Financial Data and Key Metrics Changes - The company reported a record revenue of $4.7 billion for the fourth quarter, with a gross profit of $793 million, marking a gross profit margin of 17% and an expansion of 31 basis points year-over-year [8][9] - Adjusted earnings per share (EPS) for the quarter was $6.67, with an adjusted net income of $129 million [15][9] - The adjusted operating margin was 5.4%, and adjusted EBITDA reached $250 million [8][9] Business Line Data and Key Metrics Changes - New vehicle sales volume decreased by 6% year-over-year, with average gross profit per vehicle at $3,135, reflecting a slight decrease [10] - Used vehicle gross profit increased by 6% year-over-year, with retail gross profit per unit rising 18% to $1,749 [11] - Parts and service gross profit increased by 2% year-over-year, with total revenue growing 12% to $658 million, achieving a gross profit margin of 58.1% [13] Market Data and Key Metrics Changes - Same-store new vehicle revenue was down 6%, following a contraction in the seasonally adjusted annual rate (SAR) of 5% [10] - The company noted a pullback in consumer spending in parts and service, although there was optimism about the fixed operations business outlook [7] Company Strategy and Development Direction - The company is focused on managing its portfolio and allocating capital to areas that generate the greatest returns, with plans to divest four stores in the quarter and another nine by the end of the first quarter [8][6] - The transition to the Tekion platform is a key strategic initiative, with 38 stores operating on the new system by year-end [5][6] - The company aims to maintain a disciplined approach to capital allocation, balancing share repurchases with strategic acquisitions [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning for 2026, despite challenges such as weather disruptions and inventory management [20][21] - The first half of 2026 is expected to be more challenging, with improvements anticipated in the second half as inventory levels normalize [21][22] - The company is optimistic about the parts and service business, citing the aging vehicle population and increasing technology complexity as growth drivers [13][14] Other Important Information - The company deployed $186 million in capital expenditures and repurchased $50 million in shares during the quarter [5][8] - The transaction-adjusted net leverage ratio was 3.2x at year-end, better than expected, providing room for continued strategic capital decisions [16] Q&A Session Summary Question: Outlook for 2026 and SAR forecast - Management anticipates a slight decline in SAR but expects a recovery in certain brands, particularly Stellantis, which faced challenges in 2025 [20] Question: Used vehicle gross profit normalization - Management is confident in their strategy to maximize gross profit per unit while managing inventory levels effectively [26] Question: Customer pay growth in parts and service - Management acknowledged dissatisfaction with customer pay growth and emphasized a renewed strategy to improve performance in this area [35] Question: Tekion rollout and dual expenses - The rollout of Tekion is expected to be completed by the third quarter of 2026, with initial duplicated costs anticipated in the first half of the year [44][45] Question: Demand environment for new and used vehicles - Management noted a strong start to January before weather disruptions impacted sales, with expectations for recovery as conditions improve [59]

Asbury Automotive Group (NYSE:ABG) Q4 2025 Earnings call February 05, 2026 09:00 AM ET Company ParticipantsChris Reeves - VP Finance and TreasurerDan Clara - COODaniela Haigian - VP of Equity ResearchDavid Hult - President and CEOMichael Welch - SVP and CFORajat Gupta - Equity Derivatives StructuringConference Call ParticipantsGlenn Chin - Senior Equity Analyst of AutomotiveJeff Lick - Managing Director and Research AnalystJohn Babcock - Stock AnalystMatthew Raab - Equity Research AnalystOperatorGreetings a ...

Core Insights - The automotive retail industry is experiencing a digital transformation, with major dealership groups investing in cloud-based platforms to enhance operational efficiency [2] Group 1: Company Performance - Asbury Automotive operates 175 new vehicle dealerships and 39 collision centers, generating $4.80 billion in revenue during Q3 2025 [3] - AutoNation, the largest automotive retailer in the U.S., reported $27.92 billion in trailing twelve-month revenue [4] - Lithia Motors, the second-largest retailer, achieved $37.61 billion in revenue [5] Group 2: Digital Initiatives - Asbury is implementing Tekion's cloud-based dealership management system across its network, with a focus on improving operational efficiency [3][7] - AutoNation has invested in digital retail innovations, allowing customers to complete approximately 80% of the car-buying process online [4] - Lithia Motors has developed its Driveway digital platform, averaging 1.3 million unique visitors per month in Q2 2025 [5] Group 3: Financial Metrics - Asbury posted a 13% revenue growth year-over-year in Q3, outperforming AutoNation's 6.9% and Lithia's 4.9% [6][8] - Asbury's profit margin stands at 3.15%, exceeding AutoNation's 2.38% despite AutoNation's larger scale [6] - Asbury trades at an 8x P/E ratio, compared to AutoNation's 12x and Lithia's 10x, reflecting its faster growth [8]

Financial Data and Key Metrics Changes - The company generated a record revenue of $4.8 billion in Q3 2025, with a gross profit of $803 million and a gross profit margin of 16.7% [7] - Adjusted earnings per share (EPS) was $7.17, with adjusted EBITDA at $261 million [7][16] - Adjusted net income for the quarter was $140 million, excluding various non-cash and one-time expenses [16] Business Line Data and Key Metrics Changes - Same-store revenue for new vehicles increased by 8% year-over-year, with unit sales up by 7% [9] - Used vehicle unit volume decreased by 4% year-over-year, but used retail gross profit per unit (GPU) increased to $1,551 [10] - Parts and service gross profit rose by 7% year-over-year, with a gross profit margin of 58.8% [13] Market Data and Key Metrics Changes - The company experienced strong demand for electric vehicles (EVs), with EV unit sales doubling from Q2 to Q3 [25] - Same-store new vehicle day supply was 58 days at the end of September, indicating a stable inventory level against consumer demand [10] Company Strategy and Development Direction - The company is focused on deleveraging its balance sheet and optimizing its portfolio while being opportunistic with share repurchases [6][20] - The integration of the Chambers Group is expected to enhance operating metrics and contribute positively to gross profits [4][26] - The strategy emphasizes large, transformative acquisitions in desirable markets [6] Management's Comments on Operating Environment and Future Outlook - Management noted that the fourth quarter is traditionally strong for luxury vehicle sales, with expectations for margins to hold up well [25] - There are anticipated headwinds in the used vehicle market due to a softening labor market and vehicle affordability challenges [10] - The company expects to see efficiency gains from the rollout of Tekion, with significant savings projected by early 2027 [60][61] Other Important Information - The company divested four stores in July, generating annualized revenue of $300 million, as part of its disciplined portfolio management [6] - The adjusted SG&A as a percentage of gross profit was 64.2%, with expectations for reduction as the Tekion rollout progresses [17] Q&A Session Summary Question: Impact of Chambers acquisition on new GPUs - Management confirmed that the Chambers acquisition is expected to have a slightly accretive effect on new GPUs in Q4 [26] Question: Changes in TCA outlook and EPS impact - Management explained that the revised TCA outlook reflects changes in the SAR assumption and the impact of acquisitions and divestitures [31][33] Question: Capital allocation priorities - Management indicated a focus on share repurchases and debt reduction, with M&A remaining a consideration depending on market conditions [44] Question: Trends in luxury vehicle sales - Management noted that luxury vehicle sales remain strong, with no material changes in consumer demand observed [51] Question: Strategies for increasing used vehicle volume - Management highlighted the use of digital marketing tools and a focus on service drives to acquire more used vehicles [65]