Asbury sets Q4 net income record; expects low car supply, high margins for first half of ’22

Asbury Automotive Group Inc. CEO David Hult, whose company’s net income soared to a fourth-quarter record, expects a seasonally adjusted annual U.S. rate of sales of 15.5 million to 16 million vehicles this year.

“We are excited about 2022,” Hult told analysts on an earnings call on Tuesday, calling the year an opportunity for Asbury.

Hult said he expected consumer demand for vehicles would outpace supply “for most of the year” and not truly settle until 2023. He said Asbury expected lower inventory and higher margins in the first half of 2022 and growing vehicle supply and shrinking margins in the final six months.

Asbury had just an eight-day supply of new vehicles at the end the fourth quarter, down from 12 at the end of September and 40 at the end of 2020. Its stores held 34 days’ supply of used vehicles on Dec. 31, up from 28 on Sept. 30 and 31 at the end of 2020.

But its average same-store gross profit per new vehicle more than doubled to $6,335 during the quarter, while its average gross profit per used vehicle rose 42 percent to $2,623.

In the fourth quarter, Asbury considerably grew through the mega acquisition of Larry H. Miller Dealerships in December, adding 54 new-vehicle dealerships and other assets. Also in December, the retailer added eight dealerships through the acquisition of Stevinson Automotive Group in Colorado. The quarter also brought Arapahoe Hyundai-Genesis in suburban Denver and a Stellantis dealership in Noblesville, Ind, to Asbury.

Asbury also said it has doubled its share repurchase authorization to $200 million. Shares of Asbury were up 7.1 percent to $172.62 by just after 1 p.m. Tuesday.

• Q4 revenue: $2.65 billion, up 19 percent from a year earlier.
• Q4 net income: $140.5 million, up 58 percent from a year earlier.
• Q4 adjusted net income: $162.6 million, up 89 percent from a year earlier.
• Q4 vehicle sales: Asbury sold 53,233 new and used vehicles, up 6.6 percent from a year earlier. On a same-store basis, Asbury sold 47,110 new and used vehicles, down 5.2 percent.
• Records: Fourth-quarter and full-year net income; full-year adjusted earnings before interest, taxes, depreciation and amortization; fourth-quarter revenue and fourth-quarter earnings per share.
• 2021 revenue: $9.84 billion, up 38 percent from a year earlier.
• 2021 net income: $532.4 million, up 109 percent from a year earlier.
• 2021 adjusted net income: $548.5 million, up 120 percent from a year earlier.
• 2021 sales: Asbury sold 215,116 new and used vehicles, up 22 percent. On a same-store basis, Asbury sold 190,993 new and used vehicles, up 11.4 percent.
• Ranking: Asbury, of Duluth, Ga., ranks No. 6 on Automotive News most recent list of the top 150 dealership groups based in the U.S. with new-vehicle sales of 95,165 in 2020. Asbury has estimated that incorporating Larry H. Miller Dealerships, which had ranked eighth on that list, and its other 2021 acquisitions would make it the fourth-largest new-vehicle retailer when measured by pro forma annualized revenue.