NEW YORK — Despite a record level of F&I income, Asbury Automotive saw its fourth-quarter earnings fall 9 percent due to continued car sales decline in Florida – the auto retailer’s biggest market.
"Asbury faced a very challenging environment for vehicle sales — both new and used — in the fourth quarter, with notable softness in our key Florida markets,” said Charles Oglesby, president and CEO. “Our service businesses again performed well, as fixed operations delivered same-store growth of 4 percent and F&I income reached a record level of $1,057 per vehicle retailed. We also made significant progress during the quarter in adjusting expenses to the current market conditions, by reducing our advertising, staffing levels and used-vehicle inventories."
Adjusted income from continuing operations for the fourth quarter was $12.7 million, compared to $14.6 million in the fourth quarter of last year. Income from continuing operations for the fourth quarter was $11.5 million, compared with $15.8 million a year ago. Net income for the quarter totaled $11.0 million, compared to $12.0 million in the fourth quarter of last year.
Income from continuing operations, adjusted for non-core items, for the year increased 5 percent to $69.5 million from $66.2 million in 2006. For the year, income from continuing operations was $54.3 million, compared with $67.1 million in 2006. Net income for the year totaled $51.0 million, compared to $60.7 million last year.
"For the full year, diluted earnings per share, excluding non-core items, increased 8 percent, a solid performance in view of the retail environment,” Oglesby added. “We achieved significant cost savings from our debt refinancing early in the year, and began implementing a new dealership technology platform that will reduce expenses and drive efficiency gains in the years ahead. We also successfully stepped up our acquisition program, acquiring dealerships with approximately $350 million in annualized revenues — well above our target of $200 million."
Commenting on the company’s 2008 outlook, J. Gordon Smith, senior vice president and CFO, said: "While retail market conditions are likely to remain difficult throughout 2008, we believe our expense reductions have positioned us well. We are establishing an initial guidance range for 2008 diluted earnings per share from continuing operations of between $1.80 and $2.00. This guidance is based on a range for U.S. new-vehicle unit sales of between 15.3 million and 15.5 million for the full year, as well as a projected decline in our same store used unit volumes of between 5 percent and 8 percent."