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):
April 30, 2003
-------------------------------------------------
Asbury Automotive Group, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware
-----------------------------------------------------------------------
(State or other jurisdiction of incorporation)
5511 01-0609375
- -------------------------- -------------------------------
(Commission File Number) (IRS Employer Identification No.)
Three Landmark Square, Suite 500, Stamford, CT 06901
---------------------------------------------- ------------------
(Address of principal executive offices) (Zip Code)
(203) 356-4400
---------------------------------------------------
(Registrant's telephone number, including area code)
None
-------------------------------------------------------------
(Former name or former address, if changed since last report)
Item 7. Financial Statements and Exhibits.
(c) Exhibits
Exhibit No. Description
99.1 Press Release dated April 30, 2003
Item 9. Regulation FD Disclosure.
The registrant issued a press release on April 30, 2003, announcing its
earnings for the first quarter ended March 31, 2003, which press release is
attached hereto as exhibit 99.1. This earnings release is also being furnished
to the Commission under new Item 12 on Fork 8-K.
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.
Date: April 30, 2003 By: /s/ Kenneth B. Gilman
------------------------------
Name: Kenneth B. Gilman
Title: Chief Executive Officer
EXHIBIT INDEX
Exhibit No. Description
99.1 Press Release dated April 30, 2003
Contact Information: Stacey Yonkus
Asbury Automotive
203-356-4424
investor@asburyauto.com
ASBURY AUTOMOTIVE GROUP REPORTS
FIRST QUARTER FINANCIAL RESULTS
STAMFORD, Conn. - April 30, 2003 - Asbury Automotive Group, Inc. (NYSE: ABG),
one of the largest automotive retail and service companies in the U.S., today
reported financial results for the first quarter ended March 31, 2003.
Net income for the quarter was $7.1 million, or $0.21 per share, while in the
prior year quarter, the Company reported pro forma net income from continuing
operations of $11.4 million, or $0.33 per share (a reconciliation of pro forma
net income from continuing operations to GAAP net income from continuing
operations is provided on the Consolidated Statement of Income accompanying this
release). The pro forma results for the prior-year quarter 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 in conjunction with its March 2002 initial public offering, and
assume that the Company was a publicly traded "C" corporation for the entire
period.
President and CEO Kenneth B. Gilman said, "As anticipated, earnings were down on
a year-over-year basis, due to increased operating expenses, which we discussed
in our year-end results call. At that time, we shared with investors specific
expense reduction initiatives we were taking in certain of our platforms, with
the anticipation of seeing the effects of those changes in the second quarter. I
am pleased to be able to report that we were able to realize some of the
benefits of those initiatives in March. Specifically, our SG&A expenses, as a
percent of total revenue, were 12.2% in March versus 13.2% for the first two
months of the quarter. While expenses are still high by historical standards,
early indications are encouraging, as we still anticipate that most of the
intended effects of our expense control initiatives will be fully realized in
the second quarter.
"The strategy during the quarter, in terms of new vehicle sales, was primarily
volume-driven. The new vehicle environment was particularly difficult,
especially in the first two months of the quarter. By taking a volume-driven
approach, and foregoing a small amount of new vehicle margin, we were able to
sustain unit sales - thereby fostering good relations with our manufacturer
partners. On a same-store basis, our new vehicle retail unit sales were down
only 1.5 percent, while the industry was down 4.4 percent.
"An area of notable strength for Asbury during the quarter was our used car
business, despite what many had perceived to be a difficult used vehicle
environment. This has been a key initiative for us, an area of considerable
focus, with our Tampa platform being our most recent and notable success story.
Tampa simply had an outstanding used car first quarter, increasing used retail
unit sales by 36 percent, growing used vehicle retail gross profit margin to
12.9 percent from 10.2 percent, and increasing total used vehicle gross profit
by 54 percent. Clearly, Tampa's focus on used vehicles is working, and
demonstrates the value of our approach to sharing best practices.
"Our higher margin businesses - parts and service operations, and finance and
insurance - remained strong during the quarter," Mr. Gilman added." These
businesses, which together account for well over half of Asbury's gross profit,
have continued to grow in the face of a challenging environment for new vehicle
sales."
Financial highlights for the quarter included:
o The Company's total revenues were approximately $1.1 billion, up 4.9
percent from a year ago. On a same-store basis, retail sales (excluding
fleet and wholesale business) were up 1.3 percent.
o Total gross profit dollars rose 3.4 percent, while same-store retail
gross profit was up marginally, in spite of a difficult pricing
environment in both the new and used car markets.
o On a same-store basis, new vehicle retail unit sales declined 1.5
percent, while new vehicle same-store retail gross profit dollars
decreased 10.5 percent.
o Used vehicle retail unit sales were flat on a same-store basis, as was
retail gross profit margin at 12.2 percent of used retail sales.
o Parts and service revenues increased 7.6 percent (4.8 percent
same-store), with the related gross profit increasing 6.7 percent (3.4
percent same-store).
o Net finance and insurance (F&I) income was up 13.7 percent (9.8 percent
same-store) from a year ago, while F&I per vehicle retailed rose 10.4
percent to $783.
Commenting on the Company's Price 1 used car pilot program, Mr. Gilman said, "We
have seen a steady improvement in Price 1's performance on a sequential,
month-to-month basis, starting with January, and continue to believe the
potential upside of developing a stand-alone used car business is well worth our
modest incremental investment at this point. For the first quarter, the loss
from Price 1 was $1.5 million on a pre-tax basis, and we still expect the
year-over-year losses to come down by approximately $3 million."
The Company's earnings per share guidance for 2003 remains unchanged in a range
between $1.50 and $1.60, based on new U.S. light vehicle sales of about 16
million units. This guidance does not include the potential impact of any
acquisitions that may be completed in 2003.
Mr. Gilman concluded, "Ongoing manufacturer incentive programs, encouraging
trends in new vehicle affordability, as well as the industry's strong new
product pipeline, should continue to keep new car sales at a relatively strong
level. Given our diverse income streams, and with more stringent cost controls
now in place, we remain optimistic about Asbury's growth prospects in 2003 and
beyond."
Asbury will host a conference call to discuss its 2003 first quarter results
this morning at 10:00 a.m. Eastern Time. The call will be simulcast live on the
Internet and can be accessed by logging onto http://www.asburyauto.com or
http://www.ccbn.com. In addition, a live audio of the call will be accessible to
the public by calling (800) 818-5264; international callers, please dial (913)
981-4910; no access code is required.
About Asbury Automotive Group
Asbury Automotive Group, Inc., headquartered in Stamford, Connecticut, is one of
the largest automobile retailers in the U.S., with 2002 revenues of $4.5
billion. Built through a combination of organic growth and a series of strategic
acquisitions, Asbury now operates through nine geographically concentrated,
individually branded "platforms." These platforms currently operate 94 retail
auto stores, encompassing 133 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 public U.S. 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, projections and guidance
regarding the Company's financial position, results of operations, market
position, product development, pending and potential future acquisitions 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
that 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 annual report on Form 10-K 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.
(Tables Follow)
ASBURY AUTOMOTIVE GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands except per share data)
(unaudited)
For the Three Months Ended
------------------------------------------------
March 31, 2003 March 31, 2002 March 31, 2002
Actual Pro Forma(a) Actual
-------------- -------------- --------------
REVENUES:
New vehicle .................................................. $ 636,109 $ 621,018 $ 621,018
Used vehicle ................................................. 304,307 280,856 280,856
Parts, service and collision repair .......................... 131,207 121,968 121,968
Finance and insurance, net ................................... 29,649 26,085 26,085
----------- ----------- -----------
Total revenues ............................................ 1,101,272 1,049,927 1,049,927
COST OF SALES:
New vehicle .................................................. 588,691 569,471 569,471
Used vehicle ................................................. 275,458 253,933 253,933
Parts, service and collision repair .......................... 62,343 57,439 57,439
----------- ----------- -----------
Total cost of sales .......................................... 926,492 880,843 880,843
----------- ----------- -----------
GROSS PROFIT ..................................................... 174,780 169,084 169,084
OPERATING EXPENSES:
Selling, general and administrative .......................... 142,164 130,308 130,308
Depreciation and amortization ................................ 5,947 5,756 5,756
----------- ----------- -----------
Income from operations .................................... 26,669 33,020 33,020
OTHER INCOME (EXPENSE):
Floor plan interest expense .................................. (4,570) (4,182) (4,182)
Other interest expense ....................................... (9,954) (9,748) (9,748)
Interest income .............................................. 181 314 314
Net losses from unconsolidated entities ...................... -- (100) (100)
Other ....................................................... (859) (392) (392)
----------- ----------- -----------
Total other expense, net ..................................... (15,202) (14,108) (14,108)
----------- ----------- -----------
Income before income taxes and discontinued operations .... 11,467 18,912 18,912
INCOME TAX PROVISION:
Income tax expense ........................................... 4,564 7,527 2,228
Tax adjustment upon conversion from an L.L.C. to a corporation -- -- 11,553
----------- ----------- -----------
Income before discontinued operations ..................... 6,903 11,385 5,131
DISCONTINUED OPERATIONS, net of tax .............................. 194 31 31
----------- ----------- -----------
Net income (b) ............................................... $ 7,097 $ 11,416 $ 5,162
=========== =========== ==========
EARNINGS PER COMMON SHARE:
Basic and Diluted
Income from continuing operations ......................... $ 0.21 $ 0.33 $ 0.17
=========== =========== ===========
Net income ................................................ $ 0.21 $ 0.34 $ 0.17
=========== =========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Basic ........................................................ 33,052 34,000 30,400
=========== =========== ===========
Diluted ...................................................... 33,053 34,034 30,434
=========== =========== ===========
(a) Pro forma column includes a tax provision as if the Company were a "C"
corporation for the entire quarter as well as assumes that all shares were
outstanding for the full quarter. 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 $ 5,162
Tax adjustment upon conversion from an L.L.C.
to a corporation 11,553
Pro forma income tax charge (5,299) (c)
-------
Pro forma net income $11,416
=======
(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)
December 31,
ASSETS March 31, 2003 2002
-------------- ------------
(unaudited)
CURRENT ASSETS:
Cash and cash equivalents ............................. $ 38,077 $ 22,613
Contracts-in-transit .................................. 88,936 91,190
Accounts receivable, net .............................. 93,275 96,090
Inventories ........................................... 622,436 604,791
Prepaid and other current assets ...................... 30,810 35,099
---------- ----------
Total current assets ............................... 873,534 849,783
PROPERTY AND EQUIPMENT, net ............................... 277,735 286,930
GOODWILL .................................................. 400,666 402,133
OTHER ASSETS .............................................. 67,233 66,798
---------- ----------
Total assets ....................................... $1,619,168 $1,605,644
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Floor plan notes payable .............................. $ 559,783 $ 540,419
Current maturities of long-term debt .................. 30,609 35,009
Accounts payable and accrued liabilities .............. 118,529 117,445
---------- ----------
Total current liabilities .......................... 708,921 692,873
LONG-TERM DEBT ............................................ 436,241 440,143
OTHER LIABILITIES ......................................... 41,817 45,677
STOCKHOLDERS' EQUITY ...................................... 432,189 426,951
---------- ----------
Total liabilities and stockholders' equity ......... $1,619,168 $1,605,644
========== ==========
ASBURY AUTOMOTIVE GROUP, INC.
SELECTED DATA
(dollars in thousands except per unit data)
(unaudited)
GAAP Results For the Three Same Store Results for the
Months Ended March 31, Three Months Ended March 31,
-------------------------- ----------------------------
2003 2002 2003 2002
---------- ---------- ---------- ----------
RETAIL UNITS:
New .............................................. 22,283 22,211 21,888 22,211
Used ............................................. 15,602 14,579 14,569 14,579
---------- ---------- ---------- ----------
Total ....................................... 37,885 36,790 36,457 36,790
REVENUE:
New retail ....................................... $ 622,647 $ 609,841 $ 611,673 $ 609,841
Used retail ...................................... 232,576 217,546 220,007 217,546
Parts, service and collision repair .............. 131,207 121,968 127,871 121,968
Finance and insurance, net ....................... 29,649 26,085 28,638 26,085
Fleet ............................................ 13,462 11,177 13,457 11,177
Wholesale ........................................ 71,731 63,310 62,300 63,310
---------- ---------- ---------- ----------
Total ...................................... $1,101,272 $1,049,927 $1,063,946 $1,049,927
========== ========== ========== ==========
GROSS PROFIT:
New retail ....................................... $ 41,686 $ 45,923 $ 41,084 $ 45,923
Used retail ...................................... 28,610 26,483 26,887 26,483
Parts, Service and collision repair .............. 68,864 64,529 66,712 64,529
Finance and Insurance, net ....................... 29,649 26,085 28,638 26,085
Fleet ............................................ 343 261 337 261
Wholesale ........................................ 239 440 392 440
Floor Plan Interest Credit ....................... 5,389 5,363 5,279 5,363
---------- ---------- ---------- ----------
Total ...................................... $ 174,780 $ 169,084 $ 169,329 $ 169,084
========== ========== ========== ==========
GROSS MARGIN %:
New retail (including floor plan interest credits) 7.6% 8.4% 7.6% 8.4%
Used retail ...................................... 12.3% 12.2% 12.2% 12.2%
Parts, service and collision repair .............. 52.5% 52.9% 52.2% 52.9%
Finance and insurance, net ....................... 100.0% 100.0% 100.0% 100.0%
---------- ---------- ---------- ----------
Total ...................................... 15.9% 16.1% 15.9% 16.1%
GROSS PROFIT PER UNIT:
New retail (including floor plan interest credits) $ 2,113 $ 2,309 $ 2,118 $ 2,309
Used retail ...................................... 1,834 1,817 1,845 1,817
---------- ---------- ---------- ----------
Weighted average ........................... $ 1,998 $ 2,114 $ 2,009 $ 2,114
========== ========== ========== ==========
F&I PVR .............................................. $ 783 $ 709 $ 786 $ 709
EBITDA (a) ........................................... $ 27,368 $ 34,516 $ 28,765 $ 34,516
EBITDA % ............................................. 2.5% 3.3% 2.7% 3.3%
OPERATING INCOME % ................................... 2.4% 3.1% 2.7% 3.1%
CAPITAL EXPENDITURES ................................. $ 15,223 $ 8,593
========== ==========
FREE CASH FLOW (b) ................................... $ 14,015 $ 7,807
========== ==========
March 31, 2003 December 31, 2002
-------------- -----------------
CAPITALIZATION:
Long-term debt (including current portion) $466,850 $475,152
Stockholders' equity 432,189 426,951
-------- --------
Total $899,039 $902,103
======== ========
(a) EBITDA is defined as earnings before income taxes, minority interest,
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.