Asbury Automotive Group(US:ABG)2025-10-29 20:41Financial Performance - Consolidated revenue for the nine months ended September 30, 2025, increased to $13.32 billion, compared to $12.68 billion for the prior year, representing a growth of approximately 5.1%[123] - Consolidated gross profit for the nine months ended September 30, 2025, increased to $2.28 billion, compared to $2.20 billion for the prior year, reflecting a growth of about 3.6%[123] - Total revenue for the three months ended September 30, 2025, increased by $564.2 million (13%) to $4,800.9 million compared to $4,236.7 million in 2024, driven by a $365.4 million (17%) increase in new vehicle revenue[128] - Gross profit for the same period increased by $84.5 million (12%) to $802.5 million, with parts and service gross profit rising by $52.0 million (15%)[128] - Net income increased by $20.8 million (16%) to $147.1 million, with diluted net income per share rising by $1.14 (18%) to $7.52[130] - Total revenue for the nine months ended September 30, 2025 increased by $638.4 million (5%) to $13,322.5 million compared to the same period in 2024[157] - New vehicle revenue rose by $578.2 million (9%) to $6,970.9 million, while used vehicle revenue decreased by $25.8 million (1%) to $3,933.8 million[157] - Gross profit for the nine months ended September 30, 2025 increased by $79.9 million (4%) to $2,278.6 million, driven by a $75.5 million (7%) increase in parts and service gross profit[157][159] Vehicle Sales and Revenue - The increase in consolidated revenue was primarily due to an increase in new vehicle units sold and parts and service volume growth, partially offset by a decrease in used vehicle units sold[123] - New vehicle revenue reached $2,528.9 million, a $365.4 million (17%) increase, with new vehicle units sold rising by 5,463 (13%)[132] - The seasonally adjusted annual rate (SAAR) for new vehicle sales in the U.S. was approximately 16.3 million, up from 15.6 million in the prior year, reflecting higher consumer demand[134] - Total new vehicle units sold increased to 134,003 for the nine months ended September 30, 2025, up from 125,963 in the same period of 2024, reflecting a growth of 8,040 units (6%)[162] - Used vehicle retail units sold increased by 1% to 37,696, while same store retail units sold decreased by 4% to 34,294[135] Expenses and Profitability - Income from operations rose by $9.9 million (4%) to $242.6 million, primarily due to the increase in gross profit, despite a $60.6 million (13%) rise in selling, general, and administrative expenses[129] - Selling, general, and administrative (SG&A) expenses increased by $60.6 million (13%) to $527.1 million for the three months ended September 30, 2025, with SG&A as a percentage of gross profit rising to 65.7%[148] - The company experienced a $11.7 million increase in asset impairment expense during the quarter[129] - Total other expenses, net decreased by $20.6 million (33%), primarily due to a $30.7 million increase in gains from dealership divestitures[130] Acquisitions and Investments - The Herb Chambers acquisition, completed on July 21, 2025, involved an aggregate purchase price of approximately $1.78 billion, comprising 33 dealerships and 52 franchises[118] - The company's operating results for the three and nine months ended September 30, 2025, include the results of the Herb Chambers Businesses, significantly impacting revenue and gross profit increases[124] - The company expects capital expenditures of approximately $175.0 million during 2025 for facility upgrades and technology investments[207] Cash Flow and Liquidity - The company’s ability to generate sufficient cash flows and maintain liquidity is critical for working capital, capital expenditures, and acquisitions[109] - Total available liquidity as of September 30, 2025, was $686.9 million, including cash and cash equivalents of $21.2 million[184] - Net cash provided by operating activities was $623.3 million for the nine months ended September 30, 2025, compared to $427.0 million for the same period in 2024[199] - Net cash used in investing activities totaled $1.49 billion for the nine months ended September 30, 2025, compared to net cash provided of $17.8 million for the same period in 2024[201] - Net cash provided by financing activities was $830.7 million for the nine months ended September 30, 2025, compared to net cash used of $430.2 million for the same period in 2024[208] Market Conditions and Future Outlook - Economic conditions, including rising inflation and interest rates, may adversely impact demand and pricing for the company's products and services[119] - The company expects lower finance and insurance (F&I) revenue and gross profit over the next few years due to changes in revenue recognition from TCA contracts[147] - The company anticipates rolling out TCA products to its Koons stores in Q4 2025 and Herb Chambers stores in 2026[147] - The company noted that consumers are keeping vehicles longer due to higher vehicle costs and interest rates, impacting service revenue trends[170] Financial Ratios and Margins - The gross profit margin for new vehicles decreased to 6.4% from 7.0%, attributed to easing inventory constraints affecting historically high margins[133] - Used vehicle retail gross profit margins increased from 5.1% to 5.2% for all stores during the nine months ended September 30, 2025, driven by higher prices for used vehicles[166] - Total parts and service gross margin improved to 58.8% from 57.3% year-over-year, reflecting better profitability in parts and service operations[171]