Acquisition Represents:
- Eighth largest franchised dealership group in the US1
- Over 60 stores in the attractive Western US representing 18
franchise brands with best-in-class operators
- Provider of service contracts and other vehicle protection
products
- Well-respected group with the leading brands in high-growth
markets
- Includes 54 new vehicle dealerships, seven used vehicle
dealerships, 11 collision centers, a used vehicle wholesale
business and the F&I product provider
Strategically Important to Asbury:
- Expected to generate significant value for shareholders
- LTM Revenue through September 30, 2021 of $5.7 billion and LTM
Adjusted EBITDA (a non-GAAP measure) through September 30, 2021 of
$473 million, including day-one cost savings
- Expands Asbury’s footprint coast to coast and increases
potential of Asbury’s Clicklane omni-channel platform
- Diversifies Asbury with addition of vertically integrated
profitable F&I product provider, offering opportunity for
future expansion into other Asbury dealerships
Asbury Automotive Group, Inc. (NYSE: ABG), one of the largest
automotive retail and service companies in the U.S., completed the
previously announced acquisition (the LHM Acquisition), which
includes Larry H. Miller Dealerships (LHM Dealerships) and Total
Care Auto, Powered by Landcar (TCA ) from the Larry H. Miller Group
of Companies (LHM Group), adding 54 new vehicle dealerships, seven
used vehicle dealerships, 11 collision centers, a used vehicle
wholesale business and an F&I product provider. The LHM
Acquisition will add approximately $5.7 billion in annualized
revenues.
“We are excited to complete the transformative acquisition of
Larry H. Miller Dealerships. With its strong culture and
stewardship mentality, coupled with the ability to rapidly expand
Asbury’s presence into these desirable, high-growth Western
markets, it is a rare opportunity,” said David Hult, Asbury's
President and Chief Executive Officer. “Larry H. Miller Dealerships
is a well-run operation with a rich history, and we are honored to
be the stewards of Larry and Gail’s vision. We have enjoyed getting
to know the Larry H. Miller team members during this acquisition
process and look forward to working together to continue the
journey.”
“Our family expresses deep gratitude to the employees of Larry
H. Miller Dealerships for their ongoing commitment to our
organization over the past 42 years,” said Gail Miller, Owner, LHM
Group. “Our employees have continually exemplified our values of
hard work, stewardship, integrity and service. Their dedication to
our customers and our communities has allowed us to become the
second largest privately held automotive group in the nation. We
treasure them, our loyal customers, many partners and deep
friendships built during four decades in the automobile business.
David Hult and his team have been exceptional to work with and we
appreciate their approach and care during this transaction. Our
family looks forward to continuing our mission of enriching lives
through reinvestments in new business opportunities and continued
philanthropy.”
“We couldn’t be more pleased with the approach and stewardship
Asbury Automotive Group has taken during this process,” said Steve
Starks, Chief Executive Officer, LHM Group. “We know they are
people-focused, which includes their associates and customers. Our
employees now have an opportunity to continue building an exciting
future with a leading automotive group that will have
coast-to-coast operations. We want to thank Dean Fitzpatrick and
the LHM Dealerships leadership team for their incredible work and
tenacity throughout this transaction, as well as their constant
efforts over the decades to grow the automotive business. Moving
forward, the LHM Group expects to further diversify and grow our
portfolio of operating businesses and investments.”
This acquisition diversifies Asbury's geographic mix, with entry
into six Western states: Arizona, Utah, New Mexico, Idaho,
California and Washington, and adds to its growing Colorado
footprint. LHM Dealerships portfolio mix of largely domestic brands
has historically delivered strong and stable margins in these
markets.
LHM Dealerships sold approximately 120,000 new and used vehicles
in the 12 months ended September 30, 2021.
In addition to the dealerships, Asbury acquired TCA, a leading
provider of service contracts and other vehicle protection
products, providing enhanced profitability and cash flow. “TCA is
comprehensively integrated with Larry H. Miller Dealerships and
presents a compelling opportunity for Asbury to generate
significant additional operating income by activating this captive
top-quality F&I products provider across our entire, now
national, store footprint. Like the dealerships, this service
contract company is extremely well run.” Hult said. “Our now
national footprint with our digital retailing capabilities in
Clicklane and the full reach of TCA create a truly expansive
platform of dealerships.”
“We are excited to complete this transaction and to join
Asbury,” said Dean Fitzpatrick, President, LHM Dealerships. “Our
team is proud to share in the heritage and foundation created by
Larry and Gail, and the entire Miller family. We are grateful for
the opportunities they provided to our employees and their
families. It is with much admiration and appreciation to the
Millers and the LHM Group that we now take our first step forward
as part of Asbury, a well-respected and employee-focused national
leader. We know our LHM Dealerships customers will continue to
experience exceptional service.”
Acquisitions Year to Date
With the LHM Acquisition, in total, Asbury has acquired $6.6
billion in annualized revenue in 2021, achieving its five-year
target of $5 billion in acquired revenue during the first year of
the strategic plan. Asbury maintains a strong balance sheet and
expects to provide an update on its strategic plan in April 2022,
along with first quarter earnings.
Advisors
For Asbury: BofA Securities served as financial advisor; BofA
Securities, JPMorgan Chase Bank, N.A., Wells Fargo, US Bank
National Association, Santander Bank, N.A. and Comerica Bank
provided the committed financing for the transaction; and Jones Day
and Hill Ward Henderson acted as legal counsel. For the LHM Group,
J.P. Morgan Securities, LLC served as exclusive financial advisor
while Katten Muchin Rosenman LLP and Snell & Wilmer acted as
legal counsel.
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 five-year
plan to increase revenue and profitability strategically through
organic and acquisitive growth as well as their innovative
Clicklane digital vehicle purchasing platform, with its
guest-centric approach as Asbury’s constant North Star. Asbury
currently operates 155 dealerships, consisting of 205 franchises,
representing 31 domestic and foreign brands of vehicles. Asbury
also operates seven stand-alone used vehicle stores, 35 collision
repair centers, an auto auction, a used vehicle wholesale business
and an F&I product provider. 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.
For additional information, visit www.asburyauto.com.
About Larry H. Miller Group of Companies
Headquartered in Sandy, Utah, the Larry H. Miller Group of
Companies is a family owned, diversified portfolio of businesses
and investments spanning multiple industries and asset classes.
What began with the purchase of a single automotive dealership in
1979, has grown to one of the largest privately held companies in
the United States. Today, the LHM Group’s main areas of focus
include health care, real estate, entertainment, sports, finance,
investments and partnerships and philanthropy.
For additional information, visit www.lhm.com or email
communications@lhm.com.
Forward-Looking Statements
To the extent that statements in this press release are not
recitations of historical fact, such statements constitute
"forward-looking statements" as such term is defined in the Private
Securities Litigation Reform Act of 1995. The forward-looking
statements in this press release may include statements relating to
goals, plans, expectations, projections regarding the expected
benefits of the transaction, management’s plans, projections and
objectives for the transaction, future operations, scale and
performance, integration plans and expected synergies therefrom,
and our financial position, results of operations, market position,
capital allocation strategy, initiatives, business strategy and
expectations of our management.
The following are some but not all of the factors that could
cause actual results or events to differ materially from those
anticipated, including: failure to realize the benefits expected
from the transaction; failure to promptly and effectively integrate
the acquisition; our inability to complete future acquisitions or
divestitures and the risks resulting thereto; our inability to
complete the title process in a timely manner with respect to the
real estate related to LHM Dealerships; our ability to execute our
business strategy; the impact of the COVID-19 pandemic, market
factors, Asbury's relationships with, and the financial and
operational stability of, vehicle manufacturers and other
suppliers, acts of God or other incidents and the shortage of
semiconductor chips, which may adversely impact supply from vehicle
manufacturers and/or present retail sales challenges, risks
associated with Asbury's indebtedness (including available
borrowing capacity, compliance with its financial covenants and
ability to refinance or repay such indebtedness, on favorable
terms), Asbury's relationships with, and the financial stability
of, its lenders and lessors, risks related to competition in the
automotive retail and service industries, general economic
conditions both nationally and locally, governmental regulations,
legislation, adverse results in litigation and other proceedings,
and Asbury's ability to execute its five-year strategic plan, IT
initiatives and other operational strategies, 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. These risks, uncertainties and other factors are
disclosed in Asbury's Annual Report on Form 10-K, subsequent
quarterly reports on Form 10-Q and other periodic and current
reports filed with the Securities and Exchange Commission from time
to time.
These forward-looking statements and such risks, uncertainties
and other factors speak only as of the date of this press release.
We expressly disclaim any obligation or undertaking to disseminate
any updates or revisions to any forward-looking statement contained
herein, whether as a result of new information, future events or
otherwise.
Non-GAAP Financial Reconciliation
The following provides a numerical reconciliation of EBITDA and
Adjusted EBITDA of the LHM businesses to the net income of the LHM
businesses, which is the most directly comparable financial measure
prepared in accordance with GAAP:
Last Twelve
Months Ended September 30,
2021
(in millions)
Net income
$
344.0
Income tax expense
2.4
Income before income taxes
346.4
Depreciation and amortization
24.3
Non-floor plan interest expense, net
16.0
EBITDA(1)
386.7
Franchise rights impairment
7.4
Adjusted EBITDA(1)
394.1
Pro forma adjustments(2)
14.3
Adjusted EBITDA with pro forma
adjustments
408.4
Anticipated cost savings
65.0
Adjusted EBITDA with cost savings and pro
forma adjustments
$
473.4
(1) We define EBITDA for the LHM business
as net income plus income tax expense, depreciation and
amortization, swap and non-floor plan interest expense. We define
Adjusted EBITDA for the LHM business as EBITDA as adjusted for any
(gain) loss on non-recurring or non-core items from time to time
such as franchise rights impairment, real estate related charges,
legal settlements, fixed assets write-offs, dealership and real
estate divestitures, potential fees associated with acquisitions
and stock-based compensation expenses, among others. We believe the
use of EBITDA and Adjusted EBITDA along with GAAP financial
measures enhances the understanding of our operating results and
may be useful to investors in comparing our operating performance
with that of our competitors and estimating our enterprise value.
EBITDA and Adjusted EBITDA are also useful tools in evaluating our
core operating results given the significant variation that can
result in any period from non-recurring or non-core items.
EBITDA and Adjusted EBITDA are not
measurements of our financial performance recognized under GAAP.
EBITDA and Adjusted EBITDA are used in addition to and in
conjunction with results presented in accordance with GAAP, and
should be considered as a supplement to, and not as a substitute
for, net income or any other performance measure calculated or
derived in accordance with GAAP. Furthermore, this measure is not
necessarily comparable to similarly titled measures employed by
other companies. EBITDA and Adjusted EBITDA has limitations as an
analytical tool as it should not be considered in isolation or as a
substitute for analysis of our results of operations as reported
under GAAP.
(2) Pro forma adjustments consist of $13.7
million related to LIFO adjustments and $1.6 million in floor plan
interest expenses offset by $1.0 million related to the
amortization of definite-lived intangible assets.
_____________________
1 Per Automotive News 2020 Top 150 Dealership Groups by New
Vehicle Retail Sales dated April 5, 2021.
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version on businesswire.com: https://www.businesswire.com/news/home/20211217005632/en/
Investors & Reporters May Contact: Karen Reid VP –
Corporate FP&A and Treasurer (770) 418-8211
ir@asburyauto.com
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