Asbury Automotive Group, Inc., one of the largest automotive retail and service companies in the U.S., reported net income for the first quarter 2018 of $40.1 million ($1.93 per diluted share).  This compares to net income of $34.0 million ($1.61 per diluted share) and adjusted net income (a non-GAAP measure) of $33.4 million ($1.58 per diluted share) in the prior year quarter. Net income for the first quarter 2017 was adjusted for a $0.9 million pre-tax gain on legal settlements ($0.03 per diluted share).

On January 1, 2018, the company adopted ASC 606 for revenue recognition which impacted F&I and parts and service revenue and gross profit.  The net impact of adopting ASC 606 in the first quarter was to reduce net income by $0.9 million and EPS by $0.04.

As a result of tax legislation passed in December 2017, the tax rate in the first quarter of 2018 was 25% compared to 36% in the first quarter of 2017.

"In a flat SAAR environment, we delivered both F&I and parts and service gross profit growth," said David Hult, Asbury's President and Chief Executive Officer. "We continued with our balanced approach to capital allocation, repurchasing $20 million of our common stock, acquiring a Honda dealership in the Indiana market, and contracting to acquire two more dealerships in the Atlanta market in the second quarter."

First Quarter 2018 Operational Summary

Same store:

• Total revenue increased 2%; gross profit increased 1%

• New vehicle revenue increased 1%; gross profit decreased 6%

• Used vehicle retail revenue increased 4%; gross profit decreased 5%

• Finance and insurance revenue and gross profit increased 2%

• Parts and service customer pay gross profit increased 5%

Total store:

• SG&A as a percentage of gross profit decreased 20 basis points to 69.4%

• Income from operations as a percentage of revenue was 4.5%

• Adjusted EPS from operations increased 22%

Strategic Highlights:

• Purchased a Honda dealership in the Indiana market, which should generate approximately $120 million in annual revenue

• Repurchased $20 million of common stock

• On track to close two acquisitions in the Atlanta market by the end of the second quarter 2018, which combined should generate approximately $120 million in annual revenue