Asbury Automotive Group, Inc., one of the largest automotive retail and service companies in the U.S., reported net income for the second quarter 2018 of $43.2 million ($2.11 per diluted share) and adjusted net income (a non-GAAP measure) of $42.7 million ($2.08 per diluted share). This compares to net income of $31.9 million ($1.52 per diluted share) and adjusted net income of $33.2 million ($1.58 per diluted share) in the prior year quarter. Net income for the second quarter 2018 was adjusted for a $0.7 million pre-tax gain on legal settlements ($0.03 per diluted share); while net income for the second quarter 2017 was adjusted for $0.8 million pre-tax investment income ($0.02 per diluted share) and $2.9 million pre-tax real estate-related charges ($0.08 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 second quarter was to reduce net income by $0.6 million or $0.03 per diluted share.

As a result of tax legislation passed in December 2017, the tax rate in the second quarter of 2018 was 26% compared to 38% in the second quarter of 2017.

"In a healthy SAAR environment, we grew revenue 6% despite continued margin pressure. We also improved our SG&A as a percentage of gross profit by 90 basis points and maintained our industry leading operating margins while further investing in our omni-channel capabilities," 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 and acquiring a Chevrolet dealership and a Toyota dealership in the Atlanta market."

Second Quarter 2018 Operational Summary (change from the prior year period)

Total company:

• Total revenue increased 6%; gross profit increased 4%

• SG&A as a percentage of gross profit decreased 90 basis points to 68.6%

• Adjusted income from operations as a percentage of revenue was 4.6% up 10 basis points

• Adjusted EPS from continuing operations increased 32%

Same store:

• Total revenue increased 4%; gross profit increased 2%

• New vehicle revenue increased 3%; gross profit decreased 3%

• Used vehicle retail revenue increased 8%; gross profit increased 2%

• Finance and insurance revenue and gross profit increased 5%

• Parts and service revenue was flat; gross profit increased 2%

Strategic Highlights:

• Completed the acquisition of a Chevrolet dealership and a Toyota dealership in the Atlanta market, which should generate approximately $120 million in annual revenue

• Repurchased $20 million of common stock

The Company's revenue for the six-month period ended June 30, 2018 period totaled $3.33 billion, an increase of 5% compared to $3.18 billion in the prior year period.

For the six-month period ended June 30, 2018, the Company reported net income of $83.3 million, or $4.02 per diluted share, compared to reported net income of $65.9 million, or $3.12 per diluted share in the prior year period.  For the six-month period ended June 30, 2018 the Company reported adjusted net income of $82.8 million, or $4.00 per diluted share, compared to $66.6 million, or $3.16 per diluted share, for the prior year period.  See attached reconciliation for reported adjustments.