Asbury Automotive Group(US:ABG)2025-07-30 20:52PART I—Financial Information Condensed Consolidated Financial Statements (unaudited) The unaudited statements present the company's financial position, results of operations, and cash flows Condensed Consolidated Balance Sheets Total assets slightly decreased to $10.13 billion while shareholders' equity increased to $3.78 billion as of June 30, 2025 Condensed Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $10,131.6 | $10,337.0 | | Total Current Assets | $3,129.6 | $3,137.9 | | Inventories, net | $1,942.2 | $1,978.8 | | Goodwill | $1,974.7 | $2,044.7 | | Total Liabilities | $6,354.6 | $6,834.9 | | Total Current Liabilities | $2,403.1 | $2,836.3 | | Floor plan notes payable, net | $1,288.6 | $1,694.7 | | Long-term debt | $2,964.1 | $3,023.9 | | Total Shareholders' Equity | $3,777.0 | $3,502.1 | Condensed Consolidated Statements of Income Net income surged in Q2 2025, primarily due to the absence of a prior-year asset impairment charge Q2 Financial Performance (in millions, except EPS) | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $4,373.1 | $4,246.2 | 3.0% | | Gross Profit | $751.9 | $730.7 | 2.9% | | Income from Operations | $257.4 | $100.5 | 156.1% | | Net Income | $152.8 | $28.1 | 443.8% | | Diluted EPS | $7.76 | $1.39 | 458.3% | H1 Financial Performance (in millions, except EPS) | Metric | H1 2025 | H1 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $8,521.6 | $8,447.4 | 0.9% | | Gross Profit | $1,476.1 | $1,480.7 | -0.3% | | Income from Operations | $491.7 | $363.3 | 35.3% | | Net Income | $284.9 | $175.2 | 62.6% | | Diluted EPS | $14.46 | $8.64 | 67.4% | Condensed Consolidated Statements of Cash Flows Operating cash flow significantly increased, driven by higher net income and favorable working capital changes Six Months Ended June 30 Cash Flow Summary (in millions) | Cash Flow Category | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $316.4 | $22.7 | | Net cash provided by (used in) investing activities | $129.1 | $(18.0) | | Net cash (used in) provided by financing activities | $(460.1) | $16.7 | | Net (decrease) increase in cash | $(14.6) | $21.5 | Notes to Condensed Consolidated Financial Statements The notes detail the significant post-quarter Herb Chambers acquisition, divestitures, and a pending FTC legal proceeding - The company operates through two reportable segments: Dealerships and Total Care Auto (TCA), its finance and insurance (F&I) product provider2487 - On July 21, 2025, after the quarter ended, the company completed the acquisition of The Herb Chambers Companies for a preliminary purchase price of approximately $1.82 billion, financed through borrowings and cash3940 - During the first six months of 2025, the company sold seven franchises across multiple locations, recording a pre-tax gain of $10.1 million44 - A pre-tax non-cash franchise rights impairment charge of $14.3 million was recognized in March 2025 in connection with five dealerships classified as assets held for sale51 - The company is involved in an administrative proceeding with the Federal Trade Commission (FTC) regarding alleged violations of the FTC Act and Equal Credit Opportunity Act94 Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes revenue growth to new vehicle sales, with income boosted by the absence of a prior-year impairment charge Results of Operations - Three Months Ended June 30, 2025 vs. 2024 Q2 revenue and operating income grew significantly, aided by a favorable comparison to the prior year's impairment charge - The CDK Global cyber-incident in June 2024 negatively impacted the prior year's results, creating a favorable comparison for Q2 2025 performance121 Q2 2025 Key Performance Indicators vs. Q2 2024 | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | New Vehicle Revenue | $2,303.9M | $2,164.9M | 6% | | Used Vehicle Revenue | $1,285.8M | $1,308.0M | -2% | | Parts & Service Revenue | $601.5M | $580.9M | 4% | | F&I Revenue, net | $182.0M | $192.4M | -5% | | SG&A as % of Gross Profit | 63.2% | 65.2% | -2.0 p.p. | Q2 2025 Gross Profit Per Vehicle Retailed (PVR) vs. Q2 2024 | PVR Category | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | New Vehicle | $3,601 | $3,633 | -1% | | Used Vehicle (Retail) | $1,720 | $1,463 | 18% | | F&I, net | $2,084 | $2,151 | -3% | Results of Operations - Six Months Ended June 30, 2025 vs. 2024 H1 revenue saw modest growth while operating income increased substantially due to lower asset impairment charges H1 2025 Key Performance Indicators vs. H1 2024 | Metric | H1 2025 | H1 2024 | % Change | | :--- | :--- | :--- | :--- | | New Vehicle Revenue | $4,442.0M | $4,229.1M | 5% | | Used Vehicle Revenue | $2,521.6M | $2,664.9M | -5% | | Parts & Service Revenue | $1,189.1M | $1,171.2M | 2% | | F&I Revenue, net | $368.9M | $382.1M | -3% | | SG&A as % of Gross Profit | 63.1% | 63.8% | -0.7 p.p. | H1 2025 Gross Profit Per Vehicle Retailed (PVR) vs. H1 2024 | PVR Category | H1 2025 | H1 2024 | % Change | | :--- | :--- | :--- | :--- | | New Vehicle | $3,527 | $3,814 | -8% | | Used Vehicle (Retail) | $1,654 | $1,556 | 6% | | F&I, net | $2,171 | $2,205 | -2% | Liquidity and Capital Resources The company maintained a strong liquidity position of $1.12 billion, with no share repurchases during the period - Total available liquidity as of June 30, 2025, was $1.12 billion181 Adjusted Cash Flow from Operating Activities (in millions) | Period | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Adjusted Cash Flow | $334.0 | $402.0 | - No shares were repurchased under the share repurchase program in H1 2025185 - The company had $275.9 million remaining on its share repurchase authorization as of June 30, 2025186 - Projected capital expenditures for the full year 2025 are expected to be approximately $273.1 million200 Quantitative and Qualitative Disclosures About Market Risk The company is exposed to interest rate risk on its variable-rate debt, which it mitigates using interest rate swaps - The company has $1.28 billion in variable interest rate debt, where a 100 basis point change would impact annual interest expense by $12.8 million212 - Asbury uses five interest rate swap agreements to hedge against changes in variable rate cash flows related to the SOFR rate214215 Controls and Procedures Disclosure controls were deemed ineffective due to a material weakness at a recently acquired dealership, with remediation underway - Disclosure controls and procedures were deemed not effective as of June 30, 2025, due to a material weakness217 - The material weakness stems from insufficient IT general controls at a third-party DMS vendor for the acquired Koons dealerships219 - Remediation efforts are underway, with the transition of Koons stores to a new DMS nearly complete as of July 2025 and full remediation expected in 2025220 PART II—Other Information Legal Proceedings No new material legal proceedings or developments were reported during the period - No material developments in legal proceedings were reported for the quarter223 Risk Factors No material changes to previously disclosed risk factors were identified in the quarter - No material changes to risk factors were reported for the quarter224 Unregistered Sales of Equity Securities and Use of Proceeds The company did not repurchase shares under its public program but has $275.9 million remaining in its authorization Q2 2025 Share Repurchase Activity | Period | Shares Purchased (Program) | Shares Purchased (Other) | Avg. Price Paid | | :--- | :--- | :--- | :--- | | Apr 2025 | 0 | 72 | $223.54 | | May 2025 | 0 | 138 | $223.57 | | Jun 2025 | 0 | 436 | $245.99 | | Total Q2 | 0 | 646 | N/A | - The company has $275.9 million remaining under its share repurchase authorization as of June 30, 2025226 Other Information No directors or officers adopted, modified, or terminated Rule 10b5-1 trading arrangements during the quarter - No directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement during the quarter228 Exhibits This section lists exhibits filed with the Form 10-Q, including certifications and interactive data files