Asbury Automotive ((ABG)) has held its Q4 earnings call. Read on for the main highlights of the call.
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The latest earnings call for Asbury Automotive Group was characterized by an overall optimistic sentiment, highlighting strong financial performance despite certain challenges. The company reported record revenue and profit growth, underscoring effective cost management and operational improvements. However, issues with the Stellantis brand and the used vehicle market posed ongoing challenges. Nonetheless, the outlook remains positive with expectations of sustained growth and efficiency advancements.
Record Revenue and Profit Growth
Asbury Automotive Group reported a remarkable financial performance with revenue reaching a record $4.5 billion, marking an 18% increase year-over-year. The gross profit rose to $750 million, up 11%, with a gross profit margin of 16.6% for the fourth quarter of 2024. This record-breaking achievement underscores the company’s successful strategies in achieving substantial growth.
Strong Same-Store Performance
The company saw significant gains in same-store performance, with new vehicle volume up by 7% year-over-year and a 12% sequential increase. Additionally, same-store gross profit for fixed operations business increased by 11%, and the Customer Pay segment grew by 13%, highlighting the strength in core business operations.
SG&A Cost Improvement
Asbury Automotive’s efforts in cost management were evident as SG&A costs, as a percentage of gross profit, reduced to 63% on an adjusted basis. This marks the second consecutive quarter of improvement, demonstrating the company’s commitment to operational efficiency.
Clicklane Sales Increase
The Clicklane platform made significant contributions with approximately 12,000 retail sales in the fourth quarter, a 6% year-over-year increase. The platform accounted for over 51,000 units for the entire year, representing a 13% rise from 2023, highlighting the growing significance of digital sales channels.
Stellantis Headwinds
Despite overall positive performance, the Stellantis brand faced challenges with a significant year-over-year decline. This issue affected the overall gross profit per unit and contributed to a challenging inventory situation, necessitating a strategic approach to address these headwinds.
Used Vehicle Market Challenges
The used vehicle segment experienced a slight decline in unit volume compared to the previous year. However, there was an increase in gross profit per unit, indicating resilience in profitability despite market difficulties.
Hurricane and Asset Impairments
The fourth quarter results were impacted by non-cash asset impairments amounting to $11 million and losses of $5 million related to Hurricane Milton. These factors influenced the financial outcomes for the quarter, highlighting external challenges faced by the company.
Forward-Looking Guidance
Asbury Automotive provided an optimistic guidance for the upcoming year. They anticipate a 7% year-over-year increase in same-store new vehicle volume with gross profit per new vehicle expected to range between $2,500 and $3,000 for 2025. The used vehicle market is projected to maintain flat volume but with continuing growth in gross profit per unit. Parts and Service segments are expected to see sustainable mid-single-digit growth, reflecting the company’s strategic focus on maintaining cost discipline and operational efficiency.
In conclusion, Asbury Automotive Group’s earnings call reflected a strong and optimistic financial outlook, with record revenue and profit growth achieved through effective cost management and operational improvements. Despite facing challenges from the Stellantis brand and used vehicle market, the company remains focused on sustainable growth and efficiency improvements. The forward-looking guidance suggests continued positive momentum, making Asbury Automotive a noteworthy player in the automotive industry.
