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Asbury ‘Very Confident’ About Meeting CFPB’s Requirements

February 6, 2014

By Brittany-Marie Swanson

DULUTH, Ga. — Asbury Automotive Group officials, during a quarterly earning conference call on Tuesday, said they are “very confident” that the company is on the right path to complying with the Consumer Financial Protection Bureau (CFPB)’s recent recommendations in the auto lending space. Also during the call, the company reported a record fourth quarter.

The CFPB was a hot topic at the recent National Automobile Dealers Association (NADA) Convention and Expo, held in New Orleans in January. When asked what business practices Asbury Automotive would change based on the talk coming out of the convention, President and CEO Craig Monaghan said many of the bureau’s suggested safeguards are already in place.

“I would say that from a big picture, we’d love clarity and we don’t feel like our industry or the CFPB has given us clarity that we would very much like to have,” Monaghan said. “With turning to NADA, I would say that we very much support the direction that they are going and trying to nail down something that’s little more concrete for all us.”

At the convention, the NADA announced a fair credit compliance program to help dealers document variations in rate markups on retail finance contracts. The CFPB has alleged that policies allowing dealers to mark up rates have resulted in discrimination against minorities.

“I think bottom line for us is we feel very confident that no matter what comes we’ll be able to manage through it,” Monaghan added.

Asbury Automotive reported a record performance in 2013, with income from continuing operations rising from $22.6 million in the year-ago quarter to $27.2 million in the fourth quarter 2013. Net income for the fourth quarter 2013 was $26.9 million, up from $22.8 million in the year-ago quarter. 

"These results reflect the benefits of our operational excellence and disciplined capital allocation,” said Monaghan. “We believe the automotive retail environment will remain healthy in 2014 as more customers take advantage of the extremely attractive financing options to replace their aging vehicles with the many exciting new vehicles available today."

For the fourth quarter, total revenues increased 13% over the same period last year to $1.4 billion. New-vehicle revenues were up 10%, and used-vehicle retail revenues were up 24%. The company also saw an increased in F&I revenues (21%) and parts and service revenues (10%). Total gross profit was up 14%, with double-digit increases recorded for all business lines.

Michael Kearney, Asbury’s executive vice president and COO, said the dealer group set a new record for total fund and gross profit yield from new- and used-vehicle gross profit per vehicle sold, plus F&I profit per vehicle sold. For the full year, that metric stood at $3,268.

“This is almost $30 more per vehicle than we produced during the same period in 2012,” Kearney said.

For the full year 2013, the company reported adjusted income from continuing operations of $109.7 million, up from $83.3 million in the year-ago quarter. Net income for the full-year 2013 was $109.1 million, up from $82.2 million in 2012. Revenues for the full-year 2013 totaled $5.3 billion, an 15% increase vs. 2012.

"Our teams produced these record results by providing our customers with the highest levels of service,” said Kearney. “We believe there continues to be opportunity to grow across all of our business lines in 2014."

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