Back to top

Image: Bigstock

Asbury (ABG) Beats Q1 Earnings Mark, Lifts Long-Term Targets

Read MoreHide Full Article

Asbury Automotive (ABG - Free Report) reported first-quarter 2022 adjusted earnings of $9.27 per share, which skyrocketed 98% year over year and topped the Zacks Consensus Estimate of $8.92. This outperformance can be primarily attributed to higher-than-expected sales from Used Vehicle, Parts & Services, and Finance & Insurance units. For the reported quarter, revenues amounted to $3,912 million, surging 78% year over year. The top line also outpaced the Zacks Consensus Estimate of $3,837 million.

Segment Details

For the quarter, new-vehicle revenues jumped 61% year over year to $1,855.6 million but missed the Zacks Consensus Estimate of $1,883 million. Gross profit from the segment came in at $224 million, soaring 197% from the prior-year quarter but missing the consensus mark of $240 million.

Used-vehicle revenues also rose 96% from the year-ago figure to $1,350.9 million, beating the consensus mark of $1,306 million. Gross profit from the segment came in at $99.3 million, which surged 78% but missed the consensus mark of $106 million.

Net revenues in the finance and insurance business amounted to $203.4 million, increasing 130% from the year-ago quarter and outpacing the consensus mark of $171 million. Gross profit was $192.2 million, rising 107% year over year and beating the consensus mark of $162 million.

Revenues from the parts and service business rose 92% from the prior-year quarter to $502 million and topped the consensus mark of $460 million. Gross profit from this segment came in at $276.5 million, rising 70% year over year but falling short of the consensus mark of $279 million.

Other Tidbits

Selling, general & administrative (SG&A) expenses as a percentage of gross profit came in at 57.5% for the quarter under discussion, decreasing 520 basis points year over year. Asbury sold 5,600 vehicles (of which 38% were new and 62% were used) through the “end-to-end” online sales platform, Clicklane.

Year to date, ABG completed seven divestitures, including four that were closed in the quarter under review, and garnered proceeds of $327 million. As of Mar 31, the company had cash/cash equivalents of $284.3 million and long-term debt of $3,403.3 million.

During the quarter under discussion, Asbury repurchased 1.1 million shares for $200 million. To investors’ delight, it authorized a new share repurchase program of up to $200 million.

The company also provided an update to the 2025 strategic growth plan. When ABG originally launched this plan in 2020, it targeted revenue growth from $8 billion to $20 billion in 2025. But thanks to the significant progress made last year, the firm has raised the revenue target to $32 billion by 2025. The incremental $12 billion will likely comprise $2 billion of same-store sales growth, $3 billion from Clicklane and $7 billion from acquisitions. The company aims to generate EPS of more than $55 a share by 2025.

Asbury currently carries a Zacks Rank #3 (Hold).You can see the complete list of today’s Zacks #1 Rank stocks here.

Peer Releases

Lithia Motors (LAD - Free Report) reported first-quarter 2022 adjusted earnings of $11.96 per share, marking a whopping 103% increase from the prior-year period’s $5.89. The bottom line also beat the Zacks Consensus Estimate of $9.63 per share. Higher-than-expected revenues from new vehicle, used vehicle (retail and wholesale) and fleet and others segments led to the upside. Total revenues jumped 54% year over year to $6,705.3 million. The top line also exceeded the Zacks Consensus Estimate of $6,031.8 million.

The company approved a dividend of 42 cents per share for first-quarter 2022, which marks an increase from the previous payout of 35 cents. Year to date, LAD has repurchased 515,130 shares at a weighted average price of $292.80. Nearly $572 million is remaining under its authorization. Lithia had cash and cash equivalents of $161.4 million as of Mar 31, 2022, down from $174.8 million on Dec 31, 2021. Long-term debt was $3,395.2 million, marking an increase from $3,185.7 million as of Dec 31, 2021.

AutoNation (AN - Free Report)  reported first-quarter 2022 adjusted earnings of $5.78 per share, which skyrocketed 103% year over year and topped the Zacks Consensus Estimate of $5.39. This outperformance can be primarily attributed to higher-than-expected used vehicle sales. For the reported quarter, revenues amounted to $6,752.8 million, up 14.4% year over year. The top line also outpaced the Zacks Consensus Estimate of $6,628.1 million.

AutoNation’s cash and cash equivalents were $608.1 million as of Mar 31, 2022, reflecting a sharp rise from $350 million in the year-ago period. The company’s liquidity was $2.4 billion, including $608 million in cash and nearly $1.8 billion availability under the revolving credit facility. The firm’s inventory was valued at $1,698.3 million. At first quarter-end, non-vehicle debt was $3,548.3 million. Capital expenditure for the quarter amounted to $50.8 million. During the reported quarter, AutoNation repurchased 3.5 million shares of common stock for an aggregate purchase price of $381 million. On Apr 19, it had around $376 million remaining for share buyback under the current authorization.

Penske Automotive (PAG - Free Report) reported impressive first-quarter 2022 adjusted earnings of $4.76 per share, increasing a whopping 110.6% year over year and surpassing the Zacks Consensus Estimate of $3.94. Higher-than-expected gross profit in the Retail Automotive and Retail Commercial Truck segments resulted in this outperformance. The auto retailer registered net sales of $6,975.4 million, outpacing the Zacks Consensus Estimate of $6,257.2 million. The top line also rose 20.8% from the year-ago quarter.

For the quarter under review, Penske incurred SG&A costs of $797.8 million, up 20.1% year over year. The company had cash and cash equivalents of $170.3 million as of Mar 31, 2022, up from $100.7 million at 2021-end. Long-term debt amounted to $1,383.9 million, slightly down from $1,392 million as of Dec 31, 2021. PAG repurchased 1.2 million shares of common stock for nearly $119.2 million during the quarter under review. As of Apr 26, 2022, around $46.3 million remained available for repurchase under its existing share repurchase authorization.