Asbury's Q1 net jumps 18 percent

Asbury Automotive Group Inc.'s first-quarter profits jumped, driven by finance and insurance and parts and service gains amid weak vehicle sales, the dealership group said Tuesday.

Net income rose 18 percent from the year earlier to $40.1 million in the first quarter, as revenue grew 3.7 percent to $1.61 billion.

Net income was adjusted for a $900,000 pretax gain on legal settlements, the company said in a statement on Tuesday. In addition, an accounting change trimmed net by another $900,000.

Because of the new tax law, the Duluth, Ga., company's tax rate in the quarter was 25 percent, compared to 36 percent in the first quarter of 2017.

Some highlights:

Sales: Total new-vehicle sales rose 0.8 percent to 23,659 units. Used-vehicle sales rose 2.5 percent to 20,570.

Same-store sales: New-vehicle sales fell 1.8 percent to 22,965, vs. a 2 percent gain for industrywide first-quarter U.S. light-vehicle sales. Asbury's domestic-brand unit sales declined 9.4 percent, while import-brand sales fell 0.9 percent. Luxury-brand unit sales increased 2.7 percent.

Profits: Gross profit rose 4.3 percent for parts and service, to $125.1 million, and 3.5 percent for finance and insurance, to $68.2 million. But gross profit fell 4.5 percent for new vehicles, to $38.6 million, and dropped 1.2 percent for used vehicles, to $33.5 million.

The dealership group also acquired a Honda dealership in Indiana and plans to acquire two dealerships in Atlanta in the second quarter. Those two, combined, are expected to add about $120 million in annual revenue.

Asbury’s stock price closed Tuesday up $1.65, or 2.4 percent, at $69.30, after trading as high as $73.45, on a day when the market was broadly lower. The Dow Jones Industrial Average fell 1.7 percent and the S&P 500 slid 1.3 percent.

Asbury Automotive ranks No. 7 on Automotive News' list of the top 150 dealership groups based in the U.S., with new-vehicle retail sales of 99,975 units in 2017.