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Auto Roundup: GM's Cruise Layoff Update, BLBD's Quarterly Release & More
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Last week, auto retailers Penske Automotive Group, Inc. (PAG - Free Report) and Asbury Automotive Group, Inc. (ABG - Free Report) made headlines with acquisition updates. While PAG signed a deal to acquire Rybrook Group Limited to expand its footprint in the United Kingdom, ABG completed the acquisition of Jim Koons, which will add around $3 billion in its annualized sales.
General Motors’ (GM - Free Report) self-driving business Cruise is set to reduce its workforce by 24% as part of a restructuring effort following a recent incident that compelled the suspension of its U.S. testing activities. Meanwhile, school bus manufacturer Blue Bird Corporation (BLBD - Free Report) reported fiscal fourth-quarter 2023 results. It exceeded expectations on both fronts as well as lifted fiscal 2024 guidance.
Penske signed an agreement to acquire Rybrook Group Limited, which consists of 15 premium dealerships in the United Kingdom. These dealerships comprise four BMW dealerships, four MINI dealerships, four Volvo dealerships, two Land Rover dealerships and one Porsche dealership. Among the four BMW dealerships, three locations retail BMW Motorrad motorcycles.
The buyout represents estimated annualized revenues of $1 billion. Subject to regulatory approvals and satisfactory closing conditions, the transaction is expected to be completed by January 2024. The company plans to fund this acquisition using its existing liquidity. Last year, PAG completed several acquisitions and opened new dealerships worth more than $1.3 billion in annualized revenues.
Asbury completed the acquisition of Jim Koons Automotive Companies, one of the 10 largest privately owned dealership groups in the United States.The sale comprised 20 dealerships, 29 franchises and six collision centers in the United States. It also included one of the highest-volume Toyota dealerships in the United States. The transaction was financed through borrowings under Asbury's existing credit facility and available cash reserves.
The acquisition will contribute around $3 billion in annualized revenues. Asbury foresees the profitability of the Koons dealership to align closely with that of Asbury's other dealerships. The total purchase price, approximately $1.2 billion, encompasses $740 million in goodwill and $420 million in real estate and leasehold improvements, along with vehicle inventory (net of floorplan), parts inventory, and fixed assets of the dealerships.
General Motors’ Cruise will reduce its workforce by 24%, mainly in commercial operations and related corporate functions. Before announcing the layoff, Cruise had 3,800 employees. The affected employees will receive their paychecks till Feb 12, 2023. They will also receive an additional eight weeks of salary plus tenure-based severance.
Cruise also dismissed nine key leaders due to an accident that took place on Oct 2, 2023. The accident involved a Cruise self-driving car that dragged a pedestrian 20 feet after being struck by a vehicle. Per a memo seen by Reuters, new leadership is crucial for the company to regain trust and operate with the highest standards. After the accident, California suspended the driverless testing permit of the Cruise robotaxi unit. Last month, GM announced cutting costs at Cruise, which has lost more than $700 million in the third quarter and $8 billion since 2016.
Blue Bird came out with fiscal fourth-quarter 2023 adjusted quarterly earnings of 62 cents per share, beating the Zacks Consensus Estimate of 46 cents per share. The company had reported a loss of 67 cents per share a year ago. Revenues totaled $303 million, ahead of the consensus mark of $300 million and increasing from $257.7 million recorded in the year-ago period.
During the quarter under review, bus sales saw an uptick of $41.7 million, primarily driven by a 12.1% rise in the average sales price per unit. This increase can be attributed to product and mix adjustments, strategic pricing measures implemented by management in response to heightened inventory purchase costs and a 5% rise in the number of units booked. In the fourth quarter of fiscal 2023, 2,116 units were booked, up from 2,016 units booked during the corresponding period in fiscal 2022.
Given the strong finish to 2023 and improved visibility for 2024, Blue Bird is raising its fiscal 2024 guidance. The updated projections include net revenues in the range of $1.15-1.25 billion. Adjusted EBITDA is expected to be between $105 million and 125 million. Adjusted FCF is anticipated to be in the range of $50-$60 million. The company is affirming its long-term outlook, aiming for sustained and profitable growth toward achieving revenues of $2 billion and maintaining adjusted EBITDA margins of 12% or higher.
Price Performance
The following table shows the price movement of some of the major auto players over the last week and six-month period.
Image Source: Zacks Investment Research
What’s Next in the Auto Space?
Industry watchers will keep a tab on November new car registration data to be released by the European Automobile Manufacturers Association.
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Auto Roundup: GM's Cruise Layoff Update, BLBD's Quarterly Release & More
Last week, auto retailers Penske Automotive Group, Inc. (PAG - Free Report) and Asbury Automotive Group, Inc. (ABG - Free Report) made headlines with acquisition updates. While PAG signed a deal to acquire Rybrook Group Limited to expand its footprint in the United Kingdom, ABG completed the acquisition of Jim Koons, which will add around $3 billion in its annualized sales.
General Motors’ (GM - Free Report) self-driving business Cruise is set to reduce its workforce by 24% as part of a restructuring effort following a recent incident that compelled the suspension of its U.S. testing activities. Meanwhile, school bus manufacturer Blue Bird Corporation (BLBD - Free Report) reported fiscal fourth-quarter 2023 results. It exceeded expectations on both fronts as well as lifted fiscal 2024 guidance.
While PAG currently carries a Zacks Rank #4 (Sell), ABG, GM and BLBD carry a Zacks Rank #3 (Hold) each. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Last Week’s Top Stories
Penske signed an agreement to acquire Rybrook Group Limited, which consists of 15 premium dealerships in the United Kingdom. These dealerships comprise four BMW dealerships, four MINI dealerships, four Volvo dealerships, two Land Rover dealerships and one Porsche dealership. Among the four BMW dealerships, three locations retail BMW Motorrad motorcycles.
The buyout represents estimated annualized revenues of $1 billion. Subject to regulatory approvals and satisfactory closing conditions, the transaction is expected to be completed by January 2024. The company plans to fund this acquisition using its existing liquidity. Last year, PAG completed several acquisitions and opened new dealerships worth more than $1.3 billion in annualized revenues.
Asbury completed the acquisition of Jim Koons Automotive Companies, one of the 10 largest privately owned dealership groups in the United States.The sale comprised 20 dealerships, 29 franchises and six collision centers in the United States. It also included one of the highest-volume Toyota dealerships in the United States. The transaction was financed through borrowings under Asbury's existing credit facility and available cash reserves.
The acquisition will contribute around $3 billion in annualized revenues. Asbury foresees the profitability of the Koons dealership to align closely with that of Asbury's other dealerships. The total purchase price, approximately $1.2 billion, encompasses $740 million in goodwill and $420 million in real estate and leasehold improvements, along with vehicle inventory (net of floorplan), parts inventory, and fixed assets of the dealerships.
General Motors’ Cruise will reduce its workforce by 24%, mainly in commercial operations and related corporate functions. Before announcing the layoff, Cruise had 3,800 employees. The affected employees will receive their paychecks till Feb 12, 2023. They will also receive an additional eight weeks of salary plus tenure-based severance.
Cruise also dismissed nine key leaders due to an accident that took place on Oct 2, 2023. The accident involved a Cruise self-driving car that dragged a pedestrian 20 feet after being struck by a vehicle. Per a memo seen by Reuters, new leadership is crucial for the company to regain trust and operate with the highest standards. After the accident, California suspended the driverless testing permit of the Cruise robotaxi unit. Last month, GM announced cutting costs at Cruise, which has lost more than $700 million in the third quarter and $8 billion since 2016.
Blue Bird came out with fiscal fourth-quarter 2023 adjusted quarterly earnings of 62 cents per share, beating the Zacks Consensus Estimate of 46 cents per share. The company had reported a loss of 67 cents per share a year ago. Revenues totaled $303 million, ahead of the consensus mark of $300 million and increasing from $257.7 million recorded in the year-ago period.
During the quarter under review, bus sales saw an uptick of $41.7 million, primarily driven by a 12.1% rise in the average sales price per unit. This increase can be attributed to product and mix adjustments, strategic pricing measures implemented by management in response to heightened inventory purchase costs and a 5% rise in the number of units booked. In the fourth quarter of fiscal 2023, 2,116 units were booked, up from 2,016 units booked during the corresponding period in fiscal 2022.
Given the strong finish to 2023 and improved visibility for 2024, Blue Bird is raising its fiscal 2024 guidance. The updated projections include net revenues in the range of $1.15-1.25 billion. Adjusted EBITDA is expected to be between $105 million and 125 million. Adjusted FCF is anticipated to be in the range of $50-$60 million. The company is affirming its long-term outlook, aiming for sustained and profitable growth toward achieving revenues of $2 billion and maintaining adjusted EBITDA margins of 12% or higher.
Price Performance
The following table shows the price movement of some of the major auto players over the last week and six-month period.
Image Source: Zacks Investment Research
What’s Next in the Auto Space?
Industry watchers will keep a tab on November new car registration data to be released by the European Automobile Manufacturers Association.