Asbury Automotive Group Board Increases Stock Repurchase Authorization to $400 Million

Rhea-AI Summary

Asbury Automotive Group announced an increase in its share repurchase authorization to $400 million. This expansion reflects Asbury's commitment to a disciplined capital allocation approach. Year-to-date 2024, the company has repurchased about 281,000 shares for $59 million. The expanded program allows Asbury to repurchase shares in various manners, including open market and privately negotiated transactions. Factors influencing repurchase decisions include stock price, economic conditions, and strategic capital uses. Asbury operates 157 new vehicle dealerships, 37 collision repair centers, and offers a range of automotive products and services. The company is recognized on Forbes’ list of America's Best Mid-Sized Companies and by Newsweek and U.S. News & World Report as one of the best workplaces in the retail industry.

Positive

• Increased share repurchase authorization to $400 million.
• Repurchased approximately 281,000 shares year-to-date 2024 for $59 million.
• Strong cash flow and balance sheet backing the buyback strategy.
• Flexible repurchase options including open market and private transactions.
• Asbury is ranked 18th on America's Best Mid-Sized Companies by Forbes.
• Recognized as one of America's Greatest Workplaces 2023 by Newsweek.
• Ranked as one of the Best Companies to Work For in Retailers by U.S. News & World Report.

Negative

• Repurchase decisions depend on fluctuating factors like stock price and economic conditions.
• The new program does not guarantee any specific number of shares will be repurchased.
• Potential capital allocation towards share repurchases could limit funds for other investments.

Insights

Financial Analyst

The authorization to increase the stock repurchase program to $400 million is a key strategic move that signals Asbury Automotive Group's strong confidence in its financial health and future business prospects. Stock buybacks often reflect a company's belief that its shares are undervalued, suggesting it's a good investment to repurchase and retire shares.

Short-term implications: The stock repurchase can boost the company's Earnings Per Share (EPS) by reducing the number of outstanding shares. This can make the stock more attractive to investors, potentially driving up the stock price in the short term.

Long-term implications: From a long-term perspective, the buyback demonstrates the company's commitment to returning value to shareholders. However, investors should consider whether this allocation of capital is the best use of funds compared to other opportunities, such as acquisitions or reinvestment in the business.

While this move is financially sound given their strong cash flow, it's essential to monitor general economic conditions and their impact on Asbury, considering that macroeconomic factors like consumer confidence and interest rates can significantly affect the auto industry.

Market Research Analyst

Expanding the stock repurchase program to $400 million can be viewed as a strategic approach to enhance shareholder value. For retail investors, it’s important to understand that buybacks can indicate management’s belief in the company’s intrinsic value.

Buybacks also reduce the number of shares available on the market, which can increase demand and drive up the stock price. However, the timing and extent of the repurchases depend on market conditions and the stock price, which introduces an element of uncertainty.

It's also worth noting that while buybacks can be beneficial, they are not a panacea. If a company overemphasizes buybacks and underinvests in growth opportunities, it could hinder long-term growth. Thus, investors should consider the balance Asbury Automotive Group strikes between returning capital to shareholders and investing in its future business growth.

DULUTH, Ga.--(BUSINESS WIRE)-- Asbury Automotive Group, Inc. (NYSE: ABG) (the “Company”), one of the largest automotive retail and service companies in the U.S., today announced its board of directors approved an increase in the authorization of the share repurchase plan for the Company, which expands the remaining availability to $400 million.

“This expansion of our previous authorization reflects the commitment to our disciplined capital allocation approach,” said David Hult, Asbury’s President and Chief Executive Officer. “The expanded buyback program gives us confidence in the execution of our strategy and the outlook for our business. With our strong cash flow and balance sheet, we believe we can deliver the best returns for our shareholders over the long-term.”

Year-to-date 2024, the Company had repurchased approximately 281,000 shares for approximately $59 million. The Company had $144 million of remaining availability to repurchase shares of common stock under its existing stock repurchase program and with the increase in authorization by $246 million, the Company now has a total authorization of $400 million.

Under the amended stock repurchase program, the shares of common stock of the Company may be purchased from time to time in the open market, in privately negotiated transactions or in other manners as permitted by federal securities laws and other legal and contractual requirements. The extent to which the Company repurchases its shares, the number of shares and the timing of any repurchase will depend on such factors as Asbury’s stock price, general economic and market conditions, the potential impact on its capital structure, the expected return on competing uses of capital such as strategic dealership acquisitions and capital investments and other considerations. The new program does not require the Company to repurchase any specific number of shares, and may be modified, suspended or terminated at any time without further notice.

About Asbury Automotive Group, Inc.

Asbury Automotive Group, Inc. (NYSE: ABG), a Fortune 500 company headquartered in Duluth, GA, is one of the largest automotive retailers in the U.S. In late 2020, Asbury embarked on a multi-year plan to increase revenue and profitability strategically through organic operations, acquisitive growth and innovative technologies, with its guest-centric approach as Asbury’s constant North Star. As of March 31, 2024, Asbury operated 157 new vehicle dealerships, consisting of 206 franchises, representing 31 domestic and foreign brands of vehicles. Asbury also operates Total Care Auto, Powered by Landcar, a leading provider of service contracts and other vehicle protection products, and 37 collision repair centers. Asbury offers an extensive range of automotive products and services, including new and used vehicles; parts and service, which includes vehicle repair and maintenance services, replacement parts and collision repair services; and finance and insurance products, including arranging vehicle financing through third parties and aftermarket products, such as extended service contracts, guaranteed asset protection debt cancellation, and prepaid maintenance. Asbury ranks 18th in the 2023 Forbes list of America’s Best Mid-Sized Companies. Asbury is recognized as one of America’s Greatest Workplaces 2023 by Newsweek as well as one of the Best Companies to Work For in the Retailers industry by U.S. News & World Report.

For additional information, visit www.asburyauto.com.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements other than historical fact, and may include statements relating to goals, plans, objectives, projections regarding Asbury's financial position, liquidity, results of operations, cash flows, leverage, market position, the timing and amount of any stock repurchases, and dealership portfolio, revenue enhancement strategies, operational improvements, projections regarding the expected benefits of Clicklane, management’s plans, projections and objectives for future operations, scale and performance, integration plans and expected synergies from acquisitions, capital allocation strategy, business strategy. These statements are based on management's current expectations and beliefs and involve significant risks and uncertainties that may cause results to differ materially from those set forth in the statements. These risks and uncertainties include, among other things, our inability to realize the benefits expected from recently completed transactions; our inability to promptly and effectively integrate completed transactions and the diversion of management’s attention from ongoing business and regular business responsibilities; our inability to complete future acquisitions or divestitures and the risks resulting therefrom; any supply chain disruptions impacting our industry and business, market factors, Asbury's relationships with, and the financial and operational stability of, vehicle manufacturers and other suppliers, acts of God, acts of war or other incidents and the shortage of semiconductor chips and other components, which may adversely impact supply from vehicle manufacturers and/or present retail sales challenges; risks associated with Asbury's indebtedness and our ability to comply with applicable covenants in our various financing agreements, or to obtain waivers of these covenants as necessary; risks related to competition in the automotive retail and service industries, general economic conditions both nationally and locally, governmental regulations, legislation, including changes in automotive state franchise laws, adverse results in litigation and other proceedings, and Asbury's ability to execute its strategic and operational strategies and initiatives, including its five-year strategic plan, Asbury's ability to leverage gains from its dealership portfolio, Asbury's ability to capitalize on opportunities to repurchase its debt and equity securities or purchase properties that it currently leases, and Asbury's ability to stay within its targeted range for capital expenditures. There can be no guarantees that Asbury's plans for future operations will be successfully implemented or that they will prove to be commercially successful.

These and other risk factors that could cause actual results to differ materially from those expressed or implied in our forward-looking statements are and will be discussed in Asbury's filings with the U.S. Securities and Exchange Commission from time to time, including its most recent annual report on Form 10-K and any subsequently filed quarterly reports on Form 10-Q. These forward-looking statements and such risks, uncertainties and other factors speak only as of the date of this press release. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240515998538/en/

Investors & Reporters May Contact:

Joe Sorice

Manager, Investor Relations

(770) 418-8211

ir@asburyauto.com

Source: Asbury Automotive Group, Inc.

FAQ

What is the new share repurchase authorization for ABG?

The new share repurchase authorization for ABG is $400 million.

How many shares has Asbury Automotive repurchased in 2024?

Asbury Automotive has repurchased approximately 281,000 shares in 2024.

What factors influence Asbury Automotive's share repurchase decisions?

Factors include stock price, economic conditions, capital structure impact, and strategic investments.

What are the options for Asbury Automotive to repurchase shares?

Options include open market transactions, privately negotiated transactions, and other methods as permitted by law.

Is Asbury Automotive Group required to repurchase a specific number of shares?

No, the new program does not require repurchasing any specific number of shares.