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• | Online traffic up 33% over prior year |
• | Total revenues increased 15% |
• | Total same store sales increased 1% |
• | Adjusted SG&A as a percentage of gross profit was 69.6% |
• | Expected operating results, such as improved store efficiency and performance; achieving a 2018 full year earnings target of $9.50 per diluted share and all projections set forth under the headings "Earnings Outlook"; |
• | Our ability to improve store performance; |
• | Anticipated acquisition opportunities and additions of dealership locations to our portfolio in the future, and our ability to improve earnings and achieve returns on investments; |
• | Anticipated revenues from acquired and open point stores; and |
• | Anticipated availability of liquidity from our credit facility and unfinanced operating real estate. |
Three months ended September 30, | % | Nine months ended September 30, | % | |||||||||||||||||||
Increase | Increase | |||||||||||||||||||||
2018 | 2017 | (Decrease) | 2018 | 2017 | (Decrease) | |||||||||||||||||
Revenues: | ||||||||||||||||||||||
New vehicle retail | $ | 1,732,950 | $ | 1,553,511 | 11.6 | % | $ | 4,914,478 | $ | 4,147,870 | 18.5 | % | ||||||||||
Used vehicle retail | 805,928 | 679,180 | 18.7 | 2,325,600 | 1,915,038 | 21.4 | ||||||||||||||||
Used vehicle wholesale | 91,956 | 65,739 | 39.9 | 253,246 | 206,754 | 22.5 | ||||||||||||||||
Finance and insurance | 121,062 | 101,044 | 19.8 | 342,059 | 282,672 | 21.0 | ||||||||||||||||
Service, body and parts | 311,327 | 265,683 | 17.2 | 908,431 | 744,262 | 22.1 | ||||||||||||||||
Fleet and other | 28,729 | 15,185 | 89.2 | 104,354 | 86,883 | 20.1 | ||||||||||||||||
Total revenues | 3,091,952 | 2,680,342 | 15.4 | % | 8,848,168 | 7,383,479 | 19.8 | % | ||||||||||||||
Cost of sales: | ||||||||||||||||||||||
New vehicle retail | 1,632,068 | 1,465,466 | 11.4 | 4,625,155 | 3,909,168 | 18.3 | ||||||||||||||||
Used vehicle retail | 719,575 | 600,522 | 19.8 | 2,078,535 | 1,693,091 | 22.8 | ||||||||||||||||
Used vehicle wholesale | 90,553 | 64,565 | 40.3 | 248,991 | 202,351 | 23.0 | ||||||||||||||||
Service, body and parts | 156,871 | 133,191 | 17.8 | 461,860 | 376,096 | 22.8 | ||||||||||||||||
Fleet and other | 26,646 | 13,577 | 96.3 | 98,550 | 82,829 | 19.0 | ||||||||||||||||
Total cost of sales | 2,625,713 | 2,277,321 | 15.3 | 7,513,091 | 6,263,535 | 19.9 | ||||||||||||||||
Gross profit | 466,239 | 403,021 | 15.7 | % | 1,335,077 | 1,119,944 | 19.2 | % | ||||||||||||||
SG&A expense | 309,024 | 282,241 | 9.5 | 939,868 | 782,303 | 20.1 | ||||||||||||||||
Depreciation and amortization | 19,649 | 14,828 | 32.5 | 55,324 | 41,598 | 33.0 | ||||||||||||||||
Income from operations | 137,566 | 105,952 | 29.8 | % | 339,885 | 296,043 | 14.8 | % | ||||||||||||||
Floor plan interest expense | (15,958 | ) | (10,629 | ) | 50.1 | (45,126 | ) | (28,013 | ) | 61.1 | ||||||||||||
Other interest expense | (15,010 | ) | (9,905 | ) | 51.5 | (40,645 | ) | (23,745 | ) | 71.2 | ||||||||||||
Other income (expense), net | 2,389 | 1,125 | NM | 5,422 | 11,357 | NM | ||||||||||||||||
Income before income taxes | 108,987 | 86,543 | 25.9 | % | 259,536 | 255,642 | 1.5 | % | ||||||||||||||
Income tax expense | (15,880 | ) | (34,657 | ) | (54.2 | ) | (53,708 | ) | (99,829 | ) | (46.2 | ) | ||||||||||
Income tax rate | 14.6 | % | 40.0 | % | 20.7 | % | 39.1 | % | ||||||||||||||
Net income | $ | 93,107 | $ | 51,886 | 79.4 | % | $ | 205,828 | $ | 155,813 | 32.1 | % | ||||||||||
Diluted net income per share: | ||||||||||||||||||||||
Net income per share | $ | 3.84 | $ | 2.07 | 85.5 | % | $ | 8.31 | $ | 6.19 | 34.2 | % | ||||||||||
Diluted shares outstanding | 24,258 | 25,076 | (3.3) | % | 24,767 | 25,158 | (1.6 | )% |
Three months ended September 30, | % | Nine months ended September 30, | % | |||||||||||||||||||
Increase | Increase | |||||||||||||||||||||
2018 | 2017 | (Decrease) | 2018 | 2017 | (Decrease) | |||||||||||||||||
Gross margin | ||||||||||||||||||||||
New vehicle retail | 5.8 | % | 5.7 | % | 10 | bps | 5.9 | % | 5.8 | % | 10 | bps | ||||||||||
Used vehicle retail | 10.7 | 11.6 | (90 | ) | 10.6 | 11.6 | (100 | ) | ||||||||||||||
Finance and insurance | 100.0 | 100.0 | — | 100.0 | 100.0 | — | ||||||||||||||||
Service, body and parts | 49.6 | 49.9 | (30 | ) | 49.2 | 49.5 | (30 | ) | ||||||||||||||
Gross profit margin | 15.1 | 15.0 | 10 | 15.1 | 15.2 | (10 | ) | |||||||||||||||
Unit sales | ||||||||||||||||||||||
New vehicle retail | 48,790 | 45,452 | 7.3 | % | 139,314 | 121,944 | 14.2 | % | ||||||||||||||
Used vehicle retail | 39,751 | 34,717 | 14.5 | 114,961 | 97,671 | 17.7 | ||||||||||||||||
Total retail units sold | 88,541 | 80,169 | 10.4 | 254,275 | 219,615 | 15.8 | ||||||||||||||||
Average selling price | ||||||||||||||||||||||
New vehicle retail | $ | 35,519 | $ | 34,179 | 3.9 | % | $ | 35,276 | $ | 34,015 | 3.7 | % | ||||||||||
Used vehicle retail | 20,274 | 19,563 | 3.6 | 20,229 | 19,607 | 3.2 | ||||||||||||||||
Average gross profit per unit | ||||||||||||||||||||||
New vehicle retail | $ | 2,068 | $ | 1,937 | 6.8 | % | $ | 2,077 | $ | 1,957 | 6.1 | % | ||||||||||
Used vehicle retail | 2,172 | 2,266 | (4.1 | ) | 2,149 | 2,272 | (5.4 | ) | ||||||||||||||
Finance and insurance | 1,367 | 1,260 | 8.5 | 1,345 | 1,287 | 4.5 | ||||||||||||||||
Total vehicle(1) | 3,498 | 3,354 | 4.3 | 3,471 | 3,405 | 1.9 | ||||||||||||||||
Revenue mix | ||||||||||||||||||||||
New vehicle retail | 56.0 | % | 58.0 | % | 55.5 | % | 56.2 | % | ||||||||||||||
Used vehicle retail | 26.1 | 25.3 | 26.3 | 25.9 | ||||||||||||||||||
Used vehicle wholesale | 3.0 | 2.5 | 2.9 | 2.8 | ||||||||||||||||||
Finance and insurance, net | 3.9 | 3.8 | 3.9 | 3.8 | ||||||||||||||||||
Service, body and parts | 10.1 | 9.9 | 10.3 | 10.1 | ||||||||||||||||||
Fleet and other | 0.9 | 0.5 | 1.1 | 1.2 |
Adjusted | As reported | Adjusted | As reported | |||||||||||||||||||||
Three months ended September 30, | Three months ended September 30, | Nine months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||
Other metrics | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||
SG&A as a % of revenue | 10.5 | % | 10.3 | % | 10.0 | % | 10.5 | % | 10.7 | % | 10.4 | % | 10.6 | % | 10.6 | % | ||||||||
SG&A as a % of gross profit | 69.6 | 68.7 | 66.3 | 70.0 | 71.2 | 68.8 | 70.4 | 69.9 | ||||||||||||||||
Operating profit as a % of revenue | 3.9 | 4.1 | 4.4 | 4.0 | 3.7 | 4.2 | 3.8 | 4.0 | ||||||||||||||||
Operating profit as a % of gross profit | 26.1 | 27.6 | 29.5 | 26.3 | 24.6 | 27.4 | 25.5 | 26.4 | ||||||||||||||||
Pretax margin | 3.0 | 3.4 | 3.5 | 3.2 | 2.8 | 3.5 | 2.9 | 3.5 | ||||||||||||||||
Net profit margin | 2.2 | 2.0 | 3.0 | 1.9 | 2.1 | 2.1 | 2.3 | 2.1 |
(1) | Includes the sales and gross profit related to new, used retail, used wholesale and finance and insurance and unit sales for new and used retail |
Three months ended September 30, | % | Nine months ended September 30, | % | |||||||||||||||||||
Increase | Increase | |||||||||||||||||||||
2018 | 2017 | (Decrease) | 2018 | 2017 | (Decrease) | |||||||||||||||||
Revenues | ||||||||||||||||||||||
New vehicle retail | $ | 1,443,965 | $ | 1,480,737 | (2.5) | % | $ | 3,954,946 | $ | 3,998,702 | (1.1 | )% | ||||||||||
Used vehicle retail | 688,965 | 655,814 | 5.1 | 1,960,126 | 1,855,211 | 5.7 | ||||||||||||||||
Finance and insurance | 105,462 | 97,033 | 8.7 | 287,202 | 273,143 | 5.1 | ||||||||||||||||
Service, body and parts | 260,683 | 254,084 | 2.6 | 740,725 | 719,898 | 2.9 | ||||||||||||||||
Total revenues | 2,594,562 | 2,566,159 | 1.1 | 7,230,131 | 7,134,877 | 1.3 | ||||||||||||||||
Gross profit | ||||||||||||||||||||||
New vehicle retail | $ | 82,596 | $ | 83,478 | (1.1) | % | $ | 226,531 | $ | 228,625 | (0.9 | )% | ||||||||||
Used vehicle retail | 77,667 | 76,836 | 1.1 | 218,013 | 217,190 | 0.4 | ||||||||||||||||
Finance and insurance | 105,462 | 97,033 | 8.7 | 287,202 | 273,143 | 5.1 | ||||||||||||||||
Service, body and parts | 129,720 | 126,623 | 2.4 | 366,878 | 355,917 | 3.1 | ||||||||||||||||
Total gross profit | 398,673 | 386,805 | 3.1 | 1,107,344 | 1,083,312 | 2.2 | ||||||||||||||||
Gross margin | ||||||||||||||||||||||
New vehicle retail | 5.7 | % | 5.6 | % | 10 | bps | 5.7 | % | 5.7 | % | — | |||||||||||
Used vehicle retail | 11.3 | 11.7 | (40 | ) | 11.1 | 11.7 | (60 | ) | ||||||||||||||
Finance and insurance | 100.0 | 100.0 | — | 100.0 | 100.0 | — | ||||||||||||||||
Service, body and parts | 49.8 | 49.8 | — | 49.5 | 49.4 | 10 | ||||||||||||||||
Gross profit margin | 15.4 | 15.1 | 30 | 15.3 | 15.2 | 10 | ||||||||||||||||
Unit sales | ||||||||||||||||||||||
New vehicle retail | 40,974 | 43,171 | (5.1) | % | 112,660 | 117,086 | (3.8 | )% | ||||||||||||||
Used vehicle retail | 34,434 | 33,498 | 2.8 | 97,962 | 94,338 | 3.8 | ||||||||||||||||
Average selling price | ||||||||||||||||||||||
New vehicle retail | $ | 35,241 | $ | 34,299 | 2.7 | % | $ | 35,105 | $ | 34,152 | 2.8 | % | ||||||||||
Used vehicle retail | 20,008 | 19,578 | 2.2 | 20,009 | 19,666 | 1.7 | ||||||||||||||||
Average gross profit per unit | ||||||||||||||||||||||
New vehicle retail | $ | 2,016 | $ | 1,934 | 4.2 | % | $ | 2,011 | $ | 1,953 | 3.0 | % | ||||||||||
Used vehicle retail | 2,256 | 2,294 | (1.7 | ) | 2,225 | 2,302 | (3.3 | ) | ||||||||||||||
Finance and insurance | 1,399 | 1,266 | 10.5 | 1,364 | 1,292 | 5.6 | ||||||||||||||||
Total vehicle(1) | 3,541 | 3,372 | 5.0 | 3,490 | 3,421 | 2.0 |
(1) | Includes the sales and gross profit related to new, used retail, used wholesale and finance and insurance and unit sales for new and used retail |
As of | |||||
September 30, | December 31, | September 30, | |||
2018 | 2017 | 2017 | |||
Days Supply(1) | |||||
New vehicle inventory | 77 | 69 | 64 | ||
Used vehicle inventory | 64 | 66 | 63 |
Financial covenants | |||
Requirement | As of September 30, 2018 | ||
Current ratio | Not less than 1.10 to 1 | 1.28 to 1 | |
Fixed charge coverage ratio | Not less than 1.20 to 1 | 2.35 to 1 | |
Leverage ratio | Not more than 5.00 to 1 | 2.86 to 1 |
September 30, 2018 | December 31, 2017 | |||||||
Cash and cash equivalents | $ | 31,432 | $ | 57,253 | ||||
Trade receivables, net | 470,689 | 521,938 | ||||||
Inventories, net | 2,275,965 | 2,132,744 | ||||||
Other current assets | 47,648 | 70,847 | ||||||
Total current assets | $ | 2,825,734 | $ | 2,782,782 | ||||
Property and equipment, net | 1,248,692 | 1,185,169 | ||||||
Intangibles | 612,972 | 443,297 | ||||||
Other non-current assets | 487,171 | 271,818 | ||||||
Total assets | $ | 5,174,569 | $ | 4,683,066 | ||||
Floor plan notes payable | 1,955,867 | 1,919,026 | ||||||
Other current liabilities | 407,343 | 381,955 | ||||||
Total current liabilities | $ | 2,363,210 | $ | 2,300,981 | ||||
Long-term debt | 1,287,052 | 1,028,476 | ||||||
Other long-term liabilities and deferred revenue | 319,165 | 270,391 | ||||||
Total liabilities | $ | 3,969,427 | $ | 3,599,848 | ||||
Stockholder's Equity | 1,205,142 | 1,083,218 | ||||||
Total liabilities & stockholders' equity | $ | 5,174,569 | $ | 4,683,066 |
Nine months ended September 30, | ||||||||
2018 | 2017 | |||||||
Net income | $ | 205,828 | $ | 155,813 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 55,324 | 41,598 | ||||||
Stock-based compensation | 9,776 | 8,396 | ||||||
(Gain) on disposal of assets | (91 | ) | (382 | ) | ||||
(Gain) on sale of franchises | (15,396 | ) | — | |||||
Deferred income taxes | 19,446 | 7,398 | ||||||
(Increase) decrease: | ||||||||
Trade receivables, net | 63,419 | (13,345 | ) | |||||
Inventories | (14,466 | ) | (16,098 | ) | ||||
Other assets | 12,007 | 15,207 | ||||||
Increase (decrease): | ||||||||
Floor plan notes payable, net | 8,073 | 12,126 | ||||||
Trade payables | 3,645 | 12,397 | ||||||
Accrued liabilities | 8,637 | 25,907 | ||||||
Other long-term liabilities and deferred revenue | 23,084 | 11,519 | ||||||
Net cash provided by operating activities | $ | 379,286 | $ | 260,536 |
Nine months ended September 30, | ||||||||
Net cash provided by operating activities | 2018 | 2017 | ||||||
As reported | $ | 379,286 | $ | 260,536 | ||||
Floor plan notes payable, non-trade, net | 61,705 | 34,056 | ||||||
Less: Borrowings on floor plan notes payable, non-trade associated with acquired new vehicle inventory | (120,899 | ) | (85,527 | ) | ||||
Adjusted | $ | 320,092 | $ | 209,065 |
Three Months Ended September 30, 2018 | ||||||||||||||||
As reported | Disposal gain on sale of store | Tax attributes | Adjusted | |||||||||||||
Selling, general and administrative | $ | 309,024 | 15,681 | $ | — | $ | 324,705 | |||||||||
Income from operations | 137,566 | (15,681 | ) | — | 121,885 | |||||||||||
Income before income taxes | $ | 108,987 | $ | (15,681 | ) | $ | — | $ | 93,306 | |||||||
Income tax benefit (expense) | (15,880 | ) | 4,089 | (12,848 | ) | (24,639 | ) | |||||||||
Net income | $ | 93,107 | $ | (11,592 | ) | $ | (12,848 | ) | $ | 68,667 | ||||||
Diluted earnings per share | $ | 3.84 | $ | (0.48 | ) | $ | (0.53 | ) | $ | 2.83 | ||||||
Diluted share count | 24,258 |
Three Months Ended September 30, 2017 | ||||||||||||||||
As reported | Insurance reserves | Acquisition expenses | Adjusted | |||||||||||||
Selling, general and administrative | $ | 282,241 | $ | (1,704 | ) | $ | (3,516 | ) | $ | 277,021 | ||||||
Income from operations | 105,952 | 1,704 | 3,516 | 111,172 | ||||||||||||
Income before income taxes | $ | 86,543 | $ | 1,704 | $ | 3,516 | $ | 91,763 | ||||||||
Income tax expense | (34,657 | ) | (943 | ) | (1,380 | ) | (36,980 | ) | ||||||||
Net income | $ | 51,886 | $ | 761 | $ | 2,136 | $ | 54,783 | ||||||||
Diluted earnings per share | $ | 2.07 | $ | 0.03 | $ | 0.08 | $ | 2.18 | ||||||||
Diluted share count | 25,076 |
Nine Months Ended September 30, 2018 | ||||||||||||||||||||||||
As reported | Insurance reserves | Acquisition expenses | Disposal gain on sale of store | Tax attributes | Adjusted | |||||||||||||||||||
Selling, general and administrative | $ | 939,868 | $ | (1,490 | ) | $ | (3,251 | ) | 15,681 | $ | — | $ | 950,808 | |||||||||||
Income from operations | 339,885 | 1,490 | 3,251 | (15,681 | ) | — | 328,945 | |||||||||||||||||
Income before income taxes | $ | 259,536 | $ | 1,490 | $ | 3,251 | $ | (15,681 | ) | $ | — | $ | 248,596 | |||||||||||
Income tax benefit (expense) | (53,708 | ) | (389 | ) | (853 | ) | 4,089 | (14,257 | ) | (65,118 | ) | |||||||||||||
Net income | $ | 205,828 | $ | 1,101 | $ | 2,398 | $ | (11,592 | ) | $ | (14,257 | ) | $ | 183,478 | ||||||||||
Diluted earnings per share | $ | 8.31 | 0.04 | $ | 0.10 | $ | (0.47 | ) | $ | (0.57 | ) | $ | 7.41 | |||||||||||
Diluted share count | 24,767 |
Nine Months Ended September 30, 2017 | ||||||||||||||||||||
As reported | Insurance reserves | Acquisition expenses | OEM settlement | Adjusted | ||||||||||||||||
Selling, general and administrative | $ | 782,303 | $ | (5,582 | ) | $ | (5,653 | ) | $ | — | $ | 771,068 | ||||||||
Income from operations | 296,043 | 5,582 | 5,653 | — | 307,278 | |||||||||||||||
Other income (expense), net | 11,357 | — | — | (9,111 | ) | 2,246 | ||||||||||||||
Income before income taxes | $ | 255,642 | $ | 5,582 | $ | 5,653 | $ | (9,111 | ) | $ | 257,766 | |||||||||
Income tax benefit (expense) | (99,829 | ) | (2,174 | ) | (2,201 | ) | 3,423 | (100,781 | ) | |||||||||||
Net income | $ | 155,813 | $ | 3,408 | $ | 3,452 | $ | (5,688 | ) | $ | 156,985 | |||||||||
Diluted earnings per share | $ | 6.19 | $ | 0.14 | $ | 0.14 | $ | (0.23 | ) | $ | 6.24 | |||||||||
Diluted share count | 25,158 |
Three months ended September 30, | % | Nine months ended September 30, | % | |||||||||||||||||||
Increase | Increase | |||||||||||||||||||||
2018 | 2017 | (Decrease) | 2018 | 2017 | (Decrease) | |||||||||||||||||
EBITDA and Adjusted EBITDA | ||||||||||||||||||||||
Net income | $ | 93,107 | $ | 51,886 | 79.4 | % | $ | 205,828 | $ | 155,813 | 32.1 | % | ||||||||||
Other interest expense | 15,010 | 9,905 | 51.5 | 40,645 | 23,745 | 71.2 | ||||||||||||||||
Income tax expense | 15,880 | 34,657 | (54.2 | ) | 53,708 | 99,829 | (46.2 | ) | ||||||||||||||
Depreciation and amortization | 19,649 | 14,828 | 32.5 | 55,324 | 41,598 | 33.0 | ||||||||||||||||
EBITDA | $ | 143,646 | $ | 111,276 | 29.1 | % | $ | 355,505 | $ | 320,985 | 10.8 | % | ||||||||||
Other adjustments: | ||||||||||||||||||||||
Less: used vehicle line of credit interest | $ | (443 | ) | $ | (365 | ) | 21.4 | $ | (978 | ) | $ | (2,522 | ) | (61.2 | ) | |||||||
Less: gain on divestitures | (15,681 | ) | — | NM | (15,681 | ) | — | NM | ||||||||||||||
Add: insurance reserve | — | 1,704 | NM | 1,490 | 5,582 | (73.3 | ) | |||||||||||||||
Add: acquisition expenses | — | 3,516 | NM | 3,251 | 5,653 | (42.5 | ) | |||||||||||||||
Less: OEM legal settlements | — | — | NM | — | (9,111 | ) | NM | |||||||||||||||
Adjusted EBITDA | $ | 127,522 | $ | 116,131 | 9.8 | % | $ | 343,587 | $ | 320,587 | 7.2 | % | ||||||||||
Leveraged EBITDA | ||||||||||||||||||||||
Adjusted EBITDA | $ | 127,522 | $ | 116,131 | 9.8 | % | $ | 343,587 | $ | 320,587 | 7.2 | % | ||||||||||
Less: Capital expenditures | (41,013 | ) | (39,908 | ) | 2.8 | (113,386 | ) | (72,174 | ) | 57.1 | ||||||||||||
Leveraged EBITDA | $ | 86,509 | $ | 76,223 | 13.5 | % | $ | 230,201 | $ | 248,413 | (7.3) | % |
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