* Asbury wants to buy more dealerships
* Asbury plans to repurchase $25M-$30M of stock per year
* Asbury, Sonic make changes to capital structure in Q3
* Sonic falls short of estimates; Asbury beats
* Sonic shares up 3 pct, Asbury up 1.5 pct
Oct 23 (Reuters) - U.S. auto dealership groups Sonic Automotive Inc and Asbury Automotive Group Inc posted higher third-quarter adjusted earnings as vehicle sales rose and costs stayed about flat.
Sonic, the third-largest U.S. dealership group, reported a smaller-than-expected profit. Sonic reported adjusted earnings of 40 cents per share, compared with the 42 cents per share predicted by analysts, according to Thomson Reuters I/B/E/S.
Meanwhile, Asbury, the No. 7 dealer, beat estimates with a 72-cent-per-share profit, excluding one-time items, while analysts on average expected a profit of 64 cents.
Both companies took actions during the quarter to revamp their capital structure. Sonic bought back debt, which led to a pretax charge of about $18.5 million or 19 cents per share, while Asbury repurchased $6 million of its common stock.
Sonic said the move simplified its capital structure and delayed its earliest debt maturity to 2018.
Asbury CEO Craig Monaghan said in a telephone interview that the company plans to spend $25 million to $30 million per year over the next three years to repurchase shares, which he said was like a dividend to shareholders.
He said Asbury has come back from near-death during the U.S. auto industry downturn in 2009 to a point where ``our balance sheet is stronger than it's ever been.''
``We are a very different company than we were just three years ago,'' Monaghan said.
Sonic shares were up 2.9 percent at $18.70 and Asbury shares were up 1.5 percent at $30.49 at midday Tuesday on the New York Stock Exchange.
Morgan Stanley analyst Ravi Shanker said that Asbury's performance on its selling, general and administrative (SG&A) expenses was a major reason the company beat estimates.
Asbury revamped itself dramatically after the financial crisis by cutting labor and other costs and saved millions by moving its headquarters to suburban Atlanta from New York.
Asbury's third-quarter SG&A expenses as a percentage of gross profit fell to 72.3 percent from 77.1 percent a year ago. Sonic's SG&A expenses during the quarter were 77.6 percent of gross profit, down from 77.9 percent a year ago.
Both companies were helped by higher U.S. auto sales this year, which are up 14.5 percent through September. Sonic's new vehicle retail sales were 19.5 percent higher and Asbury saw a 14 percent jump.
Sonic said net income during the third quarter fell to $10 million, or 21 cents per share, from $21.3 million or 34 cents per share a year before. Sonic revenue rose 11.7 percent to nearly $2.2 billion.
Excluding one-time items, Sonic reported adjusted earnings of $21.3 million, or 40 cents per share, up from $19.4 million or 34 cents per share a year earlier.
Asbury, based in suburban Atlanta, reported net income for the quarter of $20.7 million, or 66 cents per diluted share, compared with $12.3 million, or 38 cents per diluted share a year earlier. Revenue was up 14 percent to $1.2 billion.
ASBURY ADDING DEALERS
About half of Sonic's new vehicle revenue comes from luxury nameplates including BMW, Daimler AG's Mercedes and General Motors Co's Cadillac brand.
Asbury's is more reliant on mainstream brands. Honda Motor Co accounted for 26 percent of new vehicle sales in the first nine months, followed by Nissan Motor Co and Toyota Motor Co, each at 18 percent.
Asbury is looking to expand, Monaghan said. The company plans to buy dealerships that have combined revenue of between $400 million and $600 million in the next three years, he said.
Asbury currently has 77 auto stores representing 97 franchises.
Asbury will concentrate on acquiring dealers that are already in its primary Southeast U.S. area, but also may expand beyond its current U.S. footprint, Monaghan said.
Monaghan also said that Asbury wants to buy more of the land on which its dealers are located in the next three years, to 75 percent from the current 60 percent.
(Reporting by Deepa Seetharaman and Bernie Woodall in Detroit; editing by Matthew Lewis)