On February 8, 2024, Asbury Automotive Group Inc. (ABG, Financial) released its 8-K filing, revealing its financial performance for the fourth quarter of 2023. Revenue increased 3% to $3.8 billion. However, net income declined significantly, dropping 84% year over year to $55.5 million. Adjusted net income, which excludes certain non-recurring items, also fell 28% year over year to $146 million.
Asbury Automotive Group operates 158 new vehicle dealerships and 37 collision repair centers, offering a variety of automotive products and services. The company's revenue growth is due to strategic acquisitions, including the recent addition of Jim Koons Automotive Companies. Despite this expansion, Asbury faced challenges in the fourth quarter. This included a non-cash asset impairment of $117.2 million, which significantly impacted earnings per share (EPS) to $2.70 from $15.95 in the prior year quarter.
financial performance analysis
The company's gross profit decreased 9% to $673 million, and gross profit margin decreased 226 basis points to 17.7%. The Automotive Group also experienced an 11% decline in financial and insurance (F&I) reductions (PVR) per vehicle and a 1% decline in parts and service revenue. Selling, general and administrative (SG&A) expenses as a percentage of gross profit increased to 61.5%, reflecting the increase in operating costs.
Asbury's adjusted operating margin (non-GAAP) decreased 180 basis points to 6.4%. The company's liquidity remained strong with a total of $460 million, including cash and floor plan offset accounts, as well as availability under the revolver. The adjusted net leverage ratio was reported as 2.5x at quarter end.
“2023 is a year ahead for the continued consolidation of acquired companies, including expanding 72% of our stores to 72% of TCA and closing our largest industry acquisition of 2023 in December.” Asbury President and Chief Executive Officer David Hult said:
Despite the challenges faced in the fourth quarter, Asbury Automotive Group remains focused on its strategic plan to increase business scale and increase operational efficiency. The company's stock repurchase program continued with approximately 246,000 shares repurchased during the quarter for $47 million, demonstrating confidence in the value of its stock and its commitment to shareholder returns.
Investors and analysts looking for more detailed insight into Asbury Automotive Group Inc's financial performance can access the earnings conference call and supplementary materials on the company's Investor Relations website.
Value investors interested in the automotive retail and service industry can find Asbury a strategic acquisition and focus on operational efficiencies despite current headwinds. The company's journey toward technology investments with a 2025 revenue target of approximately $32 billion could position it for future growth in the evolving automotive market.
For a comprehensive understanding of Asbury Automotive Group Inc.'s financial health and strategic direction, readers are encouraged to review the full 8-K filing and consider the impact of the company's latest financial results .
For more information, see Asbury Automotive Group Inc.'s full 8-K earnings release here.
