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01/11 03:33
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
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.
Revenue $4.4 billion, with no specific year-over-year percentage change mentioned.
Gross Profit $752 million, with a gross profit margin of 17.2%. No specific year-over-year percentage change mentioned.
Adjusted Operating Margin 5.8%, no specific year-over-year percentage change mentioned.
Adjusted Earnings Per Share (EPS) $7.43, with an adjusted EBITDA of $256 million. No specific year-over-year percentage change mentioned.
Same-store adjusted SG&A as a percentage of gross profit 63.2%, an improvement of over 100 basis points from the second quarter of 2024.
Same-store new vehicle revenue Up 9% year-over-year, with units up 7%. New average gross profit per vehicle was $3,611.
Used vehicle unit volume Down 4% year-over-year. Used retail gross profit per unit was $1,729, marking the fourth quarter of sequential growth.
F&I PVR $2,096, with a $161 decrease in the same-store F&I PVR number year-over-year due to deferred revenue headwind of TCA.
Same-store parts and service gross profit Up 7% in the quarter, with a gross profit margin of 59.2%, an expansion of 53 basis points.
Customer pay and warranty gross profit Customer pay gross profit was up 7%, with warranty gross profit higher by 16% or 9% on a combined basis.
Adjusted net income $146 million, with adjusted EPS of $7.43 for the quarter. Noncash deferral headwind due to TCA was $0.43 per share.
Adjusted SG&A as a percentage of gross profit 63.6%, with Tekion implementation costs beginning to impact the P&L.
Adjusted operating cash flow $334 million through the first half of 2025. Free cash flow was $275 million through the first 2 quarters of 2025.
Transition to Tekion: The Koons stores are now 100% converted to the new DMS, Tekion, as part of investments in tools and technology to enhance operational efficiency and guest experience.
Herb Chambers Acquisition: Acquired Herb Chambers Automotive Group for $1.45 billion, including $750 million for Blue Sky and $610 million for real estate and improvements. This acquisition expands Asbury's presence in the New England market.
Same-store SG&A improvement: Same-store adjusted SG&A as a percentage of gross profit improved to 63.2%, a 100 basis point improvement from Q2 2024.
Parts and Service Growth: Same-store parts and service gross profit increased by 7%, with a gross profit margin of 59.2% and a fixed absorption rate over 100%.
Used Vehicle Profitability: Used retail gross profit per unit was $1,729, marking the fourth quarter of sequential growth.
Portfolio Optimization: Divested 9 stores with annualized revenue of $619 million, generating $250-$270 million in net proceeds to reduce leverage and optimize the portfolio.
Leverage Reduction: Plans to prioritize leverage reduction over the next 12-18 months following the Herb Chambers acquisition.
Tariff and Trade Developments: Potentially higher prices from an ever-changing tariff landscape could impact consumer demand and pricing, particularly in the second half of the year. This creates uncertainty in revenue projections and profitability.
Used Vehicle Market Constraints: The limited pool of used vehicles has led to a focus on gross profit rather than volume, which may limit growth opportunities in the used vehicle segment.
Tekion Implementation Costs: The rollout of the Tekion system is beginning to impact SG&A expenses, and additional costs are anticipated as the implementation continues.
Leverage and Debt Management: Following the acquisition of Herb Chambers, the company's leverage ratio is above the target range, and it will take 12 to 18 months to reduce it. This could constrain financial flexibility in the near term.
Economic Uncertainty and SAAR Decline: The decline in the SAAR (Seasonally Adjusted Annual Rate) and economic uncertainties could negatively impact new vehicle sales and overall revenue.
Deferred Revenue from TCA Rollout: The timing of the TCA rollout and associated deferred revenue headwinds are affecting financial performance and EPS projections.
Regulatory and Tariff Risks: Uncertainty around future tariff policies and their duration could impact capital expenditure plans and financial performance.
New Vehicle Gross Profit Per Unit: Expected to trend back towards the $2,500 to $3,000 range over time, with optimism for reaching the higher end of this range.
Used Vehicle Profitability: Focus remains on gross profit due to constrained supply, with ongoing evaluation based on market evolution.
Parts and Service Business: Continued investment in tools and technology to enhance operational efficiency and guest experience. Long-term growth expected due to aging vehicle population and increasing vehicle complexity.
Capital Expenditures (CapEx): Anticipated to be approximately $250 million annually for 2025 and 2026, subject to adjustments based on tariff policies.
Leverage Reduction: Plan to prioritize reducing leverage over the next 12 to 18 months, with expectations to be below the higher end of the target range by mid- to late 2026.
TCA Rollout: Planned rollout to Koons stores in early Q4 2025, with updated deferral impacts on 2025 EPS.
Herb Chambers Acquisition Integration: Focus on integrating the acquisition and leveraging its $176.8 million adjusted EBITDA contribution for 2024.
Share Repurchase Program: Share repurchases are an important component of our capital allocation strategy, and we will be opportunistic in our execution of share buybacks even as we work to reduce our leverage ratio.
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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