After a strong start to the year through February, first-quarter net income for Asbury Automotive Group Inc. dropped by more than half in part because of the hit to vehicle sales caused by the coronavirus pandemic and costs related to the cancellation of its Park Place Dealerships acquisition deal.
Asbury reported first-quarter net income of $19.5 million, down 52 percent from the year-ago quarter. But when adjusted for one-time items, Asbury's net income slid 19 percent to $34.7 million. The pretax adjustments included a $23 million franchise rights impairment, a $20.7 million loss on debt extinguishment and Park Place termination costs of $11.6 million.
The adjustments also included a $33.7 million gain on dealership divestitures, a $900,000 gain on legal settlements and a $300,000 gain on the sale of vacant property, the company said in a statement Tuesday.
Asbury sold five stores in Mississippi and one in Atlanta during the first quarter. The company terminated its planned $1 billion acquisition of most of the luxury Park Place Dealerships in Texas only days before it was slated to close.
Revenue during the quarter slid 3.8 percent to $1.61 billion, and gross profit declined 2.4 percent to $272.4 million.
Through February, the Duluth, Ga., retailer recorded double-digit percentage gains in both revenue and gross profit, Asbury CEO David Hult said in the statement.
Asbury shares closed Tuesday's trading up 2.2 percent to $67.45.
As the effects of the COVID-19 outbreak began to be felt in March, "our team acted decisively to right-size our business, reduced expenses, deferred most capital expenditures, and focus on our omni-channel sales initiatives," Hult said. "In addition, we also drew down our credit facilities to maximize our liquidity. As we manage through this crisis, our top priorities are maintaining the health and safety of our employees and guests and preserving the financial strength of our company."
Asbury furloughed 2,300 employees and slashed executive pay during the quarter amid slowing vehicle sales.
On a same-store operational basis, profits from new and used vehicles, finance and insurance and parts and service all declined in the first quarter.
Sales: Sales of new vehicles dropped 8.8 percent to 21,977. Sales of used vehicles slid 3.8 percent to 20,287.
Same-store sales: Sales of new vehicles on a same-store basis fell 9.2 percent to 19,913. That compares with a drop of 12 percent in new light-vehicle sales across the U.S. during the first quarter, according to the Automotive News Data Center. Sales of used vehicles on a same-store basis slid 6.6 percent to 18,230.