Core Insights - Magnolia Group, LLC has increased its stake in Asbury Automotive Group by purchasing an additional 44,500 shares, bringing its total holdings to 282,623 shares valued at $69.09 million, which represents 10.95% of Magnolia's U.S. equity assets [1][2]. Company Overview - Asbury Automotive Group, Inc. is a U.S. automotive retailer with diversified revenue streams including vehicle sales, after-sales services, and financial products [5][7]. - The company reported a total revenue of $17.83 billion and a net income of $560.80 million for the trailing twelve months (TTM) [4]. Financial Metrics - Asbury Automotive's stock was priced at $235.89 as of October 28, 2025, with a one-year price change of 4.57% [4]. - The company's five-year revenue compound annual growth rate (CAGR) is 19%, with a forward price-to-earnings (P/E) ratio of 8.6 for FY2026 and an enterprise value to EBITDA ratio of 8.5 as of September 30, 2025 [2][4]. Recent Performance - Asbury Automotive experienced a strong Q3 revenue growth of 13% year-over-year, reaching an all-time high of $4.8 billion [8]. - Despite this growth, Asbury's stock has declined approximately 2% in 2025 through October 29, primarily due to an ongoing lawsuit from the U.S. Federal Trade Commission (FTC) regarding alleged hidden fees and racial discrimination [9][10]. Investment Position - Magnolia Group's investment in Asbury Automotive increased from 8.7% to 11% of its assets under management (AUM) in the third quarter, indicating a bullish outlook on the company [8]. - Asbury Automotive's stock is currently below its 52-week high of $312.56, which may have influenced Magnolia Group's decision to expand its position [10].

Financial Performance - Consolidated revenue for the nine months ended September 30, 2025, increased to $13.32 billion, compared to $12.68 billion for the prior year, representing a growth of approximately 5.1%[123] - Consolidated gross profit for the nine months ended September 30, 2025, increased to $2.28 billion, compared to $2.20 billion for the prior year, reflecting a growth of about 3.6%[123] - Total revenue for the three months ended September 30, 2025, increased by $564.2 million (13%) to $4,800.9 million compared to $4,236.7 million in 2024, driven by a $365.4 million (17%) increase in new vehicle revenue[128] - Gross profit for the same period increased by $84.5 million (12%) to $802.5 million, with parts and service gross profit rising by $52.0 million (15%)[128] - Net income increased by $20.8 million (16%) to $147.1 million, with diluted net income per share rising by $1.14 (18%) to $7.52[130] - Total revenue for the nine months ended September 30, 2025 increased by $638.4 million (5%) to $13,322.5 million compared to the same period in 2024[157] - New vehicle revenue rose by $578.2 million (9%) to $6,970.9 million, while used vehicle revenue decreased by $25.8 million (1%) to $3,933.8 million[157] - Gross profit for the nine months ended September 30, 2025 increased by $79.9 million (4%) to $2,278.6 million, driven by a $75.5 million (7%) increase in parts and service gross profit[157][159] Vehicle Sales and Revenue - The increase in consolidated revenue was primarily due to an increase in new vehicle units sold and parts and service volume growth, partially offset by a decrease in used vehicle units sold[123] - New vehicle revenue reached $2,528.9 million, a $365.4 million (17%) increase, with new vehicle units sold rising by 5,463 (13%)[132] - The seasonally adjusted annual rate (SAAR) for new vehicle sales in the U.S. was approximately 16.3 million, up from 15.6 million in the prior year, reflecting higher consumer demand[134] - Total new vehicle units sold increased to 134,003 for the nine months ended September 30, 2025, up from 125,963 in the same period of 2024, reflecting a growth of 8,040 units (6%)[162] - Used vehicle retail units sold increased by 1% to 37,696, while same store retail units sold decreased by 4% to 34,294[135] Expenses and Profitability - Income from operations rose by $9.9 million (4%) to $242.6 million, primarily due to the increase in gross profit, despite a $60.6 million (13%) rise in selling, general, and administrative expenses[129] - Selling, general, and administrative (SG&A) expenses increased by $60.6 million (13%) to $527.1 million for the three months ended September 30, 2025, with SG&A as a percentage of gross profit rising to 65.7%[148] - The company experienced a $11.7 million increase in asset impairment expense during the quarter[129] - Total other expenses, net decreased by $20.6 million (33%), primarily due to a $30.7 million increase in gains from dealership divestitures[130] Acquisitions and Investments - The Herb Chambers acquisition, completed on July 21, 2025, involved an aggregate purchase price of approximately $1.78 billion, comprising 33 dealerships and 52 franchises[118] - The company's operating results for the three and nine months ended September 30, 2025, include the results of the Herb Chambers Businesses, significantly impacting revenue and gross profit increases[124] - The company expects capital expenditures of approximately $175.0 million during 2025 for facility upgrades and technology investments[207] Cash Flow and Liquidity - The company’s ability to generate sufficient cash flows and maintain liquidity is critical for working capital, capital expenditures, and acquisitions[109] - Total available liquidity as of September 30, 2025, was $686.9 million, including cash and cash equivalents of $21.2 million[184] - Net cash provided by operating activities was $623.3 million for the nine months ended September 30, 2025, compared to $427.0 million for the same period in 2024[199] - Net cash used in investing activities totaled $1.49 billion for the nine months ended September 30, 2025, compared to net cash provided of $17.8 million for the same period in 2024[201] - Net cash provided by financing activities was $830.7 million for the nine months ended September 30, 2025, compared to net cash used of $430.2 million for the same period in 2024[208] Market Conditions and Future Outlook - Economic conditions, including rising inflation and interest rates, may adversely impact demand and pricing for the company's products and services[119] - The company expects lower finance and insurance (F&I) revenue and gross profit over the next few years due to changes in revenue recognition from TCA contracts[147] - The company anticipates rolling out TCA products to its Koons stores in Q4 2025 and Herb Chambers stores in 2026[147] - The company noted that consumers are keeping vehicles longer due to higher vehicle costs and interest rates, impacting service revenue trends[170] Financial Ratios and Margins - The gross profit margin for new vehicles decreased to 6.4% from 7.0%, attributed to easing inventory constraints affecting historically high margins[133] - Used vehicle retail gross profit margins increased from 5.1% to 5.2% for all stores during the nine months ended September 30, 2025, driven by higher prices for used vehicles[166] - Total parts and service gross margin improved to 58.8% from 57.3% year-over-year, reflecting better profitability in parts and service operations[171]

Core Insights - Asbury Automotive (ABG) reported Q3 2025 adjusted earnings per share of $7.17, exceeding the Zacks Consensus Estimate of $6.80 and up from $6.35 in the previous year, driven by strong gross profits from new vehicle sales, finance and insurance, and parts and service [1][9] - Total revenues for the quarter reached $4.80 billion, marking a nearly 13% year-over-year increase and surpassing the Zacks Consensus Estimate of $4.69 billion [1][9] Segment Performance - New vehicle revenues increased by 17% year over year to $2.53 billion, exceeding the Zacks Consensus Estimate of $2.44 billion, supported by a higher number of units sold, totaling 48,070 (up 13% year over year) [2] - The average selling price (ASP) for new vehicles was $52,609, up 4% year over year, also beating the consensus mark of $52,259 [2] - Gross profit from new vehicle sales was $161 million, a 7% increase from the prior year, surpassing the Zacks Consensus Estimate of $157 million [2] Used Vehicle Performance - Used vehicle retail revenues rose 7% year over year to $1.23 billion but fell short of the Zacks Consensus Estimate of $1.24 billion due to lower unit sales, totaling 37,696 (up 1% year over year) [3] - The ASP for used vehicles was $32,543, up 6% year over year, exceeding the consensus estimate of $31,576 [3] - Gross profit from used vehicles was $61.5 million, a 10% year-over-year increase, but missed the Zacks Consensus Estimate of $63 million [3] Wholesale and Finance Performance - Revenues from the used vehicle wholesale business increased by 27% to $185.5 million, beating the consensus mark of $160 million, although gross profit of $3.8 million fell short of the estimate of $4.15 million [4] - Net revenues from the finance and insurance business reached $200.3 million, an 8% increase year over year, surpassing the Zacks Consensus Estimate of $187 million [5] - Gross profit from finance and insurance was $187.1 million, up 9% year over year, exceeding the consensus estimate of $178 million [5] Parts and Service Performance - Revenues from the parts and service business were $659.4 million, up from $593.1 million in the prior year but missed the Zacks Consensus Estimate of $661 million [6] - Gross profit from this segment was $389.1 million, surpassing the consensus mark of $388 million and reflecting a 9% year-over-year increase [6] Financial Metrics - Selling, general & administrative expenses as a percentage of gross profit rose to 65.7%, an increase of 70 basis points year over year [7] - As of September 30, 2025, the company had cash and cash equivalents of $32.2 million, down from $69.4 million as of December 31, 2024, with long-term debt increasing to $3.6 billion from $3.14 billion [7]

Core Insights - Asbury Automotive Group reported a revenue of $4.8 billion for the quarter ended September 2025, reflecting a year-over-year increase of 13.3% and surpassing the Zacks Consensus Estimate by 2.37% [1] - The earnings per share (EPS) for the quarter was $7.17, up from $6.35 in the same quarter last year, exceeding the consensus EPS estimate by 5.44% [1] Financial Performance Metrics - New vehicle unit sales reached 48,070, exceeding the average estimate of 45,535 [4] - Used vehicle retail unit sales were 37,696, slightly below the average estimate of 39,323 [4] - The average selling price for new vehicles was $52.61 billion, surpassing the average estimate of $52.26 billion [4] - Same-store used vehicle retail unit sales were 34,294, above the average estimate of 33,321 [4] - Average gross profit per unit for total new vehicles was $3.35 billion, slightly above the average estimate of $3.33 billion [4] - Average gross profit per unit for used vehicle retail was $1.63 billion, exceeding the average estimate of $1.59 billion [4] Revenue Breakdown - Revenues from new vehicles totaled $2.53 billion, compared to the average estimate of $2.44 billion, marking a year-over-year increase of 16.9% [4] - Revenues from used vehicles were $1.41 billion, slightly above the average estimate of $1.4 billion, with a year-over-year increase of 9.1% [4] - Wholesale revenues from used vehicles reached $185.5 million, exceeding the average estimate of $159.86 million, representing a year-over-year change of 26.9% [4] - Finance and insurance net revenues were $200.3 million, surpassing the average estimate of $186.93 million, with a year-over-year increase of 8% [4] - Retail revenues from used vehicles were $1.23 billion, slightly below the average estimate of $1.24 billion, reflecting a year-over-year increase of 6.8% [4] - Parts and service revenues were $659.4 million, close to the average estimate of $661.34 million, with a year-over-year increase of 11.2% [4] Stock Performance - Asbury Automotive's shares have returned -2.6% over the past month, while the Zacks S&P 500 composite has increased by 3.6% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - The company generated a record revenue of $4.8 billion in Q3 2025, with a gross profit of $803 million and a gross profit margin of 16.7% [7] - Adjusted earnings per share (EPS) was $7.17, with adjusted EBITDA at $261 million [7][16] - Adjusted net income for the quarter was $140 million, excluding various non-cash and one-time expenses [16] Business Line Data and Key Metrics Changes - Same-store revenue for new vehicles increased by 8% year-over-year, with unit sales up by 7% [9] - Used vehicle unit volume decreased by 4% year-over-year, but used retail gross profit per unit (GPU) increased to $1,551 [10] - Parts and service gross profit rose by 7% year-over-year, with a gross profit margin of 58.8% [13] Market Data and Key Metrics Changes - The company experienced strong demand for electric vehicles (EVs), with EV unit sales doubling from Q2 to Q3 [25] - Same-store new vehicle day supply was 58 days at the end of September, indicating a stable inventory level against consumer demand [10] Company Strategy and Development Direction - The company is focused on deleveraging its balance sheet and optimizing its portfolio while being opportunistic with share repurchases [6][20] - The integration of the Chambers Group is expected to enhance operating metrics and contribute positively to gross profits [4][26] - The strategy emphasizes large, transformative acquisitions in desirable markets [6] Management's Comments on Operating Environment and Future Outlook - Management noted that the fourth quarter is traditionally strong for luxury vehicle sales, with expectations for margins to hold up well [25] - There are anticipated headwinds in the used vehicle market due to a softening labor market and vehicle affordability challenges [10] - The company expects to see efficiency gains from the rollout of Tekion, with significant savings projected by early 2027 [60][61] Other Important Information - The company divested four stores in July, generating annualized revenue of $300 million, as part of its disciplined portfolio management [6] - The adjusted SG&A as a percentage of gross profit was 64.2%, with expectations for reduction as the Tekion rollout progresses [17] Q&A Session Summary Question: Impact of Chambers acquisition on new GPUs - Management confirmed that the Chambers acquisition is expected to have a slightly accretive effect on new GPUs in Q4 [26] Question: Changes in TCA outlook and EPS impact - Management explained that the revised TCA outlook reflects changes in the SAR assumption and the impact of acquisitions and divestitures [31][33] Question: Capital allocation priorities - Management indicated a focus on share repurchases and debt reduction, with M&A remaining a consideration depending on market conditions [44] Question: Trends in luxury vehicle sales - Management noted that luxury vehicle sales remain strong, with no material changes in consumer demand observed [51] Question: Strategies for increasing used vehicle volume - Management highlighted the use of digital marketing tools and a focus on service drives to acquire more used vehicles [65]

Financial Data and Key Metrics Changes - The company generated a record revenue of $4.8 billion in Q3 2025, with a gross profit of $803 million and a gross profit margin of 16.7% [7] - Adjusted earnings per share (EPS) was reported at $7.17, with an adjusted EBITDA of $261 million [7][16] - Adjusted net income for the quarter was $140 million, excluding various non-cash and acquisition-related expenses [16] Business Line Data and Key Metrics Changes - Same-store revenue for new vehicles increased by 8% year-over-year, with unit sales up by 7% [9] - The parts and service business saw a same-store gross profit increase of 7%, with customer pay gross profit up by 8% [6][13] - Used vehicle unit volume decreased by 4% year-over-year, but used retail gross profit per unit (GPU) increased to $1,551 [10][11] Market Data and Key Metrics Changes - The company experienced elevated consumer demand for electric vehicles (EVs), with EV unit sales doubling from Q2 to Q3 [25] - Same-store new day supply was reported at 58 days, indicating a slight improvement in inventory management [10] - The company anticipates headwinds in the used vehicle market due to a softening labor market and vehicle affordability challenges [10] Company Strategy and Development Direction - The company is focused on deleveraging its balance sheet and optimizing its portfolio while being opportunistic with share repurchases [6][20] - The integration of the Herb Chambers Group is expected to enhance operating metrics and contribute positively to gross profits [4][26] - The company aims to continue its transition to the Techyon platform, which is expected to improve operational efficiency and reduce costs in the long term [57][58] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about maintaining margins in Q4, particularly in the luxury vehicle segment, despite macroeconomic uncertainties [25] - The company expects to see a recovery in the used vehicle market starting in 2026, with improved inventory levels anticipated in the following years [11][66] - Management acknowledged the challenges posed by the current economic environment but remains confident in the company's ability to generate cash and reduce leverage [20] Other Important Information - The company divested four stores in July, generating annualized revenue of $300 million, as part of its disciplined portfolio management strategy [6] - The adjusted SG&A as a percentage of gross profit was reported at 64.2%, with expectations for potential reductions as the Techyon rollout progresses [17] Q&A Session Summary Question: Insights on new GPUs for Q4 - Management indicated that Q4 is traditionally strong for luxury vehicles, and they expect margins to hold up well despite the lower gross profit from EVs compared to traditional vehicles [25][26] Question: Impact of Chambers acquisition on new GPUs - The acquisition is expected to have a positive effect on new GPUs, as the Herb Chambers Group has historically performed well in generating growth [26] Question: Updates on TCA and EPS projections - Management revised TCA projections due to changes in the SAR estimates, indicating a delay in achieving previous EPS targets [30][32] Question: Capital allocation priorities - Management indicated a focus on share repurchases and debt reduction, with a balanced approach to portfolio management [43] Question: Trends in luxury vehicle performance - Management noted that luxury performance is more brand-specific than region-specific, with expectations for a strong luxury end to the quarter [49] Question: Strategies for increasing used vehicle volume - The company is leveraging digital marketing tools and focusing on service drives to acquire more used vehicles, while balancing volume and profitability [64][66]

Financial Data and Key Metrics Changes - The company generated a record $4.8 billion in revenue for Q3 2025, with a gross profit of $803 million and a gross profit margin of 16.7% [7] - Adjusted earnings per share (EPS) was $7.17, with adjusted EBITDA at $261 million [7][15] - Adjusted net income for the quarter was $140 million, excluding various non-cash impacts [15] - Same-store SG&A as a percentage of gross profit was 64.2%, indicating a focus on cost management [16] Business Line Data and Key Metrics Changes - Same-store revenue for new vehicles increased by 8% year over year, with unit sales up by 7% [9] - Used vehicle unit volume decreased by 4% year over year, but used retail gross profit per unit increased to $1,551 [10] - Parts and service gross profit rose by 7% year over year, with a gross profit margin of 58.8% [12] Market Data and Key Metrics Changes - The company experienced elevated consumer demand for electric vehicles (EVs), with new EV unit sales doubling compared to Q2 [9][23] - Same-store new day supply was 58 days at the end of September, indicating inventory management aligned with consumer demand [10] Company Strategy and Development Direction - The company is focused on deleveraging the balance sheet and optimizing its portfolio while being opportunistic with share repurchases [5][19] - The acquisition of the Herb Chambers Group is expected to enhance operating metrics and contribute positively to gross profits [4][24] - The company aims to continue integrating Techyon to improve operational efficiency and customer experience [4][53] Management's Comments on Operating Environment and Future Outlook - Management noted that while there are macroeconomic challenges, they remain optimistic about maintaining margins and performance in the luxury vehicle segment [23][46] - The company anticipates a recovery in the used vehicle market starting in 2026, with expectations for improved inventory levels [11][61] Other Important Information - The company divested four stores in July, generating annualized revenue of $300 million, as part of its disciplined portfolio management strategy [6] - The rollout of Techyon is ongoing, with expectations for efficiency gains and cost savings once fully implemented [54][56] Q&A Session Summary Question: Impact of Chambers acquisition on new GPUs - Management confirmed that the Chambers acquisition will have a positive effect on new gross profits per vehicle [24] Question: Changes in TCA outlook and EPS impact - Management explained that the revised TCA outlook is primarily due to changes in the SAR assumption and the timing of rollouts [28][30] Question: Capital allocation priorities - Management indicated a focus on share repurchases and debt reduction, with M&A remaining a consideration depending on market conditions [40] Question: Trends in luxury vehicle sales - Management noted that luxury vehicle sales remain strong, with no significant changes in consumer demand observed [46] Question: Marketing strategies for used vehicles - Management highlighted the use of digital platforms and service drives to acquire more used vehicles, while balancing volume and profitability [60][61]

A B G | A s b u r y A u t o m o t i v e Investor Relations Presentation 2025 Third Quarter Forward-Looking Statements This presentation contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements other than historical fact, and may include statements relating to goals, plans, objectives, beliefs, expectations and assumptions, projections regarding Asbury's financial position, liquidity, results of operations, cas ...

Group 1: Earnings Performance - Asbury Automotive Group reported quarterly earnings of $7.17 per share, exceeding the Zacks Consensus Estimate of $6.8 per share, and up from $6.35 per share a year ago, representing an earnings surprise of +5.44% [1] - The company posted revenues of $4.8 billion for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 2.37%, compared to year-ago revenues of $4.24 billion [2] Group 2: Stock Performance and Outlook - Asbury Automotive shares have declined approximately 3.6% since the beginning of the year, while the S&P 500 has gained 16.9% [3] - The current consensus EPS estimate for the upcoming quarter is $6.65 on revenues of $4.87 billion, and for the current fiscal year, it is $27.31 on revenues of $18.09 billion [7] Group 3: Industry Context - The Automotive - Retail and Whole Sales industry is currently ranked in the bottom 23% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Performance - Record third quarter 2025 net income of $147 million ($7.52 per diluted share), up 16% from $126 million ($6.37 per diluted share) in Q3 2024[2] - Adjusted net income for Q3 2025 was $140 million ($7.17 per diluted share), an increase of 11% from $126 million ($6.35 per diluted share) in Q3 2024[2][5] - Net income for Q3 2025 reached $147.1 million, a 16% increase from $126.3 million in Q3 2024[25] - Diluted EPS for the three months ended September 30, 2025, was $7.52, compared to $6.37 in the same period of 2024, representing a growth of 18.1%[40] - For the nine months ended September 30, 2025, net income was $432.0 million, a decrease of 45.8 million compared to the previous year[41] - Diluted EPS for the same period was $21.99, down from $23.74, reflecting a decrease of 1.75[41] Revenue Growth - Total revenue reached $4.8 billion, representing a growth of 13% year-over-year[5] - Total revenue for Q3 2025 was $4,800.9 million, a 13% increase from $4,236.7 million in Q3 2024[25] - New vehicle revenue increased by 17% to $2,528.9 million in Q3 2025, compared to $2,163.5 million in Q3 2024[25] - Used vehicle retail revenue grew by 7% to $1,226.8 million in Q3 2025, while wholesale revenue surged by 27% to $185.5 million[25] - Total revenue for the three months ended September 30, 2025, was $4,800.9 million, a 13% increase from $4,236.7 million in 2024[31] - New vehicle revenue reached $2,528.9 million, up 17% from $2,163.5 million year-over-year[31] Profitability Metrics - Gross profit for Q3 2025 was $803 million, a 12% increase compared to the previous year[5] - Total gross profit for the company remained stable at 100.0% year-over-year[29] - Total gross profit increased to $802.5 million, a 12% rise compared to $718.0 million in the same period last year[31] - Parts and service gross profit rose by 15% to $389.1 million, compared to $337.1 million in 2024[31] - The company reported a total gross profit margin of 16.7%, slightly down from 16.9% year-over-year[31] Operating Expenses - Operating expenses for the quarter were $527.1 million, a 13% increase from $466.5 million in the same quarter last year[31] - Operating expenses increased by 2% to $453.8 million in Q3 2025, compared to $445.2 million in Q3 2024[33] - Selling, general and administrative (SG&A) expenses for the nine months ended September 30, 2025, were $1,458.9 million, representing 64.0% of gross profit[41] - The company reported a decrease in SG&A as a percentage of gross profit from 64.2% in 2024 to 64.0% in 2025[41] Liquidity and Debt - The company had $687 million in total liquidity as of September 30, 2025[9] - Long-term debt increased to $3,605.3 million as of September 30, 2025, from $3,138.6 million at the end of 2024[26] - Adjusted long-term net debt for September 30, 2025, was $3,467.1 million, compared to $2,403.7 million in 2024[39] - The transaction adjusted net leverage ratio was 3.2x at the end of the quarter[9] - The adjusted leverage ratio as of September 30, 2025, was 3.2, compared to 2.5 in the previous year[39] Share Repurchase and Inventory - Approximately 220,500 shares were repurchased for $50 million during Q3 2025, with $226 million remaining on the share repurchase authorization[11] - Inventory increased to $2,318.9 million as of September 30, 2025, up from $1,978.8 million at the end of 2024[26] - Days supply of new vehicle inventory was 58 days as of September 30, 2025, compared to 72 days in the same period of 2024[27] Vehicle Sales and Market Performance - New vehicle unit volume increased by 13%, with new vehicle revenue rising by 17% and gross profit increasing by 7%[10] - Used vehicle retail sales grew by 25.6% compared to the same period last year[29] - Domestic vehicle sales represented 27% of total sales, a decrease from 29% in the previous year[29] - The used to new vehicle sales ratio decreased to 78.4% from 87.7% year-over-year[31] - The used to new vehicle sales ratio was 79.5% in Q3 2025, down from 88.4% in Q3 2024[33]