UNITED STATES

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 27, 2006

 

Asbury Automotive Group, Inc.
(Exact name of registrant as specified in its charter)

 

Delaware

(State or other jurisdiction of incorporation)

 

 

(212) 885-2500

(Registrant’s telephone number, including area code)

None

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 2.02  Results of Operations and Financial Conditions.

The registrant issued a press release on July 27, 2006 announcing its financial results for the second quarter and six-month period ended June 30, 2006, which press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 7.01  Regulation FD Disclosure.

The registrant hereby furnishes the press release identified under Item 2.02 and attached hereto as Exhibit 99.1.

Item 9.01  Financial Statements and Exhibits.

(c)           Exhibits.

	Exhibit No.		Description
	99.1		Press Release dated July 27, 2006.

 

2

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SIGNATURE

 

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: July 27, 2006		By:	/s/ Kenneth B. Gilman
			Name:   Kenneth B. Gilman
			Title:     President and Chief Executive Officer

 

 

3

 

EXHIBIT INDEX

Exhibit No.		Description
99.1		Press Release dated July 27, 2006.

 

 

4

Exhibit 99.1

 

			Investors May Contact:
			Stacey Yonkus Director, Investor Relations
			(212) 885-2512
			investor@asburyauto.com
			Reporters May Contact:
			Tom Pratt
			RFBinder Partners
			(212) 994-7563
			Tom.Pratt@RFBinder.com

 

Asbury Automotive Group Reports Second Quarter Financial Results

Income from Continuing Operations Increases 14%

SG&A as a Percent of Gross Profit Improves 140 Basis Points

New York, NY, July 27, 2006 — 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 second quarter and six months ended June 30, 2006.

Income from continuing operations for the second quarter increased 14% to $19.4 million, or $0.58 per diluted share, from $17.1 million, or $0.52 per diluted share, in last year’s second quarter.  Results for this year’s second quarter include non-operating one-time items that added $0.04 per diluted share.  This year’s second quarter also includes a stock-based compensation charge of approximately $0.02 per diluted share.  Excluding these items, second quarter income from continuing operations improved 10% to $18.8 million, or $0.56 per diluted share.

For the first six months of 2006, income from continuing operations was $33.0 million, or $0.98 per diluted share, up 23% from $26.9 million, or $0.82 per diluted share, in the corresponding period last year.  Results for the 2006 period include non-operating one-time items that added $0.03 per diluted share.  This year’s results also include a stock-based compensation charge of approximately $0.04 per diluted share.  Results for the first half of 2005 include after-tax costs of  approximately $0.07 per diluted share related to the Company’s regional restructuring.  Excluding these items from our 2006 and 2005 results, income from continuing operations improved 15% for the first half of 2006 to $33.3 million, or $0.99 per diluted share.

Additional financial highlights for the second quarter of 2006, as compared to last year’s second quarter, included:

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·                  Total revenue for the quarter was approximately $1.5 billion, up 7%.  Total gross profit was $228.8 million, up 9%.

·                  Same-store retail revenue and gross profit (excluding fleet and wholesale businesses) were up 7% and 9%, respectively.

·                  New vehicle retail revenue increased 6% (5% same-store), and unit sales increased 3% (2% same-store).  New vehicle retail gross profit rose 6% (4% same-store).

·                  Used vehicle retail revenue (total and same-store) increased 11%  and unit sales (total and same-store) increased 6%.  Used vehicle retail gross profit (total and same-store) increased 20%.

·                  Parts, service and collision repair (fixed operations) revenue increased 9% (8% same-store), and gross profit increased 8% (total and same-store).

·                  Net finance and insurance (F&I) revenue was up 11% (10% same-store).  Excluding a one-time gain on the sale of the remaining interest in variable profits on a pool of extended service contracts, net F&I revenue rose 2% (1% same-store).  F&I per vehicle retailed (PVR) increased 6% to $966, while dealership-generated F&I PVR was flat at $875.

·                  Selling, general and administrative (SG&A) expenses as a percentage of gross profit were 75.1% for the quarter, a 140 basis point improvement compared with 76.5% a year ago.

President and CEO Kenneth B. Gilman said, “I am pleased to report that Asbury delivered solid financial results again in the second quarter, despite the lackluster industry environment for new car sales.  Our used vehicle and fixed operations continue to benefit from the focused investments we’ve made in those businesses over the last few years.  We also again outperformed the industry in new vehicle unit sales, thanks to our strong brand mix.  In addition, our ongoing cost-reduction efforts are helping to offset some of the impact of higher interest rates.”

J. Gordon Smith, Senior Vice President and CFO, said, “Asbury’s SG&A expenses for the second quarter improved by 140 basis points as a percentage of gross profit.  Asbury’s overall results include an after-tax gain of $2.1 million on the sale of Asbury’s remaining interest in variable profits on a pool of extended service contracts, and an after-tax charge of $0.9 million related to the Company’s recent abandonment of strategic projects.  We continue to realize cost savings from our regional reorganization in 2005 and benefited from the further leveraging of our fixed cost structure.  Our more strategic approach to advertising is also delivering substantial savings, as advertising expense again declined, approximately 10% on a PVR basis.  In addition, we have identified cost reduction opportunities as we continue to standardize our back office systems.  For example, we are in the process of consolidating Asbury’s three dealer management systems (DMS) to a single technology vendor .”

Mr. Gilman continued, “I am particularly pleased to report the standout performance of our West region during the quarter, which delivered growth across all four of their business lines. Of particular note, our investments in two new Honda stores in Texas and Southern California are beginning to pay dividends. In my view, a significant amount of potential remains in our

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West region, with an expectation of continued improvements over the next two years.”

Commenting on earnings guidance for 2006, the Company increased its guidance to a range of $1.82 and $1.87 for diluted earnings per share from continuing operations, including the expected $0.10 per share impact of the new accounting rules governing the expensing of stock-based compensation.

Asbury will host a conference call to discuss its second 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) 289-0730 (domestic), or (913) 981-5509 (international); no access code is necessary.  Callers should dial in approximately 5 to10 minutes before the call begins.

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 2005 revenue of approximately $5.5 billion.  Built through a combination of organic growth and a series of strategic acquisitions, the Company currently operates 87 retail auto stores, encompassing 120 franchises for the sale and servicing of 33 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 indebtedness, risks related to pending and potential future acquisitions, risks related to competition in the automotive retail and service industries, 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.

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Asbury Automotive Group, Inc.

Consolidated Statements of Income

(In thousands, except per share data)

(Unaudited)

 

		For the Three Months Ended  June 30,						For the Six Months Ended June 30,
		2006			2005			2006			2005
REVENUES:
New vehicle		$	918,116		$	872,308		$	1,739,153		$	1,643,577
Used vehicle		384,561			348,416			742,667			668,872
Parts, service and collision repair		172,036			157,999			341,924			309,672
Finance and insurance, net		43,224			39,064			78,844			74,554
Total revenues		1,517,937			1,417,787			2,902,588			2,696,675
COST OF SALES:
New vehicle		854,390			812,339			1,617,630			1,530,845
Used vehicle		349,923			318,479			675,102			610,233
Parts, service and collision repair		84,842			77,510			169,744			151,641
Total cost of sales		1,289,155			1,208,328			2,462,476			2,292,719
GROSS PROFIT		228,782			209,459			440,112			403,956
OPERATING EXPENSES:
Selling, general and administrative		171,715			160,185			337,364			318,552
Depreciation and amortization		5,113			4,768			10,088			9,460
Income from operations		51,954			44,506			92,660			75,944
OTHER INCOME (EXPENSE):
Floor plan interest expense		(11,239		)	(7,458		)	(20,401		)	(13,988		)
Other interest expense		(11,139		)	(10,269		)	(22,043		)	(19,869		)
Interest income		1,021			171			1,748			435
Other income, net		481			332			825			441
Total other expense, net		(20,876		)	(17,224		)	(39,871		)	(32,981		)
Income before income taxes		31,078			27,282			52,789			42,963
INCOME TAX EXPENSE		11,654			10,231			19,796			16,111
INCOME FROM CONTINUING OPERATIONS		19,424			17,051			32,993			26,852
DISCONTINUED OPERATIONS, net of tax		(420		)	(1,065		)	(1,436		)	(1,225		)
NET INCOME		$	19,004		$	15,986		$	31,557		$	25,627
BASIC EARNINGS PER COMMON SHARE:
Continuing operations		$	0.59		$	0.52		$	1.00		$	0.82
Discontinued operations		(0.02		)	(0.03		)	(0.04		)	(0.03		)
Net income		$	0.57		$	0.49		$	0.96		$	0.79
DILUTED EARNINGS PER COMMON SHARE:
Continuing operations		$	0.58		$	0.52		$	0.98		$	0.82
Discontinued operations		(0.02		)	(0.03		)	(0.04		)	(0.04		)
Net income		$	0.56		$	0.49		$	0.94		$	0.78
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic		33,077			32,604			33,000			32,596
Diluted		33,709			32,725			33,680			32,753

 

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Asbury Automotive Group, Inc.

Selected Data

(Dollars in thousands, except per vehicle data)

(Unaudited)

 

		As Reported for the  Three Months Ended June 30,										Same Store for the  Three Months Ended June 30,
		2006					2005					2006					2005
RETAIL VEHICLES SOLD:
New retail units		28,329			63.3	%	27,449			64.0	%	27,986			63.0	%	27,449			64.0	%
Used retail units		16,414			36.7	%	15,425			36.0	%	16,414			37.0	%	15,425			36.0	%
Total retail units		44,743			100.0	%	42,874			100.0	%	44,400			100.0	%	42,874			100.0	%
REVENUE:
New retail		$	887,068		58.4	%	$	838,985		59.2	%	$	876,954		58.2	%	$	838,985		59.2	%
Used retail		295,268			19.5	%	265,220			18.7	%	295,268			19.6	%	265,220			18.7	%
Parts, service and collision repair		172,036			11.3	%	157,999			11.1	%	170,753			11.3	%	157,999			11.1	%
Finance and insurance, net		43,224			2.8	%	39,064			2.8	%	42,932			2.9	%	39,064			2.8	%
Total retail revenue		1,397,596					1,301,268					1,385,907					1,301,268
Fleet		31,048			2.0	%	33,323			2.4	%	30,639			2.0	%	33,323			2.4	%
Wholesale		89,293			6.0	%	83,196			5.8	%	89,293			6.0	%	83,196			5.8	%
Total revenue		$	1,517,937		100.0	%	$	1,417,787		100.0	%	$	1,505,839		100.0	%	$	1,417,787		100.0	%
GROSS PROFIT:
New retail		$	62,466		27.3	%	$	59,140		28.2	%	$	61,762		27.2	%	$	59,140		28.2	%
Used retail		35,897			15.7	%	29,818			14.2	%	35,897			15.8	%	29,818			14.2	%
Parts, service and collision repair		87,194			38.1	%	80,489			38.4	%	86,527			38.1	%	80,489			38.4	%
Finance and insurance, net		43,224			18.9	%	39,064			18.6	%	42,932			18.9	%	39,064			18.6	%
Total retail gross profit		228,781					208,511					227,118					208,511
Fleet		1,260			0.6	%	829			0.4	%	1,240			0.5	%	829			0.4	%
Wholesale		(1,259		)	(0.6	)%	119			0.2	%	(1,259		)	(0.5	)%	119			0.2	%
Total gross profit		$	228,782		100.0	%	$	209,459		100.0	%	$	227,099		100.0	%	$	209,459		100.0	%
Adjusted gross profit		$	225,382				$	209,459				$	223,699				$	209,459
Adjusted SG&A expenses		$	169,371				$	160,185				$	168,537				$	160,185
Adjusted SG&A expenses as a percentage of adjusted gross profit		75.1		%			76.5		%			75.3		%			76.5		%
REVENUE PER VEHICLE RETAILED:
New retail		$	31,313				$	30,565				$	31,335				$	30,565
Used retail		17,989					17,194					17,989					17,194
GROSS PROFIT PER VEHICLE RETAILED:
New retail		$	2,205				$	2,155				$	2,207				$	2,155
Used retail		2,187					1,933					2,187					1,933
Finance and insurance, net		966					911					967					911
Dealership generated finance and insurance, net		875					879					875					879
GROSS PROFIT MARGIN:
New retail		7.0		%			7.0		%			7.0		%			7.0		%
Used retail		12.2		%			11.2		%			12.2		%			11.2		%
Parts, service and collision repair		50.7		%			50.9		%			50.7		%			50.9		%

 

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Asbury Automotive Group, Inc.

Selected Data

(Dollars in thousands, except per vehicle data)

(Unaudited)

 

		As Reported for the  Six Months Ended June 30,										Same Store for the  Six Months Ended June 30,
		2006					2005					2006					2005
RETAIL VEHICLES SOLD:
New retail units		52,887			62.4	%	50,934			63.0	%	51,911			62.1	%	50,934			63.0	%
Used retail units		31,904			37.6	%	29,926			37.0	%	31,675			37.9	%	29,926			37.0	%
Total retail units		84,791			100.0	%	80,860			100.0	%	83,586			100.0	%	80,860			100.0	%
REVENUE:
New retail		$	1,658,049		57.1	%	$	1,563,516		58.0	%	$	1,630,973		56.9	%	$	1,563,516		58.0	%
Used retail		565,414			19.5	%	503,825			18.7	%	561,891			19.6	%	503,825			18.7	%
Parts, service and collision repair		341,924			11.8	%	309,672			11.5	%	338,566			11.8	%	309,672			11.5	%
Finance and insurance, net		78,844			2.7	%	74,554			2.8	%	77,785			2.7	%	74,554			2.8	%
Total retail revenue		2,644,231					2,451,567					2,609,215					2,451,567
Fleet		81,104			2.8	%	80,061			3.0	%	80,285			2.8	%	80,061			3.0	%
Wholesale		177,253			6.1	%	165,047			6.0	%	176,373			6.2	%	165,047			6.0	%
Total revenue		$	2,902,588		100.0	%	$	2,696,675		100.0	%	$	2,865,873		100.0	%	$	2,696,675		100.0	%
GROSS PROFIT:
New retail		$	119,441		27.1	%	$	111,344		27.6	%	$	117,604		27.0	%	$	111,344		27.6	%
Used retail		68,415			15.5	%	57,429			14.2	%	67,922			15.6	%	57,429			14.2	%
Parts, service and collision repair		172,180			39.1	%	158,031			39.1	%	170,456			39.2	%	158,031			39.1	%
Finance and insurance, net		78,844			17.9	%	74,554			18.5	%	77,785			17.9	%	74,554			18.5	%
Total retail gross profit		438,880					401,358					433,767					401,358
Fleet		2,082			0.5	%	1,388			0.3	%	2,069			0.5	%	1,388			0.3	%
Wholesale		(850		)	(0.1	)%	1,210			0.3	%	(883		)	(0.2	)%	1,210			0.3	%
Total gross profit		$	440,112		100.0	%	$	403,956		100.0	%	$	434,953		100.0	%	$	403,956		100.0	%
Adjusted gross profit		$	436,712				$	403,956				$	431,553				$	403,956
Adjusted SG&A expenses		$	333,410				$	314,986				$	330,574				$	314,986
Adjusted SG&A expenses as a percentage of adjusted gross profit		76.3		%			78.0		%			76.6		%			78.0		%
REVENUE PER VEHICLE RETAILED:
New retail		$	31,351				$	30,697				$	31,419				$	30,697
Used retail		17,722					16,836					17,739					16,836
GROSS PROFIT PER VEHICLE RETAILED:
New retail		$	2,258				$	2,186				$	2,265				$	2,186
Used retail		2,144					1,919					2,144					1,919
Finance and insurance, net		930					922					931					922
Dealership generated finance and insurance, net		870					890					870					890
GROSS PROFIT MARGIN:
New retail		7.2		%			7.1		%			7.2		%			7.1		%
Used retail		12.1		%			11.4		%			12.1		%			11.4		%
Parts, service and collision repair		50.4		%			51.0		%			50.3		%			51.0		%

 

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Asbury Automotive Group, Inc.

Selected Data

(In thousands)

 

		As of			As of
		June 30, 2006			December 31, 2005
		(Unaudited)
BALANCE SHEET HIGHLIGHTS:
Cash and cash equivalents		$	89,097		$	57,194
Inventories		779,817			709,791
Total current assets		1,230,970			1,185,180
Floor plan notes payable		657,328			614,382
Total current liabilities		841,092			838,226
CAPITALIZATION:
Long-term debt (including current portion)		$	497,000		$	496,949
Stockholders’ equity		587,630			547,766
Total		$	1,084,630		$	1,044,715