Asbury Automotive Group(ABG) - 2024 Q2 - Quarterly Report

Revenue and Profit Growth - Consolidated revenue for the six months ended June 30, 2024, was $8.45 billion, up from $7.32 billion in the prior year, reflecting a growth of approximately 15.4%[108] - Consolidated gross profit for the six months ended June 30, 2024, was $1.48 billion, compared to $1.41 billion for the prior year, indicating an increase of about 4.9%[108] - The increase in revenue and gross profit is primarily attributed to the acquisition of the Jim Koons Dealerships, offset by the negative impact of the CDK outage and lower gross profit per vehicle sold[108] - Total revenue for the second quarter of 2024 increased by $503.7 million (13%) to $4,246.2 million compared to $3,742.5 million in the second quarter of 2023[114] - New vehicle revenue rose by $222.2 million (11%) to $2,164.9 million, while used vehicle revenue increased by $200.7 million (18%) to $1,308.0 million[114] - Gross profit for the second quarter of 2024 was $730.7 million, a $17.6 million (2%) increase from $713.1 million in the same period last year[114] - Total revenue for the six months ended June 30, 2024, increased by $1,122.6 million (15%) to $8,447.4 million compared to $7,324.8 million in 2023[144] - New vehicle revenue rose by $518.8 million (14%) to $4,229.1 million, while used vehicle revenue increased by $431.1 million (19%) to $2,664.9 million[144] Asset Impairments and Expenses - The company recorded asset impairments of $135.4 million related to franchise rights for certain underperforming stores during the three months ended June 30, 2024[110] - Income from operations decreased by $187.2 million (65%) to $100.5 million, primarily due to $135.4 million in asset impairments[115] - Total other expenses, net increased by $35.9 million (135%) primarily due to a $20.2 million rise in floor plan interest expense[115] - Selling, general, and administrative (SG&A) expenses increased by $133.6 million (16%) to $945.1 million compared to $811.6 million in the prior year[144] - Asset impairments recognized during the three months ended June 30, 2024, totaled $135.4 million, compared to no impairment charges in the same period of 2023[138] - Floor plan interest expense surged by $20.2 million to $21.0 million for the three months ended June 30, 2024, compared to $0.8 million in 2023[139] - Other interest expense increased by $5.8 million (15%) to $45.1 million, driven by a $6.3 million rise in credit facility interest expense[139] Vehicle Sales Performance - New vehicle units sold increased by 4,419 (12%) to 42,679 units compared to 38,260 units in the prior year[117] - The seasonally adjusted annual rate (SAAR) for new vehicle sales in the U.S. was approximately 15.6 million, reflecting an increase from 15.5 million in the same period last year[121] - Total new vehicle units sold increased by 10,590 (15%) to 83,356 units for the six months ended June 30, 2024[149] - Same store new vehicle revenue decreased by $125.7 million (3%) as a result of a 3% decrease in new vehicle units sold[151] Parts and Service Revenue - Parts and service revenue increased by $54.7 million (10%) to $580.9 million, driven by a $40.7 million (15%) increase in customer pay revenue and a $13.1 million (20%) increase in warranty revenue[130] - Total parts and service gross profit rose by $47.9 million (16%) to $339.9 million, with same store gross profit increasing by $10.5 million (4%) to $299.9 million[131] - Parts and service revenue increased by $129.5 million (12%) to $1,171.2 million for the six months ended June 30, 2024, driven by a $89.1 million (16%) increase in customer pay revenue[158] - Total parts and service gross profit rose by $99.9 million (17%) to $674.0 million, with same store gross profit increasing by $26.3 million (5%) to $594.7 million[160] Financial Performance and Net Income - Net income fell by $168.2 million (86%) to $28.1 million, with diluted net income per share decreasing to $1.39 from $9.34[115] - Net income for the six months ended June 30, 2024, decreased by $202.5 million (54%) to $175.2 million compared to $377.7 million in 2023[144] - The effective tax rate for the three months ended June 30, 2024, was 26.1%, up from 24.8% in the prior year, with an estimated effective tax rate of 25.0% for the year ended December 31, 2024[141] Share Repurchase and Capital Allocation - The company repurchased 432,389 shares for $93.2 million during the six months ended June 30, 2024, supporting its capital allocation priorities[108] - The company repurchased 432,389 shares of common stock for a total of $93.2 million during the six months ended June 30, 2024, compared to 1,070,126 shares for $220.3 million in 2023[191] Impact of CDK Outage - The CDK outage negatively impacted financial results due to fewer new and used vehicle sales and reduced parts and service volumes[105] - The CDK outage negatively impacted both new and used vehicle revenue and gross profit during the quarter ended June 30, 2024[120][126] - The CDK outage negatively impacted parts and service revenue and gross profit during the quarter[131] - The CDK outage negatively impacted financial results during the quarter ended June 30, 2024, affecting new and used vehicle sales and parts and service volumes[146] Liquidity and Cash Flow - Total available liquidity as of June 30, 2024, was $806.0 million, including cash and cash equivalents of $52.6 million[174] - Adjusted cash flow provided by operating activities was $402.0 million for the six months ended June 30, 2024, compared to $418.3 million in the same period of 2023[183] - Net cash provided by operating activities for the six months ended June 30, 2024, was $22.7 million, down from $221.7 million in 2023, with adjusted cash flow decreasing from $418.3 million to $402.0 million[184] - Net cash used in investing activities was $18.0 million for the six months ended June 30, 2024, compared to $62.5 million in 2023, with capital expenditures rising from $40.8 million to $65.4 million[187] Other Financial Metrics - The company has $1.85 billion of total variable interest rate debt outstanding, with a potential $18.5 million change in annual interest expense for a 100 basis point change in interest rates[200] - Non-trade floor plan borrowings increased from $3.72 billion in 2023 to $4.83 billion in 2024, while repayments rose from $3.72 billion to $5.08 billion[190]