Asbury Automotive Group Reports Second Quarter Financial Results

Asbury Automotive Group, Inc. , one of the largest automotive retail and service companies in the U.S., today reported financial results for the second quarter and six months ended June 30, 2006.

Income from continuing operations for the second quarter increased 14% to $19.4 million, or $0.58 per diluted share, from $17.1 million, or $0.52 per diluted share, in last year's second quarter. Results for this year's second quarter include non-operating one-time items that added $0.04 per diluted share. This year's second quarter also includes a stock-based compensation charge of approximately $0.02 per diluted share. Excluding these items, second quarter income from continuing operations improved 10% to $18.8 million, or $0.56 per diluted share.

For the first six months of 2006, income from continuing operations was $33.0 million, or $0.98 per diluted share, up 23% from $26.9 million, or $0.82 per diluted share, in the corresponding period last year. Results for the 2006 period include non-operating one-time items that added $0.03 per diluted share. This year's results also include a stock-based compensation charge of approximately $0.04 per diluted share. Results for the first half of 2005 include after-tax costs of approximately $0.07 per diluted share related to the Company's regional restructuring. Excluding these items from our 2006 and 2005 results, income from continuing operations improved 15% for the first half of 2006 to $33.3 million, or $0.99 per diluted share.

Additional financial highlights for the second quarter of 2006, as compared to last year's second quarter, included:

- Total revenue for the quarter was approximately $1.5 billion, up 7%. Total gross profit was $228.8 million, up 9%. - Same-store retail revenue and gross profit (excluding fleet and wholesale businesses) were up 7% and 9%, respectively. - New vehicle retail revenue increased 6% (5% same-store), and unit sales increased 3% (2% same-store).New vehicle retail gross profit rose 6% (4% same-store). - Used vehicle retail revenue (total and same-store) increased 11% and unit sales (total and same-store) increased 6%.Used vehicle retail gross profit (total and same-store) increased 20%. - Parts, service and collision repair (fixed operations) revenue increased 9% (8% same-store), and gross profit increased 8% (total and same- store). - Net finance and insurance (F&I) revenue was up 11% (10% same-store). Excluding a one-time gain on the sale of the remaining interest in variable profits on a pool of extended service contracts, net F&I revenue rose 2% (1% same-store).F&I per vehicle retailed (PVR) increased 6% to $966, while dealership-generated F&I PVR was flat at $875. - Selling, general and administrative (SG&A) expenses as a percentage of gross profit were 75.1% for the quarter, a 140 basis point improvement compared with 76.5% a year ago.

President and CEO Kenneth B. Gilman said, "I am pleased to report that Asbury delivered solid financial results again in the second quarter, despite the lackluster industry environment for new car sales. Our used vehicle and fixed operations continue to benefit from the focused investments we've made in those businesses over the last few years. We also again outperformed the industry in new vehicle unit sales, thanks to our strong brand mix. In addition, our ongoing cost-reduction efforts are helping to offset some of the impact of higher interest rates."

J. Gordon Smith, Senior Vice President and CFO, said, "Asbury's SG&A expenses for the second quarter improved by 140 basis points as a percentage of gross profit. Asbury's overall results include an after-tax gain of $2.1 million on the sale of Asbury's remaining interest in variable profits on a pool of extended service contracts, and an after-tax charge of $0.9 million related to the Company's recent abandonment of strategic projects. We continue to realize cost savings from our regional reorganization in 2005 and benefited from the further leveraging of our fixed cost structure. Our more strategic approach to advertising is also delivering substantial savings, as advertising expense again declined, approximately 10% on a PVR basis. In addition, we have identified cost reduction opportunities as we continue to standardize our back office systems. For example, we are in the process of consolidating Asbury's three dealer management systems (DMS) to a single technology vendor."

Mr. Gilman continued, "I am particularly pleased to report the standout performance of our West region during the quarter, which delivered growth across all four of their business lines. Of particular note, our investments in two new Honda stores in Texas and Southern California are beginning to pay dividends. In my view, a significant amount of potential remains in our West region, with an expectation of continued improvements over the next two years."

Commenting on earnings guidance for 2006, the Company increased its guidance to a range of $1.82 and $1.87 for diluted earnings per share from continuing operations, including the expected $0.10 per share impact of the new accounting rules governing the expensing of stock-based compensation.