Asbury Automotive Group (ABG) Q2 2024 earnings summary

Executive summary

• Achieved record Q2 revenue of $4.2 billion, up 13% year-over-year, despite significant disruption from the CDK Global cyber incident, which affected operations from June 19 to July 8 and required manual recreation of nearly 100,000 repair orders.

• Net income for Q2 was $28.1 million, down 86% year-over-year, primarily due to $135.4 million in franchise rights impairment and one-time cyber incident costs; adjusted net income was $129 million ($6.40 per diluted share).

• Clicklane online platform delivered record sales of 15,201 vehicles, up 33% year-over-year, helping mitigate the outage impact.

• The Koons acquisition added 20 dealerships and six collision centers, contributing $1.41 billion in revenue and $49.2 million in net income for the first half.

• Repurchased 193,000 shares for $43 million in Q2 and 592,000 shares for $130 million year-to-date.

Financial highlights

• Q2 2024 revenue increased 13% year-over-year to $4.25 billion; gross profit rose 2% to $731 million, with a gross margin of 17.2%.

• Adjusted net income for Q2 2024 was $129 million, with adjusted diluted EPS of $6.40; adjusted EBITDA was $236 million.

• Free cash flow was $154 million for the quarter and $337 million year-to-date; adjusted operating cash flow for YTD 2Q24 was $689 million.

• Parts and service gross profit reached a record $340 million, with gross margin expanding to 58.7%.

• Floor plan interest expense rose to $21 million in Q2 2024 from $0.8 million in Q2 2023.

Outlook and guidance

• SG&A as a percentage of gross profit expected to remain in the mid-60s for the rest of 2024.

• Full-year tax rate estimated at 25%.

• Capital expenditures for 2024 projected at $200–$250 million for facility upgrades, new construction, and technology.

• High single-digit same-store gross profit growth in parts and service anticipated for the second half of 2024 and into 2025.

• New vehicle GPU expected to decline, while used vehicle GPU to remain stable for the remainder of the year.