Sign in
AA

ASBURY AUTOMOTIVE GROUP INC (ABG)·Q4 2024 Earnings Summary

Executive Summary

  • Record Q4 revenue of $4.50B (+18% y/y) and gross profit of $749.9M (+11% y/y); GAAP diluted EPS was $6.54 vs $2.70 y/y, while adjusted EPS was $7.26 (-2% y/y) due to non-core items .
  • Parts & Service performance was the standout: gross profit reached $340.1M (+19% y/y) with 57.6% margin; same-store Parts & Service gross profit rose 11% and customer pay was up 13% .
  • Operating discipline: adjusted SG&A was 63.0% of gross profit (all-stores), improving sequentially for the second straight quarter; same-store adjusted SG&A was 62.0% . Management emphasized Tekion pilots to lower bolt-ons and SG&A over time .
  • Outlook and catalysts: management expects new-vehicle GPU to normalize to $2,500–$3,000 over time (timing mid/late 2025 or early 2026); 2025 SG&A mid-60s% and capex ~$250M each in 2025–2026; TCA expected pretax ~$8M in 2025 with a ~$2.35 EPS noncash deferral headwind; improvement at Stellantis is a potential tailwind as mix/inventory normalizes .
  • Estimates context: S&P Global consensus for Q4 2024 was unavailable due to data access limits; comparisons vs Street estimates not provided (S&P Global data unavailable).

What Went Well and What Went Wrong

What Went Well

  • Parts & Service momentum: Q4 Parts & Service gross profit rose 19% y/y to $340.1M, with margin expansion to 57.6%; same-store gross profit was +11%, customer pay +13% .
  • Operating efficiency: adjusted SG&A as % of gross profit improved to 63.0% (all-stores) and 62.0% (same-store), marking back-to-back quarterly improvements; management: “delivering lower SG&A costs as a percent of gross profit for the second quarter in a row” .
  • Volume strength despite mix headwinds: total new units +18% y/y and used retail +15% y/y; revenue mix held stable with new at 54.5% of revenue and F&I PVR of $2,236 sequentially improved vs Q3 .

What Went Wrong

  • Front-end margin compression: total gross margin fell 101 bps y/y to 16.6%; total new-vehicle GPU declined to $3,641 (down 15% y/y); used retail GPU $1,449 (-15% y/y) .
  • Stellantis drag: management cited Stellantis as a “major headwind” in Q4; inventory and incentives forced low GPUs; improvement is expected as mix/orders normalize but will take time .
  • F&I headwinds and mix: F&I PVR decreased ~3% y/y to $2,236 (same-store $2,238) with deferred revenue impacts from TCA contributing to declines; TCA deferral headwinds are expected to intensify in 2025–2026 before turning tailwind thereafter .

Financial Results

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Revenue ($USD Billions)$3.81 $4.25 $4.24 $4.50
Gross Profit ($USD Millions)$673.0 $730.7 $718.0 $749.9
Gross Margin %17.7% 17.2% 16.9% 16.6%
Operating Margin % (GAAP)3.3% 2.4% 5.5% 5.3%
Adjusted Operating Margin %6.4% 5.6% 5.6% 5.7%
Net Income ($USD Millions)$55.5 $28.1 $126.3 $128.8
Diluted EPS (GAAP)$2.70 $1.39 $6.37 $6.54
Adjusted EPS (Non-GAAP)$7.12 $6.40 $6.35 $7.26

Segment breakdown (revenue and gross profit):

SegmentQ4 2023 Revenue ($MM)Q3 2024 Revenue ($MM)Q4 2024 Revenue ($MM)Q4 2023 GP ($MM)Q3 2024 GP ($MM)Q4 2024 GP ($MM)
New Vehicle$2,058.5 $2,163.5 $2,457.1 $170.8 $150.4 $172.1
Used Retail$965.8 $1,148.5 $1,098.9 $52.3 $56.1 $51.2
Used Wholesale$102.9 $146.2 $159.6 $1.8 $3.3 $1.9
Parts & Service$513.4 $593.1 $590.4 $285.3 $337.1 $340.1
F&I (net)$171.2 $185.4 $198.5 $162.8 $171.2 $184.6

Key KPIs:

KPIQ2 2024Q3 2024Q4 2024
F&I PVR ($/unit)$2,151 $2,141 $2,236
Total New Vehicle GPU ($)$3,633 $3,529 $3,641
Used Retail GPU ($)$1,463 $1,501 $1,449
New Vehicle Days Supply (units)72 63 49
Used Vehicle Days Supply (units)38 38 37
Same-store Parts & Service GP growth y/y (%)+4% +4% +11%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
SG&A as % of Gross Profit (All-stores)Q4 2024 → 2025Mid-60s% for Q4 2024 Mid-60s% for 2025 Maintained into 2025
New Vehicle GPU (steady-state)2025–2026N/A$2,500–$3,000 “new normal”; timing mid/late 2025 or early 2026 New disclosure
Adjusted Tax RateFY 2025~25.3% for 2024 25.3% for 2025 Maintained
CapexFY 2025–2026$200–$250M 2024 view ~$250M in both 2025 and 2026 Raised to top end
TCA Pretax IncomeFY 2024 → FY 2025$70–$80M FY2024 ~$8M FY2025 Lowered (rollouts/deferral)
TCA Noncash Deferral ImpactFY 2025N/A$62M deferral hit ($2.35 EPS) New headwind quantified
TCA Rollouts1H 2025Florida & Koons “next year” Florida in Q1 2025; Koons in Q2 2025 Timing specified

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024, Q3 2024)Current Period (Q4 2024)Trend
DMS/Technology (Tekion)CDK outage; Tekion pilot planned; Clicklane mitigated impact 4-store Tekion pilot live; 70% bolt-ons reduction envisioned; onboarding faster; SG&A savings expected with full rollout (late 2026/2027 benefits) Improving; execution progressing
Stellantis impactQ3: major headwind in volume/GPU; incentives evolving Q4: still “material hit”; inventory mix and incentives hurt GPUs; improvements anticipated as restrictions lift and right options/models arrive Mixed; gradual recovery expected
Parts & Service growthQ2: high-single-digit targeted; Q3: +4% same-store GP Q4: same-store GP +11%; customer pay +13%; margin 57.9% same-store Strengthening
TCA accountingQ2/Q3: deferred revenue headwind emerging Q4: FY25 pretax ~$8M; ~$62M deferral hit; EPS headwind ~$2.35; peak deferral in 2026, tailwind thereafter Near-term negative; long-term positive
Macro/tariffs/affordabilityQ3: stop-sales and hurricanes; macro cautious; affordability issues Q4: optimism post-election; possible tariff risks monitored; affordability concerns persist but sentiment improved Cautiously positive
Used strategyPrioritized profitability over volume amid tight supply Strategy maintained; sequential GPU improved; expect supply challenges in 2025 Steady

Management Commentary

  • “Asbury delivered strong fourth quarter results, setting records for total revenue, and growing our Parts & Service gross profit by double digits… delivering lower SG&A costs as a percent of gross profit for the second quarter in a row.” — CEO David Hult .
  • “In 2025, we expect new vehicle gross profit per vehicle somewhere in the $2,500 to $3,000 range.” — CEO David Hult .
  • “Our 4-store pilot with Tekion went live in October… reduce plug-ons by about 70%… easier to onboard, more efficient, lower cost per transaction… material savings in SG&A.” — CEO David Hult .
  • “Adjusted SG&A… came in at 63%, a sequential improvement… we anticipate 2025 SG&A… in the mid-60s.” — CFO Michael Welch .
  • “We anticipate 2025 TCA pretax income to be approximately $8 million, which includes a noncash deferral hit of $62 million or $2.35 per diluted share… peak deferral to occur in 2026.” — CFO Michael Welch .

Q&A Highlights

  • GPUs and normalization: Management sees GPUs stabilizing with luxury strength; long-run new-vehicle GPU “new normal” $2,500–$3,000 timing mid/late 2025 or early 2026; Q4 benefited from seasonality and brand mix .
  • Tekion benefits: ~70% reduction in plug-ons; lower toll fees; faster onboarding (service advisor from five days to one); productivity gains expected to drive SG&A savings over full rollout .
  • Stellantis outlook: Inventory days down, incentives up; wrong inventory mix hurt Q4 GPUs; restrictions lifting should allow ordering the options customers want; expectation of gradual improvement .
  • F&I dynamics: Mix remains ~1/3 finance reserve, ~2/3 products; training focus on bottom 20% stores; TCA deferral headwind will lower consolidated PVR in 2025–2026 before turning tailwind .
  • Macro and demand: Post-election “uptick” in traffic; January mixed due to weather but parts & service, sales encouraging; affordability concerns persist yet sentiment improved .

Estimates Context

  • S&P Global consensus estimates for Q4 2024 revenue and EPS were unavailable due to data access limits; as a result, comparisons to Street expectations could not be provided (S&P Global data unavailable).
  • Implication: Without consensus benchmarks, the focus shifts to sequential and y/y trends and management’s quantified forward guidance .

Key Takeaways for Investors

  • Parts & Service is the core earnings engine: sustained double-digit customer pay growth and margin expansion provide resilience against front-end volatility .
  • Operating leverage discipline continues: sequential SG&A % declines and Tekion-driven structural savings should support margins through cycles .
  • Front-end margins likely to normalize lower over time; manage expectations around the $2.5–3.0K new GPU steady-state and watch mix/luxury availability .
  • Near-term TCA accounting headwind is material in 2025–2026 (~$2.35 EPS impact in 2025) but sets up a multi-year tailwind thereafter; track rollout milestones (Florida Q1, Koons Q2) .
  • Stellantis recovery is a credible upside catalyst as ordering restrictions lift and mix improves; monitor brand-specific inventory and incentive trends .
  • Liquidity and balance sheet remain solid ($828M liquidity; 2.85x transaction-adjusted net leverage), supporting capex and buybacks while integrating M&A .
  • Trading lens: Favor exposure into Parts & Service momentum and SG&A efficiency; be prepared for headline volatility around TCA accounting and OEM-specific developments (Stellantis, recalls/stop-sales) .