Asbury Automotive Group Inc. posted its highest-ever quarterly profit in the third quarter — the fourth public retailer to do so this month — as the largest dealerships benefited from higher gross profits on new- and used-vehicle sales amid short supply.
Asbury on Tuesday reported third-quarter net income of $96.2 million, more than double the $45 million reported last year. After accounting for one-time items, adjusted net income was $79.2 million, a 76 percent increase. The adjustments were a $24.7 million gain on a dealership sale, a $1.3 million acquisition-related cost and a $700,000 real estate charge. There were no adjustments to net income in third-quarter 2019, Asbury said.
Revenue for the Duluth, Ga., retailer was flat at $1.84 billion.
Asbury CEO David Hult said in a statement that closing the Park Place Dealerships acquisition in the quarter— the retailer's largest ever purchase at $735 million — and posting record earnings amid pandemic conditions underscored the resiliency of the franchised dealership business model. A previous deal to purchase most of the Texas dealership group fell apart in the early days of the pandemic.
"Our continued focus on gross profit combined with disciplined expense management enabled us to deliver the best quarterly results in our company's history," Hult said.
The supply-and-demand disparity favored per-vehicle profit for auto retailers this quarter, though the megadealers that gave their reports last week warned short supply would strain earnings in the long term. The average same-store gross profit for new and used cars both rose significantly for Asbury in the third quarter, up 58 percent on new cars to $2,269 and up 35 percent to $2,036 on used.
Asbury shares fell 9 percent to close at $106.04 on Tuesday.
Record: All-time quarterly net income.
Sales: Sales of new vehicles dipped 9 percent to 24,555 vehicles in the quarter. Sales of used vehicles slipped 11 percent to 20,464 cars.
Same-store sales: Sales of new vehicles on a same-store basis sank 12 percent to 22,217 vehicles. That compared with a 9.5 percent drop in U.S. new light-vehicle sales industrywide in the third quarter, according to the Automotive News Data Center. Sales of used vehicles on a same-store basis fell 11 percent to 18,815.