was estimated at $125 per vehicle [15] Company Strategy and Development Direction - The company is focused on a disciplined growth strategy, including the pending acquisition of the Herb Chambers Automotive Group, valued at $1.34 billion [26] - The company plans to reduce leverage over the next 18 to 24 months following the acquisition [12] - The implementation of the Techeon system is expected to improve productivity and guest experience [10] Management's Comments on Operating Environment and Future Outlook - Management noted that the first quarter was impacted by weather-related disruptions and tariff uncertainties [41][44] - The company remains optimistic about long-term growth, particularly in parts and service due to an aging vehicle fleet [20] - Management emphasized the importance of focusing on gross profit rather than volume in the current market conditions [42] Other Important Information - The company generated $187 million of adjusted operating cash flow for the first quarter [24] - Free cash flow was $166 million for the first quarter [25] - The company ended Q1 with $964 million of liquidity [25] Q&A Session Summary Question: Inquiry about TCA and tariff impacts - Management indicated that tariffs could slow down deferral impacts, affecting future earnings [31] Question: Integration of Techeon and SG&A savings - Management reported that the rollout of Techeon is progressing well and is expected to lead to significant SG&A savings [34] Question: Gross profit performance compared to peers - Management acknowledged weather impacts and emphasized a focus on maximizing returns rather than chasing volume [42] Question: Impact of tariffs on acquisition agreements - Management confirmed that there is no breakup fee for the company in the acquisition agreement, and they do not foresee reasons to back out of the deal [48] Question: Front end gross outlook - Management noted that the company is different post-COVID and emphasized focusing on gross profit rather than volume [56] Question: Parts and service growth outlook - Management maintained a mid-single-digit growth outlook for parts and service, despite weather-related impacts [60] Question: Price versus car count in parts and service - Management indicated that revenue increases were primarily due to dollar increases rather than traffic increases [89] Question: Supply issues with luxury brands - Management expressed concerns about potential supply issues with luxury brands due to tariff-related shipment holds [90]

Priced as of April 17, 2025 In this note, we include the latest comp sheet and valuation metrics for global automotive OEMs (page 3), auto parts suppliers (page 5), auto auction service providers (page 13), tire manufacturers (page 14), auto rentals (page 15), and auto dealers (page 16). J P M O R G A N North America Equity Research 21 April 2025 Autos Valuation Comp Sheet Autos & Auto Parts Ryan Brinkman AC (1-212) 622-6581 ryan.j.brinkman@jpmorgan.com Rajat Gupta AC (1-212) 622-6382 rajat.gupta@jpmorgan.c ...