Asbury Automotive Group Inc

Good day and welcome to the Asbury Automotive Group Q3 2021 earnings call. Today's conference is being recorded. At this time, I would like to turn the conference over to Karen Reed. Please go ahead.

Thanks, Operator, and good morning, everyone. As noted, today's call is being recorded and will be available for replay later this afternoon. Welcome to Asbury Automotive's third quarter 2021 earnings call. The press release detailing Asbury's third quarter results was issued earlier this morning and is posted on our website at asburyauto.com. Participating with me today are David Holt, our President and Chief Executive Officer, Dan Clara, our Senior Vice President of Operations, and Michael Welch, our Senior Vice President and Chief Financial Officer. At the conclusion of our remarks, we will open the call up for questions. and I will be available later today for any follow-up questions that you may have. Before we begin, we must remind you that the discussion during the call today is likely to contain forward-looking statements. Forward-looking statements are statements other than those which are historical in nature, which may include financial projections, forecasts, and current expectations, each of which are subject to certain uncertainties. Information regarding certain of the risks that may cause actual results to differ materially from these statements, please see our filings with the SEC from time to time, including our Form 10-K for the year ended December 2020, any subsequently filed quarterly reports on Form 10-Q, and our earnings release issued earlier today. We expressly disclaim any responsibility to update forward-looking statements. In addition, certain non-GAAP financial measures, as defined under SEC rules, may be discussed on this call. As required by applicable SEC rules, we provide reconciliations of any such non-GAAP financial measures to the most directly comparable GAAP measures on our website. We've also posted an updated investor presentation on our website, asburyauto.com, highlighting our third quarter results. It is now my pleasure to hand the call over to our CEO, David Holt. David?

Thank you, Karen, and good morning, everyone. Welcome to our third quarter earnings call. In our earnings release this morning, we reported adjusted EPS of $7.36, a record third quarter, up 80% over the prior year. Though our new car inventory levels continue to be challenged due to the chip shortage, Our team delivered strong results and enabled us to deliver an impressive gross margin of 20%, an all-time record, and an expansion of 180 basis points versus the third quarter last year. These results demonstrate the resilient strength of the franchise model with its full suite of services through the car ownership journey from sales to service contributing to sustained profitability. We've also stayed disciplined in managing expenses, resulting in adjusted SG&A as a percentage of gross profit of 55.3%, a 580 basis point improvement versus prior year. Our total revenue for the quarter was up 30% year over year, and total gross profit was up 43%. Due to this record performance and strong cash flow, our balance sheet remains strong. Our net leverage ratio ended this quarter at 1.2 times. A quick update on our five-year strategic plan. Same-store revenue growth, assuming 2020 annualized revenue for Park Place, is up 10% and is exceeding expectations. Regarding click lane, our unit sales are pacing ahead of our projection for year one, and we've made great strides this quarter on our acquisition pillar. As announced, we expect to close on the transformative acquisition of the Larry H. Miller dealerships and Total Care Auto in the fourth quarter. With their strong name and brand mix in the right states and our aligned cultures, we look forward to jointly deploying our capabilities and growing together. In addition, we closed two acquisitions recently, Greeley Subaru in the Denver market and Kalo Chrysler Jeep Dodge in Indianapolis. and are on schedule to close Arapahoe Hyundai Genesis in the Denver market today. With another acquisition still under contract and expected to close in the fourth quarter as well, in total, in 2021, we anticipate that we will close on 6.6 billion of annualized revenue from acquisitions. With these results, we maintain full confidence in the execution of our growth strategy. and we will update our five-year plan during our Q1 earnings call in 2022. Now, I would like to welcome Michael Welch, our new CFO to the Asbury team. He brings his vast knowledge of the auto retail business along with his broad experience in finance. We worked together at Group 1 for many years, and I'm excited to be working with him again. I am also thrilled to welcome our new team members in Indianapolis and in Colorado into the Asbury family. And finally, I would like to address all of my teammates at Asbury. Our ability to add quality stores who, like us, care about serving our guests and being highly engaged in our communities could not have happened without you. You all have given us the ability to thoughtfully grow our core business because you align behind our vision and you are executing each and every day. I appreciate all of you, and I'm thankful to be part of this team. People make the difference in any organization, and you are making us the best place to work, do business, and grow your careers. Thank you. I'll now hand the call over to Dan to discuss our operating performance. Dan?