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]

Investment Rating - The report assigns an "Overweight" (OW) rating to General Motors (GM) and Ford, while Tesla and Rivian are rated "Underweight" (UW) [6][7]. Core Insights - The automotive industry is experiencing varied performance metrics across different companies, with GM and Ford showing potential upside in their stock prices, while Tesla and Rivian face significant downside risks [6][7]. - The report highlights the importance of valuation metrics such as EV/EBITDA, P/E ratios, and sales growth projections for assessing investment opportunities within the automotive sector [6][22]. Global Auto OEMs Investment Comparables - General Motors (GM) has a current price of $44.57 with a market cap of $43.067 billion and a target price of $53.00, indicating a 19% upside potential [6]. - Ford (F) is priced at $9.63 with a market cap of $38.294 billion and a target price of $11.00, representing a 14% upside [6]. - Ferrari (RACE) is valued at $439.97 with a target price of $460.00, showing a 5% upside [6]. - Tesla (TSLA) is currently priced at $241.37 with a target price of $120.00, indicating a -50% downside [6]. - Rivian (RIVN) has a price of $11.60 with a target price of $11.00, reflecting a -5% downside [6]. Global Auto Parts Suppliers Valuation Metrics - The average EV/EBITDA for US auto parts suppliers is projected at 1.8x for 2024, with a corresponding EBITDA margin of 12% [22]. - Aptiv (APTV) is rated "Overweight" with a current price of $51.71 and a target price of $102, indicating a 97% upside [22]. - Borg Warner (BWA) is rated "Overweight" with a price of $26.45 and a target price of $46, representing a 74% upside [22]. - Lear Corp (LEA) is rated "Overweight" with a price of $79.42 and a target price of $140, indicating a 76% upside [22]. Performance Metrics - The report indicates that the average revenue CAGR for US auto parts suppliers is projected to be 2% from 2023 to 2025 [74]. - The EBITDA margin for US auto parts suppliers is expected to be around 12% in 2025, with some companies showing higher margins [74][83]. - The report also highlights the financial returns of various suppliers, with some companies achieving significant returns on invested capital (ROIC) [54][56].

Group 1: Trade and Market Impact - Investors showed relief on April 22 due to signs of easing trade tensions, with hints from President Trump and Treasury Secretary Scott Bessent about potential reductions in the 145% tariffs on Chinese goods [1] - The positive developments regarding tariffs have led to a bullish market trend since April 22, with expectations of further gains as more tariff-related good news is anticipated [2] Group 2: Stock Screening and Recommendations - A screening process has been designed to identify stocks based on improving broker recommendations and upward revisions in earnings estimates over the past four weeks, incorporating the price/sales ratio as a complementary valuation metric [3] - The screening criteria include a net upgrade in ratings, percentage change in earnings estimates, price-to-sales ratio, stock price above $5, average daily volume over 100,000 shares, and market capitalization in the top 3000 [4][5] Group 3: Featured Stocks - Avis Budget operates as a leading vehicle rental operator with a fleet of nearly 695,000 vehicles, benefiting from strong demand in North America [6] - ABM Industries provides integrated facility solutions and has a strong earnings surprise history, with an average beat of 9.6% over the last four quarters [7] - CVR Energy focuses on renewable energy and petroleum refining, committed to developing renewable biofuels [9] - Delek US Holdings is an independent refiner with significant competitive advantages in the Permian Basin, achieving an average earnings beat of 22.3% [10][11] - Asbury Automotive Group's diversified product mix and e-commerce platform, Clicklane, are driving growth and improving its risk profile [11][12]

Core Viewpoint - The article emphasizes the importance of value investing and highlights Asbury Automotive Group (ABG) as a strong value stock based on various financial metrics [2][8]. Group 1: Company Overview - Asbury Automotive Group (ABG) currently holds a Zacks Rank of 2 (Buy) and an A for Value, indicating strong potential for investors [4]. - The stock is trading at a P/E ratio of 8.41, which is slightly below the industry average of 8.51 [4]. - ABG's Forward P/E has fluctuated between 6.61 and 11.25 over the past 12 months, with a median of 8.39 [4]. Group 2: Financial Ratios - ABG has a P/B ratio of 1.23, which is significantly lower than the industry average of 2.18, suggesting a favorable valuation [5]. - The P/S ratio for ABG is 0.25, compared to the industry's average of 0.26, indicating that the stock is reasonably valued based on sales [6]. - The P/CF ratio for ABG stands at 7.79, which is lower than the industry average of 9.88, further supporting the notion of undervaluation [7]. Group 3: Investment Potential - The combination of ABG's strong earnings outlook and favorable financial ratios suggests that the stock is likely undervalued at the moment, making it an attractive option for value investors [8].

Group 1 - Investors in Asbury Automotive Group, Inc. (ABG) should monitor the stock due to significant activity in the options market, particularly the Apr 17, 2025 $200.00 Call which has high implied volatility [1] - Implied volatility indicates the market's expectation of future price movement, suggesting that investors anticipate a significant change in Asbury's stock price, possibly due to an upcoming event [2] - Asbury currently holds a Zacks Rank 3 (Hold) in the Automotive - Retail and Wholesale industry, which is in the top 18% of the Zacks Industry Rank, although the Zacks Consensus Estimate for the current quarter has decreased from $7.07 to $6.67 per share over the last 60 days [3] Group 2 - The high implied volatility surrounding Asbury's stock may indicate a developing trading opportunity, as options traders often seek to sell premium on options with high implied volatility to benefit from time decay [4]

Core Viewpoint - The U.S. is experiencing heightened tariff tensions, particularly affecting major trading partners like Canada, Mexico, and China, leading to retaliatory measures and increased trade volatility [1][2]. Group 1: Market Impact - The trade war is expected to create increased volatility and uncertainty in U.S. equity markets, but investors are encouraged to remain engaged with stocks [2]. - A screening process has been developed to identify stocks with improving broker recommendations and upward revisions in earnings estimates over the past four weeks [3]. Group 2: Screening Criteria - The screening criteria include net upgrades in broker ratings, percentage change in earnings estimates, and price-to-sales ratios, focusing on companies in the bottom 10% of this ratio [4][5]. - Additional criteria include a stock price greater than $5, an average daily volume exceeding 100,000 shares, and a market value ranking in the top 3000 [5]. Group 3: Selected Stocks - Cardinal Health (CAH) is a nationwide drug distributor with an expected earnings growth rate of 5.4% for the current year, and its earnings estimates have improved by 1.5% over the last 60 days [6][7]. - DXC Technology is benefiting from its digital business and partnerships, with a 5.4% increase in earnings estimates over the past 60 days and a strong earnings surprise history [7][8]. - Cross Country Healthcare (CCRN) is experiencing growth in its home care staffing business and has a Zacks Rank of 3, with earnings surpassing estimates in three of the last four quarters [9]. - Avnet (AVT) is capitalizing on the defense and data center markets, with a focus on Internet of Things capabilities and a Zacks Rank of 3 [10][11]. - Asbury Automotive Group (ABG) is leveraging its diversified product mix and e-commerce platform for growth, with a recent increase in earnings estimates [11][12].

Financial Performance - Total revenue for 2024 reached $17,188.6 million, an increase of 15.8% compared to $14,802.7 million in 2023 [389]. - Net income for 2024 was $430.3 million, down 28.5% from $602.5 million in 2023 [392]. - Gross profit for 2024 was $2,948.6 million, compared to $2,755.8 million in 2023, reflecting a gross margin improvement [389]. - Comprehensive income for 2024 was $426.1 million, down from $589.1 million in 2023, reflecting overall market conditions [398]. - Earnings per share (diluted) for 2024 was $21.50, down from $28.74 in 2023, a decline of 25.5% [389]. Assets and Liabilities - The company’s total assets increased to $10,337.0 million in 2024, compared to $10,159.4 million in 2023, marking a growth of 1.8% [387]. - Current liabilities decreased slightly to $2,836.3 million in 2024 from $2,875.7 million in 2023 [387]. - Long-term debt decreased to $3,023.9 million in 2024 from $3,121.2 million in 2023, a reduction of 3.1% [387]. - The company had total debt of $3.16 billion as of December 31, 2024, excluding floor plan notes payable and certain debt issuance costs [456]. - As of December 31, 2024, total mortgage notes payable outstanding were $29.6 million, down from $31.9 million in 2023, with a revised interest rate of 5.8% [538]. Cash Flow - Cash provided by operating activities increased significantly to $671.2 million in 2024, compared to $313.0 million in 2023, and $696.0 million in 2022 [398]. - The company experienced a net increase in cash and cash equivalents of $23.7 million for the year ended December 31, 2024, compared to a decrease of $(189.6) million in 2023 [399]. - The net cash provided by financing activities for the year ended December 31, 2024, was $(510.3) million, a significant decrease compared to $1,175.8 million in 2023 [399]. Inventory and Receivables - The company reported a 10.5% increase in accounts receivable, netting $285.5 million in 2024 versus $226.1 million in 2023 [387]. - Inventories increased to $1,978.8 million in 2024, up from $1,768.3 million in 2023, indicating an 11.9% rise [387]. - Total inventories, net, rose to $1,978.8 million in 2024 from $1,768.3 million in 2023, with new vehicle inventories at $1,450.6 million [483]. Acquisitions and Divestitures - The acquisition of Jim Koons Dealerships on December 11, 2023, involved a total purchase price of approximately $1.50 billion, including $256.1 million in new vehicle floor plan financing [472]. - The Koons acquisition added $2,805.5 million in revenue and $86.9 million in net income to the consolidated statements for the year ended December 31, 2024 [476]. - The company completed dealership divestitures, generating proceeds of $196.3 million in 2024, compared to $30.7 million in 2023 [398]. Impairments and Charges - The company recorded impairment charges of $134.1 million related to manufacturer franchise rights during the second quarter of 2024 [369]. - The company recognized asset impairments of $149.5 million in 2024, compared to $117.2 million in 2023, indicating an increase in asset impairment charges [509]. - The company recorded a goodwill impairment charge of $1.3 million during the year ended December 31, 2024, related to one dealership meeting the assets held for sale criteria [507]. Debt and Financing - The company has six interest rate swap agreements in place to hedge against fluctuations in variable rate cash flows [354]. - The 2023 Senior Credit Facility allows for an increase in the size of the facilities by up to $750.0 million, subject to conditions [515]. - Borrowings under the 2023 Senior Credit Facility bear interest based on Daily Simple SOFR or the Base Rate, with an Applicable Rate ranging from 1.00% to 2.00% [518]. Operational Highlights - The company operates in two reportable segments: Dealerships and Total Care Auto (TCA) [404]. - Major manufacturers contributing to new vehicle sales included Toyota (30%), Ford (13%), and Honda (10%), with no other manufacturer exceeding 5% [461]. - The company expects revenues to be higher during the second and third quarters due to seasonal demand for new vehicles [405]. Investments - The company maintains total investments of $348.6 million as of December 31, 2024 [455]. - The company has a VOBA of $5.6 million related to the acquisition of TCA in 2021, amortized over 5 years [426]. - The company has determined it has both the intent and ability to hold investments until market price recovery, resulting in no credit losses recognized on available-for-sale debt securities during 2024 and 2023 [494].

Group 1: Acquisition Details - Asbury Automotive Group (ABG) has agreed to acquire 33 dealerships, 52 car franchises, and three repair centers from The Herb Chambers Companies for $1.34 billion, expected to close by late Q2 2025 [1] - The acquisition will significantly enhance ABG's presence in the New England market and strengthen its position as a leading auto retailer in the U.S. [2] Group 2: Financial Performance - In the trailing 12-month period, ABG shares have increased by 38.7%, outperforming the Zacks Retail and Wholesale sector's growth of 31% and the Zacks Automotive – Retail and Wholesale industry's return of 23.3% [2] - ABG's same-store new vehicle sales rose by 7% year-over-year and 12% sequentially in Q4 2024, with an average gross profit per unit of $3,661 [7] - The Parts & Service segment saw an 11% increase in same-store gross profit, with the high-margin Customer Pay segment up 13% in Q4 2024 [8] Group 3: Market Position and Valuation - ABG's shares are considered undervalued, with a Value Score of A, trading at a forward 12-month price/sales ratio of 0.34x compared to the sector's 1.68x [9] - The stock is currently trading above both the 50-day and 200-day moving averages, indicating a bullish trend [10] Group 4: Challenges and Estimates - ABG faces inventory constraints, particularly in the used vehicle segment, which may limit volume growth throughout 2025 [13] - The Zacks Consensus Estimate for ABG's Q1 2025 revenues is $4.3 billion, reflecting a year-over-year growth of 2.44%, while the EPS estimate is $6.76, down 4.1% over the past 30 days [15] - For full-year 2025, revenues are estimated at $17.21 billion, indicating a growth of 0.13%, with EPS pegged at $26.80, down 0.7% [16]