Asbury Automotive Group Inc

Greetings and welcome to Asbury Automotive Group fourth quarter 2024 earnings conference call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Chris Reeves, Vice President of Finance and Treasurers. Thank you. You may begin.

Thanks, Operator, and good morning. As noted, today's call is being recorded and will be available for replay later this afternoon. Welcome to Asbury Automotive Group's fourth quarter 2024 earnings call. The press release detailing Asbury's fourth quarter results was issued earlier this morning and is posted on our website at investors.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 up the call for questions and will be available later for any follow-up questions. 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 that each of which are subject to significant uncertainties. For 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 2023, 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 the 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 have also posted an updated investor presentation on our website, investors.asburyauto.com, highlighting our fourth quarter results. Now it is my pleasure to hand the call over to our CEO, David Holt. David?

Thank you, Chris. Good morning, everyone. Welcome to our fourth quarter earnings call. The performance of our business is a direct reflection of the efforts of our team members who come to work each and every day striving to improve the guest experience. Their hard work translated into strong results for the fourth quarter, and I couldn't be more proud of the team. After our recent election, we saw an increase in traffic and sales throughout Q4. Overall, volume for same-store new vehicle was up 7% year-over-year, 12% sequentially, and same-store gross profit per new vehicle was up $149 compared with the third quarter of 2024. In 2025, we expect new vehicle gross profit per vehicle somewhere in the $2,500 to $3,000 range. Our performance in used vehicles is consistent with our shift in strategy in mid-2024, prioritizing profitability over volume given the supply challenges in the used vehicle market. While overall volume was essentially flat, our gross profit per unit increased for the second quarter in a row. These results are particularly impressive when set against the backdrop of rising new vehicle incentives, which create headwinds on used vehicle pricing. We expect inventory challenges to persist throughout 2025. Difting to our parts and service business, I couldn't be more proud of how the team came together to deliver outstanding results for the quarter. On a same-store basis, gross profit for our fixed operations business was up 11%. and the all-important customer pay segment was up 13 percent. Looking ahead, we remain confident in a mid-single-digit growth rate where customer pay is sustainable. In parallel with our operational success, we remain keenly focused on cost discipline. Our SG&A costs as a percent of gross profit fell for the second consecutive quarter, coming in at 63 percent on an adjusted basis. While we are proud of our results to make the business more efficient, our work here is not done. We continue to evaluate other opportunities to deliver a guest experience in a more efficient manner. Our four-store pilot with Techion went live in October, and we're encouraged by the early feedback from our operators. From sales to service, this new platform has the potential to simplify the guest experience, improve team member efficiency, all at a lower cost per transaction. Now for our consolidated results for the fourth quarter. We generated a record $4.5 billion in revenue, up 18% year-over-year, had a gross profit of $750 million, up 11%, and a gross profit margin of 16.6%. Our same-store adjusted SG&A as a percentage of gross profit was 62%. and it was 63% on an adjusted all-store basis. We delivered a same-store adjusted operating margin of 6% and an all-store adjusted operating margin of 5.7%. Our adjusted earnings per share was $7.26, and our adjusted EBITDA was $254 million. Finally, thank you to our team members who continue to deliver and find innovative solutions to make our company better. I'm excited about the momentum we've built heading into 2025. Now Dan will discuss our operational performance. Dan?