Asbury Automotive Group Inc: Form 10-Q for the period ended Sep 30, 2025

Forward-Looking Information

Certain of the discussions and information included or incorporated by reference in this report may constitute "forward-looking statements" within the meaning of the federal securities laws. Forward-looking statements are statements that are not historical in nature and may include statements relating to our goals, plans and projections regarding industry and general economic trends, our expected financial position, results of operations or market position and our business strategy. Such statements can generally be identified by words such as "may," "target," "could," "would," "will," "should," "believe," "expect," "anticipate," "plan," "intend," "foresee," and other similar words or phrases. Forward-looking statements may also relate to our expectations and assumptions with respect to, among other things:

• the seasonally adjusted annual rate of new vehicle sales in the United States;
• general economic conditions and its expected impact on our revenue and expenses;
• our expected parts and service revenue due to, among other things, improvements in vehicle technology;
• our ability to limit our exposure to regional economic downturns due to our geographic diversity and brand mix;
• manufacturers' continued use of incentive programs to drive demand for their product offerings;
• our capital allocation strategy, including as it relates to acquisitions and divestitures, stock repurchases and capital expenditures;
• our revenue growth strategy;
• the growth of the brands that comprise our portfolio over the long-term;
• disruptions in the production and supply of vehicles and parts from our vehicle and parts manufacturers and other suppliers, which can disrupt our operations; and
• our estimated future capital expenditures, which can be impacted by increasing prices and labor shortages and acquisitions and divestitures.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual future results, performance or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. Such factors include, but are not limited to:

• the ability to acquire and successfully integrate acquired businesses into our existing operations, realize expected benefits and synergies from such acquisitions, and identify and remediate insufficient control activities of the acquired businesses, if any, given that substantially all of our acquired businesses are private companies;
• the effects of increased expenses or unanticipated liabilities incurred as a result of, or due to activities related to our acquisitions or divestitures;
• changes in general economic and business conditions, including the current inflationary environment, the current interest rate environment, changes in U.S. trade policy, including the imposition of tariffs, changes in employment levels, consumer confidence levels, consumer demand and preferences, the availability and cost of credit, fuel prices and levels of discretionary personal income;
• our ability to generate sufficient cash flows, maintain our liquidity and obtain any necessary additional funds for working capital, capital expenditures, acquisitions, stock repurchases, debt maturity payments and other corporate purposes, if necessary or desirable;
• significant disruptions in the production and delivery of vehicles and parts, or our business operations, for any reason, including supply shortages, natural disasters, severe weather including hurricanes and hail, civil unrest, both at home and abroad, product recalls, work stoppages or other occurrences that are outside of our control;
• our ability to successfully attract and retain skilled employees;
• our ability to successfully operate, including our ability to maintain, and obtain future necessary regulatory approvals, for Total Care Auto, Powered by Landcar ("TCA"), our finance and insurance ("F&I ") product provider;
• adverse conditions affecting the vehicle manufacturers whose brands we sell, and their ability to design, manufacture, deliver and market their vehicles successfully;
• changes in the mix and total number of vehicles we are able to sell;
• our outstanding indebtedness and our continued ability to comply with applicable covenants in our various financing and lease agreements, or to obtain waivers of these covenants as necessary;
• high levels of competition in our industry, which may create pricing and margin pressures on our products and services;
• our relationships with manufacturers of the vehicles we sell and our ability to renew, and enter into new framework and dealer agreements with vehicle manufacturers whose brands we sell, on terms acceptable to us;
• the availability of manufacturer incentive programs and our ability to earn these incentives;
• failure of our management information systems and our ability to successfully transition between key information systems, including our ability to successfully incorporate new technologies and transition to Tekion, a dealer management systems provider, from CDK, our existing DMS provider;
• failure of management information systems used or maintained by our third-party service providers;
• any data security breaches occurring, including with regard to PII;
• changes in laws and regulations governing the operation of automobile franchises, including trade restrictions, consumer protections, accounting standards, taxation requirements and environmental laws;
• macroeconomic and geopolitical conditions, including global trade relations, changes to consumer and business confidence, international tensions, hostilities and instability, a slowdown in U.S. or global economic growth, higher rates of unemployment, changes in interest rates, inflation, and market volatility;
• changes in, or the imposition of, new tariffs or trade restrictions on imported vehicles or parts;
• adverse results from litigation, regulatory investigations or other similar proceedings involving us, including costs, expenses, settlements and judgments related thereto;
• our ability to consummate planned or pending mergers, acquisitions and dispositions;
• any disruptions in the financial markets, which may impact our ability to access capital;
• our relationships with, and the financial stability of, our lenders and lessors;
• our ability to execute our initiatives and other strategies;
• our ability to leverage scale and cost structure to improve operating efficiencies across our dealership portfolio; and
• our ability to remediate material weakness and the ongoing effectiveness of internal control over financial reporting.

Many of these factors are beyond our ability to control or predict, and their ultimate impact could be material. Moreover, the factors set forth under "Item 1A. Risk Factors" and other cautionary statements made in this report should be read and considered as forward-looking statements subject to such uncertainties. We urge you to carefully consider those factors.

Forward-looking statements speak only as of the date of this report. We expressly disclaim any obligation to update any forward-looking statements contained herein.

OVERVIEW

We are one of the largest automotive retailers in the United States. As of September 30, 2025, through our Dealerships segment, we owned and operated 230 new vehicle franchises (175 dealership locations), representing 36 brands of automobiles, within 15 states. As of September 30, 2025, we also operated 39 collision centers, and Total Care Auto, Powered by Landcar ("TCA"), our F&I product provider. Our stores offer an extensive range of automotive products and services, including new and used vehicles; parts and service, which include repair and maintenance services, replacement parts and collision repair services; and finance and insurance products. The finance and insurance products are provided by both TCA and independent third parties. The F&I products offered by TCA are sold through affiliated dealerships. For the nine months ended September 30, 2025, our new vehicle revenue brand mix consisted of 31% luxury, 41% imports and 29% domestic brands. The Company manages its operations in two reportable segments: Dealerships and TCA.

Our Dealerships segment revenues are derived primarily from: (i) the sale of new vehicles; (ii) the sale of used vehicles to individual retail customers ("used retail") and to other dealers at auction ("wholesale") (the terms "used retail" and "wholesale" are collectively referred to as "used"); (iii) repair and maintenance services, including collision repair, the sale of automotive replacement parts, and the reconditioning of used vehicles (collectively referred to as "parts and service"); and (iv) the arrangement of third-party vehicle financing and the sale of a number of vehicle protection products. F&I products are offered by dealerships to customers in connection with the purchase of vehicles through either TCA or independent third parties. We evaluate the results of our new and used vehicle sales based on unit volumes and gross profit per vehicle sold, our parts and service operations based on aggregate gross profit, and our F&I business based on F&I gross profit per vehicle sold. Amounts presented have been calculated using non-rounded amounts for all periods presented and therefore certain amounts may not compute.

Our continued organic growth is dependent upon the execution of our balanced automotive retailing and service business strategy, the continued strength of our brand mix and the production and allocation of desirable vehicles from the automobile manufacturers whose brands we sell. Our vehicle sales have historically fluctuated with product availability as well as local and national economic conditions, including consumer confidence, availability of consumer credit, fuel prices and employment levels.

In addition, our ability to sell certain new and used vehicles can be negatively impacted by a number of factors, some of which are outside of our control. Certain manufacturers continue to be hampered by the lack of availability of parts and key components from suppliers which has impacted new vehicle inventory levels and availability of certain parts. We cannot predict with any certainty how long the automotive retail industry will continue to be subject to these production slowdowns or when normalized production will resume at these manufacturers.

Recent Events

Herb Chambers acquisition

On July 21, 2025, the Company completed its previously announced acquisition of substantially all of the assets, including real property and businesses of The Herb Chambers Companies (the "Herb Chambers Dealerships") pursuant to a Purchase and Sale Agreement (the "Transaction Agreement") with various entities that comprise the Herb Chambers automotive group (the "Herb Chambers acquisition") for an aggregate purchase price of approximately $1.78 billion. The acquisition was primarily funded with borrowings under Asbury’s existing senior credit facility and borrowings under the 2025 Real Estate Facility. The Herb Chambers acquisition comprised 33 dealerships, 52 franchises and three collision centers and real property and businesses of the Herb Chambers Dealerships (collectively, the "Businesses").

Macroeconomic and geopolitical considerations

The demand and availability for and pricing of our products and services may be adversely impacted by economic conditions and financial developments, including increasing interest rates, rising inflation, high energy prices, a potential recessionary environment and other factors. The automotive retail industry is influenced by general economic conditions, particularly consumer confidence and consumer spending, interest rates, fuel prices, exchange rates, technology and business model changes, supply conditions, consumer transportation preferences, credit availability, and the unemployment rate. Consumer spending can be materially and adversely impacted by periods of economic uncertainty or by consumer concern regarding manufacturer viability. In addition, local economic, competitive and other conditions affect the performance of our dealerships. Our results of operations depend substantially on general economic conditions and consumer spending in those regions where we maintain operations.

Tariffs and trade risks

A significant portion of our business involves the sale of vehicles, parts, or vehicles composed of, or maintenance and repair services including, parts that are manufactured outside the U.S. Changes or increases in tariffs, trade restrictions, fluctuations in foreign currency exchange rates, the negotiation of new trade agreements, non-tariff trade barriers, local content requirements, uncertainty surrounding global trade policies, and the imposition of new or retaliatory tariffs against certain countries or covering certain products, including vehicles and parts, may affect our competitive position and impair our ability to sell and service vehicles and parts, and have a material adverse effect on our results of operations.

In late January 2025, the U.S. government commenced a broad review of U.S. trade relations, following which it began issuing numerous executive orders and other public policy statements imposing or threatening to impose tariffs on certain countries, materials, and industries, including the automotive industry. Such tariffs include a 25% tariff on imports of automobiles and certain automobile parts, with different rates for some countries as a result of respective trade deals. In response, certain impacted countries have imposed or threatened various corresponding retaliatory tariffs and other actions. If maintained, these and other newly announced tariffs and actions and the potential escalation of trade disputes are expected to affect the automotive industry generally, including manufacturers, distributors and retailers of vehicles, parts and supplies. The extent of the tariffs and the resulting impact on general economic conditions and on our business are uncertain and depend on various factors, such as negotiations between the U.S. and affected countries, the duration of such tariffs, the responses of other countries or regions to such tariffs, the actual increases in the costs of vehicles, products and raw materials, and exemptions or exclusions that may be granted. Should tariffs increase and be sustained, our inventory acquisition and carrying costs, and the production costs for many of our manufacturer, distributor and supplier partners, may be increased, which costs may be passed on to us and consumers through higher prices for many new vehicles and certain parts we sell. These increased prices may adversely affect our new vehicle sales and related finance and insurance sales and may adversely impact demand for such vehicles and parts, and could materially and adversely affect the results of our operations.

Financial Highlights

Highlights related to our financial condition and results of operations include the following:

• Consolidated revenue for the nine months ended September 30, 2025, increased to $13.32 billion, compared to $12.68 billion for the prior year.
• Consolidated gross profit for the nine months ended September 30, 2025, increased to $2.28 billion, compared to $2.20 billion for the prior year.
• The increase in consolidated revenue is primarily due to an increase in new vehicles units sold and parts and service volume growth offset partially by a decrease in used vehicle units sold. The increase in consolidated gross profit is primarily due to an increase in growth in our parts and services gross profit, an increase in used vehicle gross profit per vehicle sold which was offset by lower gross profit per vehicle sold for new vehicles as margins continue to shift downward from the historic highs in recent years.
• Our capital allocation priorities were supported by the repurchase of 220,587 shares for $50.0 million for the nine months ended September 30, 2025, under our share repurchase program.
• We incurred borrowings under our 2023 Senior Credit Facility and 2025 Real Estate Facility upon the consummation of the Herb Chambers acquisition which will increase future floor plan interest expense and other interest expense, net. See Note 3 "Acquisitions and Divestitures" of the notes to the condensed consolidated financial statements for more information.

CONSOLIDATED RESULTS OF OPERATIONS

The Company's operating results for the three and nine months ended September 30, 2025 include the results of the Herb Chambers Businesses acquired in the third quarter of 2025. Accordingly, the increases in revenue and gross profit for the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024 are largely a result of this acquisition.

We assess the organic growth of our revenue and gross profit on a same store basis. We believe that our assessment on a same store basis represents an important indicator of comparative financial performance and provides relevant information to assess our performance. As such, for the following discussion, same store amounts consist of information from dealerships for identical months in each comparative period, commencing with the first full month we owned the dealership. Additionally, amounts related to divested dealerships are excluded from each comparative period.

Three Months Ended September 30, 2025 Compared to the Three Months Ended September 30, 2024

(Dollars in millions, except per share data)

NM—Not Meaningful

Total revenue during the third quarter of 2025 increased by $564.2 million (13%) compared to the third quarter of 2024, due to a $365.4 million (17%) increase in new vehicle revenue, a $117.5 million (9%) increase in used vehicle revenue, a $66.3 million (11%) increase in parts and service revenue and a $14.9 million (8%) increase in F&I, net revenue. During the three months ended September 30, 2025, gross profit increased by $84.5 million (12%) driven by a $52.0 million (15%) increase in parts and service gross profit, a $15.9 million (9%) increase in F&I gross profit, a $10.6 million (7%) increase in new vehicle gross profit and a $5.9 million (10%) increase in used vehicle gross profit.

Income from operations during the three months ended September 30, 2025 increased by $9.9 million (4%) compared to three months ended September 30, 2024, primarily due to the $84.5 million (12%) increase in gross profit offset by a $60.6 million (13%) increase in selling, general and administrative expenses and an $11.7 million increase in asset impairment expense.

Total other expenses, net decreased by $20.6 million (33%) during the third quarter of 2025 as compared to the third quarter of 2024, primarily as a result of a $30.7 million increase in the gain on dealership divestitures, net offset by a $5.6 million increase in other interest expense, net and a $4.4 million increase in floor plan interest expense. Income before income taxes increased $30.5 million to $200.2 million for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024. Overall, net income increased by $20.8 million during the third quarter of 2025 as compared to the third quarter of 2024.

New Vehicle—

(Dollars in millions, except for per vehicle data)

36

New Vehicle Metrics—

For the three months ended September 30, 2025, new vehicle revenue increased by $365.4 million (17%) due to an increase in new vehicle units sold of 5,463 (13%) and an $1,830 (4%) increase in revenue per new vehicle sold as compared to the three months ended September 30, 2024. Same store new vehicle revenue increased by $172.9 million, driven by an increase in new vehicles sold of 2,835 (7%) and a $663 (1%) increase in revenue per new vehicle sold as compared to the three months ended September 30, 2024.

For the three months ended September 30, 2025, new vehicle gross profit and same store new vehicle gross profit increased by $10.6 million (7%) and decreased by $5.6 million (4%), respectively. Same store new vehicle gross margin for the three months ended September 30, 2025, decreased 79 basis points to 6.2%. A 58 basis points decrease was seen in new vehicle gross profit margins, as reported. The decrease in our new vehicle gross profit margin was primarily attributable to the continued easing of new vehicle inventory constraints which softened the historically high new vehicle margins seen in recent years.

The seasonally adjusted annual rate ("SAAR") for new vehicle sales in the U.S. during the three months ended September 30, 2025, was approximately 16.3 million which increased as compared to approximately 15.6 million during the three months ended September 30, 2024. The increase in SAAR period over period reflects higher consumer demand for new vehicles driven by automobile tariff uncertainty and expiring electric vehicle federal tax credits. We also continue to be impacted by the significant variation in new vehicle days supply among brands and models.

Used Vehicle—

(Dollars in millions, except for per vehicle data)

Used Vehicle Metrics—

For the three months ended September 30, 2025, used vehicle revenue increased by $117.5 million (9%) compared to the same period of the prior year, due to a $78.3 million (7%) increase in used vehicle retail revenue and a $39.3 million (27%) increase in used vehicle wholesale revenue. Same store used vehicle revenue increased by $22.0 million, largely due to a $28.3 million (20%) increase in used vehicle wholesale revenue, offset by a $6.4 million (1%) decrease in used vehicle retail revenue. Total used vehicle retail unit sales increased by 1% while same store used vehicle retail unit sales decreased by 4% during the three months ended September 30, 2025 as compared to the three months ended September 30, 2024. Used vehicle revenue and unit volumes have been negatively impacted by the lack of inventory availability, especially in vehicles with lower mileage. Revenue per used vehicle retailed increased in the third quarter of 2025, on both an all store and same store basis.

For the three months ended September 30, 2025, total Company and same store used vehicle retail gross profit margins increased by 13 basis points and decreased by 9 basis points, respectively, as compared to the three months ended September 30, 2024. Increases in used vehicle gross margins on a total Company basis were largely driven by the addition of the Herb Chambers Dealerships during the three months ended September 30, 2025 as compared to the three months ended September 30, 2024.

For the three months ended September 30, 2025, used vehicle retail gross profit margins increased from 4.9% to 5.0% for all stores and decreased 5.0% to 4.9% on a same store basis when compared to the same period of the prior year. Used vehicle retail gross profit increased $5.4 million (10%) for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024 and decreased $1.3 million (2%) on a same store basis for the same periods. On a total company and same store basis, our gross profit per used vehicle retailed increased $130 (9%), and $22 (1%), respectively, when compared to the prior year period, which was primarily driven by increases in used vehicle market prices due to the tight used vehicle inventory market.

Parts and Service—

(Dollars in millions)

* Reconditioning and preparation represents the gross profit earned by our parts and service departments for internal work performed and is included as a reduction of Parts and Service Cost of Sales in the accompanying Condensed Consolidated Statements of Income upon the sale of the vehicle.

The $66.3 million (11%) increase in parts and service revenue was primarily due to a $43.7 million (14%) increase in customer pay revenue, a $19.0 million (21%) increase in warranty revenue, a $2.6 million (1%) increase in wholesale parts revenue and a $1.0 million (1%) increase in collision revenue. Same store parts and service revenue increased by $24.5 million (4%) to $591.1 million during the three months ended September 30, 2025 from $566.6 million during the three months ended September 30, 2024. The increase in same store parts and service revenue was due to a $19.3 million (6%) increase in customer pay revenue, a $6.9 million (8%) increase in warranty revenue and a $1.2 million (1%) increase in wholesale parts revenue, partially offset by a $3.0 million (4%) decrease in collision revenue. The average age of vehicles in 2025 is historically high at 12.8 years. Consumers are retaining vehicles for longer periods of time due to various factors, including the higher cost of vehicles, higher interest rates, as well as the vehicle inventory constraints experienced in the automotive industry in recent years.

For the three months ended September 30, 2025, total parts and service gross profit increased by $52.0 million (15%) to $389.1 million and same store total parts and service gross profit increased by $24.2 million (7%) to $347.6 million when compared to the same period of the prior year. The all store and same store increase is primarily due to increased customer pay and warranty volume, which is in line with the increasing trend of aged vehicles.

Finance and Insurance, net—

(Dollars in millions, except for per vehicle data)

F&I revenue, net increased by $14.9 million (8%) during the third quarter of 2025 when compared to the third quarter of 2024, as a result of a 7% increase in total retail units sold and a $41 (2%) increase in F&I per vehicle retailed.

On a same store basis, F&I revenue, net increased by $2.1 million (1%) during the three months ended September 30, 2025 when compared to the three months ended September 30, 2024, primarily due to a 2% increase in total retail units sold. F&I revenue, net was negatively impacted by the deferral of commission revenue on the sale of TCA products, which we continue to roll out to all our stores, as compared to the immediate revenue recognition on the sale of third party F&I products. In addition, customers continue to look for ways to manage lower monthly payments in a high interest rate environment.

The financial results of the TCA segment, after dealership eliminations, are as follows:

(Dollars in millions)

TCA offers a variety of F&I products, such as extended vehicle service contracts, prepaid maintenance contracts, GAP, appearance protection contracts and lease wear-and-tear contracts. TCA's products are sold through our automobile dealerships.

Revenue generated by TCA is earned over the period of the related product contract. The method for recognizing revenue is assigned based on contract type and expected claim patterns. Premium revenues are supplemented with investment gains or losses and income earned associated with the performance of TCA's investment portfolio. During the three months ended September 30, 2025, TCA generated $23.7 million revenue, after dealership eliminations, consisting primarily of earned premiums and $5.5 million investment income from the investment portfolio. F&I revenue decreased by $5.9 million (20%) for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024 due to the continued roll-out of TCA products across Asbury dealerships resulting in the deferral of F&I revenue over the TCA contract term as opposed to the immediate recognition of revenue associated with third-party F&I product sales.

Direct expenses incurred for the acquisition of F&I contracts on which revenue has not yet been recognized have been deferred and are amortized over the related contract period. During the three months ended September 30, 2025, TCA recorded $13.2 million of cost of sales consisting primarily of claims expense. Commissions expense paid by TCA to our affiliated dealerships and reflected as F&I revenue in our Dealerships segment is eliminated in the TCA segment upon consolidation.

As we continue to integrate TCA, we expect a rollout of TCA products to our Koons stores in the fourth quarter of 2025 and our Herb Chambers stores beginning in 2026. With the ownership of TCA, while the combined profitability of the transaction is higher, the timing of revenue and cost recognition is deferred and amortized over the life of the contract. We expect that this rollout will result in lower F&I revenue and gross profit over the next few years due to the change in how revenue is earned from these contracts. The extent of the lower F&I revenue and gross profit will vary due to various factors including, but not limited to, SAAR levels and the Company's acquisition and divestiture activity.

Selling, General, and Administrative Expense—

(Dollars in millions)

SG&A expense as a percentage of gross profit increased 71 basis points from 65.0% for the three months ended September 30, 2024 to 65.7% for the three months ended September 30, 2025, while same store SG&A expense as a percentage of gross profit decreased 58 basis points to 64.0% over the same period in 2025. The increase in SG&A expense as a percentage of gross profit on a total company basis during the three months ended September 30, 2025 is primarily due to an increase of $30.6 million in personnel expenses driven by the Herb Chambers acquisition and an increase in other expenses of $24.9 million due to transaction costs incurred of $9.6 million associated with the Herb Chambers acquisition and other outside service costs related to legal and professional fees incurred. The decrease in SG&A expense as a percentage of gross profit on a same store basis during the three months ended September 30, 2025 is primarily the result of higher gross profits for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024.

Floor Plan Interest Expense—

Floor plan interest expense increased by $4.4 million to $26.7 million during the three months ended September 30, 2025 as compared to $22.3 million floor plan interest expense for the three months ended September 30, 2024 primarily due to lower balances held in our offset accounts during the three months ended September 30, 2025 as compared to the same period in the prior year.

Other Interest Expense—

Other interest expense increased $5.6 million (12%) during the three months ended September 30, 2025 from $45.7 million during the three months ended September 30, 2024 to $51.3 million. This increase was primarily due to a $5.3 million increase in our mortgage facilities interest expense as a result of borrowings incurred in connection with the Herb Chambers acquisition.

Gain on Dealership Divestitures, net—

During the three months ended September 30, 2025, we sold two Lexus franchises (two dealership locations) and one Chrysler Jeep Dodge Ram franchise (one dealership location) in Salt Lake City, Utah, and one Chrysler Jeep Dodge Ram franchise (one dealership location) in Denver, Colorado. The Company recorded a pre-tax gain totaling $35.7 million, which is presented in our accompanying condensed consolidated statements of income as a gain on dealership divestitures, net.

During the three months ended September 30, 2024, we sold one Nissan franchise (one dealership location) in Denver, Colorado, and one Nissan franchise (one dealership location) in Atlanta, Georgia. The Company recorded a pre-tax gain totaling $5.0 million, which is presented in our accompanying condensed consolidated statements of income as a gain on dealership divestitures, net.

Income Tax Expense—

The $9.7 million increase in income tax expense was primarily the result of a $30.5 million increase in income before income taxes and the impact on our deferred taxes due to the acquisition of the Herb Chambers Businesses. Our effective tax rate for the three months ended September 30, 2025 was 26.5% compared to 25.6% in the prior year comparative period, which differed from the U.S. statutory rate primarily due to the favorable effects of the windfall component of equity compensation as well as the favorable effects of amended state income tax returns, which are discrete items, and unfavorable effects of various permanent tax adjustments such as executive compensation. We estimate our effective tax rate for the year ended December 31, 2025 at 25.5%. This estimated effective tax rate includes the effects of the deferred tax impact related to an increase in our estimated future state effective tax rate due to the acquisition of the Herb Chambers Businesses.

CONSOLIDATED RESULTS OF OPERATIONS

We assess the organic growth of our revenue and gross profit on a same store basis. We believe that our assessment on a same store basis represents an important indicator of comparative financial performance and provides relevant information to assess our performance. As such, for the following discussion, same store amounts consist of information from dealerships for identical months in each comparative period, commencing with the first full month we owned the dealership. Additionally, amounts related to divested dealerships are excluded from each comparative period for same store reporting.

Nine Months Ended September 30, 2025 Compared to the Nine Months Ended September 30, 2024

(Dollars in millions, except per share data)

NM—Not Meaningful

Total revenue for the nine months ended September 30, 2025 increased by $638.4 million (5%) compared to the nine months ended September 30, 2024, due to a $578.2 million (9%) increase in new vehicle revenue, an $84.2 million (5%) increase in parts and service revenue and a $1.8 million increase in F&I, revenue, net, offset by a $25.8 million (1%) decrease in used vehicle revenue. The $79.9 million (4%) increase in gross profit during the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024, was driven by a $75.5 million (7%) increase in parts and service gross profit, a $6.4 million (3%) increase in used vehicle gross profit and a $2.2 million increase in F&I gross profit, offset by a $4.2 million (1%) decrease in new vehicle gross profit.

Income from operations during the nine months ended September 30, 2025 increased by $138.3 million (23%), compared to the nine months ended September 30, 2024, primarily due to a $109.4 million decrease in asset impairment charges and a $79.9 million (4%) increase in gross profit, partially offset by a $47.3 million (3%) increase in SG&A expense and a $3.6 million (7%) increase in depreciation and amortization expense.

Total other expenses, net decreased by $37.5 million (20%) as a result of a $37.1 million increase in gain on dealership divestitures, net, recorded during the nine months ended September 30, 2025 when compared to the same period of the prior year. Income before income taxes increased $175.8 million (44%) to $579.5 million for the nine months ended September 30, 2025. Overall, net income increased by $130.4 million (43%) during the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024.

New Vehicle—

(Dollars in millions, except for per vehicle data)

45

New Vehicle Metrics—

For the nine months ended September 30, 2025, new vehicle revenue increased by $578.2 million (9%) due to an increase in new vehicle units sold of 8,040 (6%) and a $1,270 (3%) increase in revenue per new vehicle sold as compared to the nine months ended September 30, 2024. Same store new vehicle revenue increased by $460.7 million (8%), driven by an increase in new vehicles sold of 7,262 (6%) and a $723 (1%) increase in revenue per new vehicle sold as compared to the nine months ended September 30, 2024.

For the nine months ended September 30, 2025, new vehicle gross profit and same store new vehicle gross profit decreased by $4.2 million (1%) and $17.0 million (4%), respectively as compared to the same period in the prior year. Same store new vehicle gross margin for the nine months ended September 30, 2025 decreased 78 basis points to 6.6%. A 67 basis points decrease was seen in new vehicle gross profit margins, as reported. The decrease in our new vehicle gross profit margin was primarily attributable to the continued easing of new vehicle inventory constraints which softened the historically high new vehicle margins seen in recent years.

The seasonally adjusted annual rate ("SAAR") for new vehicle sales in the U.S. during the nine months ended September 30, 2025 was approximately 16.3 million which increased as compared to approximately 15.6 million during the nine months ended September 30, 2024. The increase in SAAR period over period reflects higher inventory supply and consumer demand for new vehicles driven by automobile tariff uncertainty and expiring electric vehicle federal tax credits. We also continue to be impacted by the significant variation in new vehicle days supply among brands and models.

Used Vehicle—

(Dollars in millions, except for per vehicle data)

Used Vehicle Metrics—

For the nine months ended September 30, 2025, used vehicle revenue decreased by $25.8 million (1%) compared to the same period of the prior year, due to a $71.9 million (2%) decrease in used vehicle retail revenue partially offset by a $46.1 million (10%) increase in used vehicle wholesale revenue. Same store used vehicle revenue decreased by $68.2 million (2%) due to a $106.7 million (3%) decrease in used vehicle retail revenue partially offset by a $38.5 million (9%) increase in used vehicle wholesale revenue. Both total used vehicle retail unit sales and same store used vehicle retail sales decreased by 5% during the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024. Used vehicle unit volumes have been negatively impacted by the lack of inventory availability, especially in vehicles with lower mileage. Revenue per used vehicle retailed increased during nine months ended September 30, 2025 compared to the same period of the prior year.

For the nine months ended September 30, 2025, total company and same store gross profit margins increased by 18 basis points and 6 basis points, respectively, as compared to the nine months ended September 30, 2024. Increases in used vehicle gross margins, on both a total Company and same store basis, were largely driven by higher prices for used vehicles during the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024.

For the nine months ended September 30, 2025, used vehicle retail gross profit margins increased from 5.1% to 5.2% for all stores and remained consistent on a same store basis when compared to the same period of the prior year. Used vehicle retail gross profit increased $2.6 million (1%) for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024 and decreased $3.4 million (2%) on a same store basis for the same period. On a total company basis, our gross profit per used vehicle retailed increased $108 (7%), and on a same store basis, our gross profit per used vehicle retailed increased $52 (3%) when compared to the prior period, which was primarily driven by increases in used vehicle market prices due to the surge in demand as a result of tariff uncertainty.

Parts and Service—

(Dollars in millions)

* Reconditioning and preparation represents the gross profit earned by our parts and service departments for internal work performed is included as a reduction of parts and service cost of sales in the accompanying condensed consolidated statements of income upon the sale of the vehicle.

The $84.2 million (5%) increase in parts and service revenue was primarily due to a $54.0 million (6%) increase in customer pay revenue and a $44.0 million (18%) increase in warranty revenue, offset by a $7.3 million (3%) decrease in collision revenue and a $6.5 million (2%) decrease in wholesale parts revenue. Same store parts and service revenue increased by $63.5 million (4%) from $1.68 billion for the nine months ended September 30, 2024 to $1.74 billion for the nine months ended September 30, 2025. The increase in same store parts and service revenue was due to a $44.4 million (5%) increase in customer pay revenue and a $34.0 million (14%) increase in warranty revenue, offset by an $11.2 million (5%) decrease in collision revenue and a $3.6 million (1%) decrease in wholesale parts revenue. Consumers are owning a vehicle for longer periods of time due to various factors, including the higher cost of vehicles, higher interest rates, as well as the vehicle inventory constraints experienced in the automotive industry in recent years.

For the nine months ended September 30, 2025, total parts and service gross profit increased by $75.5 million (7%) to $1,086.6 million, and same store total parts and service gross profit increased by $60.5 million (6%) to $1,023.9 million when compared to the same period of the prior year. The all store and same store gross profit increases are primarily a result of increased customer pay and warranty volume and reconditioning and preparation, which is in line with the increasing trend of aged vehicles; however these increases were offset by decreases in body shop and wholesale parts activity.

Finance and Insurance, net—

(Dollars in millions, except for per vehicle data)

F&I revenue, net increased $1.8 million during the nine months ended September 30, 2025 when compared to the nine months ended September 30, 2024, primarily due to a 1% increase in total retail units sold.

On a same store basis, F&I revenue, net decreased by $4.9 million during the nine months ended September 30, 2025 when compared to the nine months ended September 30, 2024 primarily as a result of a $36 decrease in F&I per vehicle retailed. We are seeing slightly lower gross profit in our F&I products as customers look for ways to manage lower monthly payments in a higher interest rate environment.

The financial results of the TCA segment, after dealership eliminations, are as follows:

(Dollars in millions)

TCA offers a variety of F&I products, such as extended vehicle service contracts, prepaid maintenance contracts, GAP, appearance protection contracts and lease wear-and-tear contracts. TCA's products are sold through our automobile dealerships.

Revenue generated by TCA is earned over the period of the related product contract. The method for recognizing revenue is assigned based on contract type and expected claim patterns. Premium revenues are supplemented with investment gains or losses and income earned associated with the performance of TCA's investment portfolio. During the nine months ended September 30, 2025, TCA generated $70.3 million of revenue, consisting primarily of earned premiums and $15.2 million investment income from the investment portfolio. F&I revenue decreased by $18.9 million (21%) for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024 due to the continued roll-out of TCA products across Asbury dealerships resulting in the deferral of F&I revenue over the TCA contract term as opposed to the immediate recognition of revenue associated with third-party F&I product sales.

Direct expenses incurred for the acquisition of F&I contracts on which revenue has not yet been recognized have been deferred and are amortized over the related contract period. During the nine months ended September 30, 2025, TCA recorded

$40.1 million of cost of sales consisting primarily of claims expense. Commissions expense paid by TCA to our affiliated dealerships and reflected as F&I revenue in our Dealerships segment is eliminated in the TCA segment upon consolidation.

Selling, General, and Administrative Expense—

(Dollars in millions)

SG&A expense as a percentage of gross profit decreased 18 basis points from 64.2% for the nine months ended September 30, 2024 to 64.0% for the nine months ended September 30, 2025, while same store SG&A expense as a percentage of gross profit decreased 51 basis points to 63.2% over the same period. The decrease in SG&A as a percentage of gross profit on a total company and same store basis during the nine months ended September 30, 2025 is primarily the result of higher gross profits when compared to the nine months ended September 30, 2024.

On a total company basis, SG&A expense increased by $47.3 million for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, primarily due to an increase of $27.8 million in personnel costs driven by the Herb Chambers acquisition and in other expenses of $30.0 million due to transaction costs of $14.7 million incurred in connection with the Herb Chambers acquisition, offset by a decrease in rent and related expenses of $13.8 million (inclusive of $15.0 million in insurance recoveries in the period).

Asset Impairments—

During the nine months ended September 30, 2025, we recognized asset impairment charges of $26.0 million as compared to $135.4 million of asset impairment charges during the nine months ended September 30, 2024. For the nine months ended September 30, 2025, asset impairment charges were recorded related to five dealerships that met the criteria to be reflected as assets held for sale in March 2025 and one that met the criteria in October 2025 whose franchise rights carrying values exceeded the Company's estimate of the franchise rights fair value less costs to sell. For the nine months ended September 30, 2024, the asset impairments resulted from our interim franchise rights impairment tests for certain underperforming stores, limited primarily to one brand.

Floor Plan Interest Expense—

Floor plan interest expense decreased by $0.6 million (1%) to $65.6 million during the nine months ended September 30, 2025 compared to $66.1 million during the nine months ended September 30, 2024 primarily due to lower interest rates and higher cash balances held in the floor plan offset account during the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024. The decrease was offset by an increase in the unused credit facility fees of $1.2 million.

Other Interest Expense—

Other interest expense, net increased $0.2 million from $134.9 million during the nine months ended September 30, 2024 to $135.0 million during the nine months ended September 30, 2025. This increase was primarily due to the $7.1 million increase in our mortgage interest expense due to borrowings incurred in connection with the Herb Chambers acquisition. This increase was offset by a decrease of $4.4 million in our credit facility interest expense driven by lower balances outstanding and lower interest rates applicable during the nine months ended September 30, 2025 as compared to the same period in the prior year.

Gain on Dealership Divestitures, net—

During the nine months ended September 30, 2025, we sold two Toyota franchises (two dealership locations) in San Diego, California, and Los Angeles, California, one Nissan franchise (one dealership location) and one Chrysler Jeep Dodge Ram franchise (one dealership location) in Denver, Colorado, one Volvo franchise (one dealership location) in Greenville, South Carolina, and six franchises in Salt Lake City, Utah, comprising two Lexus franchises (two dealership locations), one Chevrolet franchise (one dealership location), two Chrysler Jeep Dodge Ram franchises (two dealership locations) and one Ford franchise (one dealership location). The Company recorded a pre-tax gain totaling $45.8 million, which is presented in our accompanying condensed consolidated statements of income as a gain on dealership divestitures, net.

During the nine months ended September 30, 2024, we sold one Lexus franchise (one dealership location) in Wilmington, Delaware due to OEM requirements in connection with the Koons acquisition, one Nissan franchise (one dealership location) in Denver, Colorado, and one Nissan franchise (one dealership location) in Atlanta, Georgia. The Company recorded a pre-tax gain totaling $8.6 million, which is presented in our accompanying condensed consolidated statement of income as a gain on dealership divestitures, net.

Income Tax Expense—

The $45.4 million (44%) increase in income tax expense was primarily the result of a $175.8 million (44%) increase in income before income taxes. For the nine months ended September 30, 2025, our effective income tax rate was 25.5% compared to 25.3% in the comparative period, respectively, which differed from the U.S. statutory rate primarily due to the favorable effects of the windfall component of equity compensation as well as the favorable effects of amended state income tax returns, which are discrete items, and unfavorable effects of various permanent tax adjustments such as executive compensation. We estimate our effective tax rate for the year ended December 31, 2025 at 25.5%. This estimated effective tax rate includes the effects of the deferred tax impact related to an increase in our estimated future state effective tax rate due to the acquisition of the Herb Chambers Dealerships.

LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2025, we had total available liquidity of $686.9 million, which consisted of cash and cash equivalents of $21.2 million (excluding $11.0 million held by TCA), available funds in our floor plan offset accounts of $108.7 million, $548.7 million of availability under our revolving credit facility and $8.3 million of availability under our used vehicle floor plan facility. The borrowing capacities under our revolving credit facility and our used vehicle revolving floor plan facility are limited by borrowing base calculations and, from time to time, may be further limited by our required compliance with certain financial covenants. As of September 30, 2025, these financial covenants did not further limit our availability under our other credit facilities.

We continually evaluate our liquidity and capital resources based upon (i) our cash and cash equivalents on hand, (ii) the funds that we expect to generate through future operations, (iii) current and expected borrowing availability under our 2023 Senior Credit Facility, (iv) amounts in our new vehicle floor plan notes payable offset accounts, and (v) the potential impact of our capital allocation strategy and any contemplated or pending future transactions, including, but not limited to, financings, acquisitions, dispositions, equity and/or debt repurchases, dividends, or other capital expenditures. We believe we will have sufficient liquidity to meet our debt service and working capital requirements; commitments and contingencies; debt repayment, maturity and repurchase obligations; acquisitions; capital expenditures; and any operating requirements for at least the next twelve months and the foreseeable future.

Covenants

We are subject to a number of customary operating and other restrictive covenants in our various debt and lease agreements. We were in compliance with all of our covenants as of September 30, 2025.

Share Repurchases and Dividend Restrictions

Our ability to repurchase shares or pay dividends on our common stock is subject to our compliance with the covenants and restrictions in our various debt and lease agreements.

On May 15, 2024, the Company announced that its Board of Directors approved an increase of $256.2 million in the Company's common share repurchase authorization to $400.0 million (the "New Share Repurchase Authorization"). As of September 30, 2025, the Company had $225.9 million remaining on its share repurchase authorization. The extent that the Company repurchases its shares, the number of shares and the timing of any repurchases will depend on general market conditions, legal requirements and other corporate considerations. The repurchase program may be modified, suspended or terminated at any time without prior notice.

During both the three and nine months ended September 30, 2025, the Company repurchased and retired 220,587 shares of our common stock under our share repurchase program. The cash paid for these share repurchases was $50.0 million for the nine months ended September 30, 2025.

During the three and nine months ended September 30, 2024, the Company repurchased and retired 393,951 and 826,340 shares of our common stock under our share repurchase program, respectively. The cash paid for these share repurchases was $182.1 million for the nine months ended September 30, 2024.

During the three and nine months ended September 30, 2025, the Company repurchased 643 and 44,069 shares of our common stock for $0.2 million and $12.9 million, respectively, from employees in connection with a net share settlement feature of employee equity-based awards.

During the three and nine months ended September 30, 2024, the Company repurchased 1,050 and 46,711 shares of our common stock for $0.2 million and $10.1 million, respectively, from employees in connection with a net share settlement feature of employee equity-based awards.

Cash Flows

Classification of Cash Flows Associated with Floor Plan Notes Payable

Borrowings and repayments of floor plan notes payable through our 2023 Senior Credit Facility ("Non-Trade"), and all floor plan notes payable relating to used vehicles (together referred to as "Floor Plan Notes Payable—Non-Trade"), are classified as financing activities on the accompanying condensed consolidated statements of cash flows, with borrowings reflected separately from repayments. The net change in floor plan notes payable to a lender affiliated with the manufacturer from which we purchase a particular new vehicle (collectively referred to as "Floor Plan Notes Payable—Trade") is classified as an operating activity on the accompanying condensed consolidated statements of cash flows. Borrowings of non-trade floor plan notes payable associated with inventory acquired in connection with all acquisitions and repayments made in connection with all divestitures are classified as a financing activity in the accompanying condensed consolidated statements of cash flows. Cash flows related to floor plan notes payable included in operating activities differ from cash flows related to floor plan notes payable included in financing activities only to the extent that the former are payable to a lender affiliated with the manufacturer from which we purchased the related inventory, while the latter are payable to our 2023 Senior Credit Facility that includes lenders affiliated with the manufacturers and lenders not affiliated with the manufacturers from which we purchased the related inventory. The majority of our floor plan notes are payable to our 2023 Senior Credit Facility, with the exception of floor plan notes payable relating to the financing of new Ford and Lincoln vehicles and certain loaner vehicle programs.

Floor plan borrowings are required by all vehicle manufacturers for the purchase of new vehicles, and all floor plan lenders require amounts borrowed for the purchase of a vehicle to be repaid within a short time period after the related vehicle is sold. As a result, we believe that it is important to understand the relationship between the cash flows of all of our floor plan notes payable and new vehicle inventory in order to understand our working capital and operating cash flow and to be able to compare our operating cash flow to that of our competitors (i.e., if our competitors have a different mix of trade and non-trade floor plan financing as compared to us). In addition, we include all floor plan borrowings and repayments in our internal operating cash flow forecasts. As a result, we use the non-GAAP measure "Adjusted cash flow provided by operating activities" (defined below) to compare our results to forecasts. We believe that splitting the cash flows of floor plan notes payable between operating activities and financing activities, while all new vehicle inventory activity is included in operating activities, results in significantly different operating cash flow than if all the cash flows of floor plan notes payable were classified together in operating activities.

Adjusted cash flow provided by operating activities includes borrowings and repayments of floor plan notes payable non-trade and used floor plan notes payable borrowing base changes. Adjusted cash flow provided by operating activities may not be comparable to similarly titled measures of other companies and should not be considered in isolation, or as a substitute for analysis of our operating results in accordance with GAAP. In order to compensate for these potential limitations, we also review the related GAAP measures. We believe that the adjustments related to cash flows associated with our used vehicle borrowing base, floor plan offset accounts and the impact of acquisitions and divestitures eliminates cash flow volatility and provides an adjusted operating cash flow metric that best reflects our results of operations and our management of inventory and related financing activities.

We have provided below a reconciliation of cash flow provided by operating activities, as if all changes in floor plan notes payable, except for (i) borrowings associated with acquisitions and repayments associated with divestitures and (ii) borrowings and repayments associated with the purchase of used vehicle inventory and (iii) changes in the floor plan offset accounts were classified as an operating activity for both floor plan notes payable - non-trade and floor plan notes payable - trade.

(In millions)

Operating Activities—

Net cash provided by operating activities totaled $623.3 million and $427.0 million, for the nine months ended September 30, 2025 and 2024, respectively. Adjusted cash flow provided by operating activities totaled $542.6 million and $487.2 million, for the nine months ended September 30, 2025 and 2024, respectively. Adjusted cash flow provided by operating activities includes net income, adjustments to reconcile net income to net cash provided by operating activities, changes in working capital, changes in used vehicle borrowing base, changes in floor plan notes payable—non-trade and trade, excluding the impact of offsets, and excluding operating cash flows associated with acquisitions and divestitures related to loaner vehicles and new vehicle inventories financed through floor plan notes payable—trade.

The $55.4 million increase in adjusted cash flow provided by operating activities for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, was primarily the result of the following:

• increase of $34.2 million related to accounts payable and accrued liabilities;
• $17.9 million increase related to sales volume and the timing of collection of accounts receivable and contracts-in-transit during 2025 as compared to 2024;
• $16.0 million increase related to other long term assets and liabilities, net; and
• increase of $28.1 million in inventory, net of floor plan notes payable, including both trade and non-trade, excluding offset and including used vehicle borrowing base changes adjusted for acquisitions and divestitures.

The increase in our adjusted cash flow provided by operating activities was partially offset by:

• decrease of $25.5 million in other current assets, net; and
• decrease of $13.4 million in net income and non-cash adjustments to net income.

Investing Activities—

Net cash used in investing activities totaled $1.49 billion for the nine months ended September 30, 2025 compared to net cash provided by investing activities of $17.8 million for the nine months ended September 30, 2024.

Capital expenditures, excluding the purchase of real estate, were $104.4 million and $104.5 million for the nine months ended September 30, 2025 and 2024, respectively.

During the nine months ended September 30, 2024, we acquired real estate properties for $69.6 million and also purchased previously leased real estate properties for $11.9 million. We did not acquire real estate properties during the nine months ended September 30, 2025.

During the nine months ended September 30, 2025, we sold two Toyota franchises (two dealership locations) in San Diego, California, and Los Angeles, California, one Nissan franchise (one dealership location) and one Chrysler Jeep Dodge Ram franchise (one dealership location) in Denver, Colorado, one Volvo franchise (one dealership location) in Greenville, South Carolina, and six franchises in Salt Lake City, Utah, comprising two Lexus franchises (two dealership locations), one Chevrolet franchise (one dealership location), two Chrysler Jeep Dodge Ram franchises (two dealership locations) and one Ford franchise (one dealership location) for an aggregate purchase price of $452.9 million. The Company recorded a pre-tax gain totaling $45.8 million, which is presented in our accompanying condensed consolidated statements of income as a gain on dealership divestitures, net.

During the nine months ended September 30, 2024, we sold one Lexus franchise (one dealership location) in Wilmington, Delaware due to OEM requirements in connection with the Koons acquisition, one Nissan franchise (one dealership location) in Denver, Colorado, and one Nissan franchise (one dealership location) in Atlanta, Georgia for an aggregate purchase price of $196.3 million. The Company recorded a pre-tax gain totaling $8.6 million, which is presented in our accompanying condensed consolidated statement of income as a gain on dealership divestitures, net.

We purchased $153.8 million and $60.0 million of debt securities during the nine months ended September 30, 2025 and 2024, respectively.

We received proceeds of $98.0 million and $70.0 million from the sale of debt securities during the nine months ended September 30, 2025 and 2024, respectively.

During the nine months ended September 30, 2025, we did not sell any real estate. During the nine months ended September 30, 2024, we received cash proceeds of $2.2 million from the sale of real estate.

As a result of the Herb Chambers acquisition, we acquired substantially all of the assets including the real property related thereto, for a total preliminary purchase price of approximately $1.78 billion, paid in cash. The Businesses comprise 33 dealerships, 52 franchises and three collision centers. The Businesses will form part of our Dealerships segment.

We expect that capital expenditures during 2025 will total approximately $175.0 million to upgrade or replace our existing facilities, construct new facilities, expand our service capacity, and invest in technology and equipment. In addition, as part of our capital allocation strategy, we continually evaluate opportunities to purchase properties currently under lease and acquire properties in connection with future dealership relocations. No assurances can be provided that we will have or be able to access capital at times or on terms in amounts deemed necessary to execute this strategy.

Financing Activities—

Net cash provided by financing activities totaled $830.7 million for the nine months ended September 30, 2025 compared to net cash used in financing activities of $430.2 million for the nine months ended September 30, 2024.

During the nine months ended September 30, 2025 and 2024, we had non-trade floor plan borrowings, excluding floor plan borrowings associated with acquisitions, of $7.95 billion and $6.92 billion, respectively, and non-trade floor plan repayments, excluding floor plan repayments associated with divestitures, of $7.70 billion and $7.30 billion, respectively. We had floor plan borrowings incurred to finance the Herb Chambers acquisition of $262.7 million.

On July 21, 2025, certain subsidiaries of the Company borrowed $546.5 million (the “2025 Real Estate Facility”) under a real estate term loan credit agreement, dated as of July 21, 2025 (the “Real Estate Credit Agreement”) by and among the Company, certain of the Company’s subsidiaries that own or lease the real estate financed thereunder, as borrowers, Wells Fargo Bank, National Association, as administrative agent, and the various financial institutions parties thereto, as lenders. The

Real Estate Facility matures ten years from the initial funding date. The Company used the proceeds from these borrowings, together with other available funds, to finance the Herb Chambers acquisition.

During the nine months ended September 30, 2025 and 2024, we had non-trade floor plan repayments associated with dealership divestitures of $72.0 million and $34.1 million, respectively.

Repayments of borrowings totaled $154.8 million and $56.9 million for the nine months ended September 30, 2025 and 2024, respectively. In addition, payments of debt issuance costs related to borrowings incurred to finance the Herb Chambers acquisition totaled $5.7 million for the nine months ended September 30, 2025.

There were $1.55 billion borrowings and $1.48 billion repayments under our revolving credit facility during the nine months ended September 30, 2025. During the nine months ended September 30, 2024, there were $1.01 billion borrowings and $782.8 million repayments under our revolving credit facility.

During the nine months ended September 30, 2025, we repurchased 220,587 shares of our common stock under our share repurchase program for a total of $50.0 million and repurchased 44,069 shares of our common stock for $12.8 million from employees in connection with a net share settlement feature of employee equity-based awards. During the nine months ended September 30, 2024, we repurchased 826,340 shares of our common stock under our share repurchase program for a total of $182.1 million and repurchased 46,711 shares of our common stock for $10.1 million from employees in connection with a net share settlement feature of employee equity-based awards.

Off Balance Sheet Arrangements

We had no off balance sheet arrangements during any of the periods presented other than those disclosed in Note 13 "Commitments and Contingencies" of the Company's condensed consolidated financial statements.

Guarantor Financial Information

As of September 30, 2025, the Company had outstanding $405.0 million of 4.500% Senior Notes due 2028 and $445.0 million of 4.750% Senior Notes due 2030. The Senior Notes have been fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis, by each existing and future restricted subsidiary of the Company (the “Guarantor Subsidiaries”), with the exception of Landcar Administration Company, Landcar Agency, Inc. and Landcar Casualty Company and their respective subsidiaries (collectively, the “TCA Non-Guarantor Subsidiaries"). The 2028 Notes and the 2030 Notes were required to be registered under the Securities Act of 1933 within 270 days of the closing date for the offering of each respective series. The Company completed the registration of the 2028 Notes and 2030 Notes in October 2020.

The following tables present summarized financial information for the Company and the Guarantor Subsidiaries on a combined basis after elimination of (i) intercompany transactions and balances among Asbury and the Guarantor Subsidiaries and (ii) assets, liabilities, and equity in earnings from and investments in any non-guarantor subsidiaries.

Summarized Balance Sheet Data of Asbury and Guarantor Subsidiaries

(In millions)

Summarized Statement of Operations Data for Asbury and Guarantor Subsidiaries

(In millions)

Critical Accounting Policies and Estimates

For a description of our critical accounting policies and estimates, see our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. Our critical accounting policies and estimates have not changed materially during the nine months ended September 30, 2025.

Interest Rate Risk

We are exposed to risk from changes in interest rates on a significant portion of our outstanding indebtedness. Based on $2.14 billion of total variable interest rate debt, which includes our floor plan notes payable, amounts drawn on our used vehicle floor plan, revolver and certain mortgage liabilities, outstanding as of September 30, 2025, a 100 basis point change in interest rates would result in a change of $21.4 million in annual interest expense.

We periodically receive floor plan assistance from certain automobile manufacturers, which is primarily accounted for as a reduction in our new vehicle inventory cost. Floor plan assistance reduced our cost of sales for the nine months ended September 30, 2025 and 2024 by $83.4 million and $70.4 million, respectively. We cannot provide assurance as to the future amount of floor plan assistance and these amounts may be negatively impacted due to future changes in interest rates.

As part of our strategy to mitigate our exposure to fluctuations in interest rates, we have various interest rate swap agreements. All of our interest rate swaps qualify for cash flow hedge accounting treatment and do not contain any ineffectiveness.

As of September 30, 2025 we had five interest rate swap agreements. These swaps are designed to provide a hedge against changes in variable rate cash flows regarding fluctuations in SOFR. The following table provides information on the attributes of each swap as of September 30, 2025:

(In millions)

These interest rate swaps are marked to market at each reporting date and any unrealized gains or losses are included in accumulated other comprehensive income and reclassified to other interest expense in the same period or periods during which the hedged transactions affect earnings. For additional information about the effect of our derivative instruments, please refer to Note 10 "Financial Instruments and Fair Value" within the accompanying condensed consolidated financial statements.

Disclosure Controls and Procedures

As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934

(the "Exchange Act"). Based on this evaluation, our principal executive officer and principal financial officer concluded that as of the end of such period such disclosure controls and procedures were not effective, solely as a result of a previously reported material weakness.

Notwithstanding the foregoing, there were no changes to previously issued financial statements and management did not identify any misstatements in our financial statements as a result of this material weakness. Our principal executive officer and principal financial officer believe that the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial condition, results of operations and cash flows as of and for the periods presented in accordance with United States Generally Accepted Accounting Principles ("US GAAP").

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The material weakness is due to control deficiencies in information technology general controls ("ITGCs") identified at the Jim Koons Dealerships ("Koons") that we acquired in December 2023. Specifically, the material weakness is due to insufficient control activities at a third-party software vendor for the Dealer Management System ("DMS") utilized by Koons. The third-party software vendor who supports the DMS on behalf of Koons does not have a Service Organization Control ("SOC") report that covers the DMS utilized by Koons. The ineffective ITGCs limited the level of assurance over the completeness and accuracy of information derived from the affected IT application used in automated and manual business process controls at Koons. Refer to Item 9A in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 for more information.

As previously described in Item 9A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, management is in the process of implementing its remediation plan. Our remediation efforts include the transition of Koons to another DMS in 2025. As of September 30, 2025, all of the Koons stores have been transitioned to a new DMS. We expect that the material weakness will be remediated in 2025, once the ITGCs have operated for a sufficient period for management to conclude, through testing, that the controls are designed and operating effectively.

Changes in Internal Control Over Financial Reporting

On July 21, 2025, we completed the Herb Chambers acquisition. The Businesses comprise 33 dealerships, 52 franchises and three collision centers. During the quarter ended September 30, 2025, we started evaluating and have begun to implement changes related to the Businesses' IT infrastructure, ITGCs and business process controls to more closely align with the standards of the Company's control environment. We plan to incorporate the Businesses operations into our internal control over financial reporting program within the time provided by the applicable rules and regulations of the U.S. Securities and Exchange Commission.

Other than with respect to the material weakness remediation efforts and the July 2025 acquisition of the Businesses described above, there were no changes in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) during the quarter ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors that affect our business and financial results that are discussed in Part I, Item 1A, of our Annual Report on Form 10-K for the year ended December 31, 2024. These factors could materially adversely affect our business, financial condition, liquidity, results of operations and capital position, and could cause our actual results to differ materially from our historical results or the results contemplated by the forward-looking statements contained in this report. There have been no material changes to such risk factors.