Asbury plans to add stores over 3 years
Monaghan: “Proximity matters.”
ATLANTA -- Asbury Automotive Group Inc. is ready to go on a store-buying spree, predicated on its forecast that annual U.S. auto sales will recover to 16 million vehicles in 2015.
During the next three years, Asbury expects to acquire stores that will represent $400 million to $600 million in additional annual revenue, company CEO Craig Monaghan said.
In 2011, Asbury's revenue totaled $4.28 billion.
"We are now positioned to go on the offensive," Monaghan told Automotive News. He added that interest from potential sellers seems to have increased in just the past 60 days.
Monaghan said the nation's sixth-largest automotive retailer will consider a variety of brands and markets outside of its current geographic footprint -- but not too far outside.
Monaghan did not specify which particular markets Asbury, of suburban Atlanta, is considering but noted a preference to be near the company's existing locations in the Southeast and Texas.
"We'd much rather be in Tennessee or Kentucky or Alabama than we would be in Washington state or California," he said. "We believe that proximity matters."
Monaghan laid out the retailer's three-year vision after Asbury reported a 68 percent increase in net income for the third quarter, to $20.7 million, on a 14 percent rise in revenues, to $1.2 billion.
In addition to the acquisition targets, Monaghan said Asbury will:
Devote $35 million to $45 million a year for the next three years for capital expenditures, primarily store renovations. That will drop from expected spending of $55 million to $60 million in 2012. In 2013 the company is budgeting $45 million, and it will decrease the next two years. By the end of 2015 Asbury will have rebuilt or significantly renovated 90 percent of its stores, Monaghan said.
Spend $10 million to $20 million a year on lease buyouts. Asbury aims to own 75 percent of its own dealership real estate.
Spend $25 million to $30 million to buy back the company's stock, or more if the share price decreases enough to create additional repurchase opportunities.
"We've come a long way. It wasn't all that long ago that there were questions about our survivability," Monaghan said. "And here we are today with one of the strongest balance sheets in the industry. Our cash balances are building. The operating side of the business is performing extremely well."
Asbury ranks No. 6 on the Automotive News list of the top 125 dealership groups in the United States with retail sales of 68,770 new vehicles in 2011.
You can reach Amy Wilson at email@example.com.