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01/11 03:34
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlights strong financial performance with a 6% revenue growth and robust gross profit margins. The pending acquisition and divestitures are expected to positively impact the company's financial health. While there are some concerns about tariffs and weather impacts, management's optimistic guidance and focus on deleveraging are reassuring. The market strategy with Techheon and steady growth in parts and service further supports a positive outlook. Given the market cap, a 2% to 8% stock price increase is likely over the next two weeks.
Revenue $4.1 billion, up 6% year-over-year, driven by increased demand in March.
Gross Profit $724 million, with a gross profit margin of 17.5%, reflecting strong performance in parts and service.
Adjusted Operating Margin 5.8%, with adjusted SG&A as a percentage of gross profit at 63.9%.
Adjusted EPS $6.82, slightly below expectations of $6.84.
Adjusted Net Income $134 million, excluding non-cash asset impairments and other adjustments.
Adjusted EBITDA $240 million, reflecting strong operational performance.
Adjusted Operating Cash Flow $187 million for Q1 2025.
Free Cash Flow $166 million for Q1 2025.
Liquidity $964 million at the end of Q1 2025.
Transaction Adjusted Net Leverage 2.75 times at the end of March.
Capital Expenditures $21 million spent through March, with an anticipated $250 million in CapEx for 2025.
ClickLane Sales: Retailed over 10,500 sales through ClickLane in Q1, with approximately 5,000 new units sold, representing about 47% of all ClickLane sales.
Herb Chambers Acquisition: Pending acquisition of the Herb Chambers Automotive Group valued at $1.34 billion, expected to close by the end of Q2 2025, pending OEM approval.
Parts and Service Growth: Same-store parts and service gross profit up 5% in Q1, with a gross profit margin of 58.3%, an expansion of 170 basis points.
Techion Implementation: Progressing with Techion implementation beyond the four-store pilot, with multiple stores transitioning and expected completion by the end of Q3.
Capital Allocation Strategy: Focus on reducing leverage over the next 18-24 months following the Herb Chambers acquisition.
Earnings Expectations: Asbury Automotive Group, Inc. missed earnings expectations with reported EPS of $6.82 against expectations of $6.84.
Tariff Impact: The company is facing uncertainty due to new tariff policies, which may affect vehicle pricing and demand. Approximately 56% of new vehicle units were produced in America, potentially insulating them from tariffs, but predicting trends for volumes and new GPUs remains challenging.
SG&A Profile: There is a risk of a slightly higher SG&A profile if tariff policies persist, which could impact overall profitability.
Capital Expenditures: The anticipated capital expenditures of approximately $250 million for 2025 and 2026 are dependent on the impact and duration of tariff policies, indicating potential adjustments to spending.
Acquisition Financing: The pending acquisition of the Herb Chambers Automotive Group, valued at $1.34 billion, will be financed through a combination of credit facility funding and existing cash, which may increase leverage ratios.
Leverage Ratio: The transaction adjusted net leverage was 2.75 times at the end of March, with expectations to be near the higher end of the target range by next year.
Divestitures: Pending divestitures are expected to generate net proceeds between $250 million and $275 million, which will contribute to debt reduction efforts.
Pending Acquisition of Herb Chambers Automotive Group: The transaction is valued at $1.34 billion before inventory and fixed assets to be acquired to close. This acquisition is part of Asbury's disciplined growth strategy and is expected to close by the end of Q2 2025.
Techion Implementation: The rollout of Techion is progressing beyond the initial four-store pilot, with plans to complete the transition for the Koons Group by the end of Q3 2025.
Focus on Deleveraging: Following the acquisition, Asbury intends to focus on reducing leverage over the next 18 to 24 months.
Revenue Expectations: For Q1 2025, Asbury generated $4.1 billion in revenue.
CapEx Projections: Asbury anticipates approximately $250 million in capital expenditures for both 2025 and 2026, subject to adjustments based on tariff impacts.
Adjusted Tax Rate: The adjusted tax rate for 2025 is forecasted to be 25.2%.
Free Cash Flow: Free cash flow for Q1 2025 was $166 million.
Net Proceeds from Divestitures: Estimated net proceeds from pending divestitures should be between $250 million and $275 million, contributing to debt reduction.
Pending Acquisition of Herb Chambers Automotive Group: The transaction is valued at $1.34 billion before inventory and fixed assets to be acquired to close. This transaction amount represents $750 million of Blue Sky and $590 million of real estate and improvements.
Capital Expenditures: We anticipate approximately $250 million in CapEx spend for both 2025 and 2026.
Free Cash Flow: Free cash flow was $166 million for the first quarter of 2025.
Liquidity: We ended Q1 with $964 million of liquidity.
Deleveraging Focus: We plan to focus on deleveraging over the next eighteen to twenty-four months.
Net Proceeds from Pending Divestitures: We estimate that the net proceeds from pending divestitures should be between $250 million and $275 million.
The earnings call reveals strong financial performance with an 8% increase in revenue and a 7% rise in parts and service gross profit. The company is optimistic about luxury vehicle sales in Q4 and expects accretive effects from the Chambers acquisition. While there are some concerns about the timeline for achieving $5 EPS, the overall sentiment is positive due to strong cash flow, share repurchase priorities, and expected cost savings from the Tekion rollout. Given the company's market cap, the stock price is likely to see a positive movement of 2% to 8%.
The earnings call summary and Q&A indicate a positive outlook. The company reported strong financial metrics, with record revenue and EPS, and positive same-store sales growth in new vehicles and parts/services. The acquisition of Herb Chambers is seen as a strategic opportunity. Although used vehicle sales declined, the focus on maximizing gross profit is reassuring. The Q&A revealed some uncertainties, but management's strategic focus and positive guidance on parts and services support a positive sentiment. With a market cap of $4.56 billion, the stock is expected to react positively, within the 2% to 8% range.
The earnings call highlights strong financial performance with a 6% revenue growth and robust gross profit margins. The pending acquisition and divestitures are expected to positively impact the company's financial health. While there are some concerns about tariffs and weather impacts, management's optimistic guidance and focus on deleveraging are reassuring. The market strategy with Techheon and steady growth in parts and service further supports a positive outlook. Given the market cap, a 2% to 8% stock price increase is likely over the next two weeks.
The earnings call summary showed strong financial performance with increased revenue and gross profit, but concerns over tariffs and unclear management responses in the Q&A section create uncertainty. The integration of Tekion and focus on deleveraging are positive, yet risks from tariffs and regional weaknesses, along with potential headcount reductions, offset these gains. The market cap suggests a moderate reaction, resulting in a neutral sentiment prediction.
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