Asbury Automotive Group, Inc., one of the largest automotive retail and service companies in the U.S., reported net income for the fourth quarter 2016 of $67.1 million, or $3.08 per diluted share, compared to $41.1 million, or $1.64 per diluted share in the prior year quarter. It also reported adjusted income from continuing operations (a non-GAAP measure) for the fourth quarter 2016 of $34.0 million, or $1.56 per diluted share, compared to $32.8 million, or $1.31 per diluted share, in the prior year quarter, a 19% increase in adjusted earnings per share.
Income from continuing operations for the fourth quarter 2016 was adjusted for a $45.5 million pre-tax gain on divestitures, $6.6 million pre-tax legal settlements benefit, $0.5 million pre-tax real estate related impairment charges, and $0.9 million benefit from discrete tax items. In total, these adjustments increased our earnings per share by $1.52 for the fourth quarter of 2016. Income from continuing operations for the fourth quarter 2015 was adjusted for a $13.5 million pre-tax gain on divestitures, or $0.34 per diluted share. See attached reconciliation for reported adjustments related to both of these periods.
Total revenue for the fourth quarter was $1.7 billion, up 2% from the prior year period; total revenue on a same-store basis (a non-GAAP measure) was up 5% from the prior year period.
Fourth Quarter 2016 Operational Summary
Same store:
Total revenues increased 5%; gross profit increased 5%
New vehicle revenue increased 3%; gross profit down 5%
Used vehicle retail revenue up 7%; gross profit up 1%
Finance and insurance revenue up 8%
Parts and service revenue up 8%; gross profit up 9%
All store:
SG&A as a percentage of gross profit improved 120 basis points to 69.3%
Total company adjusted income from operations (a non-GAAP measure) as a percentage of revenue was 4.4%, up 20 basis points
Adjusted EPS from continuing operations up 19%
Strategic Highlights:
Repurchased $50 million of common stock during Q4 and $212 million for the full year 2016
Exited the Arkansas market; sold four stores representing five franchises in Q4 2016
Acquired a Chevy franchise and an Isuzu truck franchise in Indianapolis, Indiana in Q1 2017
"We closed 2016 with a strong performance, delivering 19% adjusted EPS growth in the fourth quarter," said Craig Monaghan, Asbury's President and Chief Executive Officer. "We continue to execute our two-part strategy: driving operational excellence and deploying capital to its highest returns. In 2016, in a flat SAAR environment, we strengthened our dealership portfolio, repatriated over $200 million of capital to our shareholders, and grew adjusted EPS 9%."
"We continue to grow our parts and service business, delivering same store parts and service gross profit growth of 9% for the quarter," said Asbury's Executive Vice President and Chief Operating Officer, David Hult. "In addition, we were able to grow our F&I per vehicle to approximately $1,500 and deliver 120 basis points improvement in SG&A as a percentage of gross profit. This was a direct result of our team's hard work and commitment to continuous improvement."
For the full year 2016, the Company reported net income of $167.2 million, or $7.40 per diluted share, compared to net income of $169.2 million, or $6.41 per diluted share in the prior year period. Adjusted income from continuing operations (a non-GAAP measure) for 2016 was $137.3 million, or $6.08 per diluted share, compared to $147.0 million, or $5.57 per diluted share in the prior year, a 9% increase in adjusted earnings per share.
Total revenue for the full year 2016 was $6.5 billion, down 1% from the prior year period principally attributable to strategic divestitures over the past year; total revenue on a same-store basis (a non-GAAP measure) was up 2% from the prior year period.