Asbury Posts Record First Quarter
DULUTH, Ga. — In a conference call Wednesday, Asbury Automotive reported an all-time record for first quarter earnings, despite weather conditions that were expected to put a damper on sales in many of its business regions. Also during the call, Executive Vice President and COO Michael Kearney discussed his pending retirement.
Earnings per share from continuing operations were at $1.03, a 34% increase from last year's first quarter. Total gross profit for the quarter was up $24 million, or 12%, from a year ago, with 80% of the incremental gross profit coming from used cars, F&I and parts and service.
“We are thrilled with the way our stores performed this quarter, especially in light of the challenging weather conditions we faced in many of our geographies,” Executive Vice President and COO Michael Kearney said. “Once again, our performance was driven through growth in all areas of the business and continued expense discipline.”
The group’s gross profit per unit retail benefitted from strong luxury sales and improved margins at many of its midline import stores, officials said.
“I believe we can maintain new-vehicle gross profit per unit retail in a range of around $2,000 to $2,100 a unit,” Kearney noted. “Based on the pace of sales we saw throughout March and continuing into April, our 2014 business plan for a SAR of around 16.2 million remains unchanged.”
In the first quarter, the group saw used-vehicle margins increase 50 basis points and profit per vehicle retail increase $78. Additionally, first quarter total frontend gross profit — which is new- and used-vehicle gross profit per vehicle sold plus F&I profit per vehicle sold — increased $34 over the prior year period to a record of $3,283.
The group’s strategy within the F&I segment remains unchanged, Kearney said. “Disciplined execution of F&I sales processes and training creates solid, reliable growth in results. First quarter F&I revenues grew 9% compared to the prior period. F&I [profit per vehicle retailed] for the quarter was $1,308, up 1% year over year.”
In the first quarter, parts and service revenues grew 6% and gross profit grew 9% compared to the first quarter of 2013. Parts and service gross margin for the quarter was 60.9%, up 180 basis points compared to the prior year. “The year-over-year gross profit improvement continues to be augmented by an 18% increase in reconditioning work, a 12% increase in warranty work, and a 6% increase in customer pay,” Kearney added.
Asbury also used its investor call to announce that Kearney will retire from his position on March 31, 2015.
“I want to thank [President and CEO] Craig [Monaghan] and the Board for allowing me to be part of this great team and to all of our associates for their help and support throughout the last 24 years,” Kearney said. “I look forward to being involved in our transition process.”
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