• Revenue: $4.1 billion for Q1 2025.
• Gross Profit: $724 million with a gross profit margin of 17.5%.
• Adjusted Operating Margin: 5.8%.
• Adjusted Earnings Per Share (EPS): $6.82.
• Adjusted EBITDA: $240 million.
• Same Store New Vehicle Revenue: Up 6% year-over-year.
• New Vehicle Gross Profit Per Vehicle: $3,449.
• Used Vehicle Unit Volume: Down 8% year-over-year.
• Used Retail Gross Profit Per Unit: $1,587.
• F&I PVR: $2,263.
• Parts and Service Gross Profit: Up 5% in Q1, with a gross profit margin of 58.3%.
• Adjusted SG&A as a Percentage of Gross Profit: 63.9%.
• Adjusted Net Income: $134 million for Q1 2025.
• Adjusted Operating Cash Flow: $187 million for Q1 2025.
• Free Cash Flow: $166 million for Q1 2025.
• Liquidity: $964 million at the end of Q1 2025.
• Pending Acquisition: Herb Chambers Automotive Group valued at $1.34 billion.

• Warning! GuruFocus has detected 4 Warning Signs with ABG.

Release Date: April 29, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Asbury Automotive Group Inc (NYSE:ABG) achieved an all-time record in gross profit for its parts and service business, with same store gross profit up 5% and customer pay gross higher by 6%.
• The company reported a strong adjusted earnings per share of $6.82 and an adjusted EBITDA of $240 million for the first quarter.
• Asbury Automotive Group Inc (NYSE:ABG) is progressing with its Tekion implementation, which is expected to improve productivity and guest experience.
• The pending acquisition of Herb Chambers Automotive Group is seen as a strategic move to enter a resilient market with a strong luxury store presence.
• The company has a robust liquidity position, ending the first quarter with $964 million in liquidity, and plans to focus on reducing leverage over the next 18 to 24 months.

Negative Points

• The company faces uncertainty due to new tariff policies, which could impact pricing and make predicting key metrics like volumes challenging.
• Used vehicle unit volume was down 8% year over year, indicating challenges in the used car market.
• Weather-related disruptions negatively impacted parts and service growth, which could have been higher without these disruptions.
• There is a risk of a slightly higher SG&A profile if tariff policies persist, potentially affecting profitability.
• The company experienced regional weaknesses, particularly in the DC and Baltimore areas, due to uncertainties around government jobs and weather impacts.

Q & A Highlights

Q: Can you explain the impact of tariffs on the TCA business and the expected deferral impact for 2025? A: Michael Welch, CFO, explained that if tariffs result in decreased volume, the deferral impact would be less in 2025 but more in 2026 and 2027. This shift depends on how tariffs affect the SAAR level, potentially pushing deferral impacts to future years.

Q: How is the Tekion integration progressing, and what are the expected SG&A savings? A: David Hult, CEO, stated that the Tekion rollout is progressing well, with plans to convert all stores by the end of 2026 or early 2027. The integration is expected to result in significant SG&A savings by reducing software application costs and improving employee productivity.

Q: What factors contributed to the gross profit performance compared to peers, and were there any regional weaknesses? A: David Hult, CEO, noted that weather issues and a strategic focus on gross profit over volume affected performance. Michael Welch, CFO, added that the DC area experienced weakness due to government job uncertainties, and weather impacted several regions.

Q: Are there any concerns about the Herb Chambers acquisition given the current macroeconomic conditions? A: David Hult, CEO, confirmed that there is no breakup fee for Asbury, and they do not intend to exit the deal. The acquisition is seen as a strategic move into a resilient market with a strong luxury brand presence.

Q: How do you view the front-end gross profit trend, and is there a floor for declines? A: David Hult, CEO, emphasized that Asbury is a different company post-COVID with a stronger store mix. The focus is on maximizing gross profit rather than chasing volume, and the company is comfortable with its current stability and operating margins.

Q: What is the outlook for parts and service growth, and are there any signs of deferred maintenance? A: Dan Clara, COO, stated that the outlook remains mid-single-digit growth. Some customers are advancing service appointments due to tariff concerns, but overall, the company expects continued growth in parts and service.

Q: How will Tekion impact personnel costs and efficiency? A: David Hult, CEO, explained that while headcount hasn't decreased yet, Tekion is expected to improve efficiency and reduce personnel costs over time. The goal is to enhance guest experience and increase income per employee.

Q: How might automakers respond to tariffs in terms of pricing and incentives? A: David Hult, CEO, suggested that responses will vary by brand, with some potentially reducing incentives first. The demand will dictate pricing strategies, and the company is monitoring developments closely.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.