Asbury Q3 net income down 17% with fewer stores

With 10 fewer franchised stores in its network, Asbury Automotive Group Inc.'s third-quarter net income fell 17 percent from a year earlier to $169 million, while revenue dropped 5.2 percent to $3.7 billion.

But Asbury is about to add double that number of locations and $3.2 billion in annual revenue with the acquisition of Jim Koons Automotive Cos. announced in the third quarter. The $1.2 billion deal is expected to close either this quarter or the first quarter of 2024.

Asbury said Tuesday it paid out $1.3 million in professional fees in the third quarter in relation to the transaction.

"I'm proud of our team members for their hard work toward the longer-term integration of our acquisitions and the support of our strategic growth priorities," Asbury CEO David Hult said in a statement Tuesday. "We are excited about our pending acquisition of Koons Automotive, which would bring over $3 billion in revenue and a talented group of team members and leaders to the Asbury team. And finally, we are proud of our team members that continue to deliver a best-in-class guest experience while maintaining our disciplined cost strategy."

Last year, Asbury sold four stores in the first quarter, three in the second quarter and nine in the fourth quarter. The group sold David McDavid Acura of Austin in Texas to Umansky Automotive in May. Asbury on Tuesday also reported that it realized a $2.7 million net gain before tax in the third quarter for selling real estate; it was unclear if this is related to the David McDavid Acura acquisition.

The Jim Koons deal would bring Asbury 20 new-vehicle stores and one used-only dealership largely in the Washington, D.C. and Baltimore areas of Delaware, Maryland and Virginia — a new market for Asbury. The group also would receive three independent collision repair facilities and three more associated with Ford and Toyota stores.

Highlights from Asbury's third-quarter earnings report include:

Q3 revenue: $3.7 billion, down 5.2 percent from a year earlier

Q3 net income: $169 million, down 17 percent from a year earlier

Q3 adjusted net income: $168 million, down 18 percent from a year earlier

Sales: 36,846 new vehicles, up 1 percent; 32,117 used vehicles, down 17 percent

Same-store sales: 36,846 new vehicles, up 5.2 percent; 32,104 used vehicles, down 11 percent

Asbury Automotive Group, of Duluth, Ga., ranks No. 5 on Automotive News' list of the top 150 dealerships based in the U.S. with retail sales of 151,179 new vehicles in 2022. Jim Koons Automotive, of Vienna, Va., ranks No. 23 on the list with retail sales of 26,188 new vehicles in 2022.