SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 25, 2002
Asbury Automotive Group, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 5511 58-2241119
(State or Other (Primary Standard (IRS Employer
Jurisdiction of Identification Industrial Classification Number)
Incorporation) Code Number)
3 Landmark Square
Suite, 500
Stamford, CT 06901
(Address of Principal Executive Office)
Registrant's telephone number, including area code: (203) 356-4400
Item 7. Financial Statements and Exhibits
(c) Exhibits
Exhibit No. Description
99.1 Press Release dated July 25, 2002
Item 9. Regulation FD Disclosure.
The registrant issued a press release today announcing the
registrant's earnings for the second quarter ending June 30, 2002, which press
release is attached hereto as exhibit 99.1.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Asbury Automotive Group, Inc.
By: /s/ Thomas F. Gilman
----------------------------------
Name: Thomas F. Gilman
Title: Chief Financial Officer
Date: July 25, 2002
EXHIBIT INDEX
Exhibit No. Description
99.1 Press Release dated July 25, 2002
EXHIBIT 99.1
ASBURY
AUTOMOTIVE GROUP Contact Information: Stacey Yonkus
Asbury Automotive
203-356-4424
investor@asburyauto.com
ASBURY AUTOMOTIVE GROUP REPORTS RECORD
SECOND QUARTER FINANCIAL RESULTS
STAMFORD, Conn. - July 25, 2002 - Asbury Automotive Group, Inc. (NYSE: ABG),
one of the largest automotive retailers in the U.S., today reported record
financial results for the second quarter and six months ended June 30, 2002.
Net income from continuing operations for the quarter was $13.8 million, or
$0.40 per diluted share. Asbury's quarterly net income totals for 2002 are not
comparable with those from 2001 due to the tax impact of Asbury's conversion
from a partnership to a "C" corporation, in connection with Company's initial
public offering earlier this year. On a more comparable basis, Asbury's income
from continuing operations before taxes and minority interest increased $7.4
million, or 47.5% from the second quarter of 2001, after adjusting for the
elimination of goodwill amortization. As required by SFAS 144, the Company's
net income for the quarter of $12.8 million, or $0.37 per diluted share,
included a loss from discontinued operations primarily related to the real
estate assets of a disposed franchise.
"For our second consecutive quarter as a public company, Asbury's earnings
have exceeded the analysts' consensus estimate," said Kenneth B. Gilman,
President and CEO. "Sales and profitability for both new and used vehicles
remained solid. We were particularly pleased with the substantial growth in
our finance and insurance business, as well as the continued strength in our
parts and service business. Overall, despite a challenging economic
environment, Asbury's gross profit rose 11.7 percent, to 15.7 percent of
revenues from 15.3 percent a year ago. These solid results reflect continued
profit improvements in our core luxury and import brand businesses, as well as
strength in our domestic lines."
Financial highlights for the quarter included:
o The Company's total revenues were approximately $1.2 billion, up 8.9
percent from a year ago.
o New vehicle retail sales rose 7.8 percent, and new vehicle retail gross
profit increased 14.4 percent.
o Used vehicle retail sales were up 8.4 percent, with related gross profit
rising 10.6 percent.
o Parts and service revenues increased 10.0 percent, with related gross
profit increasing 9.1 percent.
o Net finance and insurance (F&I) income was up 13.8 percent from a year
ago, while F&I per vehicle retailed rose 9.1 percent to $726.
o Same-store retail sales (excluding fleet and wholesale business) were up
0.4 percent, as Asbury's new car sales were slightly stronger than the
industry average, while used cars were off 2.2%.
o Same-store retail gross profits, the Company's preferred productivity
metric, increased 3.5 percent.
o Income from operations rose to $36.1 million from $30.5 million a year
ago. Results for the second quarter of 2001 included $2.5 million in
goodwill amortization, which has been eliminated this year pursuant to
Statement of Financial Accounting Standards No. 142 "Goodwill and Other
Intangible Assets" ("SFAS 142").
o As required by SFAS 142, the Company completed its fair value benchmark
assessments and has determined that it does not have impairment.
o Total interest expense declined 27 percent from a year ago, reflecting
the current lower interest rate environment.
o Income from continuing operations before taxes and minority interest was
$22.9 million, a 47.5 percent increase from a year ago (after adjusting
for the elimination of goodwill amortization).
o The Company completed a $250 million offering of 9% Senior Subordinated
Notes due 2012, significantly enhancing its financing flexibility and
increasing its overall acquisition borrowing capacity.
For the first half of 2002, pro-forma net income from continuing operations
(as described below) was $25.2 million, or $0.74 per share. Income from
continuing operations before taxes, minority interest and extraordinary loss
was $41.7 million, up 51.9% from the same period last year after adjusting for
goodwill amortization. For the 2002 period prior to Asbury's IPO, the results
include a pro forma tax provision as if the Company were a public "C"
corporation. The first-half results also exclude a non-recurring deferred
income tax provision required by SFAS 109 related to Asbury's change in tax
status from a limited liability company to a "C" corporation. On a GAAP basis,
including the non-recurring deferred income tax provision and the results of
discontinued operations, the Company's net income for the first six months of
2002 was $17.9 million, or $0.56 per share.
Mr. Gilman concluded, "The inter-relationship of the automotive retail
industry and the automotive manufacturers - including the manufacturers' need
to sustain unit sales - and the stability that the retailers enjoy from our
diverse income streams continue to support our optimistic outlook for the
balance of 2002 and beyond. We continue to believe that automotive retailers,
particularly those with a great brand mix such as Asbury, are not prone to the
same economic pressures the manufacturers face. History has clearly
illustrated the consistent profit and cash flow performance of auto retailers
during various economic cycles. In addition, with the continued steady gains
in market share by the import brands, Asbury's business model is well
positioned to deliver consistent results. In these challenging market times I
believe that our business model with its platform approach and focus on luxury
and mid-line import brands, provides an element of stability which is not
apparent or available in other retail sectors."
The Company also issued the following range of forward-looking estimates for
the full year 2002:
o Revenues $4.43 - $4.49 billion
o Gross profit 15.9% - 16.0%
o Operating expenses 12.6% - 12.7%
o Interest no change in rates assumed
o Effective tax rate 39% - 40%
o EPS $1.57 - 1.59 per share
When using these forward-looking estimates to establish or evaluate an
earnings range for the Company, the variables are not entirely dependent upon
one another because actual results will likely fall within the indicated
ranges.
Asbury will host a conference call to discuss the quarterly results later this
morning, at 10:00 a.m. Eastern Daylight Time. The conference will be webcast
live on the Internet and can be accessed by logging onto www.asburyauto.com.
In addition, a live audio of the call will be accessible to the public by
calling (800) 967-7184. International callers, please dial (719) 457-2633.
Callers should dial in approximately 10 minutes before the call begins. A
conference call replay will be available one hour following the call for seven
days, and can be accessed by dialing (888) 203-1112 (domestic) or (719)
457-0820 (international); access code - 431667.
About Asbury Automotive Group
Asbury Automotive Group, Inc. (www.asburyauto.com), headquartered in Stamford,
Connecticut, is one of the largest automobile retailers in the U.S., with 2001
revenues of $4.3 billion. Built through a combination of organic growth and a
series of strategic acquisitions over the past six years, Asbury now operates
through nine geographically concentrated, individually branded "platforms".
These platforms operate 91 retail auto stores, encompassing 127 franchises for
the sale and servicing of 36 different brands of American, European and Asian
automobiles. Asbury believes that its product mix includes one of the highest
proportions of luxury and mid-line import brands among leading U.S. public
automotive retailers. The company offers customers an extensive range of
automotive products and services, including new and used vehicle sales and
related financing and insurance, vehicle maintenance and repair services,
replacement parts and service contracts.
Forward-Looking Statements
This press release contains "forward-looking statements" as that term is
defined in the Private Securities Litigation Reform Act of 1995. The
forward-looking statements include statements relating to goals, plans and
projections regarding the company's financial position, results of operations,
market position, product development and business strategy. These statements
are based on management's current expectations and involve significant risks
and uncertainties that may cause results to differ materially from those set
forth in the statements. These risks and uncertainties include, among other
things, market factors, the company's relationships with vehicle manufacturers
and other suppliers, risks associated with the company's substantial
indebtedness, risks related to pending and potential future acquisitions,
general economic conditions both nationally and locally and governmental
regulations and legislation. There can be no guarantees the company's plans
for future operations will be successfully implemented or that they will prove
to be commercially successful. These and other risk factors are discussed in
the company's registration statement on Form S-1 and in its other filings with
the Securities and Exchange Commission. We undertake no obligation to publicly
update any forward-looking statement, whether as a result of new information,
future events or otherwise.
ASBURY AUTOMOTIVE GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands except per share data)
(unaudited)
For the Three
Months Ended For the Six Months Ended
------------------ ----------------------------------
June 30, June 30, June 30,
June 30, June 30, 2002 Pro June 30, 2001
2002 2001 Forma(a) Actual(b) Actual
-------- -------- ---------- ---------- ----------
REVENUES:
New vehicle $ 682,201 $ 634,823 $1,313,227 $1,313,227 $1,204,428
Used vehicle 311,981 280,608 598,430 598,430 561,079
Parts, service and collision repair 131,251 119,350 255,405 255,405 235,782
Finance and insurance, net 29,346 25,792 55,910 55,910 48,932
---------- ---------- ---------- ---------- ----------
Total revenues 1,154,779 1,060,573 2,222,972 2,222,972 2,050,221
COST OF SALES
New vehicle 624,845 584,235 1,203,529 1,203,539 1,107,768
Used vehicle 284,541 256,186 543,529 543,529 511,826
Parts, service and collision repair 63,658 57,389 122,237 122,237 113,770
---------- ---------- ---------- ---------- ----------
Total cost of sales 973,044 897,810 1,869,305 1,869,305 1,733,364
---------- ---------- ---------- ---------- ----------
GROSS PROFIT 181,735 162,763 353,667 353,667 316,857
OPERATING EXPENSES:
Selling, general and administrative 139,650 124,561 272,590 272,590 241,432
Depreciation and amortization 6,034 7,662 11,862 11,862 14,702
---------- ---------- ---------- ---------- ----------
Income from operations 36,051 30,540 69,215 69,215 60,723
OTHER INCOME (EXPENSE):
Floor plan interest expense (4,620) (7,575) (8,957) (8,957) (16,484)
Other interest expense (8,956) (10,988) (18,734) (18,734) (23,429)
Interest income 349 601 663 663 1,785
Net losses from unconsolidated entities - - (100) (100) 2
Other income (expense) 55 416 (338) (338) (149)
---------- ---------- ---------- ---------- ----------
Total other expense, net (13,172) (17,546) (27,466) (27,466) (38,275)
---------- ---------- ---------- ---------- ----------
Income before income taxes, minority
interest, extraordinary loss and
discontinued operation 22,879 12,994 41,749 41,749 22,448
INCOME TAX PROVISION:
Income tax expense 9,106 1,578 16,599 11,300 2,746
Tax adjustment upon conversion from an L.L.C.
to a corporation - - 11,553
MINORITY INTEREST - (359) - - (502)
---------- ---------- ---------- ---------- ----------
Income before extraordinary loss and
discontinued operation 13,773 11,057 25,150 18,896 19,200
EXTRAORDINARY LOSS ON EARLY EXTINGUISHMENT
OF DEBT - - - - (1,433)
DISCONTINUED OPERATIONS, net of tax (993) (64) - (955) (97)
---------- ---------- ---------- ---------- ----------
Net income $ 12,780 $ 10,993 $ 25,150 $ 17,941 $ 17,670
========== ========== ========== ========== ==========
EARNINGS PER COMMON SHARE:
Basic
Income from continuing operations $ 0.41 $ 0.74 $ 0.59
====== ====== ======
Net income $ 0.38 $ 0.74 $ 0.56
====== ====== ======
Diluted
Income from continuing operations $ 0.40 $ 0.74 $ 0.59
====== ====== ======
Net income $ 0.37 $ 0.74 $ 0.56
====== ====== ======
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Basic 34,000 34,000 32,210
====== ====== ======
Diluted 34,084 34,048 32,258
====== ====== ======
(a) Pro forma column includes a tax provision as if the Company were a "C" corporation for the entire six months as
well as assumes that all shares were outstanding for the full six months. This column excludes a one-time charge to
establish a net deferred tax liability upon the Company's conversion to a "C" corporation as required by SFAS 109.
(b) Reconciliation of GAAP net income to pro forma net income:
GAAP net income $ 17,941
Tax adjustment upon conversion from an L.L.C. to a corporation 11,553
Pro forma income tax charge (5,299)(c)
Discontinued operations 955
--------
Pro forma net income $ 25,150
========
(c) Represents the pro forma tax charge for the time period during the quarter that the company was an L.L.C.
ASBURY AUTOMOTIVE GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
ASSETS June 30, December
2002 31, 2001
--------- ----------
(unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 67,143 $ 60,506
Contracts-in-transit 85,160 93,044
Accounts receivable, net 89,888 81,347
Inventories 526,108 496,054
Prepaid and other current assets 36,843 26,663
---------- ----------
Total current assets 805,142 757,614
PROPERTY AND EQUIPMENT, net 262,803 256,402
GOODWILL, net 396,223 392,856
OTHER ASSETS 58,749 58,141
---------- ----------
Total assets $1,522,917 $1,465,013
========== ==========
LIABILITIES AND STOCKHOLDERS'/MEMBERS' EQUITY
CURRENT LIABILITIES:
Floor plan notes payable $ 456,500 $ 451,375
Short-term debt 10,167 10,000
Current maturities of long-term debt 42,418 35,789
Accounts payable and accrued liabilities 112,772 112,833
---------- ----------
Total current liabilities 621,857 609,997
LONG-TERM DEBT 445,098 492,548
OTHER LIABILITIES 39,728 14,561
STOCKHOLDERS'/MEMBERS' EQUITY 416,234 347,907
---------- ----------
Total liabilities and stockholders'/members' equity $1,522,917 $1,465,013
========== ==========
ASBURY AUTOMOTIVE GROUP, INC.
SELECTED DATA
(dollars in thousands except per unit data)
(unaudited)
2002 2001 2002 2001
---- ---- ---- ----
RETAIL UNITS:
New 24,931 23,960 23,171 23,794
Used 15,511 14,806 13,949 14,730
--------- ---------- ---------- ----------
Total 40,442 38,766 37,120 38,524
REVENUE:
New retail $ 671,233 $ 622,381 $ 621,548 $ 619,365
Used retail 237,522 219,135 213,413 218,267
Parts, service and collision repair 131,251 119,350 123,679 118,743
Finance and insurance, net 29,346 25,792 27,479 25,677
Fleet 10,968 12,442 6,712 12,442
Wholesale 74,459 61,473 69,571 61,168
--------- ---------- ---------- ----------
Total 1,154,779 1,060,573 1,062,402 1,055,662
GROSS MARGIN %:
New retail 8.5% 8.0%
Used retail 11.9% 11.6%
Parts, service and collision repair 51.5% 51.9%
Finance and insurance, net 100.0% 100.0%
Total 15.7% 15.3%
GROSS PROFIT PER UNIT:
New retail 2,286 $2,079
Used retail 1,818 1,723
Weighted average 2,107 1,943
F&I PVR $726 $665
EBITDA (a) $37,869 $31,644
EBITDA % 3.3% 3.0%
OPERATING INCOME % 3.1% 2.9%
CAPITAL EXPENDITURES $15,030 $16,822
FREE CASH FLOW (b) 793 21,422
June 30, December
2002 31, 2001
-------- ----------
CAPITALIZATION:
Long-term debt (including current portion) $487,516 $ 528,337
Stockholders'/members' equity 416,234 347,907
Total $903,750 $ 876,244
(a) EBITDA is defined as earnings before income taxes, minority interest, extraordinary loss, discontinued operations,
other interest expense, depreciation and amortization and net losses from unconsolidated affiliates.
(b) Free cash flow is defined as net cash provided by operating activities less capital expenditures.