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 13, 2004
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Asbury Automotive Group, Inc.
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
5511 01-0609375
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(Commission File Number) (IRS Employer Identification No.)
622 Third Avenue, 37th Floor 10017
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(Address of principal executive offices) (Zip Code)
(212) 885-2500
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(Registrant's telephone number, including area code)
None
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(Former name or former address, if changed since last report)
Item 5. Other Events and Regulation FD Disclosure
The registrant hereby files the press release identified under Item 12,
and attached hereto as Exhibit 99.1.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
Exhibit No. Description
99.1 Press Release dated April 13, 2004.
Item 12. Results of Operations and Financial Condition.
The registrant issued a press release on April 13, 2004, announcing its
financial results for the quarter ended March 31, 2004, 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.
Date: April 13, 2004 By: /s/ Kenneth B. Gilman
Name: Kenneth B. Gilman
Title: President and Chief Executive Officer
EXHIBIT INDEX
Exhibit No. Description
99.1 Press Release dated April 13, 2004
Investors May Contact:
Stacey Yonkus
Director, Investor Relations
(212) 885-2512
SYONKUS@ASBURYAUTO.COM
Reporters May Contact:
David Shein
RFBinder Partners
(212) 994-7514
DAVID.SHEIN@RFBINDER.COM
Asbury Automotive Group Reports First Quarter Financial Results
-- Reports a 30% Increase in Net Income from Continuing Operations --
-- Total Revenues Rise 14%; Gross Profit Increases 12% --
New York, NY, April 13, 2004 - 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 quarter ended March 31, 2004.
Net income from continuing operations increased 30 percent to $10.7 million, or
$0.33 per share, compared with $8.2 million, or $0.25 per share, for the first
quarter of 2003. Net income increased 46 percent for the first quarter of 2004
to $10.4 million, or $0.32 per share, up from $7.1 million, or $0.21 per share,
in the prior year period.
Other financial highlights for the first quarter of 2004, as compared to the
prior year period, included:
o Total revenues for the quarter were approximately $1.2 billion, up 14.5
percent. Total gross profit was $191.0 million, up 12.1 percent.
o Same-store retail revenue (excluding fleet and wholesale business)
increased 3.8 percent to $1.0 billion, while same-store retail gross
profit rose 2.8 percent to $174.4 million.
o New vehicle retail revenue increased 16.2 percent (5.9 percent
same-store), and unit sales increased 9.7 percent (flat on a same-store
basis). New vehicle retail gross profit increased 14.7 percent (2.5
percent same-store).
o Used vehicle retail revenue increased 6.9 percent (down 3.3 percent
same-store), and unit sales increased 7.0 percent (down 1.4 percent
same-store).
o Parts, service and collision repair revenues and gross profit increased
15.7 percent and 13.6 percent (5.3 and 3.5 percent same-store),
respectively.
o Net finance and insurance (F&I) revenue rose 15.1 percent (7.7 percent
same-store). F&I per vehicle retailed (PVR) increased 6.1 percent to
$837, and at the platform level rose 3.4 percent to $816.
o Selling, general and administrative (SG&A) expenses for the quarter,
which include $1.2 million of expenses associated with management
changes made in the previous year, were flat as a percentage of gross
profit.
o The Company's effective tax rate for the quarter was 37.5 percent compared
to 39.8 percent in the prior year period.
President and CEO Kenneth B. Gilman commented, "We are pleased to have exceeded
earnings expectations for the first quarter. While January was somewhat
difficult, our continued focus on the basics of automotive retailing in each
element of our business model produced improving trends in February and March,
leading to record first quarter sales and gross profit results."
Mr. Gilman continued, "More specifically, we were particularly pleased with the
sales and gross profit trends in our used car business. Despite a continued
challenging environment, our results are beginning to reflect the Company's
intensified focus on used vehicles, as our used car teams at the platform level
have become increasingly effective.
"At the platform level, a key highlight during the quarter was a significant
improvement in results at both our Arkansas and Oregon platforms," Mr. Gilman
noted. "In Arkansas, operating income for the first quarter was more than double
the prior year, with same-store unit sales increases well into the double digits
for both new and used vehicles. As for Oregon, with the new management team's
recovery plan in place, we are beginning to see increased revenues, particularly
in used vehicles, and also reported an operating profit for the quarter.
Significant progress has been made in adjusting the platform's cost structure,
as we were able to reduce Oregon's SG&A expenses as a percentage of gross profit
by over 200 basis points, when compared to the prior year quarter."
Mr. Gilman added, "With the exception of Texas, where our results were somewhat
below expectations, the majority of our platforms were essentially in-line with
anticipated results for the quarter. The results in our Texas platform were
adversely impacted by a competitive local Honda market, dealership construction,
as well as the continued adjustment to recent management changes made in last
year's second half."
The Company noted that in the first quarter of 2004 it had completed the
acquisition of three franchises, representing $170 million in annualized
revenues. In addition, the Company noted that it had executed contracts to
acquire four additional franchises with annual revenues of approximately $210
million. These pending transactions are subject in all cases to manufacturer
consent.
About Asbury Automotive Group
Asbury Automotive Group, Inc., headquartered in New York City, is one of the
largest automobile retailers in the U.S., with 2003 revenues of $4.8 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 100 retail
auto stores, encompassing 140 franchises for the sale and servicing of 35
different brands of American, European and Asian automobiles. Asbury believes
that its product mix contains a higher proportion of the more desirable luxury
and mid-line import brands than most 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, 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 which could cause,
among other things, acquisitions under contract or letters of intent to fail,
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.
ASBURY AUTOMOTIVE GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
For the Three Months Ended
--------------------------
March 31, March 31,
2004 2003
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REVENUES:
New vehicle ................................................... $ 725,278 $ 625,035
Used vehicle .................................................. 317,411 287,228
Parts, service and collision repair ........................... 147,345 127,379
Finance and insurance, net .................................... 33,194 28,830
------------ ------------
Total revenues .......................................... 1,223,228 1,068,472
COST OF SALES:
New vehicle ................................................... 671,822 578,198
Used vehicle .................................................. 289,277 259,650
Parts, service and collision repair ........................... 71,088 60,224
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Total cost of sales ..................................... 1,032,187 898,072
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GROSS PROFIT ..................................................... 191,041 170,400
OPERATING EXPENSES:
Selling, general and administrative ........................... 153,579 136,987
Depreciation and amortization ................................. 5,139 4,739
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Income from operations .................................. 32,323 28,674
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OTHER INCOME (EXPENSE):
Floor plan interest expense ................................... (4,989) (4,418)
Other interest expense ........................................ (10,322) (9,954)
Interest income ............................................... 275 180
Other income (expense) ........................................ (204) (840)
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Total other expense, net ................................ (15,240) (15,032)
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Income from continuing operations before income taxes and
discontinued operations ............................... 17,083 13,642
INCOME TAX EXPENSE ............................................... 6,406 5,430
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Net income from continuing operations ................... 10,677 8,212
DISCONTINUED OPERATIONS, net of tax .............................. (313) (1,115)
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Net income .............................................. $ 10,364 $ 7,097
============ ============
BASIC EARNINGS PER COMMON SHARE:
Continuing operations ......................................... $ 0.33 $ 0.25
Discontinued operations ....................................... (0.01) (0.04)
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Net income .................................................... $ 0.32 $ 0.21
============ ============
DILUTED EARNINGS PER COMMON SHARE:
Continuing operations ......................................... $ 0.33 $ 0.25
Discontinued operations ....................................... (0.01) (0.04)
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Net income .................................................... $ 0.32 $ 0.21
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WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic ......................................................... 32,435 33,052
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Diluted ....................................................... 32,721 33,053
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ASBURY AUTOMOTIVE GROUP, INC.
SELECTED DATA
(In thousands, except vehicle and per vehicle data)
(Unaudited)
As Reported Same Store
For the Three Months Ended March 31, For the Three Months Ended March 31,
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2004 2003 2004 2003
----------- ----------- ----------- -----------
RETAIL VEHICLES SOLD:
New units ......................... 23,869 60.2% 21,767 59.6% 21,796 60.0% 21,767 59.6%
Used units ........................ 15,782 39.8% 14,750 40.4% 14,540 40.0% 14,750 40.4%
----------- ------ ----------- ------ ----------- ------ ----------- ------
Total units ........ 39,651 100.0% 36,517 100.0% 36,336 100.0% 36,517 100.0%
=========== ====== =========== ====== =========== ====== =========== ======
REVENUE:
New retail ........................ $ 710,411 58.1% $ 611,600 57.2% $ 647,696 58.1% $ 611,600 57.2%
Used retail ....................... 239,130 19.6% 223,638 20.9% 216,357 19.4% 223,638 20.9%
Parts, service and collision repair 147,345 12.0% 127,379 11.9% 134,105 12.0% 127,379 11.9%
Finance and insurance, net ........ 33,194 2.7% 28,830 2.7% 31,037 2.8% 28,830 2.7%
----------- ------ ----------- ------ ----------- ------ ----------- ------
Total retail revenue ........ 1,130,080 991,447 1,029,195 991,447
Fleet ............................. 14,867 1.2% 13,435 1.3% 14,867 1.3% 13,435 1.3%
Wholesale ......................... 78,281 6.4% 63,590 6.0% 71,213 6.4% 63,590 6.0%
----------- ------ ----------- ------ ----------- ------ ----------- ------
Total revenue ............... $ 1,223,228 100.0% $ 1,068,472 100.0% $ 1,115,275 100.0% $ 1,068,472 100.0%
=========== ====== =========== ====== =========== ====== =========== ======
GROSS PROFIT:
New retail ........................ $ 47,245 24.7% $ 41,185 24.2% $ 42,204 24.2% $ 41,185 24.2%
Used retail ....................... 28,641 15.0% 27,292 16.0% 26,160 15.0% 27,292 16.0%
Parts, service and collision repair 76,257 39.9% 67,155 39.4% 69,482 39.9% 67,155 39.4%
Finance and insurance, net ........ 33,194 17.4% 28,830 16.9% 31,037 17.8% 28,830 16.9%
Floor plan interest credits ....... 5,837 3.1% 5,300 3.1% 5,559 3.2% 5,300 3.1%
----------- ----------- ----------- -----------
Total retail gross profit ... 191,174 169,762 174,442 169,762
Fleet ............................. 374 0.2% 352 0.2% 374 0.2% 352 0.2%
Wholesale ......................... (507) (0.3%) 286 0.2% (442) (0.3%) 286 0.2%
----------- ------ ----------- ------ ----------- ------ ----------- ------
Total gross profit .......... $ 191,041 100.0% $ 170,400 100.0% $ 174,374 100.0% $ 170,400 100.0%
=========== ====== =========== ====== =========== ====== =========== ======
Sales, general and administrative
(SG&A) expense .................... $ 153,579 $ 136,987 $ 140,734 $ 136,987
SG&A as a percent of gross profit .... 80.4% 80.4% 80.7% 80.4%
GROSS PROFIT PER VEHICLE RETAILED:
New retail (including floor plan ..
interest credits) ............... $ 2,224 $ 2,136 $ 2,191 $ 2,136
Used retail ....................... 1,815 1,850 1,799 1,850
Finance and insurance, net ........ 837 789 854 789
Platform finance and insurance, net 816 789 831 789
As of As of
March 31, 2004 December 31, 2003
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BALANCE SHEET HIGHLIGHTS:
Cash and cash equivalents ................................................................. $ 45,986 $ 106,711
Inventories .............................................................................. 707,513 650,397
Total current assets ...................................................................... 1,068,956 1,041,542
Floor plan notes payable .................................................................. 625,153 602,167
Total current liabilities ................................................................. 836,585 781,758
CAPITALIZATION:
Long-term debt (including current portion)................................................. 591,939 592,378
Shareholders' equity....................................................................... 442,860 433,707
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Total ....................................................................... $1,034,799 $1,026,085
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ASBURY AUTOMOTIVE GROUP, INC.
SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION
(In thousands, except vehicle data)
(Unaudited)
We evaluate our finance and insurance gross profit performance on a per vehicle
retailed basis by dividing our total finance and insurance gross profit by the
number of retail vehicles sold. During 2003, we renegotiated a contract with one
of our third party finance and insurance product providers, which resulted in
the recognition of income that was not attributable to retail vehicles sold
during the year. We believe that platform finance and insurance, which excludes
the additional revenue derived from contracts negotiated by our corporate
office, provides a more accurate measure of our finance and insurance operating
performance. The following table reconciles finance and insurance gross profit
to platform finance and insurance gross profit, and provides necessary
components to calculate platform finance and insurance gross profit per vehicle
retailed.
As Reported For the Three Same Store For the Three
Months Ended March 31, Months Ended March 31,
------------------------- -------------------------
2004 2003 2004 2003
------------ ----------- ----------- ------------
RECONCILIATION OF FINANCE AND INSURANCE GROSS PROFIT
TO PLATFORM FINANCE AND INSURANCE:
Finance and insurance, net .................................. $ 33,194 $ 28,830 $ 31,037 $ 28,830
Less: corporate finance and insurance ...................... (839) -- (839) --
-------- -------- -------- --------
Platform finance and insurance, net .................... $ 32,355 $ 28,830 $ 30,198 $ 28,830
======== ======== ======== ========
RETAIL VEHICLES SOLD:
New retail units ........................................... 23,869 21,767 21,796 21,767
Used retail units .......................................... 15,782 14,750 14,540 14,750
-------- -------- -------- --------
Total units ........................................... 39,651 36,517 36,336 36,517
======== ======== ======== ========
We define adjusted EBITDA as net income before other interest expense, income
tax expense and depreciation and amortization expense. This definition of
adjusted EBITDA may not be comparable to similarly titled measures of other
companies. Adjusted EBITDA is not a measure of financial performance under
accounting principles generally accepted in the United States. We believe
adjusted EBITDA provides a basis to measure our operating performance, apart
from the expenses associated with our physical plant or capital structure.
Adjusted EBITDA should not be considered in isolation or as a substitute for
operating income, cash flow from operating activities or other measures of
performance defined by accounting principles generally accepted in the United
States. A reconciliation of adjusted EBITDA is presented below.
As Reported For the Three
Months Ended March 31,
-------------------------
2004 2003
----------- -----------
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA:
Net income .................................. $10,364 $ 7,097
Add:
Other interest expense ................. 10,322 9,954
Income tax expense ..................... 6,406 5,430
Depreciation and amortization ........... 5,139 4,739
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Adjusted EBITDA .................................. $32,231 $27,220
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