Asbury Automotive Group (ABG) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue rose 16% year-over-year to $4.2 billion, with adjusted EPS of $6.35, but net income fell 25% to $126 million due to margin compression, hurricanes, stop sale orders, and one-time events.

• For the nine months ended September 30, 2024, revenue was $12.68 billion, up 15%, with net income down 45% to $301.5 million, reflecting higher SG&A, asset impairments, and increased interest expenses.

• Share repurchases totaled 394,000 shares for $89 million in Q3 and 830,000 shares for $183 million year-to-date, with $276 million remaining under authorization.

• The Koons acquisition added 20 dealerships and six collision centers, contributing $2.11 billion in revenue and $67.9 million in net income for the nine months.

• Hurricanes Helene and Milton, stop sale orders, and a cyber incident negatively impacted sales and earnings, with an estimated Q3 EPS impact of $0.39–$0.43 and nearly 1,200 new unit sales lost.

Financial highlights

• Q3 2024 gross profit was $718 million, up 7%, with a gross margin of 16.9% (down 142 bps year-over-year); adjusted operating margin was 5.6%.

• Adjusted net income for Q3 was $126 million; adjusted EBITDA for the twelve months ended September 30, 2024, was $980 million.

• New vehicle revenue increased 16% to $2.16 billion in Q3; used vehicle retail revenue rose 13% to $1.15 billion.

• Parts and service revenue grew 13% to $593 million in Q3, with gross profit up 16%.

• Operating cash flow for the nine months was $427 million; adjusted operating cash flow was $487 million.

Outlook and guidance

• SG&A as a percentage of gross profit expected in the mid-60s for Q4 due to hurricane and stop sale impacts.

• TCA pre-tax income expected to be $70–$80 million for 2024, with $0–$40 million in 2025; TCA rollout in 2025–2026 expected to temporarily lower F&I revenue and gross profit.

• Capital expenditures for 2024 are projected at $180–$200 million for facility upgrades, new construction, and technology.

• Tekion rollout in 2025–2026 is expected to reduce SG&A ratio into the 50s by late 2026/2027.

• Management remains focused on strategic capital allocation, operational improvements, and leveraging parts & service growth.