Asbury Q4 net income down 84%; company trims revenue goal

Asbury Automotive Group Inc. saw net income fall 84 percent year-over-year during the fourth quarter to $55.5 million, the company said Thursday.

"Our quarterly results reflect the industry trends toward normalcy within operations and the headwinds impacting our parts and services business from ongoing integration activities; headwinds we indicated would carry through year-end in our prior quarter commentary," CEO David Hult said in a statement Thursday.  The fourth quarter of 2022 saw Asbury receiving a significant one-off income injection from selling dealerships.

Asbury also reported an $88.1 million asset impairment and a $900,000 fixed-asset write-off during the quarter, and said it spent $1.8 million in professional fees related to the Jim Koons Automotive Cos. acquisition. The $1.2 billion Koons deal, which closed in December, was the industry's largest transaction in 2023, Hult said.

Asbury also announced Thursday it had dialed back its growth target slightly. The dealership group had sought to reach $32 billion in revenue by the the end of 2025, but an investor presentation indicated Asbury would now pursue becoming a $30 billion company and listed a time frame of 2025 to 2030. An Asbury spokesperson said Thursday that executives were not available to clarify that deadline.

The group produced $14.8 billion in revenue during 2023, down 4.1 percent. Jim Koons could contribute more than $3 billion in annual revenue to Asbury in 2024.

Asbury said interest rates, buy-sell prices and timing, used-vehicle inventory and the rebuilding of the industrywide new-vehicle sales rate led it to rework its goal.

Hult called 2023 "a year of building for the future," with highlights including the Koons deal and expanding the reach of Asbury's F&I products company Total Care Auto to 72 percent of Asbury dealerships.

"Our efforts in the fourth quarter and throughout the year better position us for future profitable growth and we continue to drive value for our shareholders.," he said in a statement.

Highlights from Asbury's earnings report included:

Q4 revenue: $3.8 billion, up 2.9 percent from a year earlier.

Q4 net income: $55.5 billion, down 84 percent.

Q4 adjusted net income: $146.3 million, down 28 percent.

Q4 vehicle sales: 39,897 new vehicles, up 8.4 percent; 30,778 used vehicles, down 11 percent.

2023 revenue: $14.8 billion, down 4.1 percent from a year earlier.

2023 net income: $602.5 million, down 40 percent.

2023 adjusted net income: $683.6 million, down 19 percent.

2023 vehicle sales: 149,509 new vehicles, down 1.1 percent; 127,507 used vehicles, down 16 percent.

Guidance: Goal of $30 billion in revenue, timeline unclear; down from $32 billion by the end of 2025.

Asbury, 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, of Vienna, Va., ranks No. 23 on the list with retail sales of 26,188 new vehicles in 2022.