Asbury Reports Record Second Quarter
DULUTH, Ga. — In a quarterly earnings conference call last week, Asbury Automotive posted income from continuing operations of $36.2 million, a 21% increase from a year ago.
Total revenues for the dealer group increased 12% to $1.5 billion, while total gross profit for the quarter was up $25.6 million, or 12%.
“Seventy percent of our incremental gross profit was from used vehicles, finance and insurance and parts and service,” said Keith Style, SVP and CFO of Asbury.
The dealer group’s F&I strategy remains unchanged, and the lending environment is favorable, officials said. F&I revenue for the quarter grew 6% compared to the year-ago period, while F&I profit per vehicle retail was flat from a year ago at $1,308.
“Disciplined execution of F&I sales processes and training creates solid, sustainable growth in results,” said Michael Kearney, EVP and COO of Asbury.
Asbury’s second quarter total front-end gross profit yield increased $68 over the same quarter last year to $3,282. That includes new- and used-vehicle gross profit per vehicle sold and F&I profit per vehicle sold.
“As I stated last quarter, I believe we can maintain new-vehicle gross profit per unit retail in a range of about $2,000 to $2,100,” Kearney added.
In the second quarter, the group’s parts and service revenues grew 7% and gross profit grew 9% compared to the second quarter of 2013. Parts and service gross margin for the quarter was 62%, up 100 basis points compared to the prior year. The group plans to continue to grow this segment through ongoing customer retention programs using quick service processes at a number of its stores.
“This year-over-year gross profit improvement continues to be augmented by 15% increase in reconditioning work, an 11% increase in warranty work, and a 6% increase in our customer pay,” Kearney said.
The group also opened its first Q auto store — a stand-alone used-car store —during the quarter, and is on track to open a second one this fall.
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