

o☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-31262

ASBURY AUTOMOTIVE GROUP, INC.

(Exact name of Registrant as specified in its charter)

Delaware

01-0609375

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

~~Delaware~~

~~01-0609375~~

~~(State or other jurisdiction of~~

~~incorporation or organization)~~

~~(I.R.S. Employer~~

~~Identification No.)~~

2905 Premiere Parkway NW,

Suite 300

~~Duluth, Georgia~~

~~30097~~

Duluth, Georgia

30097

(Address of principal executive offices)

(Zip Code)

(770) 418-8200

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Trading

Title of each class

Symbol(s)

Name of each exchange on which registered

Common stock, $0.01 par value per share

ABG

New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate website, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act:

Large Accelerated Filer

☒

Accelerated Filer

☐

~~Large Accelerated Filer~~

~~Accelerated Filer~~

Non-Accelerated Filer

o☐

~~(Do not check if a smaller reporting company)~~

Smaller Reporting Company

o☐

Emerging Growth Company

o☐

Table of Contents

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o☐ No x

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: The number of shares of common stock outstanding as of ~~October 24, 2017~~April 26, 2021 was ~~20,817,702~~.

19,339,306.

Table of Contents

ASBURY AUTOMOTIVE GROUP, INC.

TABLE OF CONTENTS



				Page
PART I—Financial Information
Item 1.			Condensed Consolidated Financial Statements (unaudited)
			Condensed Consolidated Balance Sheets as of ~~September 30, 2017~~March 31 , 202 1 and December 31, ~~2016~~2 020	4
			Condensed Consolidated Statements of Income for the Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 3 1 , 202 1 and ~~2016~~2 0 20	5
			Condensed Consolidated Statements of Comprehensive Income for the Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 3 1 , 202 1 and ~~2016~~2 0 20	6
			Condensed Consolidated Statements of Shareholders' Equity for the Three Months Ended Mar ch 3 1 , 202 1 and 20 20	7
			Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September 30, 2017~~Mar ch 3 1 , 202 1 and ~~2016~~20 20	78
			Notes to Condensed Consolidated Financial Statements	89
Item 2.			Management's Discussion and Analysis of Financial Condition and Results of Operations	1721
Item 3.			Quantitative and Qualitative Disclosures About Market Risk	3938
Item 4.			Controls and Procedures	4038

			PART II—Other Information

Item 1.			Legal Proceedings	4039
Item 1.A.			Risk factors	39
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds	4139
Item 4.6.			~~Mine Safety Disclosures~~Exhibits	41
			~~Item 6.~~Signatures	~~Exhibits~~	42
	~~Signatures~~	43
	~~Index to Exhibits~~	44

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

ASBURY AUTOMOTIVE GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except par value and share data)

(Unaudited)


	March 31, 2021		December 31, 2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	27.8	$	1.4
Contracts-in-transit	169.8		161.5
Accounts receivable, net	136.8		155.5
Inventories	769.6		875.2

Assets held for sale	31.5		28.3
Other current assets	182.1		183.8
Total current assets	1,317.6		1,405.7
PROPERTY AND EQUIPMENT, net	950.8		956.2
OPERATING LEASE RIGHT-OF-USE ASSETS	310.5		317.4
GOODWILL	563.2		562.2
INTANGIBLE FRANCHISE RIGHTS	425.2		425.2

OTHER LONG-TERM ASSETS	15.0		9.6
Total assets	$	3,582.3	$	3,676.3
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Floor plan notes payable—trade, net	$	48.7	$	64.9
Floor plan notes payable—non-trade, net	478.1		637.3
Current maturities of long-term debt	36.4		36.6
Current maturities of operating leases	24.9		24.8
Accounts payable and accrued liabilities	454.6		450.9
Liabilities associated with assets held for sale	6.0		8.9
Total current liabilities	1,048.7		1,223.4
LONG-TERM DEBT	1,157.7		1,165.2
OPERATING LEASE LIABILITIES	290.8		296.7
DEFERRED INCOME TAXES	36.2		34.6
OTHER LONG-TERM LIABILITIES	50.9		50.9
COMMITMENTS AND CONTINGENCIES (Note 12)	0		0
SHAREHOLDERS' EQUITY:
Preferred stock, $.01 par value; 10,000,000 shares authorized; NaN issued or outstanding	0		0
Common stock, $.01 par value; 90,000,000 shares authorized; 41,249,549 and 41,133,668 shares issued, including shares held in treasury, respectively	0.4		0.4
Additional paid-in capital	600.2		595.5
Retained earnings	1,441.7		1,348.9
Treasury stock, at cost; 21,910,207 and 21,848,314 shares, respectively	(1,043.3)		(1,033.7)
Accumulated other comprehensive loss	(1.0)		(5.6)
Total shareholders' equity	998.0		905.5
Total liabilities and shareholders' equity	$	3,582.3	$	3,676.3

September 30, 2017 December 31, 2016
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 2.8
$ 3.4
Contracts-in-transit 131.8
182.6
Accounts receivable, net 108.7
138.4
Inventories 843.5
894.9
Assets held for sale 16.2
16.1
Other current assets 117.7
97.0
Total current assets 1,220.7
1,332.4
PROPERTY AND EQUIPMENT, net 823.0
815.4
GOODWILL 160.8
128.1
INTANGIBLE FRANCHISE RIGHTS 54.7
48.5
OTHER LONG-TERM ASSETS 10.6
11.7
Total assets $ 2,269.8
$ 2,336.1
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Floor plan notes payable—trade, net $ 109.7
$ 108.3
Floor plan notes payable—non-trade, net 578.6
673.5
Current maturities of long-term debt 14.3
14.0
Accounts payable and accrued liabilities 277.8
309.1
Total current liabilities 980.4
1,104.9
LONG-TERM DEBT 901.4
912.7
DEFERRED INCOME TAXES 9.1
8.9
OTHER LONG-TERM LIABILITIES 31.6
29.9
COMMITMENTS AND CONTINGENCIES (Note 11)

SHAREHOLDERS' EQUITY:
Preferred stock, $.01 par value; 10,000,000 shares authorized; none issued or outstanding —
—
Common stock, $.01 par value; 90,000,000 shares authorized; 40,973,460 and 40,750,765 shares issued, including shares held in treasury, respectively 0.4
0.4
Additional paid-in capital 559.8
549.4
Retained earnings 707.8
611.5
Treasury stock, at cost; 20,153,622 and 19,497,596 shares, respectively (918.9 ) (879.5 )
Accumulated other comprehensive loss (1.8 ) (2.1 )
Total shareholders' equity 347.3
279.7
Total liabilities and shareholders' equity $ 2,269.8
$ 2,336.1

See accompanying Notes to Condensed Consolidated Financial Statements

Table of Contents

ASBURY AUTOMOTIVE GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share data)

(Unaudited)


	For the Three Months Ended March 31,
		2021		2020
REVENUE:
New vehicle		$	1,151.7	$	822.1
Used vehicle		690.9		493.2
Parts and service		262.0		221.6
Finance and insurance, net		88.3		70.4
TOTAL REVENUE		2,192.9		1,607.3
COST OF SALES:
New vehicle		1,076.2		785.7
Used vehicle		635.1		462.5
Parts and service		98.9		86.7
TOTAL COST OF SALES		1,810.2		1,334.9
GROSS PROFIT		382.7		272.4
OPERATING EXPENSES:
Selling, general, and administrative		239.8		194.7
Depreciation and amortization		9.8		9.5
Franchise rights impairment		0		23.0
Other operating (income) expense, net		(3.2)		10.2
INCOME FROM OPERATIONS		136.3		35.0
OTHER EXPENSES (INCOME):
Floor plan interest expense		2.9		7.0
Other interest expense, net		14.0		17.0


Loss on extinguishment of long-term debt, net		0		20.6
Gain on dealership divestitures, net		0		(33.7)
Total other expense, net		16.9		10.9
INCOME BEFORE INCOME TAXES		119.4		24.1
Income tax expense		26.6		4.6


NET INCOME		$	92.8	$	19.5
EARNINGS PER SHARE:
Basic—


Net income		$	4.81	$	1.02
Diluted—


Net income		$	4.78	$	1.01
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic		19.3		19.1

Restricted stock		0.1		0.1
Performance share units		0		0.1
Diluted		19.4		19.3

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2017 2016 2017 2016
REVENUE:
New vehicle $ 881.6
$ 940.9
$ 2,597.0
$ 2,676.3
Used vehicle 455.6
476.4
1,396.6
1,407.5
Parts and service 197.2
200.4
589.5
584.9
Finance and insurance, net 67.7
65.4
202.5
192.6
TOTAL REVENUE 1,602.1
1,683.1
4,785.6
4,861.3
COST OF SALES:
New vehicle 840.6
893.4
2,474.6
2,536.6
Used vehicle 426.8
446.6
1,301.2
1,307.7
Parts and service 74.4
77.4
222.3
222.9
TOTAL COST OF SALES 1,341.8
1,417.4
3,998.1
4,067.2
GROSS PROFIT 260.3
265.7
787.5
794.1
OPERATING EXPENSES:
Selling, general, and administrative 182.5
185.7
549.2
549.2
Depreciation and amortization 8.1
7.8
24.0
23.0
Other operating expenses, net —
1.5
0.7
4.2
INCOME FROM OPERATIONS 69.7
70.7
213.6
217.7
OTHER EXPENSES:
Floor plan interest expense 5.8
5.0
17.1
14.4
Other interest expense, net 13.4
13.2
40.2
40.0
Swap interest expense 0.4
0.8
1.6
2.4
Total other expenses, net 19.6
19.0
58.9
56.8
INCOME BEFORE INCOME TAXES 50.1
51.7
154.7
160.9
Income tax expense 19.4
19.3
58.1
60.8
NET INCOME $ 30.7
$ 32.4
$ 96.6
$ 100.1
EARNINGS PER COMMON SHARE:
Basic—
Net income $ 1.49
$ 1.47
$ 4.64
$ 4.39
Diluted—
Net income $ 1.48
$ 1.47
$ 4.60
$ 4.37
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 20.6
22.0
20.8
22.8
Restricted stock 0.1
0.0
0.1
0.0
Performance share units 0.1
0.1
0.1
0.1
Diluted 20.8
22.1
21.0
22.9

See accompanying Notes to Condensed Consolidated Financial Statements

Table of Contents

ASBURY AUTOMOTIVE GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)


	For the Three Months Ended March 31,
		2021		2020
Net income		$	92.8	$	19.5
Other comprehensive (loss) income:
Change in fair value of cash flow swaps		6.2		(4.5)

Income tax (expense) benefit associated with cash flow swaps		(1.6)		1.1
Comprehensive income		$	97.4	$	16.1

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2017 2016 2017 2016
Net income $ 30.7
$ 32.4
$ 96.6
$ 100.1
Other comprehensive income (loss):
Change in fair value of cash flow swaps 0.3
1.0
0.5
(4.8 )
Income tax benefit (expense) associated with cash flow swaps (0.1 ) (0.4 ) (0.2 ) 1.9
Comprehensive income $ 30.9
$ 33.0
$ 96.9
$ 97.2

See accompanying Notes to Condensed Consolidated Financial Statements

Table of Contents

ASBURY AUTOMOTIVE GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(Dollars in millions)

(Unaudited)


	Common Stock			Additional Paid-in Capital		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Income (Loss)		Total
	Shares	Amount						Shares	Amount
Balances, December 31, 2020	41,133,668	$	0.4	$	595.5	$	1,348.9	21,848,314	$	(1,033.7)	$	(5.6)	$	905.5
Comprehensive Income:
Net income	—	—		—		92.8		—	—		—		92.8
Change in fair value of cash flow swaps, net of reclassification adjustment and $1.6 tax charge	—	—		—		—		—	—		4.6		4.6
Comprehensive income	—	—		—		92.8		—	—		4.6		97.4
Share-based compensation	—	—		4.7		—		—	—		—		4.7
Issuance of common stock, net of forfeitures, in connection with share-based payment arrangements	115,881	—		—		—		—	—		—		0
Repurchase of common stock associated with net share settlement of employee share-based awards	—	—		—		—		61,893	(9.6)		—		(9.6)

Balances, March 31, 2021	41,249,549	$	0.4	$	600.2	$	1,441.7	21,910,207	$	(1,043.3)	$	(1.0)	$	998.0


	Common Stock			Additional Paid-in Capital		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Income (Loss)		Total
	Shares	Amount						Shares	Amount
Balances, December 31, 2019	41,072,080	$	0.4	$	582.9	$	1,094.5	21,791,707	$	(1,028.6)	$	(2.9)	$	646.3
Comprehensive Income:
Net income	—	—		—		19.5		—	—		—		19.5
Change in fair value of cash flow swaps, net of reclassification adjustment and $1.1 tax benefit	—	—		—		—		—	—		(3.4)		(3.4)
Comprehensive income	—	—		—		19.5		—	—		(3.4)		16.1

Share-based compensation	—	—		3.8		—		—	—		—		3.8
Issuance of common stock, net of forfeitures, in connection with share-based payment arrangements	68,577	—		(0.3)		—		—	—		—		(0.3)
Repurchase of common stock associated with net share settlements of employee share-based awards	—	—		—		—		53,915	(5.0)		—		(5.0)


Balances, March 31, 2020	41,140,657	$	0.4	$	586.4	$	1,114.0	21,845,622	$	(1,033.6)	$	(6.3)	$	660.9

See accompanying Notes to Condensed Consolidated Financial Statements

Table of Contents

ASBURY AUTOMOTIVE GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)


	For the Three Months Ended March 31,
	2021		2020
CASH FLOW FROM OPERATING ACTIVITIES:
Net income	$	92.8	$	19.5
Adjustments to reconcile net income to net cash provided by operating activities—
Depreciation and amortization	9.8		9.5
Share-based compensation	4.7		3.5
Deferred income taxes	0		0.1
Franchise rights impairment	0		23.0
Loss on extinguishment of long-term debt, net	0		20.6
Loaner vehicle amortization	6.7		5.8
Gain on divestitures, net	0		(33.7)
Change in right-of-use asset	6.8		5.2
Other adjustments, net	(0.2)		0.2
Changes in operating assets and liabilities, net of acquisitions and divestitures—
Contracts-in-transit	(8.3)		130.0
Accounts receivable	18.5		46.7

Inventories	156.5		7.9
Other current assets	(59.3)		(36.3)
Floor plan notes payable—trade, net	(16.2)		(16.2)
Accounts payable and other current liabilities	4.4		(52.6)
Operating lease liabilities	(6.2)		(5.3)
Other long-term assets and liabilities, net	0.8		(0.2)
Net cash provided by operating activities	210.8		127.7
CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures—excluding real estate	(11.2)		(9.1)
Capital expenditures—real estate	(5.5)		(2.3)


Acquisitions	(1.0)		(63.1)
Divestitures	0		115.5
Proceeds from the sale of assets	14.0		4.2
Net cash provided by (used in) investing activities	(3.7)		45.2
CASH FLOW FROM FINANCING ACTIVITIES:
Floor plan borrowings—non-trade	1,219.5		1,124.1
Floor plan borrowings—acquisitions	0		27.1
Floor plan repayments—non-trade	(1,375.9)		(1,086.9)
Floor plan repayments—non-trade divestitures	0		(50.5)
Proceeds from borrowings	0		1,355.3
Repayments of borrowings	(14.7)		(1,156.1)
Proceeds from sale and leaseback transaction	0		7.3
Payment of debt issuance costs	0		(3.1)

Repurchases of common stock, including shares associated with net share settlement of employee share-based awards	(9.6)		(5.0)

Net cash provided by (used in) financing activities	(180.7)		212.2
Net increase in cash and cash equivalents	26.4		385.1
CASH AND CASH EQUIVALENTS, beginning of period	1.4		3.5
CASH AND CASH EQUIVALENTS, end of period	$	27.8	$	388.6

For the Nine Months Ended September 30,
2017 2016
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $ 96.6
$ 100.1
Adjustments to reconcile net income to net cash provided by operating activities—
Depreciation and amortization 24.0
23.0
Share-based compensation 10.0
9.1
Deferred income taxes 0.1
6.4
Impairment expenses —
3.1
Loaner vehicle amortization 16.8
15.6
Other adjustments, net 2.3
2.5
Changes in operating assets and liabilities, net of acquisitions and divestitures—
Contracts-in-transit 50.8
46.8
Accounts receivable 30.0
7.5
Inventories 189.5
78.1
Other current assets (145.6 ) (111.0 )
Floor plan notes payable—trade, net 1.4
(20.4 )
Accounts payable and accrued liabilities (34.3 ) (11.0 )
Other long-term assets and liabilities, net 1.6
1.5
Net cash provided by operating activities 243.2
151.3
CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures—excluding real estate (21.4 ) (47.3 )
Capital expenditures—real estate (0.3 ) (10.6 )
Purchases of previously leased real estate —
(19.6 )
Acquisitions (80.1 ) —
Proceeds from the sale of assets 3.8
—
Net cash used in investing activities (98.0 ) (77.5 )
CASH FLOW FROM FINANCING ACTIVITIES:
Floor plan borrowings—non-trade 2,818.1
2,920.4
Floor plan borrowings—acquisitions 25.1
—
Floor plan repayments—non-trade (2,938.1 ) (2,813.9 )
Repayments of borrowings (11.5 ) (11.2 )
Payment of debt issuance costs —
(2.7 )
Repurchases of common stock, including shares associated with net share settlement of employee share-based awards (39.4 ) (165.5 )
Net cash used in financing activities (145.8 ) (72.9 )
Net (decrease) increase in cash and cash equivalents (0.6 ) 0.9
CASH AND CASH EQUIVALENTS, beginning of period 3.4
2.8
CASH AND CASH EQUIVALENTS, end of period $ 2.8
$ 3.7

See Note 1011 "Supplemental Cash Flow Information" for further details

See accompanying Notes to Condensed Consolidated Financial Statements

Table of Contents

ASBURY AUTOMOTIVE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

We are one of the largest automotive retailers in the United ~~States, operating 94~~States. As of March 31, 2021, we owned and operated 112 new vehicle franchises ~~(80~~(91 dealership locations) representing 31 automobile brands and 25 collision repair centers, and 1 auto auction in 1716 metropolitan markets within ~~nine states as of September 30, 2017.~~9 states. Our stores offer an extensive range of automotive products and services, including new and used vehicles; parts and service, which includes repair and maintenance services, replacement parts and collision repair services; and finance and insurance products. As of ~~September 30, 2017, we offered 29 brands of new vehicles and~~March 31, 2021, our new vehicle revenue brand mix consisted of ~~46%~~45% luxury, 38% imports, ~~33% luxury,~~ and ~~21%~~17% domestic brands. ~~We also operated 24 collision repair centers that serve customers in our local markets.~~

Our retail network is made up of dealerships operating primarily under the following locally-branded dealership groups:

•Coggin dealerships operating primarily in Jacksonville, Fort Pierce and Orlando, Florida;

•Courtesy dealerships operating in Tampa, Florida;

•Crown dealerships operating in North Carolina, South Carolina and Virginia;

~~Gray-Daniels~~•Greenville Automotive dealerships operating in ~~the Jackson, Mississippi area;~~Greenville, South Carolina;

•Hare and Estes dealerships operating in the Indianapolis, Indiana area;

•McDavid dealerships operating in metropolitan Austin ~~Dallas~~ and ~~Houston,~~Dallas-Fort Worth, Texas;

•Nalley dealerships operating in metropolitan Atlanta, Georgia; ~~and~~

•Park Place dealerships operating in the Dallas-Fort Worth, Texas area;

•Plaza dealerships operating in metropolitan St. Louis, ~~Missouri.~~Missouri; and

~~Our operating results are generally subject to changes~~•Mike Shaw dealerships in the economic environment as well as seasonal variations. Historically, we have generated more revenue and operating income in the second, third, and fourth quarters than in the first quarter of the calendar year. Generally, the seasonal variations in our operations are caused by factors related to weather conditions, changes in manufacturer incentive programs, model changeovers and consumer buying patterns, among other things.

~~2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~Denver, Colorado area.

Basis of Presentation

The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"), and reflect the consolidated accounts of Asbury Automotive Group, Inc. (the "Company") and our wholly owned subsidiaries. All intercompany transactions have been eliminated in consolidation. If necessary, reclassifications of amounts previously reported have been made to the accompanying Condensed Consolidated Financial Statements in order to conform to current presentation.

In the opinion of management, all adjustments, consisting only of normal, recurring adjustments, considered necessary for a fair ~~presentation~~statement of the Condensed Consolidated Financial Statements as of ~~September 30, 2017,~~March 31, 2021, and for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2021 and ~~2016,~~2020, have been ~~included.~~included, unless otherwise indicated. The results of operations for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2021 are not necessarily indicative of the results that may be expected for any other interim period, or any full year period. Our Condensed Consolidated Financial Statements should be read together with our audited ~~consolidated financial statements~~Consolidated Financial Statements contained in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2020.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the periods presented. Actual results could differ materially from these estimates. Estimates and assumptions are reviewed quarterly and the effects of any revisions are reflected in the ~~consolidated financial statements~~Consolidated Financial Statements in the period they are determined to be necessary. Significant estimates made in the accompanying Condensed Consolidated Financial Statements include, but are not limited to, those relating to inventory valuation reserves, variable consideration and constraint considerations related to retro-commission arrangements, reserves for chargebacks against revenue recognized from the sale of finance and insurance products, reserves for insurance programs, certain assumptions related to intangible and long-lived assets, and reserves for certain legal or similar proceedings relating to our business operations.

Contracts-In-Transit

Contracts-in-transit represent receivables from third-party finance companies for the portion of new and used vehicle purchase price financed by customers through sources arranged by us.

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Accounts Receivable

The allowance for credit losses is estimated using an annual loss rate approach, by type of receivable, utilizing historical loss rates which have been adjusted for expectations of future economic conditions.

Revenue Recognition

~~Revenue from the sale of~~Please refer to Note 2 "Revenue Recognition."

Internal Profit

Revenues and expenses associated with internal work performed by our parts and service departments on new and used ~~vehicles (which excludes sales tax)~~vehicle inventory are eliminated in consolidation. The gross profit earned by our parts and service departments for internal work performed is recognized upon the latest of delivery, signing of the sales contract or approval of financing. Revenue from the sale of parts, service and collision repair work (which excludes sales tax) is recognized upon delivery of parts to the customer or at the time vehicle service or repair work is completed, as applicable. Manufacturer incentives and rebates, including manufacturer holdbacks, floor plan interest assistance and certain advertising assistance, are recognizedincluded as a reduction of ~~new vehicle cost~~Parts and Service Cost of ~~sales at the time the related vehicles are sold,~~Sales in the accompanying Condensed Consolidated Statements of ~~Income.~~

~~We receive commissions from third-party lending and insurance institutions for arranging customer financing and from~~Income upon the sale of the vehicle. The costs incurred by our new and used vehicle departments for work performed by our parts and service ~~contracts, guaranteed auto protection (known as "GAP") insurance, and other insurance, to customers (collectively "F&I"). We may be charged back for F&I commissions in the event a contract~~departments is prepaid, defaulted upon, or terminated ("chargebacks"). F&I commissions are recorded at the time a vehicle is sold, and a reserve for future chargebacks is established based on historical chargeback experience and the termination provisions of the applicable contract. F&I commissions, net of estimated future chargebacks, are included in ~~Finance and Insurance, net~~either New Vehicle Cost of Sales or Used Vehicle Cost of Sales in the accompanying Condensed Consolidated Statements of ~~Income. Additionally, we participate in future profits associated with~~Income, depending on the ~~performance~~classification of the ~~third-party~~vehicle serviced. We eliminate the internal profit on vehicles that remain in inventory.

Income Taxes

We use the liability method to account for income taxes. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of differences between the carrying amounts of assets and liabilities and their respective tax basis using currently enacted tax rates.

Share Repurchases

Share repurchases may be made from time-to-time in open market transactions or through privately negotiated transactions under the authorization approved by the Board of Directors. Periodically, the Company may retire repurchased shares of common stock previously held ~~underlying portfolio~~by the Company as treasury stock. In accordance with our accounting policy, we allocate any excess share repurchase price over par value between additional paid-in capital, which is limited to amounts initially recorded for ~~certain products, pursuant to retrospective commission arrangements. Our retrospective portfolio income is recorded as revenue at~~ the ~~time it is received from our third-party providers.~~same issue, and retained earnings.

Earnings per ~~Common~~ Share

Basic earnings per ~~common~~ share is computed by dividing net income by the weighted-average common shares outstanding during the period. Diluted earnings per ~~common~~ share is computed by dividing net income by the weighted-average common shares and common share equivalents outstanding during the period. The Company excluded 600 restricted and performance share units and 0 restricted or performance share units issued under the Asbury Automotive Group, Inc. 2019 Equity and Incentive Compensation Plan, from its computation of diluted earnings per share for the three months ended March 31, 2021 and 2020, respectively because they were anti-dilutive. For all periods presented, there were no adjustments to the numerator necessary to compute diluted earnings per share.

Assets Held for Sale and Liabilities Associated with Assets Held for Sale

Certain amounts have been classified as Assets Held for Sale in the accompanying Condensed Consolidated Balance Sheets. Assets and liabilities classified as held for sale may include assets and liabilities associated with pending dealership disposals, real estate ~~not currently used in our operations that~~ we are actively marketing to sell, and any related mortgage notes payable or other liabilities, if applicable. Classification as held for sale begins on the date that we have met all of the criteria for classification as held for sale.

At the time of classifying assets as held for sale, we compare the carrying value of these assets to estimates of fair value to assess for impairment. We compare the carrying value to estimates of fair value utilizing the assistance of third-party broker opinions of value and third-party desktop appraisals to assist in our fair value estimates related to real estate properties.

Statements of Cash Flows

Borrowings and repayments of floor plan notes payable to a lender unaffiliated with the manufacturer from which we purchase a particular new vehicle ("Non-Trade") and all floor plan notes payable relating to pre-owned vehicles (together referred to as "Floor Plan Notes Payable—Non-Trade"), are classified as financing activities onin 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 onin the accompanying Condensed Consolidated Statements of Cash Flows. Borrowings of floor plan notes payable associated with inventory acquired in

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connection with all acquisitions and repayments made in connection with all divestitures are classified as financing activities in the accompanying Condensed Consolidated ~~Statement~~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 a lender not affiliated with the manufacturer from which we purchased the related inventory.

Loaner vehicles account for a significant portion of Other ~~Current Assets.~~current assets. We acquire loaner vehicles either with available cash or through borrowing from either our manufacturer affiliated lenders or through our senior secured credit agreement with Bank of America, as administrative agent, and the other agents and lenders party thereto ~~(the "2016~~(as amended, the "2019 Senior Credit Facility"). Loaner vehicles are initially used by our service department for a short period of time (typically six to twelve months) before

we seek to sell them. Therefore, we classify the acquisition of loaner vehicles in Other ~~Current Assets~~current assets and the borrowings and repayments of loaner vehicle notes payable in Accounts ~~Payable~~payable and ~~Accrued Liabilities~~accrued liabilities in the accompanying Condensed Consolidated Statements of Cash Flows. Loaner vehicles are depreciated over the service period to their estimated value. At the end of the loaner service period, loaner vehicles are transferred from Other ~~Current Assets~~current assets to used vehicle inventory. These transfers are reflected as non-cash transfers between Other ~~Current Assets~~current assets and Inventories in the accompanying Condensed Consolidated Statements of Cash Flows.

Recent Accounting Pronouncements

In March ~~2016,~~2020, the Financial Accounting Standards Board ("FASB") issued Accounting ~~Standard~~Standards Update ~~("ASU") 2016-09, Compensation—Stock Compensation~~2020-04, Reference Rate Reform (Topic ~~718), to simplify certain aspects~~848): Facilitation of the ~~accounting for share-based payment transactions to employees. The new standard requires excess tax benefits and tax deficiencies to be recorded in the statements~~Effects of ~~income as a component of the provision for income taxes when stock awards vest or are settled.~~Reference Rate Reform on Financial Reporting ("ASU 2020-04"). In addition, it eliminates the requirement to reclassify cash flows related to excess tax benefits from operating activities to financing activities on the consolidated statements of cash flows. The standard also provides an accounting policy election to account for forfeitures as they occur, allows us to withhold more of an employee’s vesting shares for tax withholding purposes without triggering liability accounting, and clarifies that all cash payments made to tax authorities on an employee’s behalf for withheld shares should be presented as a financing activity on our statements of cash flows.

~~We adopted the new standard~~ January 1, 2017, upon which excess tax benefits or deficiencies from share-based award activity were reflected in the Condensed Consolidated Statements of Income as a component of the provision for income taxes, whereas they previously were recognized in equity. We also elected to account for forfeitures as they occur, rather than estimate expected forfeitures. The adoption of ASU 2016-09 resulted in a cumulative-effect adjustment of $0.5 million (pre-tax) to reduce retained earnings and increase additional paid-in capital as of January 1, 2017, related to our election to account for forfeitures as they occur.

We adopted the aspects of the standard affecting the cash flow presentation retrospectively, and accordingly, to conform to the current year presentation, we reclassified $0.2 million of excess tax benefits under financing activities to operating activities for the nine months ended September 30, 2017 in our Condensed Consolidated Statements of Cash Flows. The presentation requirements for cash flows related to employee taxes paid for withheld shares had no impact on any of the periods presented on our consolidated statements of cash flows since such cash flows have historically been presented as a financing activity.

~~In July 2015,~~2021, the FASB issued ~~ASU 2015-11, Inventory~~Accounting Standards Update No. 2021-01, Reference Rate Reform (Topic ~~330)~~848): ~~Simplifying~~Scope, which clarified the ~~Measurement~~scope and application of ~~Inventory, changing~~ the ~~subsequent measurement~~original guidance. The guidance from the lower of cost or market to the lower of cost and net realizable value. We adopted this standard, beginning January 1, 2017, and its adoption did not have an impact on our consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), a new standard on revenue recognition. Further, the FASB has issued a number of additional ASUs regarding the new revenue recognition standard. The new standard, as amended, will supersede existing revenue recognition guidance andin these standards apply to ~~all entities~~contract accounting, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met, and provides optional expedients and exceptions for a limited time to ease the potential burden in accounting for reference rate reform. The amendments apply only to contracts and hedging relationships that ~~enter into contracts~~reference LIBOR or another reference rate expected to ~~provide goods or services~~be discontinued due to ~~customers. The guidance also addresses the measurement~~reference rate reform. ASU 2020-04 is effective upon issuance and recognition of gains and losses on the sale of certain non-financial assets, such as real estate, property, and equipment. The new standard will become effective for annual reporting periods beginning on or after December 15, 2017 and interim periods within that year. The new standardgenerally can be ~~adopted either retrospectively~~applied to ~~each reporting period presented or as a cumulative effect adjustment as of the date of adoption.~~applicable contract modifications through December 31, 2022. LIBOR benchmarking is utilized in our debt (including mortgages), revolving credit facilities, floorplan facilities, and interest rate swaps. We anticipate using the modified retrospective approach with the cumulative effect of initially adopting the standard recognized on the date of adoption. We established an implementation team to assess the impact of the new standard to our material revenue streams and potential differences from our current policies as well as the changes in controls and processes, if any, to implement the standard. We are ~~currently~~ in the process of ~~reviewing contracts~~completing our evaluation of the impact that the adoption of the provisions from this standard will have on our Consolidated Financial Statements.

2. REVENUE RECOGNITION

The Company satisfies performance obligations either over time or at a point in time. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised good or performing a service to a customer. Sales and other taxes we collect concurrent with revenue-producing activities are excluded from revenue.

Disaggregation of Revenue

The following table summarizes revenue from contracts with customers for the three months ended March 31, 2021 and 2020:


	For the Three Months Ended March 31,
	2021		2020
	(In millions)
Revenue:
New vehicle	$	1,151.7	$	822.1
Used vehicle retail	607.5		446.0
Used vehicle wholesale	83.4		47.2
New and used vehicle	1,842.6		1,315.3
Sale of vehicle parts and accessories	42.9		36.8
Vehicle repair and maintenance services	219.1		184.8
Parts and services	262.0		221.6
Finance and insurance, net	88.3		70.4
Total revenue	$	2,192.9	$	1,607.3

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Contract Asset

Changes in contract assets during the period are reflected in the table below. Contract assets related ~~documents for each material revenue stream and based on our preliminary assessment we do not anticipate changes~~ to ~~the timing of our recognition of revenue of new and used vehicle sales and the sale of vehicle parts.~~

~~Our current policy is to record revenue for customer pay~~ vehicle repair and maintenance services ~~once~~are transferred to receivables when a repair order is completed and invoiced to the repair is completed. Based on our preliminary assessment of the new standard we anticipate that this revenue will likely be recognized as we perform these services. We are currently reviewing whether our preliminary assessment is appropriate based on our review of customer contracts.customer.


	Vehicle Repair and Maintenance Services		Finance and Insurance, net		Total
	(In millions)
Contract Assets (Current), January 1, 2021	$	7.1	$	13.3	$	20.4
Transferred to receivables from contract assets recognized at the beginning of the period	(7.1)		(3.3)		(10.4)
Increases related to revenue recognized, inclusive of adjustments to constraint, during the period	8.2		3.0		11.2
Contract Assets (Current), March 31, 2021	$	8.2	$	13.0	$	21.2

We are currently evaluating the constraint factors for a portion of the transaction price for certain insurance contracts. The new standard requires that an estimate of variable consideration, subject to a constraint, be included in the transaction price and recognized when or as an entity satisfies its performance obligation. In the event variable consideration is considered fully constrained, recognition will occur once the uncertainties associated with the constraint determination are resolved. In the event

~~our evaluation of these factors results in the variable consideration not being fully constrained, revenue would be subjected to accelerated recognition under the new standard.~~

We have not yet quantified the impact from adopting this standard to our consolidated financial statements and will continue to assess the impacts, including the enhanced disclosure requirements, and any changes to our processes and controls prior to adoption.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), a new standard on lease accounting. The new standard will supersede the existing lease accounting guidance and apply to all entities. The guidance defines new principles for the recognition, measurement, presentation, and disclosure of leases for both lessees and lessors. The new standard will become effective for annual reporting periods beginning on or after December 15, 2018 and for interim periods within that year. A modified retrospective approach is required and early adoption of this standard is permitted. While we are still evaluating the impact of this standard, we expect that the right-of-use assets and the associated lease liabilities will be material to our financial statements. We plan to adopt this standard effective January 1, 2019.

3. ACQUISITIONS AND DIVESTITURES

Results of acquired dealerships are included in our accompanying Condensed Consolidated Statements of Income commencing on the date of acquisition. Our acquisitions are accounted for such that the assets acquired and liabilities assumed are recognized at their acquisition date fair values, with any excess of the consideration transferred over the estimated fair values of the identifiable net assets acquired recorded as goodwill. Goodwill is an asset representing operational synergies and future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. The fair value of our manufacturer franchise rights are determined atas of the acquisition date by discounting the projected cash flows specific to each franchise. Included in this analysis are market participant assumptions ~~at a dealership level, regarding~~related to the cash flows directly attributable to the franchise rights, ~~revenue~~including year-over-year and terminal growth rates, working capital requirements, weighted average cost of capital, future gross margins, and future selling, general, and administrative expenses. ~~Using an estimated weighted average cost~~

Park Place Acquisition

On December 11, 2019, we announced the proposed acquisition of ~~capital, estimated residual values at the end~~substantially all of the ~~forecast period and estimated future capital expenditure requirements,~~assets of the businesses of the Park Place Dealership family of entities (collectively, "Park Place") pursuant to that certain Asset Purchase Agreement, dated as of December 11, 2019, among the Company, ~~calculates~~Park Place and the ~~fair value~~other parties thereto (the "2019 Asset Purchase Agreement"), and related agreements and transactions (collectively, the "2019 Acquisition"). On March 24, 2020, as a result of the ~~franchise rights.~~uncertainties related to the COVID-19 pandemic, we delivered notice to the sellers terminating the 2019 Acquisition pursuant to the terms of the related agreements and transactions in exchange for the payment of $10.0 million of liquidated damages which is reflected in our accompanying Condensed Consolidated Statements of Income as Other operating expense (income), net.

On July 6, 2020, the Company, through 2 of its subsidiaries, entered into an Asset Purchase Agreement with certain members of the Park Place Dealership group, to acquire substantially all of the assets of, and lease the real property related to, 12 new vehicle dealership franchises (8 dealership locations), 2 collision centers and an auto auction (collectively, the "Park Place acquisition"). The Park Place acquisition was completed on August 24, 2020 and financed through a combination of cash, floor plan facilities and seller financing. The seller financing comprised $150.0 million in aggregate principal amount of a 4.00% promissory note due August 2021 and $50.0 million in aggregate principal amount of 4.00% promissory note due February 2022 (collectively, the "Seller Notes"). In September 2020, the Company redeemed the Seller Notes with proceeds from the offering of 4.50% Notes due 2028 and 4.75% Notes due 2030.

The sources of the purchase consideration are as follows:


	(In millions)
Cash	$	527.4
Seller Notes	200.0
New Vehicle Floor Plan Facility	127.5
Used Vehicle Floor Plan Facility	35.0
Purchase price	$	889.9

Under the acquisition method of accounting, the purchase price is allocated to the tangible and intangible assets acquired and liabilities assumed based on information currently available. During the three months ended March 31, 2021, we recorded a

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$1.5 million measurement period adjustment to Property and equipment and Goodwill, respectively. The following table summarizes the allocation of the purchase price:


Summary of Assets Acquired and Liabilities Assumed
	(In millions)
Inventories	$	120.8
Loaner vehicles	57.0
Property and equipment	36.5
Goodwill and intangible assets	360.4
Manufacturer franchise rights	324.0
Operating lease right-of-use assets	202.7
Total assets acquired	1,101.4
Operating lease liabilities	(202.2)
Other liabilities	(9.3)
Total liabilities assumed	(211.5)
Net assets acquired	$	889.9

The Company's Condensed Consolidated Statements of Income included revenue attributable to Park Place for the three months ended March 31, 2021 of $406.0 million.

Other Acquisitions and Divestitures

There were no business combinations or divestitures during the three months ended March 31, 2021; however, we did release $1.0 million of purchase price holdbacks related to a prior year acquisition during the three months ended March 31, 2021.

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, we acquired the assets of ~~two~~3 franchises ~~(two~~(1 dealership ~~locations) and one collision center~~location) in the ~~Indianapolis, Indiana~~Denver, Colorado market for a combined purchase price of ~~$80.1~~$63.6 million. We ~~financed these acquisitions~~funded this acquisition with ~~$55.0~~an aggregate of $34.5 million of cash and ~~$25.1~~$27.1 million of floor plan borrowings for the purchase of the related new vehicle inventory.

~~Below is~~ In the ~~preliminary allocation~~aggregate, this acquisition included purchase price holdbacks of $2.0 million for potential indemnity claims made by us with respect to the acquired franchises. In addition to the acquisition amounts above, we released $1.5 million of purchase price ~~for the acquisitions completed~~holdbacks related to a prior year acquisition during the ~~nine~~three months ended ~~September 30, 2017. We have not finished our final assessments of third party real estate appraisals and our internal valuation~~March 31, 2020.

~~of manufacturer franchise rights and the assignment of goodwill to reporting units.~~ The ~~$38.9 million of~~ goodwill and manufacturer franchise rights associated with our acquisitions will be deductible for federal and state income tax purposes ratably over a 15 year period.

Below is the allocation of purchase price for the acquisition completed during the three months ended March 31, 2020.


	For the Three Months Ended March 31,
	2020
	(In millions)
Inventory	$	29.8
Real estate	14.5
Property and equipment	0.4
Goodwill and manufacturer franchise rights	19.2



Other	(0.3)
Total purchase price	$	63.6

During the three months ended March 31, 2020, we sold 1 franchise (1 dealership location) in the Atlanta, Georgia market and we sold 6 franchises (5 dealership locations) and 1 collision center in the Jackson, Mississippi market. The Company recorded a pre-tax gain totaling $33.7 million, which is presented in our accompanying Condensed Consolidated Statements of Income as Gain on dealership divestitures, net. The divested businesses would not be considered significant subsidiaries as defined in Rule 1-02(w) of Regulation S-X.

As of
September 30, 2017
(In millions)
Inventory $ 25.9
Real estate 12.2
Property and equipment 1.4
Goodwill 32.7
Manufacturer franchise rights 6.2
Loaner and rental vehicles 3.2
Liabilities assumed (1.5 )
Total purchase price $ 80.1

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4. ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following:


	As of
	March 31, 2021		December 31, 2020
	(In millions)
Vehicle receivables	$	53.8	$	61.2
Manufacturer receivables	45.8		57.1
Other receivables	38.6		38.4
Total accounts receivable	138.2		156.7
Less—Allowance for credit losses	(1.4)		(1.2)
Accounts receivable, net	$	136.8	$	155.5

As of
September 30, 2017 December 31, 2016
(In millions)
Vehicle receivables $ 37.4
$ 53.2
Manufacturer receivables 40.9
45.5
Other receivables 32.0
41.6
Total accounts receivable 110.3
140.3
Less—Allowance for doubtful accounts (1.6 ) (1.9 )
Accounts receivable, net $ 108.7
$ 138.4

5. INVENTORIES

Inventories consisted of the following:


	As of					As of
	September 30, 2017		December 31, 2016			March 31, 2021		December 31, 2020
	(In millions)					(In millions)
New vehicles	$	673.7	$	720.6	New vehicles	$	527.5	$	640.0
Used vehicles	128.2		132.7		Used vehicles	193.5		188.5
Parts and accessories	41.6		41.6		Parts and accessories	48.6		46.7
Total inventories	$	843.5	$	894.9
Total inventories (a)					Total inventories (a)	$	769.6	$	875.2

____________________________

(a) Amounts reflected for inventory as of March 31, 2021, excluded $2.9 million of inventories classified as Assets held for sale.

The lower of cost and net realizable value reserves reduced total inventories by ~~$5.7~~$5.4 million and ~~$6.5~~$6.7 million as of ~~September 30, 2017~~March 31, 2021 and December 31, ~~2016~~,2020, respectively. As of ~~September 30, 2017~~March 31, 2021 and December 31, ~~2016,~~2020, certain automobile manufacturer incentives reduced new vehicle inventory cost by ~~$7.8~~$6.8 million and ~~$8.2~~$8.3 million,, respectively, and reduced new vehicle cost of sales for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020 by ~~$29.4~~$14.6 million and ~~$29.8~~$10.2 million, respectively.

6. ASSETS AND LIABILITIES HELD FOR SALE

Assets and liabilities classified as held for sale include (i) assets and liabilities associated with pending dealership disposals, (ii) real estate not currently used in our operations that we are actively marketing to sell and (iii) the related mortgage notes payable, if applicable.

A summary of assets held for sale and liabilities associated with assets held for sale is as follows:


	As of
	March 31, 2021		December 31, 2020
	(In millions)
Assets:
Inventory	$	2.9	$	0
Loaner vehicles	0.5		0
Property and equipment, net	27.1		28.3
Operating lease right-of-use assets	0.5		0
Goodwill	0.5		0

Total Assets held for sale	31.5		28.3
Liabilities:

Floor plan notes payable—non-trade	2.8		0
Loaners vehicle payable	0.5		0
Current maturities of long-term debt	0.2		0.5
Current maturities of operating leases	0.2		0
Long-term debt	2.1		8.4
Operating lease liabilities	0.2		0
Total Liabilities associated with assets held for sale	6.0		8.9
Net assets held for sale	$	25.5	$	19.4

As of March 31, 2021 assets held for sale consisted of 1 franchise (1 dealership location) and 1 real estate property not currently used in our operations. The assets and liabilities associated with these properties totaled $31.5 million and $6.0 million, respectively.

As of December 31, 2020, assets held for sale consisted of 3 real estate properties that were are not currently used in our operations. The assets and liabilities totaled $28.3 million and $8.9 million, respectively.

During the ~~nine~~three months ended ~~September 30, 2017, we reclassified two~~March 31, 2021, the Company sold 2 vacant properties with a net book ~~values~~value of ~~$3.8 million to Assets Held for Sale. Additionally, during~~$12.5 million.

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, the Company sold 7 franchises (6 dealership locations) and 1 collision center for a pre-tax gain totaling $33.7 million. Additionally, we sold ~~one~~1 vacant property with a net book value of ~~$3.9~~$3.7 million.

~~Assets held for sale, comprising real estate~~

7. GOODWILL AND INTANGIBLE FRANCHISE RIGHTS

Our acquisitions have resulted in the recording of goodwill and intangible franchise rights. Goodwill is an asset representing operational synergies and future economic benefits arising from other assets acquired in a business combination that are not ~~currently used in~~individually identified and separately recognized. Franchise rights are indefinite-lived intangible assets representing our ~~operations, totaled $16.2 million~~rights under franchise agreements with vehicle manufacturers. Goodwill and ~~$16.1 million~~intangible franchise rights are tested annually as of ~~September 30, 2017~~October 1st, or more frequently in the event that facts and ~~December 31, 2016, respectively, and there were no liabilities associated with these real estate assets held~~circumstances indicate a triggering event has occurred.

The results of the quantitative impairment testing for ~~sale~~certain franchise rights as of ~~September 30, 2017 or December~~March 31, ~~2016.~~

~~During~~2020, identified that the ~~nine months ended September 30, 2016, we recorded $1.5 million~~carrying values of ~~impairment expense based on~~certain of our franchise rights assets exceeded their fair value. As a third-party broker opinion of value associated with a property transferred to Assets Held for Sale. Additionally, during the nine months ended September 30, 2016, we recorded $0.7 million of impairment expense based on offers from prospective buyers on one of the real estate properties classified in Assets Held for Sale.

~~In addition to the above impairments, during the nine months ended September 30, 2016,~~result, we recognized a ~~$0.9~~$23.0 million pre-tax non-cash impairment charge ~~associated with a lease buyout~~during the three months ended March 31, 2020. We did 0t perform impairment testing related to goodwill and ~~lease termination on real estate not classified~~franchise rights for the three months ended March 31, 2021 as ~~held for sale. This was recorded in Other Operating Expenses, net in our accompanying Condensed Consolidated Statements~~no triggering events had occurred.

7.8. FLOOR PLAN NOTES PAYABLE

Floor plan notes payable consisted of the following:

____________________________

(a) Amounts reflected for floor plan notes payable—new non-trade as of March 31, 2021, excluded $2.8 million classified as Liabilities associated with assets held for sale.

We have a floor plan facility with Ford Motor Credit Company ("Ford Credit") to purchase new Ford and Lincoln vehicle inventory. Our floor plan facility with Ford Credit was amended in July 2020 to extend the maturity date to July 31, 2021. We have established a floor plan notes payable offset account with Ford ~~Motor~~ Credit ~~Company which~~that allows us to transfer cash to the account as an offset ofto our outstanding Floor Plan Notes Payable—~~Trade, net. Additionally,~~Trade. In addition, we have a similar floor plan offset account with Bank of America ~~which~~that allows us to offset our ~~outstanding~~ Floor Plan Notes Payable—~~Non-Trade, net.~~Non-Trade. These accounts allow us to transfer cash to reduce the amount of outstanding floor plan notes payable that would otherwise accrue interest, while retaining the ability to transfer amounts from the ~~floor plan~~ offset ~~accounts~~account into our operating cash accounts within one to two days. As of ~~September 30, 2017~~March 31, 2021 and December 31, ~~2016~~2020, we had ~~$75.0~~$145.4 million and ~~$70.9~~$85.4 million, respectively, in these floor plan offset accounts.

~~8. LONG-TERM~~On April 6, 2021, $190.0 million of availability under the Revolving Credit Facility was re-designated to the New Vehicle Floor Plan Facility to take advantage of lower commitment fee rates.

Long-term debt consisted of the following:

____________________________

(a) Amounts reflected for the Mortgage notes payable as of March 31, 2021, exclude $2.3 million classified as Liabilities associated with assets held for sale.

(b) Amounts reflected for the 2018 Wells Fargo Master Loan Facility (as defined herein) as of December 31, 2020, exclude $5.1 million classified as Liabilities associated with assets held for sale.

(c) Amounts reflected for the 2015 Wells Fargo Master Loan Facility (as defined herein) as of December 31, 2020, exclude $3.8 million classified as Liabilities associated with assets held for sale, respectively.

We are a holding company with no independent assets or operations. For all relevant periods presented, our ~~6.0%~~4.50% Senior ~~Subordinated~~ Notes due ~~2024 (our "6.0% Notes")~~2028 and 4.75% Senior Notes due 2030 have been fully and unconditionally guaranteed, on a joint and several basis, by substantially all of our subsidiaries. Any subsidiaries ~~which~~that have not guaranteed such notes are "minor" (as defined in Rule 3-10(h) of Regulation S-X). As of ~~September 30, 2017,~~March 31, 2021, there were no significant restrictions on the ability of our subsidiaries to distribute cash to us or our guarantor subsidiaries.

9.10. FINANCIAL INSTRUMENTS AND FAIR VALUE

In determining fair value, we use various valuation approaches, including market and income approaches. Accounting standards establish a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are inputs that reflect our assumptions about the ~~assumptions~~presumptions market

participants would use in pricing the asset or liability, developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the reliability of inputs as follows:

Level 1-Valuations based on quoted prices in active markets for identical assets or liabilities that we have the ability to access.

Level 2-Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. Assets and liabilities utilizing Level 2 inputs include interest rate swap instruments, exchange-traded debt securities that are not actively traded or do not have a high trading volume, mortgage notes payable, and certain real estate properties on a non-recurring basis.

Level 3-Valuations based on inputs that are unobservable and significant to the overall fair value measurement. Asset and liability measurements utilizing Level 3 inputs include those used in estimating the fair value of certain non-financial assets and

non-financial liabilities in purchase acquisitions and those used in the assessment of impairment for goodwill and manufacturer franchise rights.

The availability of observable inputs can vary and is affected by a wide variety of factors. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment required to determine fair value is greatest for instruments categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed is determined based on the lowest level input that is significant to the fair value measurement.

Fair value is a market-based exit price measure considered from the perspective of a market participant who holds the asset or owes the liability rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, our assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date. We use inputs that are current as of the measurement date, including during periods of significant market fluctuations.

Financial instruments consist primarily of cash and cash equivalents, contracts-in-transit, accounts receivable, cash surrender value of corporate-owned life insurance policies, accounts payable, floor plan notes payable, subordinated long-term debt, mortgage notes payable, and interest rate swap instruments. The carrying values of our financial instruments, with the exception of subordinated long-term debt and mortgage notes payable, approximate fair value due to (i) their short-term nature, (ii) recently completed market transactions, or (iii) existence of variable interest rates, which approximate market rates. The fair value of our subordinated long-term debt is based on reported market prices in an inactive market ~~which~~that reflects Level 2 inputs. We estimate the fair value of our mortgage notes payable using a present value technique based on current market interest rates for similar types of financial instruments ~~which~~that reflect Level 2 inputs.

A summary of the carrying values and fair values of our ~~6.0%~~ Notes and our ~~mortgage~~Mortgage notes payable is as follows:


	As of
	March 31, 2021		December 31, 2020
	(In millions)
Carrying Value:
4.50% Senior Notes due 2028	401.1		400.9
4.75% Senior Notes due 2030	440.7		440.6
Mortgage notes payable (a)	335.8		343.7
Total carrying value	$	1,177.6	$	1,185.2

Fair Value:
4.50% Senior Notes due 2028	411.1		423.2
4.75% Senior Notes due 2030	457.2		476.2
Mortgage notes payable (a)	347.2		354.5
Total fair value	$	1,215.5	$	1,253.9

____________________________

(a) Excludes amounts classified as Liabilities associated with assets held for sale.

As of
September 30, 2017 December 31, 2016
(In millions)
Carrying Value:
6.0% Senior Subordinated Notes due 2024 $ 607.1
$ 607.6
Mortgage notes payable 316.5
327.9
Total carrying value $ 923.6
$ 935.5

Fair Value:
6.0% Senior Subordinated Notes due 2024 $ 627.0
$ 613.5
Mortgage notes payable 320.0
339.5
Total fair value $ 947.0
$ 953.0

Table of Contents

Interest Rate Swap Agreements

~~In June 2015, we entered into an~~We currently have 4 interest rate swap ~~agreement with a notional principal amount~~agreements. Each of ~~$100.0 million. This swap was~~these swaps were designed to provide a hedge against changes in variable rate cash flows regarding fluctuations in the one month ~~LIBOR rate, through maturity in February 2025.~~LIBOR. The ~~notional value~~following table provides information on the attributes of ~~this swap was $91.7 million as of September 30, 2017 and is reducing over its remaining term to $53.1 million at maturity.~~

In November 2013, we entered into an interest rate swap agreement with a notional principal amount of $75.0 million. This swap was designed to provide a hedge against changes in variable rate cash flows regarding fluctuations in the one month LIBOR rate, through maturity in September 2023. The notional value of thiseach swap as of ~~September 30, 2017 was $61.2 million and the notional value will reduce over its remaining term to $38.7 million at maturity.~~March 31, 2021:


Inception Date	Notional Principal at Inception		Notional Value as of March 31, 2021		Notional Principal at Maturity		Maturity Date
	(In millions)
July 2020	$	93.5	$	90.5	$	50.6	December 2028
July 2020	$	85.5	$	82.8	$	57.3	November 2025
June 2015	$	100.0	$	73.7	$	53.1	February 2025
November 2013	$	75.0	$	48.0	$	38.7	September 2023

The fair value of cash flow swaps is calculated as the present value of expected future cash flows, determined on the basis of forward interest rates and present value factors. Fair value estimates reflect a credit adjustment to the discount rate applied to all expected cash flows under the swaps. Other than this input, all other inputs used in the valuation of these swaps are designated to be Level 2 fair values. The fair value ~~liabilities related to the~~of our swaps was an $1.0 million and a $7.2 million liability as of ~~September 30, 2017~~March 31, 2021 and December 31, ~~2016, were $3.1 million and $3.6 million,~~2020, respectively.

The following table provides information regarding the fair value of our interest rate swap agreements and the impact on the Condensed Consolidated Balance Sheets:


						As of
	As of					March 31, 2021		December 31, 2020
	September 30, 2017		December 31, 2016			(In millions)
	(In millions)
Accounts payable and accrued liabilities	$	1.4	$	2.2
Other current liabilities					Other current liabilities	$	(2.8)	$	(2.8)
Other long-term assets					Other long-term assets	5.7		0
Other long-term liabilities	1.7		1.4		Other long-term liabilities	(3.9)		(4.4)
Total fair value	$	3.1	$	3.6	Total fair value	$	(1.0)	$	(7.2)

Our interest rate swaps qualify for cash flow hedge accounting treatment. ~~During~~These interest rate swaps are marked to market at each reporting date andany unrealized gains or losses are included in accumulated other comprehensive income and reclassified to interest expense in the ~~three months and nine months ended September 30, 2017 and 2016, neither of our cash flow swaps contained any ineffectiveness, nor was any ineffectiveness recognized in~~same period or periods during which the hedged transactions affect earnings. Information about the effect of our interest rate swap agreements onin the accompanying Condensed Consolidated Statements of Income and Condensed Consolidated Statements of Comprehensive Income, ~~are~~is as follows (in millions):

For the Three Months Ended September 30, Results Recognized in Accumulated Other Comprehensive Loss
(Effective Portion) Location of Results Reclassified from Accumulated Other Comprehensive Loss
to Earnings Results Reclassified from Accumulated Other Comprehensive Loss
to Earnings
2017 $ (0.1 ) Swap interest expense $ (0.4 )
2016 $ 0.2
Swap interest expense $ (0.8 )

For the Nine Months Ended September 30,
Results Recognized in Accumulated Other Comprehensive Loss
(Effective Portion)

Location of Results Reclassified from Accumulated Other Comprehensive Loss
to Earnings

Amount Reclassified from Accumulated Other Comprehensive Loss
to Earnings–Active Swaps
2017 $ (1.1 ) Swap interest expense $ (1.6 )
2016 $ (7.2 ) Swap interest expense $ (2.4 )


For the Three Months Ended March 31,	Results Recognized in Accumulated Other Comprehensive Income/(Loss)		Location of Amount Reclassified from Accumulated Other Comprehensive Income/(Loss) to Earnings	Amount Reclassified from Accumulated Other Comprehensive Income/(Loss) to Earnings
2021	$	7.0	Other interest expense, net	$	(0.8)
2020	$	(4.5)	Other interest expense, net	$	(0.3)

On the basis of yield curve conditions as of ~~September 30, 2017~~March 31, 2021 and including assumptions about future changes in fair value, we expect the amount to be reclassified out of Accumulated Other Comprehensive Loss into earnings within the next 12 months will be losses of ~~$1.4 million~~.$2.8 million.

~~10.~~11. SUPPLEMENTAL CASH FLOW INFORMATION

During the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~,2020, we made interest payments, including amounts capitalized, totaling ~~$48.1~~$26.5 million and ~~$46.5~~$22.3 million,, respectively. Included in these interest payments are ~~$16.9~~$3.1 million and ~~$14.3~~$7.4 million,, of floor plan interest payments during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~,2020, respectively.

During the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016, we made~~2020, no material income tax payments ~~net~~were made and no refunds were received.

During the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016,~~2020, we transferred ~~$111.8~~$53.7 million and ~~$86.6~~$39.4 million, respectively, of loaner vehicles from Other ~~Current Assets~~current assets to Inventories on our Condensed Consolidated Balance Sheets.

~~11.~~12. COMMITMENTS AND CONTINGENCIES

Our dealerships are party to dealer and framework agreements with applicable vehicle manufacturers. In accordance with these agreements, each dealership has certain rights and is subject to restrictions typical in the industry. The ability of these manufacturers to influence the operations of the dealerships or the loss of any of these agreements could have a materially negative impact on our operating results.

In some instances, manufacturers may have the right, and may direct us, to implement costly capital improvements to dealerships as a condition to entering into, renewing, or extending franchise agreements with them. Manufacturers also typically require that their franchises meet specific standards of appearance. These factors, either alone or in combination, could cause us to use our financial resources on capital projects that we might not have planned for or otherwise determined to undertake.

From time to time, we and our dealerships are or may become involved in various claims relating to, and arising out of, our business and our operations. These claims may involve, but not be limited to, financial and other audits by vehicle manufacturers or lenders and certain federal, state, and local government authorities, which have historically related primarily to (i) incentive and warranty payments received from vehicle manufacturers, or allegations of violations of manufacturer agreements or policies, (ii) compliance with lender rules and covenants, and (iii) payments made to government authorities relating to federal, state, and local taxes, as well as compliance with other government regulations. Claims may also arise through litigation, government proceedings, and other dispute resolution processes. Such claims, including class actions, could relate to, but may not be limited to, the practice of charging administrative fees and other fees and commissions, employment-related matters, truth-in-lending and other dealer assisted financing obligations, contractual disputes, actions brought by governmental authorities, and other matters. We evaluate pending and threatened claims and establish loss contingency reserves based upon outcomes we currently believe to be probable and reasonably estimable.

We believe we have adequately accrued for the potential impact of loss contingencies that are probable and reasonably estimable. Based on our review of the various types of claims currently known to us, there is no indication of material reasonably possible losses in excess of amounts accrued in the aggregate. We currently do not anticipate that any known claim will materially adversely affect our financial condition, liquidity, or results of operations. However, the outcome of any matter cannot be predicted with certainty, and an unfavorable resolution of one or more matters presently known or arising in the future could have a material adverse effect on our financial condition, liquidity, or results of operations.

A significant portion of our business involves the sale of vehicles, parts, or vehicles composed of parts that are manufactured outside the United States. As a result, our operations are subject to customary risks of importing merchandise, including fluctuations in the relative values of currencies, import duties, exchange controls, trade restrictions, work stoppages, and general political and socio-economic conditions in foreign countries. The United States or the countries from which our products are imported may, from time to time, impose new quotas, duties, tariffs, or other ~~restrictions;~~restrictions, or adjust presently prevailing quotas, duties, or tariffs, which may affect our operations, and our ability to purchase imported vehicles and/or parts at reasonable prices.

Substantially all of our facilities are subject to federal, state and local provisions regarding the discharge of materials into the environment. Compliance with these provisions has not had, nor do we expect such compliance to have, any material effect upon our capital expenditures, net earnings, financial condition, liquidity or competitive position. We believe that our current practices and procedures for the control and disposition of such materials comply with applicable federal, state, and local requirements. No assurances can be provided, however, that future laws or regulations, or changes in existing laws or regulations, would not require us to expend significant resources in order to comply therewith.

WeAs of March 31, 2021, we had ~~$13.3~~$10.8 million of letters of credit outstanding ~~as of September 30, 2017, which are required by certain of our insurance providers. In addition, as of September 30, 2017,~~and we maintained a ~~$5.0~~$9.7 million surety bond line in the ordinary course of our ~~business.~~business, both of which are also required by certain of our insurance providers. Our letters of credit and surety bond line are considered to be off balance sheet arrangements.

Our other material commitments include (i) floor plan notes payable, (ii) operating leases, (iii) long-term debt and (iv) interest on long-term debt, as described elsewhere herein.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

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:

~~our ability to execute our business strategy;~~

~~our ability to further improve our operating cash flows, and the availability of capital and liquidity;~~

•our expected parts and service revenue due to, among other things, improvements in ~~manufacturing quality;~~vehicle technology;

~~the variable nature of significant components of our cost structure;~~

•manufacturers' ~~willingness to continue to~~continued use of incentive programs to drive demand for their product offerings;

~~our ability to leverage our common systems, infrastructure and processes in a cost-efficient manner;~~

~~the continued availability of financing, including floor plan financing for inventory;~~•our revenue growth strategy;

~~the ability of consumers to secure vehicle financing at favorable rates;~~

•the growth of ~~import and luxury~~the brands that comprise our portfolio over the ~~long-term;~~

•the declines in sales and service revenue and ongoing disruptions in our operations, the operations of our vehicle and parts manufacturers and other suppliers, vendors and business partners, and the global economy in general due to the COVID-19 pandemic; and

•our estimated future capital expenditures.

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 degree to which declines in sales and service revenue and ongoing disruptions in our operations, the operations of our vehicle and parts manufacturers and other suppliers, vendors and business partners, and the global economy in general due to the COVID-19 pandemic may adversely impact our business, results of operations, financial condition and cash flows;

•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 changes in employment levels, consumer ~~demand, preferences and~~ confidence levels, consumer demand and preferences, the availability and cost of credit, fuel prices, levels of discretionary personal income and interest rates;

•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 for any reason, including the COVID-19 pandemic, supply shortages (including semi-conductor chips and rubber-based products), natural disasters, severe weather, civil unrest, product recalls, work stoppages or other occurrences that are outside of our control;

•our ability to execute our ~~balanced~~ automotive retailing and service business ~~strategy;~~strategy while operating under restrictions and best practices imposed or encouraged by governmental and other regulatory authorities;

•our ability to attract and retain skilled employees;

•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;

•the availability of manufacturer incentive programs and our ability to earn these incentives;

•failure of our, or those of our third-party service providers, management information ~~systems or~~ systems;

•any data security ~~breaches;~~breaches with regard to personally identifiable information ("PII");

•changes in laws and regulations governing the operation of automobile franchises, including trade restrictions, consumer protections, accounting standards, taxation requirements and environmental laws;

•changes in, or the imposition of, new tariffs or trade restrictions on imported vehicles or parts;

•adverse results from litigation or other similar proceedings involving us;

•our ability to ~~generate sufficient cash flows, maintain our liquidity~~consummate planned mergers, acquisitions and ~~obtain any necessary additional funds for working capital, capital expenditures, acquisitions, stock repurchases and/or dividends, debt maturity payments, and other corporate purposes;~~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;

significant disruptions in the production, delivery or availability of vehicles and parts for any reason, including natural disasters, product recalls, work stoppages, import restrictions or limitations, significant property loss or other occurrences that are outside of our control;

•our ability to leverage gains from our dealership ~~portfolio.~~portfolio; and

•our ability to successfully integrate businesses we may acquire, or that any business we acquire may not perform as we expected at the time we acquired it.

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" ~~in our Annual Report on Form 10-K for the year ended December 31, 2016~~ and other cautionary statements made in this report should be read and considered as forward-looking statements subject to such uncertainties. Forward-looking statements speak only as of the date ~~they are made, and we~~of this report. We expressly disclaim any obligation to update any forward-looking statement contained herein.

We are one of the largest automotive retailers in the United States. As of ~~September 30, 2017~~March 31, 2021, we owned and operated 94112 new vehicle franchises ~~(80~~(91 dealership locations), representing 2931 brands of ~~automobiles and 24~~automobile, 25 collision centers, and one auto auction in 1716 metropolitan markets within nine states. Our stores offer an extensive range of automotive products and services, including new and used vehicles; parts and service, which includes repair and maintenance services, replacement parts, and collision repair services; and finance and insurance products. ~~As of September 30, 2017,~~For the three months ended March 31, 2021, our new vehicle revenue brand mix consisted of ~~46%~~45% luxury, 38% imports, ~~33% luxury,~~ and ~~21%~~17% domestic brands.

Our retail network is made up of dealerships operating primarily under the following locally-branded dealership groups:

•Coggin dealerships operating primarily in Jacksonville, Fort Pierce and Orlando, Florida;

•Courtesy dealerships operating in Tampa, Florida;

•Crown dealerships operating in North Carolina, South Carolina and Virginia;

~~Gray-Daniels~~•Greenville Automotive dealerships operating in ~~the Jackson, Mississippi area;~~Greenville, South Carolina;

•Hare and Estes dealerships operating in the Indianapolis, Indiana area;

•McDavid dealerships operating in metropolitan Austin ~~Dallas~~ and ~~Houston,~~Dallas-Fort Worth, Texas;

•Nalley dealerships operating in metropolitan Atlanta, Georgia; ~~and~~

•Park Place dealerships operating in the Dallas-Fort Worth, Texas area;

•Plaza dealerships operating in metropolitan St. Louis, ~~Missouri.~~Missouri; and

•Mike Shaw dealerships in the Denver, Colorado area.

Our 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" 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 (defined below and collectively referred to as "F&I").

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.

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. Additionally, 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 and may include manufacturer imposed stop-sales or open safety recalls, primarily due to, but not limited to, vehicle safety concerns or a vehicle's failure to meet environmental related requirements. We believe that the impact on our business of any future negative trends in new vehicle sales would be partially mitigated by (i) the expected relative stability of our parts and service operations over the long-term, (ii) the variable nature of significant components of our cost structure, and (iii) our diversified brand and geographic mix.

Our results for the three and nine months ended September 30, 2017 were impacted by Hurricanes Harvey and Irma which had a net adverse impact on our results due to the temporary closure of certain dealerships in our Texas, Florida and Georgia markets. The loss of business caused by these storms should be considered when comparing current results to prior periods.

The seasonally adjusted annual rate ("SAAR") of new vehicle sales in the U.S. during the nine months ended September 30, 2017 was 17.1 million compared to 17.4 million during the nine months ended September 30, 2016. The automotive retail business continues to benefit from the availability of credit to consumers and relatively low overall unemployment levels, fuel prices, and interest rates. Demand for new vehicles is generally highest during the second, third, and fourth quarters of each year and, accordingly, we expect our revenues and operating results to generally be higher during these periods. Revenues and operating results may be impacted significantly from quarter-to-quarter by changing economic conditions, vehicle manufacturer incentive programs, adverse weather events or other developments outside of our control.

~~Our~~ gross profit margin varies with our revenue mix. Sales of new vehicles ~~generally result~~have historically resulted in a lower gross profit margin than used vehicle sales, sales of parts and service, and sales of F&I products. As a result, when used vehicle, parts and service, and F&I revenue increase as a percentage of total revenue, we expect our overall gross profit margin to increase.

Selling, general, and administrative ("SG&A") expenses consist primarily of fixed and incentive-based compensation, advertising, rent, insurance, utilities, and other customary operating expenses. A significant portion of our cost structure is variable (such as sales commissions), or controllable (such as advertising), which we believe allows us to adapt to changes in the retail environment over the long-term. We evaluate commissions paid to salespeople as a percentage of retail vehicle gross profit, advertising expense on a per vehicle retailed ("PVR") basis, and all other SG&A expenses in the aggregate as a percentage of total gross profit.

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. As a result of the COVID-19 global pandemic, certain vehicle manufacturers slowed or temporarily halted assembly lines for the safety of their workers. For more information on the impact of COVID-19, see “Impact of COVID-19 on our Business” below. Furthermore, due to a variety of factors, including the impacts of the COVID-19 pandemic and significant shortages of semi-conductor chips and other component parts and supplies (including natural rubber-based products and petroleum-based plastics and foam), certain automotive manufacturers and other suppliers have suspended or slowed production of new vehicles, parts and other supplies. These delays have negatively impacted our new vehicle and parts inventory levels, with parts shortages in turn adversely impacting our service and collision repair business. We cannot predict with any certainty how long the automotive retail industry will continue to be subject to these shortages or when normalized production will resume at these manufacturers. We continue to believe that any future negative trends in new vehicle sales caused by lack of inventory availability would be partially mitigated by (i) increased demand for pre-owned vehicles, (ii) the expected relative stability of our parts and service operations over the long-term, (iii) the variable nature of significant components of our cost structure, and (iv) our diversified brand and geographic mix.

The seasonally adjusted annual rate ("SAAR") of new vehicle sales in the U.S. during the three months ended March 31, 2021 was 16.9 million compared to 15.2 million during the three months ended March 31, 2020. On a same-store basis, all of our revenue streams increased from the prior year quarter and we experienced a significant increase in both new and used vehicle gross profit and margins during the three months ended March 31, 2021 when compared to the prior year period. New vehicle supply disruptions as a result of the COVID-19 global pandemic and the semi-conductor chip shortage have reduced the availability of new vehicle inventory, which has driven up demand for used vehicles. Our parts and service business continued to show signs of a recovery and is approaching pre-pandemic levels of activity and profitability.

We had total available liquidity of ~~$406.4~~$551.3 million as of ~~September 30, 2017,~~March 31, 2021, which consisted of cash and cash equivalents of ~~$2.8~~$27.8 million, ~~$75.0~~$145.4 million of funds in our floor plan offset accounts, ~~$190.0 million of availability under our new vehicle floorplan facility that is able to be re-designated to our revolving credit facility, $46.7~~$239.2 million of availability under our revolving credit facility, and ~~$91.9~~$138.9 million of availability under our used vehicle revolving floor plan facility. For further discussion of our liquidity, please refer to "Liquidity and Capital Resources" below. 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.

Impact of COVID-19 on our Business

At this time, we cannot predict the duration or scope, and future effects, of the impacts from the COVID-19 pandemic. Vaccines are currently being administered with the objective of having the country return to some sense of normalcy by the second half of 2021. However, vaccine availability, distribution, efficacy to new strains of the virus, side effects and the public's willingness to get vaccinated all remain challenges, which could lengthen the duration of the impacts of the pandemic. We continue to monitor and respond as necessary to the Company’s operational needs and financial flexibility during the ongoing outbreak of the COVID-19 global pandemic and the resulting economic uncertainty. For example, we have enacted cost saving measures to respond to the uncertain environment. The Company has deferred certain capital expenditures and managed other controllable expenses.

Our top priority continues to be the safety and protection of our customers, team members and their families. We have modified certain business practices to conform to government restrictions and are taking precautionary measures as directed by government and regulatory authorities.

If the COVID-19 pandemic continues, future outbreaks in the markets in which we operate may cause changes in customer behaviors, including a potential reduction in traffic at our dealerships, and could result in certain impairment charges. The uncertainties in the global economy may negatively impact our suppliers and other business partners, which may interrupt our supply chain and require other changes to our operations. These and other factors may adversely impact our financial condition, liquidity and cash flow. We cannot accurately predict the amount and timing of any impairment charge at this time, however, any such impairment charge could have an adverse effect on our results of operations and stockholders’ equity.

Park Place Acquisition

On July 6, 2020, the Company, through two of its subsidiaries, entered into an Asset Purchase Agreement with certain members of the Park Place Dealership group, to acquire substantially all of the assets of, and lease the real property related to, 12 new vehicle dealership franchises (8 dealership locations), two collision centers and an auto auction (collectively, the "Park Place acquisition"). The Park Place acquisition was completed on August 24, 2020 and financed through a combination of cash, floor plan facilities and seller financing. The seller financing comprised $150.0 million in aggregate principal amount of a 4.00% promissory note due August 2021 and $50.0 million in aggregate principal amount of 4.00% promissory note due February 2022 (collectively, the "Seller Notes"). In September 2020, the Company redeemed the Seller Notes with proceeds from the offering of 4.50% Notes due 2028 and 4.75% Notes due 2030.

Three Months Ended ~~September 30, 2017~~March 31, 2021 Compared to the Three Months Ended ~~September 30, 2016~~March 31, 2020


	For the Three Months Ended March 31,				Increase (Decrease)		% Change
	2021		2020
	(Dollars in millions, except per share data)
REVENUE:
New vehicle	$	1,151.7	$	822.1	$	329.6	40	%
Used vehicle	690.9		493.2		197.7		40	%
Parts and service	262.0		221.6		40.4		18	%
Finance and insurance, net	88.3		70.4		17.9		25	%
TOTAL REVENUE	2,192.9		1,607.3		585.6		36	%
GROSS PROFIT:
New vehicle	75.5		36.4		39.1		107	%
Used vehicle	55.8		30.7		25.1		82	%
Parts and service	163.1		134.9		28.2		21	%
Finance and insurance, net	88.3		70.4		17.9		25	%
TOTAL GROSS PROFIT	382.7		272.4		110.3		40	%
OPERATING EXPENSES:
Selling, general, and administrative	239.8		194.7		45.1		23	%
Depreciation and amortization	9.8		9.5		0.3		3	%
Franchise rights impairment	—		23.0		(23.0)		(100)	%
Other operating (income) expense, net	(3.2)		10.2		(13.4)		(131)	%
INCOME FROM OPERATIONS	136.3		35.0		101.3		289	%
OTHER EXPENSES (INCOME):
Floor plan interest expense	2.9		7.0		(4.1)		(59)	%
Other interest expense, net	14.0		17.0		(3.0)		(18)	%


Loss on extinguishment of long-term debt, net	—		20.6		(20.6)		(100)	%
Gain on dealership divestitures, net	—		(33.7)		33.7		100	%
Total other expenses, net	16.9		10.9		6.0		55	%
INCOME BEFORE INCOME TAXES	119.4		24.1		95.3		395	%
Income tax expense	26.6		4.6		22.0		478	%


NET INCOME	$	92.8	$	19.5	$	73.3	376	%

Net income per share—Diluted	$	4.78	$	1.01	$	3.77	373	%

For the Three Months Ended September 30,
Increase
(Decrease)

%
Change
2017 2016
(Dollars in millions, except per share data)
REVENUE:
New vehicle $ 881.6
$ 940.9
$ (59.3 ) (6 )%
Used vehicle 455.6
476.4
(20.8 ) (4 )%
Parts and service 197.2
200.4
(3.2 ) (2 )%
Finance and insurance, net 67.7
65.4
2.3
4 %
TOTAL REVENUE 1,602.1
1,683.1
(81.0 ) (5 )%
GROSS PROFIT:
New vehicle 41.0
47.5
(6.5 ) (14 )%
Used vehicle 28.8
29.8
(1.0 ) (3 )%
Parts and service 122.8
123.0
(0.2 ) — %
Finance and insurance, net 67.7
65.4
2.3
4 %
TOTAL GROSS PROFIT 260.3
265.7
(5.4 ) (2 )%
OPERATING EXPENSES:
Selling, general, and administrative 182.5
185.7
(3.2 ) (2 )%
Depreciation and amortization 8.1
7.8
0.3
4 %
Other operating expenses, net —
1.5
(1.5 ) (100 )%
INCOME FROM OPERATIONS 69.7
70.7
(1.0 ) (1 )%
OTHER EXPENSES:
Floor plan interest expense 5.8
5.0
0.8
16 %
Other interest expense, net 13.4
13.2
0.2
2 %
Swap interest expense 0.4
0.8
(0.4 ) (50 )%
Total other expenses, net 19.6
19.0
0.6
3 %
INCOME BEFORE INCOME TAXES 50.1
51.7
(1.6 ) (3 )%
Income tax expense 19.4
19.3
0.1
1 %
NET INCOME $ 30.7
$ 32.4
$ (1.7 ) (5 )%
Net income per common share—Diluted $ 1.48
$ 1.47
$ 0.01
1 %

Total revenue ~~during~~for the ~~third quarter of 2017 decreased~~three months ended March 31, 2021 increased by ~~$81.0~~$585.6 million ~~(5%~~(36%) compared to the ~~third quarter of 2016,~~three months ended March 31, 2020, due to a ~~$59.3~~$329.6 million ~~(6%~~(40%) ~~decrease~~increase in new vehicle revenue, a ~~$20.8~~$197.7 million ~~(4%~~(40%) ~~decrease~~increase in used vehicle revenue, ~~and~~ a ~~$3.2~~$40.4 million ~~(2%~~(18%) ~~decrease~~increase in parts and service revenue ~~partially offset by~~and a ~~$2.3~~$17.9 million ~~(4%~~(25%) increase in F&I, net revenue. ~~During~~The $110.3 million (40%) increase in gross profit during the three months ended ~~September 30, 2017, gross profit decreased by $5.4 million (2%)~~March 31, 2021 was driven by a ~~$6.5~~$39.1 million ~~(14%~~(107%) ~~decrease~~increase in new vehicle gross profit, a ~~$1.0~~$28.2 million ~~(3%~~(21%) ~~decrease~~increase in parts and service gross profit, a $25.1 million (82%) increase in used vehicle gross profit and a ~~$0.2~~$17.9 million ~~decrease in parts and service gross profit, partially offset by a $2.3 million (4%~~(25%) increase in F&I, ~~gross profit.~~net.

Income from operations during the ~~third quarter of 2017 decreased~~three months ended March 31, 2021 increased by ~~$1.0~~$101.3 million ~~(1%)~~ compared to the ~~third quarter of 2016, primarily~~three months ended March 31, 2020, due to the ~~$5.4~~$110.3 million ~~(2%~~(40%) ~~decrease~~increase in gross profit, ~~partially offset by~~ a ~~$3.2~~$23.0 million ~~(2%) decrease in SG&A expense and~~franchise right impairment charge for the three months ended March 31, 2020, a ~~$1.5~~$13.4 million decrease in other operating expense, net, partially offset by a $45.1 million (23%) increase in SG&A expenses ~~net.~~ and a $0.3 million (3%) increase in depreciation and amortization expense.

Total other expenses, net increased by ~~$0.6~~$6.0 million ~~(3%~~(55%), primarily ~~due~~as a result of a $33.7 million decrease in the gain on dealership divestitures, net during the first three months of 2021 when compared to the first three months of 2020, partially offset by a ~~$0.8~~$4.1 million ~~(16%~~(59%) ~~increase~~decrease in floor plan interest expense, no loss on extinguishment of debt and a ~~$0.2~~$3.0 million ~~increase~~(18%) decrease in other interest expense, ~~net, partially offset by a $0.4 million (50%) decrease in swap interest expense during the third quarter of 2017. As a result, income~~net. Income before income taxes ~~decreased $1.6~~increased $95.3 million ~~(3%). The $0.1~~to $119.4 million ~~(1%) increase in income tax expense was due to an increase in our effective tax rate by 140 basis points, from 37.3%~~ for the ~~third quarter of 2016 to 38.7% for the third quarter of 2017.~~three months ended March 31, 2021. Overall, net income ~~decreased~~increased by ~~$1.7~~$73.3 million ~~(5%)~~ during the ~~third quarter of 2017~~three months ended March 31, 2021 as compared to the ~~third quarter~~three months ended March 31, 2020.

Table of ~~2016.~~Contents

During the third quarter of 2017, our dealerships in Florida, Georgia, and Houston, Texas had various levels of business interruption due to Hurricanes Irma and Harvey. As a consequence of these storms, both our sales and service operations were closed for a number of days, resulting in a net adverse affect on the company’s third quarter 2017 financial performance. Operations in each of these locations have now returned to full capacity. Property damage sustained at the Company's dealerships and to inventory are estimated to be less than $0.5 million.

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.

New Vehicle—


	For the Three Months Ended March 31,				Increase (Decrease)		% Change
	2021		2020
	(Dollars in millions, except for per vehicle data)
As Reported:
Revenue:
Luxury	$	518.0	$	276.5	$	241.5	87	%
Import	439.4		358.2		81.2		23	%
Domestic	194.3		187.4		6.9		4	%
Total new vehicle revenue	$	1,151.7	$	822.1	$	329.6	40	%
Gross profit:
Luxury	$	44.7	$	16.9	$	27.8	164	%
Import	18.1		10.6		7.5		71	%
Domestic	12.7		8.9		3.8		43	%
Total new vehicle gross profit	$	75.5	$	36.4	$	39.1	107	%
New vehicle units:
Luxury	8,511		4,992		3,519		70	%
Import	14,377		12,458		1,919		15	%
Domestic	4,371		4,527		(156)		(3)	%
Total new vehicle units	27,259		21,977		5,282		24	%

Same Store:
Revenue:
Luxury	$	322.2	$	267.2	$	55.0	21	%
Import	438.1		342.5		95.6		28	%
Domestic	189.5		171.4		18.1		11	%
Total new vehicle revenue	$	949.8	$	781.1	$	168.7	22	%
Gross profit:
Luxury	$	24.7	$	16.3	$	8.4	52	%
Import	18.4		10.2		8.2		80	%
Domestic	12.4		8.2		4.2		51	%
Total new vehicle gross profit	$	55.5	$	34.7	$	20.8	60	%
New vehicle units:
Luxury	5,526		4,820		706		15	%
Import	14,351		11,955		2,396		20	%
Domestic	4,270		4,158		112		3	%
Total new vehicle units	24,147		20,933		3,214		15	%

For the Three Months Ended September 30, Increase (Decrease)
%
Change
2017 2016
(Dollars in millions, except for per vehicle data)
As Reported:
Revenue:
Luxury $ 288.3
$ 318.2
$ (29.9 ) (9 )%
Import 414.2
427.2
(13.0 ) (3 )%
Domestic 179.1
195.5
(16.4 ) (8 )%
Total new vehicle revenue $ 881.6
$ 940.9
$ (59.3 ) (6 )%
Gross profit:
Luxury $ 18.5
$ 20.8
$ (2.3 ) (11 )%
Import 14.4
18.3
(3.9 ) (21 )%
Domestic 8.1
8.4
(0.3 ) (4 )%
Total new vehicle gross profit $ 41.0
$ 47.5
$ (6.5 ) (14 )%
New vehicle units:
Luxury 5,499
6,061
(562 ) (9 )%
Import 14,997
15,522
(525 ) (3 )%
Domestic 4,691
5,232
(541 ) (10 )%
Total new vehicle units 25,187
26,815
(1,628 ) (6 )%

Same Store:
Revenue:
Luxury $ 288.3
$ 310.3
$ (22.0 ) (7 )%
Import 406.7
410.8
(4.1 ) (1 )%
Domestic 159.1
183.6
(24.5 ) (13 )%
Total new vehicle revenue $ 854.1
$ 904.7
$ (50.6 ) (6 )%
Gross profit:
Luxury $ 18.5
$ 20.2
$ (1.7 ) (8 )%
Import 14.5
17.8
(3.3 ) (19 )%
Domestic 6.9
8.0
(1.1 ) (14 )%
Total new vehicle gross profit $ 39.9
$ 46.0
$ (6.1 ) (13 )%
New vehicle units
Luxury 5,499
5,913
(414 ) (7 )%
Import 14,753
14,969
(216 ) (1 )%
Domestic 4,103
4,899
(796 ) (16 )%
Total new vehicle units 24,355
25,781
(1,426 ) (6 )%

Table of Contents

New Vehicle Metrics—


	For the Three Months Ended March 31,						Increase (Decrease)			% Change
	2021			2020
As Reported:
Revenue per new vehicle sold	$	42,250		$	37,407		$	4,843		13	%
Gross profit per new vehicle sold	$	2,770		$	1,656		$	1,114		67	%
New vehicle gross margin	6.6		%	4.4		%	2.2		%

Luxury:
Gross profit per new vehicle sold	$	5,252		$	3,385		$	1,867		55	%
New vehicle gross margin	8.6		%	6.1		%	2.5		%
Import:
Gross profit per new vehicle sold	$	1,259		$	851		$	408		48	%
New vehicle gross margin	4.1		%	3.0		%	1.1		%
Domestic:
Gross profit per new vehicle sold	$	2,906		$	1,966		$	940		48	%
New vehicle gross margin	6.5		%	4.7		%	1.8		%

Same Store:
Revenue per new vehicle sold	$	39,334		$	37,314		$	2,020		5	%
Gross profit per new vehicle sold	$	2,298		$	1,658		$	640		39	%
New vehicle gross margin	5.8		%	4.4		%	1.4		%

Luxury:
Gross profit per new vehicle sold	$	4,470		$	3,382		$	1,088		32	%
New vehicle gross margin	7.7		%	6.1		%	1.6		%
Import:
Gross profit per new vehicle sold	$	1,282		$	853		$	429		50	%
New vehicle gross margin	4.2		%	3.0		%	1.2		%
Domestic:
Gross profit per new vehicle sold	$	2,904		$	1,972		$	932		47	%
New vehicle gross margin	6.5		%	4.8		%	1.7		%

For the Three Months Ended September 30, Increase (Decrease)
%
Change
2017 2016
As Reported:
Revenue per new vehicle sold $ 35,002
$ 35,089
$ (87 ) — %
Gross profit per new vehicle sold $ 1,628
$ 1,771
$ (143 ) (8 )%
New vehicle gross margin 4.7 % 5.0 % (0.3 )%

Luxury:
Gross profit per new vehicle sold $ 3,364
$ 3,432
$ (68 ) (2 )%
New vehicle gross margin 6.4 % 6.5 % (0.1 )%
Import:
Gross profit per new vehicle sold $ 960
$ 1,179
$ (219 ) (19 )%
New vehicle gross margin 3.5 % 4.3 % (0.8 )%
Domestic:
Gross profit per new vehicle sold $ 1,727
$ 1,606
$ 121
8 %
New vehicle gross margin 4.5 % 4.3 % 0.2 %

Same Store:
Revenue per new vehicle sold $ 35,069
$ 35,092
$ (23 ) — %
Gross profit per new vehicle sold $ 1,638
$ 1,784
$ (146 ) (8 )%
New vehicle gross margin 4.7 % 5.1 % (0.4 )%

Luxury:
Gross profit per new vehicle sold $ 3,364
$ 3,416
$ (52 ) (2 )%
New vehicle gross margin 6.4 % 6.5 % (0.1 )%
Import:
Gross profit per new vehicle sold $ 983
$ 1,189
$ (206 ) (17 )%
New vehicle gross margin 3.6 % 4.3 % (0.7 )%
Domestic:
Gross profit per new vehicle sold $ 1,682
$ 1,633
$ 49
3 %
New vehicle gross margin 4.3 % 4.4 % (0.1 )%

~~New~~For the three months ended March 31, 2021, new vehicle revenue ~~decreased~~increased by ~~$59.3~~$329.6 million ~~(6%~~(40%) as a result of a ~~$29.9~~24% increase in new vehicle units sold, as well as an increase in revenue per new vehicle sold. For the three months ended March 31, 2021, same store new vehicle revenue increased by $168.7 million ~~(9%~~(22%) ~~decrease~~as the result of a 15% increase in ~~luxury brands revenue, a $16.4 million (8%) decrease in domestic brands revenue~~new vehicle units sold, and a ~~$13.0~~5% increase in revenue per unit sold.

For the three months ended March 31, 2021, new vehicle gross profit and same store new vehicle gross profit increased by $39.1 million ~~(3%~~(107%) ~~decrease in import brands revenue.~~and $20.8 million (60%), respectively. Same store new vehicle revenue decreased by $50.6 million (6%) due to a $24.5 million (13%) decrease in domestic brands revenue, a $22.0 million (7%) decrease in luxury brands revenue and a $4.1 million (1%) decrease in import brands revenue.

~~U.S. new vehicle SAAR decreased by 2%, from 17.6 million~~gross margin for the three months ended ~~September 30, 2016~~March 31, 2021 improved 140 basis points to ~~17.2~~5.8%.

The seasonally adjusted annual rate ("SAAR") of new vehicle sales in the U.S. during the three months ended March 31, 2021 was 16.9 million compared to 15.2 million during the three months ended March 31, 2020, an 11% increase. The Company experienced continued strength in new vehicle sales for the three months ended ~~September 30, 2017. Same store unit volumes at our luxury, import, and domestic brand dealerships were down 7%, 1% and 16%, respectively.~~

~~Same store~~March 31, 2021, building on the new vehicle ~~gross profit decreased by $6.1 million (13%), due~~sales recovery in the latter part of the 2020 fiscal year. The new vehicle sales revenue increase for the three months ended March 31, 2021 over the same period in the prior year is also attributable to ~~a 6% decrease~~the significant decline in new vehicle ~~unit volumes and~~sales during the latter half of March as a result of the onset of the COVID-19 pandemic. On a same store basis, we experienced an ~~8% decrease~~increase in gross profit across all categories of vehicle sales driven by the increase in gross profit per new vehicle sold. ~~Same store~~The increased profitability is partly attributable to the lack of supply of new vehicle inventory driven by the manufacturer production challenges arising from semi-conductor chip shortages. Our new vehicle days supply of inventory was approximately 34 days for the months ended March 31, 2021, which is about half our targeted days supply. Luxury new vehicle

Table of Contents

sales and gross profit ~~margin~~increased on an as reported basis by $241.5 million (87%) and $27.8 million (164%), respectively, for the three months ended ~~September 30, 2017 decreased by 40 basis points~~March 31, 2021 as compared to ~~4.7%. The decrease~~the three months ended March 31, 2020 in ~~our same store gross profit margin was primarily attributable~~part due to ~~a change~~the Park Place acquisition in ~~our revenue mix towards our generally lower margin import brands and margin pressures as a result~~the third quarter of ~~generally higher new vehicle inventory levels across the industry and the failure to achieve the aggressive sales and marketing incentive targets set by certain manufacturers.~~2020.

~~We believe that our new vehicle inventory continues to be well-aligned with current consumer demand, with approximately 72 days of supply in our inventory as of September 30, 2017.~~

Used Vehicle—


	For the Three Months Ended March 31,				Increase (Decrease)		% Change
	2021		2020
	(Dollars in millions, except for per vehicle data)
As Reported:
Revenue:
Used vehicle retail revenue	$	607.5	$	446.0	$	161.5	36	%
Used vehicle wholesale revenue	83.4		47.2		36.2		77	%
Used vehicle revenue	$	690.9	$	493.2	$	197.7	40	%
Gross profit:
Used vehicle retail gross profit	$	47.5	$	31.2	$	16.3	52	%
Used vehicle wholesale gross profit	8.3		(0.5)		8.8		NM
Used vehicle gross profit	$	55.8	$	30.7	$	25.1	82	%
Used vehicle retail units:
Used vehicle retail units	23,519		20,287		3,232		16	%

Same Store:
Revenue:
Used vehicle retail revenue	$	499.9	$	416.9	$	83.0	20	%
Used vehicle wholesale revenue	57.3		44.8		12.5		28	%
Used vehicle revenue	$	557.2	$	461.7	$	95.5	21	%
Gross profit:
Used vehicle retail gross profit	$	40.3	$	29.6	$	10.7	36	%
Used vehicle wholesale gross profit	6.4		(0.4)		6.8		NM
Used vehicle gross profit	$	46.7	$	29.2	$	17.5	60	%
Used vehicle retail units:
Used vehicle retail units	20,740		18,979		1,761		9	%

For the Three Months Ended September 30, Increase (Decrease)
%
Change
2017 2016
(Dollars in millions, except for per vehicle data)
As Reported:
Revenue:
Used vehicle retail revenue $ 400.1
$ 423.3
$ (23.2 ) (5 )%
Used vehicle wholesale revenue 55.5
53.1
2.4
5 %
Used vehicle revenue $ 455.6
$ 476.4
$ (20.8 ) (4 )%
Gross profit:
Used vehicle retail gross profit $ 28.9
$ 31.9
$ (3.0 ) (9 )%
Used vehicle wholesale gross profit (0.1 ) (2.1 ) 2.0
95 %
Used vehicle gross profit $ 28.8
$ 29.8
$ (1.0 ) (3 )%
Used vehicle retail units:
Used vehicle retail units 18,777
20,030
(1,253 ) (6 )%

Same Store:
Revenue:
Used vehicle retail revenue $ 386.0
$ 396.9
$ (10.9 ) (3 )%
Used vehicle wholesale revenue 52.8
50.2
2.6
5 %
Used vehicle revenue $ 438.8
$ 447.1
$ (8.3 ) (2 )%
Gross profit:
Used vehicle retail gross profit $ 27.5
$ 30.4
$ (2.9 ) (10 )%
Used vehicle wholesale gross profit —
(2.1 ) 2.1
100 %
Used vehicle gross profit $ 27.5
$ 28.3
$ (0.8 ) (3 )%
Used vehicle retail units:
Used vehicle retail units 17,993
18,558
(565 ) (3 )%
_____________________________

NM—Not Meaningful

Used Vehicle Metrics—


	For the Three Months Ended September 30,						Increase (Decrease)			% Change			For the Three Months Ended March 31,						Increase (Decrease)			% Change
	2017			2016									2021			2020
As Reported:												As Reported:
Revenue per used vehicle retailed	$	21,308		$	21,133		$	175		1	%	Revenue per used vehicle retailed	$	25,830		$	21,985		$	3,845		17	%
Gross profit per used vehicle retailed	$	1,539		$	1,593		$	(54	)	(3	)%	Gross profit per used vehicle retailed	$	2,020		$	1,538		$	482		31	%
Used vehicle retail gross margin	7.2		%	7.5		%	(0.3		)%			Used vehicle retail gross margin	7.8		%	7.0		%	0.8		%

Same Store:												Same Store:
Revenue per used vehicle retailed	$	21,453		$	21,387		$	66		—	%	Revenue per used vehicle retailed	$	24,103		$	21,966		$	2,137		10	%
Gross profit per used vehicle retailed	$	1,528		$	1,638		$	(110	)	(7	)%	Gross profit per used vehicle retailed	$	1,943		$	1,560		$	383		25	%
Used vehicle retail gross margin	7.1		%	7.7		%	(0.6		)%			Used vehicle retail gross margin	8.1		%	7.1		%	1.0		%

Used vehicle revenue ~~decreased~~increased by ~~$20.8~~$197.7 million ~~(4%~~(40%) due to a ~~6% decrease~~$161.5 million (36%) increase in used vehicle retail ~~units sold partially offset by increases~~revenue, and a $36.2 million (77%) increase in ~~revenue per~~ used vehicle ~~retailed and~~ wholesale revenue. Same store used vehicle revenue ~~decreased~~increased by ~~$8.3~~

Table of Contents

$95.5 million ~~(2%~~(21%) due to ~~a 3% decrease~~an $83.0 million (20%) increase in used vehicle retail ~~units sold partially offset by~~revenue, and a ~~slight~~$12.5 million (28%) increase in ~~revenue per~~ used vehicle ~~retailed.~~

wholesale revenues.

For the three months ended ~~September 30, 2017 same store used vehicle retail~~March 31, 2021, gross ~~margin decreased 60~~profit margins increased by 80 basis points to ~~7.1% as~~7.8%. Due to the new vehicle inventory shortages that have arisen due to manufacturer challenges, we continue to see an increased demand for used vehicles. As a result, ~~of the 7% decrease~~on both a same store and as reported basis, we experienced a significant improvement in used vehicle gross profit ~~per~~margins during the three months ended March 31, 2021 as compared to the same period in the prior year. Used vehicle ~~retailed. We attribute~~gross profit margins increased for the 60three months ended March 31, 2021 by $25.1 million on an all store basis ~~point decrease in~~

~~our~~and $17.5 million on a same store ~~used vehicle retail gross margins~~basis as compared to the three months ended March 31, 2020. We finished the first quarter with a ~~combination of increased~~27 days supply of ~~off lease vehicles and margin pressure created by higher new vehicle incentives.~~

~~We believe that our~~ used vehicle inventory, ~~continues to be well-aligned with current customer demand, with approximately~~below our targeted supply of 35 ~~days of supply in our inventory as of September 30, 2017.~~days.

Parts and Service—


	For the Three Months Ended March 31,						Increase (Decrease)			% Change
	2021			2020
	(Dollars in millions)
As Reported:
Parts and service revenue	$	262.0		$	221.6		$	40.4		18	%
Parts and service gross profit:
Customer pay	97.1			78.1			19.0			24	%
Warranty	24.1			22.2			1.9			9	%
Wholesale parts	7.0			5.0			2.0			40	%
Parts and service gross profit, excluding reconditioning and preparation	$	128.2		$	105.3		$	22.9		22	%
Parts and service gross margin, excluding reconditioning and preparation	48.9		%	47.5		%	1.4		%
Reconditioning and preparation *	$	34.9		$	29.6		$	5.3		18	%
Total parts and service gross profit	$	163.1		$	134.9		$	28.2		21	%


Same Store:
Parts and service revenue	$	212.4		$	211.1		$	1.3		1	%
Parts and service gross profit:
Customer pay	77.1			74.8			2.3			3	%
Warranty	18.3			21.1			(2.8)			(13)	%
Wholesale parts	5.8			4.7			1.1			23	%
Parts and service gross profit, excluding reconditioning and preparation	$	101.2		$	100.6		$	0.6		1	%
Parts and service gross margin, excluding reconditioning and preparation	47.6		%	47.7		%	(0.1)		%
Reconditioning and preparation *	$	29.3		$	28.0		$	1.3		5	%
Total parts and service gross profit	$	130.5		$	128.6		$	1.9		1	%

For the Three Months Ended September 30,
Increase
(Decrease)

%
Change
2017 2016
(Dollars in millions)
As Reported:
Parts and service revenue $ 197.2
$ 200.4
$ (3.2 ) (2 )%
Parts and service gross profit:
Customer pay 68.1
67.0
1.1
2 %
Warranty 20.6
19.9
0.7
4 %
Wholesale parts 5.3
5.1
0.2
4 %
Parts and service gross profit, excluding reconditioning and preparation $ 94.0
$ 92.0
$ 2.0
2 %
Parts and service gross margin, excluding reconditioning and preparation 47.7 % 45.9 % 1.8 %
Reconditioning and preparation $ 28.8
$ 31.0
$ (2.2 ) (7 )%
Total parts and service gross profit $ 122.8
$ 123.0
$ (0.2 ) — %
Total parts and service gross margin 62.3 % 61.4 % 0.9 %

Same Store:
Parts and service revenue $ 193.6
$ 191.4
$ 2.2
1 %
Parts and service gross profit:
Customer pay 66.8
64.2
2.6
4 %
Warranty 20.3
19.3
1.0
5 %
Wholesale parts 5.2
4.8
0.4
8 %
Parts and service gross profit, excluding reconditioning and preparation $ 92.3
$ 88.3
$ 4.0
5 %
Parts and service gross margin, excluding reconditioning and preparation 47.7 % 46.1 % 1.6 %
Reconditioning and preparation $ 28.1
$ 29.3
$ (1.2 ) (4 )%
Total parts and service gross profit $ 120.4
$ 117.6
$ 2.8
2 %
Total parts and service gross margin 62.2 % 61.4 % 0.8 %

* 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 ~~$3.2~~$40.4 million ~~(2%~~(18%) ~~decrease~~increase in parts and service revenue was primarily due to a ~~$3.5~~$33.7 million ~~(3%~~(23%) ~~decrease~~increase in customer pay revenue, ~~and~~ a ~~$0.6~~$4.8 million ~~(2%~~(15%) ~~decrease~~increase in wholesale parts revenue ~~partially offset by~~and a ~~$0.9~~$1.9 million ~~(2%~~(5%) increase in warranty revenue. Same store parts and service revenue increased by ~~$2.2~~$1.3 million (1%) ~~to $193.6~~from $211.1 million ~~during~~for the three months ended ~~September 30, 2017 from $191.4~~March 31, 2020 to $212.4 million ~~during~~for the three months ended ~~September 30, 2016.~~March 31, 2021. The increase in same store parts and service revenue was due to a ~~$1.4~~$4.7 million ~~(4%~~(3%) increase in ~~warranty~~customer pay revenue, ~~and~~ a ~~$1.1~~$2.0 million ~~(4%~~(6%) increase in wholesale parts revenue ~~partially~~ offset by a ~~$0.3~~$5.4 million (14%) decrease in ~~customer pay~~warranty revenue.

Parts and service gross profit, excluding reconditioning and preparation, increased by ~~$2.0~~$22.9 million ~~(2%~~(22%) to $94.0 million and same store parts and service gross profit, excluding reconditioning and preparation, increased by $4.0 million (5%) to $92.3 million. The increase in same store parts and service gross profit, excluding reconditioning and preparation, is primarily due to the higher margins on warranty and sublet services.

~~Finance and Insurance, net—~~

For the Three Months Ended September 30,
Increase
(Decrease)

%
Change
2017 2016
(Dollars in millions, except for per vehicle data)
As Reported:
Finance and insurance, net $ 67.7
$ 65.4
$ 2.3
4 %
Finance and insurance, net per vehicle sold $ 1,540
$ 1,396
$ 144
10 %

Same Store:
Finance and insurance, net $ 65.5
$ 62.3
$ 3.2
5 %
Finance and insurance, net per vehicle sold $ 1,547
$ 1,405
$ 142
10 %

F&I, net revenue increased by $2.3 million (4%) during the third quarter of 2017 as compared to the third quarter of 2016 and same store F&I, net revenue increased by $3.2 million (5%) over the same period of time. During the three months ended September 30, 2017, we benefited from the acceleration of commissions as a result of our amended agreement with our primary insurance products underwriter which became effective during the fourth quarter of 2016.

~~Selling, General, and Administrative Expense—~~

For the Three Months Ended September 30,
Increase
(Decrease)

% of Gross
Profit Increase (Decrease)
2017
% of Gross
Profit
2016
% of Gross
Profit

(Dollars in millions)
As Reported:
Personnel costs $ 87.4
33.6 % $ 86.4
32.5 % $ 1.0
1.1 %
Sales compensation 27.4
10.5 % 28.6
10.8 % (1.2 ) (0.3 )%
Share-based compensation 3.6
1.4 % 3.0
1.1 % 0.6
0.3 %
Outside services 19.9
7.6 % 19.6
7.4 % 0.3
0.2 %
Advertising 6.6
2.5 % 8.5
3.2 % (1.9 ) (0.7 )%
Rent 6.5
2.5 % 7.6
2.9 % (1.1 ) (0.4 )%
Utilities 4.1
1.6 % 4.3
1.6 % (0.2 ) — %
Insurance 4.5
1.7 % 4.0
1.5 % 0.5
0.2 %
Other 22.5
8.7 % 23.7
8.9 % (1.2 ) (0.2 )%
Selling, general, and administrative expense $ 182.5
70.1 % $ 185.7
69.9 % $ (3.2 ) 0.2 %
Gross profit $ 260.3
$ 265.7

Same Store:
Personnel costs $ 84.5
33.4 % $ 82.3
32.4 % $ 2.2
1.0 %
Sales compensation 26.4
10.4 % 27.2
10.7 % (0.8 ) (0.3 )%
Share-based compensation 3.6
1.4 % 3.0
1.2 % 0.6
0.2 %
Outside services 19.3
7.6 % 18.3
7.2 % 1.0
0.4 %
Advertising 6.4
2.5 % 7.6
3.0 % (1.2 ) (0.5 )%
Rent 6.5
2.6 % 7.6
3.0 % (1.1 ) (0.4 )%
Utilities 4.0
1.6 % 4.0
1.6 % —
— %
Insurance 4.4
1.7 % 3.7
1.5 % 0.7
0.2 %
Other 22.0
8.7 % 22.9
8.9 % (0.9 ) (0.2 )%
Selling, general, and administrative expense $ 177.1
69.9 % $ 176.6
69.5 % $ 0.5
0.4 %
Gross profit $ 253.3
$ 254.2

SG&A expense as a percentage of gross profit was 70.1% for the third quarter of 2017 as compared to 69.9% for the third quarter of 2016. Same store SG&A expense as a percentage of gross profit increased by 40 basis points, from 69.5% for the third quarter of 2016 to 69.9% for the third quarter of 2017.

The 20 basis point increase in SG&A as a percentage of gross profit is partially attributable to approximately $1.5 million of expense in connection with our previously disclosed CEO transition. The $1.5 million of expense reflects the remeasurement of and changes to the amortization period of share-based awards previously granted to the CEO and other compensation to be paid during the transition period.

In addition, SG&A as a percentage of gross profit was adversely impacted by higher outside service costs predominately related to our investments in technologies to improve productivity and our customer experience, partially offset by decreases in Advertising and Rent expenses.

~~Floor Plan Interest Expense —~~

Floor plan interest expense increased by $0.8 million (16%) to $5.8 million during the three months ended September 30, 2017 compared to $5.0 million for the three months ended September 30, 2016, primarily as a result of higher interest rates.

~~Income Tax Expense —~~

During the third quarter of 2017 our effective tax rate was 38.7% compared to 37.3% for the third quarter of 2016. Our effective tax rate is highly dependent on our level of income before income taxes and permanent differences between book and tax income.

~~RESULTS OF OPERATIONS~~

~~Nine Months Ended September 30, 2017~~ ~~Compared to the~~ ~~Nine Months Ended September 30, 2016~~

For the Nine Months Ended September 30,
Increase
(Decrease)

%
Change
2017 2016
(Dollars in millions, except per share data)
REVENUE:
New vehicle $ 2,597.0
$ 2,676.3
$ (79.3 ) (3 )%
Used vehicle 1,396.6
1,407.5
(10.9 ) (1 )%
Parts and service 589.5
584.9
4.6
1 %
Finance and insurance, net 202.5
192.6
9.9
5 %
TOTAL REVENUE 4,785.6
4,861.3
(75.7 ) (2 )%
GROSS PROFIT:
New vehicle 122.4
139.7
(17.3 ) (12 )%
Used vehicle 95.4
99.8
(4.4 ) (4 )%
Parts and service 367.2
362.0
5.2
1 %
Finance and insurance, net 202.5
192.6
9.9
5 %
TOTAL GROSS PROFIT 787.5
794.1
(6.6 ) (1 )%
OPERATING EXPENSES:
Selling, general, and administrative 549.2
549.2
—
— %
Depreciation and amortization 24.0
23.0
1.0
4 %
Other operating expenses, net 0.7
4.2
(3.5 ) (83 )%
INCOME FROM OPERATIONS 213.6
217.7
(4.1 ) (2 )%
OTHER EXPENSES:
Floor plan interest expense 17.1
14.4
2.7
19 %
Other interest expense, net 40.2
40.0
0.2
1 %
Swap interest expense 1.6
2.4
(0.8 ) (33 )%
Total other expenses, net 58.9
56.8
2.1
4 %
INCOME BEFORE INCOME TAXES 154.7
160.9
(6.2 ) (4 )%
Income tax expense 58.1
60.8
(2.7 ) (4 )%
NET INCOME $ 96.6
$ 100.1
$ (3.5 ) (3 )%
Net income per common share—Diluted $ 4.60
$ 4.37
$ 0.23
5 %

For the Nine Months Ended September 30,
2017 2016
REVENUE MIX PERCENTAGES:
New vehicle 54.3 % 55.1 %
Used vehicle retail 26.0 % 25.8 %
Used vehicle wholesale 3.2 % 3.1 %
Parts and service 12.3 % 12.0 %
Finance and insurance, net 4.2 % 4.0 %
Total revenue 100.0 % 100.0 %
GROSS PROFIT MIX PERCENTAGES:
New vehicle 15.5 % 17.6 %
Used vehicle retail 12.1 % 12.7 %
Used vehicle wholesale 0.1 % (0.2 )%
Parts and service 46.6 % 45.6 %
Finance and insurance, net 25.7 % 24.3 %
Total gross profit 100.0 % 100.0 %
GROSS PROFIT MARGIN 16.5 % 16.3 %
SG&A EXPENSES AS A PERCENTAGE OF GROSS PROFIT 69.7 % 69.2 %

Total revenue during the nine months ended September 30, 2017 decreased by $75.7 million (2%) compared to the nine months ended September 30, 2016, due to a $79.3 million (3%) decrease in new vehicle revenue and a $10.9 million (1%) decrease in used vehicle, partially offset by a $9.9 million (5%) increase in F&I, net revenue and a $4.6 million (1%) increase in parts and service revenue. The $6.6 million decrease in gross profit during the nine months ended September 30, 2017 was driven by a decrease of $17.3 million (12%) in new vehicle gross profit and a $4.4 million (4%) decrease in used vehicle gross profit, offset by a $9.9 million (5%) increase in F&I gross profit and a $5.2 million (1%) increase in parts and service gross profit. For the nine months ended September 30, 2017, our total gross profit margin increased 20 basis points to 16.5%.

Income from operations during the nine months ended September 30, 2017 decreased by $4.1 million (2%) compared to the nine months ended September 30, 2016, due to a $6.6 million decrease in gross profit and a $1.0 million (4%) increase in depreciation and amortization expense, partially offset by a $3.5 million (83%) decrease in other operating expenses, net. The $2.1 million increase in other expenses, net during the nine months ended September 30, 2017 was due to a $2.7 million (19%) increase in floor plan interest expense, partially offset by a $0.8 million (33%) decrease in swap interest expense. As a result, income before income taxes decreased by $6.2 million (4%) to $154.7 million for the nine months ended September 30, 2017. The decrease in income before income taxes resulted in a decrease in income tax expense of $2.7 million (4%). Overall, net income decreased by $3.5 million (3%) during the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016.

~~New Vehicle—~~

For the Nine Months Ended September 30,
Increase
(Decrease)

%
Change
2017 2016
(Dollars in millions, except for per vehicle data)
As Reported:
Revenue:
Luxury $ 852.3
$ 909.7
$ (57.4 ) (6 )%
Import 1,205.7
1,206.0
(0.3 ) — %
Domestic 539.0
560.6
(21.6 ) (4 )%
Total new vehicle revenue $ 2,597.0
$ 2,676.3
$ (79.3 ) (3 )%
Gross profit:
Luxury $ 54.7
$ 61.4
$ (6.7 ) (11 )%
Import 42.8
52.9
(10.1 ) (19 )%
Domestic 24.9
25.4
(0.5 ) (2 )%
Total new vehicle gross profit $ 122.4
$ 139.7
$ (17.3 ) (12 )%
New vehicle units:
Luxury 16,117
17,469
(1,352 ) (8 )%
Import 43,504
43,814
(310 ) (1 )%
Domestic 14,163
15,326
(1,163 ) (8 )%
Total new vehicle units 73,784
76,609
(2,825 ) (4 )%

Same Store:
Revenue:
Luxury $ 852.3
$ 889.9
$ (37.6 ) (4 )%
Import 1,186.8
1,154.7
32.1
3 %
Domestic 487.2
524.1
(36.9 ) (7 )%
Total new vehicle revenue $ 2,526.3
$ 2,568.7
$ (42.4 ) (2 )%
Gross profit:
Luxury $ 54.8
$ 59.9
$ (5.1 ) (9 )%
Import 42.5
51.3
(8.8 ) (17 )%
Domestic 21.6
23.8
(2.2 ) (9 )%
Total new vehicle gross profit $ 118.9
$ 135.0
$ (16.1 ) (12 )%
New vehicle units:
Luxury 16,117
17,102
(985 ) (6 )%
Import 42,891
42,049
842
2 %
Domestic 12,677
14,256
(1,579 ) (11 )%
Total new vehicle units 71,685
73,407
(1,722 ) (2 )%

~~New Vehicle Metrics—~~

For the Nine Months Ended September 30, Increase (Decrease)
%
Change
2017 2016
As Reported:
Revenue per new vehicle sold $ 35,197
$ 34,935
$ 262
1 %
Gross profit per new vehicle sold $ 1,659
$ 1,824
$ (165 ) (9 )%
New vehicle gross margin 4.7 % 5.2 % (0.5 )%

Luxury:
Gross profit per new vehicle sold $ 3,394
$ 3,515
$ (121 ) (3 )%
New vehicle gross margin 6.4 % 6.7 % (0.3 )%
Import:
Gross profit per new vehicle sold $ 984
$ 1,207
$ (223 ) (18 )%
New vehicle gross margin 3.5 % 4.4 % (0.9 )%
Domestic:
Gross profit per new vehicle sold $ 1,758
$ 1,657
$ 101
6 %
New vehicle gross margin 4.6 % 4.5 % 0.1 %

Same Store:
Revenue per new vehicle sold $ 35,242
$ 34,993
$ 249
1 %
Gross profit per new vehicle sold $ 1,659
$ 1,839
$ (180 ) (10 )%
New vehicle gross margin 4.7 % 5.3 % (0.6 )%

Luxury:
Gross profit per new vehicle sold $ 3,400
$ 3,503
$ (103 ) (3 )%
New vehicle gross margin 6.4 % 6.7 % (0.3 )%
Import:
Gross profit per new vehicle sold $ 991
$ 1,220
$ (229 ) (19 )%
New vehicle gross margin 3.6 % 4.4 % (0.8 )%
Domestic:
Gross profit per new vehicle sold $ 1,704
$ 1,669
$ 35
2 %
New vehicle gross margin 4.4 % 4.5 % (0.1 )%

New vehicle revenue decreased by $79.3 million (3%) as a result of a 4% decrease in new vehicle units sold, partially offset by a 1% increase in revenue per new vehicle sold. Same store new vehicle revenue decreased by $42.4 million (2%) as a result of a 2% decrease in new vehicle units sold, partially offset by a slight increase in revenue per new vehicle sold.

Same store new vehicle gross profit for the nine months ended September 30, 2017 decreased by $16.1 million (12%), due to a 10% decrease in gross profit per new vehicle sold. Same store new vehicle gross margin for the nine months ended September 30, 2017 decreased by 60 basis points to 4.7%. The decrease in our same store gross profit margin was primarily attributable to a change in our revenue mix towards our generally lower margin import brands and margin pressures as a result of generally higher new vehicle inventory levels across the industry and the failure to achieve the aggressive sales and marketing incentive targets set by certain manufacturers.

~~Used Vehicle—~~

For the Nine Months Ended September 30, Increase (Decrease)
%
Change
2017 2016
(Dollars in millions, except for per vehicle data)
As Reported:
Revenue:
Used vehicle retail revenue $ 1,245.7
$ 1,254.7
$ (9.0 ) (1 )%
Used vehicle wholesale revenue 150.9
152.8
(1.9 ) (1 )%
Used vehicle revenue $ 1,396.6
$ 1,407.5
$ (10.9 ) (1 )%
Gross profit:
Used vehicle retail gross profit $ 94.4
$ 101.4
$ (7.0 ) (7 )%
Used vehicle wholesale gross profit 1.0
(1.6 ) 2.6
163 %
Used vehicle gross profit $ 95.4
$ 99.8
$ (4.4 ) (4 )%
Used vehicle retail units:
Used vehicle retail units 59,107
59,378
(271 ) — %

Same Store:
Revenue:
Used vehicle retail revenue $ 1,200.9
$ 1,170.5
$ 30.4
3 %
Used vehicle wholesale revenue 144.8
145.2
(0.4 ) — %
Used vehicle revenue $ 1,345.7
$ 1,315.7
$ 30.0
2 %
Gross profit:
Used vehicle retail gross profit $ 90.0
$ 94.7
$ (4.7 ) (5 )%
Used vehicle wholesale gross profit 1.2
(1.4 ) 2.6
NM
Used vehicle gross profit $ 91.2
$ 93.3
$ (2.1 ) (2 )%
Used vehicle retail units:
Used vehicle retail units 56,623
54,674
1,949
4 %

~~Used Vehicle Metrics—~~

For the Nine Months Ended September 30, Increase (Decrease)
%
Change
2017 2016
As Reported:
Revenue per used vehicle retailed $ 21,075
$ 21,131
$ (56 ) — %
Gross profit per used vehicle retailed $ 1,597
$ 1,708
$ (111 ) (6 )%
Used vehicle retail gross margin 7.6 % 8.1 % (0.5 )%

Same Store:
Revenue per used vehicle retailed $ 21,209
$ 21,409
$ (200 ) (1 )%
Gross profit per used vehicle retailed $ 1,589
$ 1,732
$ (143 ) (8 )%
Used vehicle retail gross margin 7.5 % 8.1 % (0.6 )%

NM—~~Not Meaningful~~

Used vehicle revenue decreased by $10.9 million (1%) due to a decrease of $9.0 million (1%) in used vehicle retail revenue and a $1.9 million (1%) decrease in used vehicle wholesale revenue. Same store used vehicle revenue increased by $30.0 million (2%) due to an increase of $30.4 million (3%) in same store used vehicle retail revenue, partially offset by a $0.4 million decrease in same store used vehicle wholesale revenues. For the nine months ended September 30, 2017 same store used vehicle retail unit sales grew by 1,949 units (4%).

For the nine months ended September 30, 2017 same store used vehicle retail gross margins decreased 60 basis points to 7.5% as a result of the 8% decrease in used vehicle gross profit per vehicle retailed and a 1% decrease in revenue per used vehicle retailed.

~~Parts and Service—~~

For the Nine Months Ended September 30,
Increase
(Decrease)

%
Change
2017 2016
(Dollars in millions)
As Reported:
Parts and service revenue $ 589.5
$ 584.9
$ 4.6
1 %
Parts and service gross profit:
Customer pay 203.8
201.4
2.4
1 %
Warranty 61.7
54.4
7.3
13 %
Wholesale parts 15.7
15.6
0.1
1 %
Parts and service gross profit, excluding reconditioning and preparation $ 281.2
$ 271.4
$ 9.8
4 %
Parts and service gross margin, excluding reconditioning and preparation 47.7 % 46.4 % 1.3 %

Reconditioning and preparation $ 86.0
$ 90.6
$ (4.6 ) (5 )%
Total parts and service gross profit $ 367.2
$ 362.0
$ 5.2
1 %
Total parts and service gross margin 62.3 % 61.9 % 0.4 %

Same Store:
Parts and service revenue $ 579.6
$ 556.1
$ 23.5
4 %
Parts and service gross profit:
Customer pay 199.9
192.4
7.5
4 %
Warranty 60.8
52.5
8.3
16 %
Wholesale parts 15.6
14.5
1.1
8 %
Parts and service gross profit, excluding reconditioning and preparation $ 276.3
$ 259.4
$ 16.9
7 %
Parts and service gross margin, excluding reconditioning and preparation 47.7 % 46.6 % 1.1 %

Reconditioning and preparation $ 84.1
$ 85.6
$ (1.5 ) (2 )%
Total parts and service gross profit $ 360.4
$ 345.0
$ 15.4
4 %
Total parts and service gross margin 62.2 % 62.0 % 0.2 %

The $4.6 million (1%) increase in parts and service revenue was primarily the result of an increase of $12.4 million (12%) in warranty revenue, partially offset by a $6.7 million (2%) decrease in customer pay revenue and a $1.1 million (1%) decrease in wholesale parts revenue. Same store parts and service revenue increased by $23.5 million (4%) from $556.1 million for the nine months ended September 30, 2016 to $579.6 million for the nine months ended September 30, 2017. The increase in same store parts and service revenue was primarily due to a $14.4 million (14%) increase in warranty revenue, a $4.7 million (6%) increase in wholesale parts revenue, and a $4.4 million (1%) increase in customer pay revenue.

~~Parts and service gross profit, excluding reconditioning and preparation, increased by $9.8 million (4%) to $281.2~~$128.2 million, and same store gross profit, excluding reconditioning and preparation, increased by ~~$16.9~~$0.6 million ~~(7%~~(1%) to ~~$276.3~~$101.2 million. The ~~increase in same store~~ parts and service ~~gross profit is primarily due~~business was negatively impacted by "shelter in place" orders issued in response to ~~a shift~~the COVID-19 pandemic in ~~mix towards our higher margin warranty revenue.~~2020 but has shown gradual improvement as COVID-19 restrictions have begun to ease and in conjunction with the COVID-19 vaccination rollout.

Table of Contents

Finance and Insurance, net—


	For the Nine Months Ended September 30,				Increase (Decrease)		% Change			For the Three Months Ended March 31,				Increase (Decrease)		% Change
	2017		2016							2021		2020
	(Dollars in millions, except for per vehicle data)									(Dollars in millions, except for per vehicle data)
As Reported:									As Reported:
Finance and insurance, net	$	202.5	$	192.6	$	9.9	5	%	Finance and insurance, net	$	88.3	$	70.4	$	17.9	25	%
Finance and insurance, net per vehicle sold	$	1,524	$	1,416	$	108	8	%	Finance and insurance, net per vehicle sold	$	1,739	$	1,666	$	73	4	%

Same Store:									Same Store:
Finance and insurance, net	$	196.2	$	182.5	$	13.7	8	%	Finance and insurance, net	$	80.7	$	67.2	$	13.5	20	%
Finance and insurance, net per vehicle sold	$	1,529	$	1,425	$	104	7	%	Finance and insurance, net per vehicle sold	$	1,798	$	1,684	$	114	7	%

F&I revenue, net ~~revenue~~ increased ~~by $9.9~~$17.9 million ~~(5%~~(25%) during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 when compared to the ~~nine~~three months ended ~~September 30, 2016, with~~March 31, 2020, and same store F&I revenue, net ~~revenue increasing~~increased by ~~$13.7~~$13.5 million ~~(8%~~(20%) over the same ~~time~~ period. ~~During the nine months ended September 30, 2017, we benefited from the acceleration of commissions~~F&I revenue, net increased as a result of ~~our amended agreement with our primary insurance products underwriter which became effective during~~ the ~~fourth quarter of 2016.~~increase in new and used retail unit sales for the three months ended March 31, 2021 as compared to the three months ended March 31, 2020. For the three months ended March 31, 2021, the Company was able to improve the F&I PVR by $73 per unit (4%) over the comparable prior year period.

Selling, General, and Administrative Expense—


	For the Three Months Ended March 31,								Increase (Decrease)		% of Gross Profit Increase (Decrease)
	2021		% of Gross Profit		2020		% of Gross Profit
	(Dollars in millions)
As Reported:
Personnel costs	$	117.1	30.6	%	$	94.9	34.8	%	$	22.2	(4.2)	%
Sales compensation	37.4		9.8	%	27.4		10.1	%	10.0		(0.3)	%
Share-based compensation	4.7		1.2	%	3.5		1.3	%	1.2		(0.1)	%
Outside services	23.9		6.2	%	21.4		7.9	%	2.5		(1.7)	%
Advertising	7.7		2.0	%	7.4		2.7	%	0.3		(0.7)	%
Rent	11.2		2.9	%	6.8		2.5	%	4.4		0.4	%
Utilities	4.3		1.1	%	4.1		1.5	%	0.2		(0.4)	%
Insurance	7.3		1.9	%	4.1		1.5	%	3.2		0.4	%
Other	26.2		7.0	%	25.1		9.2	%	1.1		(2.2)	%
Selling, general, and administrative expense	$	239.8	62.7	%	$	194.7	71.5	%	$	45.1	(8.8)	%
Gross profit	$	382.7			$	272.4

Same Store:
Personnel costs	$	95.3	30.4	%	$	90.4	34.8	%	$	4.9	(4.4)	%
Sales compensation	32.1		10.2	%	25.9		10.0	%	6.2		0.2	%
Share-based compensation	4.7		1.5	%	3.5		1.3	%	1.2		0.2	%
Outside services	19.6		6.3	%	20.2		7.8	%	(0.6)		(1.5)	%
Advertising	6.3		2.0	%	6.7		2.6	%	(0.4)		(0.6)	%
Rent	11.0		3.5	%	6.7		2.6	%	4.3		0.9	%
Utilities	3.5		1.1	%	3.8		1.5	%	(0.3)		(0.4)	%
Insurance	6.0		1.9	%	3.6		1.4	%	2.4		0.5	%
Other	$	21.3	6.9	%	$	24.3	9.3	%	(3.0)		(2.4)	%
Selling, general, and administrative expense	$	199.8	63.8	%	$	185.1	71.3	%	$	14.7	(7.5)	%
Gross profit	$	313.4			$	259.7

For the Nine Months Ended September 30,
Increase
(Decrease)

% of Gross
Profit Increase (Decrease)
2017
% of Gross
Profit
2016
% of Gross
Profit

(Dollars in millions)
As Reported:
Personnel costs $ 261.1
33.2 % $ 257.1
32.4 % $ 4.0
0.8 %
Sales compensation 83.5
10.6 % 83.8
10.6 % (0.3 ) — %
Share-based compensation 10.0
1.3 % 9.1
1.1 % 0.9
0.2 %
Outside services 60.7
7.7 % 57.7
7.3 % 3.0
0.4 %
Advertising 22.7
2.9 % 25.4
3.2 % (2.7 ) (0.3 )%
Rent 20.2
2.6 % 23.0
2.9 % (2.8 ) (0.3 )%
Utilities 11.8
1.5 % 11.7
1.5 % 0.1
— %
Insurance 11.4
1.4 % 13.6
1.7 % (2.2 ) (0.3 )%
Other 67.8
8.5 % 67.8
8.5 % —
— %
Selling, general, and administrative expense $ 549.2
69.7 % $ 549.2
69.2 % $ —
0.5 %
Gross profit $ 787.5
$ 794.1

Same Store:
Personnel costs $ 252.8
33.0 % $ 244.2
32.3 % $ 8.6
0.7 %
Sales compensation 80.5
10.5 % 79.4
10.5 % 1.1
— %
Share-based compensation 10.0
1.3 % 9.1
1.2 % 0.9
0.1 %
Outside services 59.0
7.7 % 54.0
7.1 % 5.0
0.6 %
Advertising 21.6
2.8 % 22.4
3.0 % (0.8 ) (0.2 )%
Rent 20.2
2.6 % 22.9
3.0 % (2.7 ) (0.4 )%
Utilities 11.4
1.5 % 10.9
1.4 % 0.5
0.1 %
Insurance 11.0
1.4 % 12.8
1.7 % (1.8 ) (0.3 )%
Other $ 66.7
8.7 % $ 65.3
8.7 % 1.4
— %
Selling, general, and administrative expense $ 533.2
69.5 % $ 521.0
68.9 % $ 12.2
0.6 %
Gross profit $ 766.7
$ 755.8

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SG&A expense as a percentage of gross profit ~~was 69.7%~~decreased 880 basis points from 71.5% for the ~~nine~~three months ended ~~September 30, 2017 compared~~March 31, 2020 to ~~69.2%~~62.7% for the ~~nine~~three months ended ~~September 30, 2016. Same~~March 31, 2021 while same store SG&A expense as a percentage of gross profit ~~increased by 60~~decreased 750 basis points ~~from 68.9% for the nine months ended September 30, 2016~~ to 69.5% for the nine months ended September 30, 2017. The increase in SG&A expense is primarily attributable to higher personnel costs and higher outside services predominately related to our investments in technologies to improve our customer experience and productivity, partially offset by decreases in Insurance, Advertising, and Rent Expense.63.8% over that same period. The decrease in ~~insurance expense for~~SG&A as a percentage of gross profit during the ~~nine~~three months ended ~~September 30, 2017 compared to the nine months ended September 30, 2016~~March 31, 2021, is primarily the result of ~~a reduction~~broad cost cutting measures arising from the COVID-19 pandemic and the higher gross profits on new and used vehicle sales triggered by new vehicle inventory shortages caused by production disruptions. On an as reported basis, Personnel costs and Sales compensation increased by $22.2 million and $10.0 million, respectively, for the three months ended March 31, 2021 as compared to the three months ended March 31, 2020, primarily due to the Park Place acquisition and an increase in ~~insurance retention~~sales commissions related to ~~hail storm damage at~~the increase in gross profits earned during the periods. In addition, the Company made the decision to continue to pay its employees when certain ~~dealerships~~of our stores were closed in ~~2016, coupled with lower premiums for property and casualty insurance. Included in SG&A expense~~February as a result of weather related disruptions. Rent increased from $6.8 million to $11.2 million for the ~~nine~~three months ended ~~September 30, 2017 is approximately $1.5~~March 31, 2021 as compared to the same period in the prior year due to real estate operating leases entered into related to Park Place dealership locations. Lastly, Insurance expenses increased by $3.2 million for the three months ended March 31, 2021 as compared to the three months ended March 31, 2020 due to increased insurance premiums stemming from the Park Place acquisition and claims associated with certain weather related events.

Franchise Rights Impairment—

During the three months ended March 31, 2020, we recorded a franchise rights impairment charge of ~~expense in connection with our previously disclosed CEO transition.~~$23.0 million. As a result of the COVID-19 pandemic, we performed a quantitative impairment analysis of certain franchise rights assets and determined that their carrying values exceeded their fair value by $23.0 million as of March 31, 2020. We did not incur a similar charge during the three months ended March 31, 2021 because there were no indicators of impairment.

Other Operating ~~Expenses, net —~~Expense, net—

Other operating ~~expenses,~~expense, net ~~which~~ includes gains and losses from the sale of property and equipment, ~~income derived from lease arrangements,~~ and other ~~non-core~~ operating items ~~was $0.7 million for~~not considered core to our business. During the ~~nine~~three months ended ~~September 30, 2017 compared with~~March 31, 2021, the Company recorded other operating ~~expenses,~~income, net of ~~$4.2~~$3.2 million, primarily related to a $3.5 million gain arising from legal settlements. Included in the ~~comparable 2016 period.~~

~~During the nine months ended September 30, 2017, we recognized expenses associated with a lease termination of $2.9 million, partially offset by $0.8~~$10.2 million of other ~~income and~~operating expense, net for the three months ended March 31, 2020, was an $11.6 million charge related to certain financing transactions related to, as well as the termination of, the Park Place acquisition, a $0.9 million gain ~~recognized for legal settlements.~~

~~During the nine months ended September 30, 2016, we recognized $3.1 million in non-cash real estate related impairment charges consisting of $0.9 million~~ related to ~~a lease buyout~~legal settlements and a ~~lease termination, $0.7~~$0.3 million gain related to the ~~write down~~sale of ~~a property classified as Assets Held for Sale, and $1.5 million related to a property transferred to Assets Held for Sale.~~vacant real estate.

Floor Plan Interest ~~Expense —~~Expense—

Floor plan interest expense ~~increased~~decreased by ~~$2.7~~$4.1 million ~~(19%~~(59%) to ~~$17.1~~$2.9 million during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 compared to ~~$14.4~~$7.0 million ~~for~~during the ~~nine~~three months ended ~~September 30, 2016,~~March 31, 2020 primarily as a result of ~~higher~~a decrease in LIBOR from which our floor plan interest ~~rates.~~rate is calculated and lower new vehicle inventory levels.

Loss on Extinguishment of Debt, net—

On March 4, 2020, the Company redeemed its $600 million 6% Notes scheduled to mature in 2024 at 103% of par, plus accrued and unpaid interest. We recorded a loss on extinguishment of the 6% Notes of $19.1 million which comprised a redemption premium of $18.0 million and the write-off of the unamortized premium and debt issuance costs totaling $1.1 million.

As a result of the termination of the Asset Purchase Agreement (the "2019 Asset Purchase Agreement"), dated as of December 11, 2019, among the Company, Park Place and the other parties thereto, the Company delivered a notice of special mandatory redemption to holders of its $525.0 million aggregate principal amount of Senior Notes due 2028 (the "Existing 2028 Notes") and $600.0 million aggregate principal amount of Senior Notes due 2030 (the "Existing 2030 Notes") pursuant to which it would redeem on a pro rata basis (1) $245.0 million of the Existing 2028 Notes and (2) $280.0 million of the Existing 2030 Notes, in each case, at 100% of the respective principal amount plus accrued and unpaid interest to, but excluding the special mandatory redemption date. On March 30, 2020, the Company completed the redemption and recorded a write-off of unamortized debt issuance costs of $1.5 million.

Gain on Dealership Divestitures, net—

During the three months ended March 31, 2020, we sold one franchise (one dealership location) in the Atlanta, Georgia market and we sold six franchises (five dealership locations) and one collision center in the Jackson, Mississippi market. The Company recorded a net pre-tax gain totaling $33.7 million.

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Income Tax Expense—

The $22.0 million increase in income tax expense was primarily the result of a $95.3 million increase in income before income taxes. Our effective tax rate for the three months ended March 31, 2021 was 22.3% and 19.1% in the prior comparative period as a result of excess tax benefits associated with share-based compensation vesting. We expect our effective tax rate for 2021 to be around 25%.

LIQUIDITY AND CAPITAL RESOURCES

As of ~~September 30, 2017~~,March 31, 2021, we had total available liquidity of ~~$406.4~~$551.3 million,, which consisted of $27.8 million of cash and cash equivalents, of ~~$2.8~~$145.4 million, ~~$75.0 million~~ of available funds in our floor plan offset accounts, ~~$190.0 million of availability under our new vehicle floor plan facility that is able to be re-designated to our revolving credit facility, $46.7~~$239.2 million of availability under our revolving credit facility, and ~~$91.9~~$138.9 million of availability under our used vehicle revolving 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~~customary operating and other restrictive covenants. As of ~~September 30, 2017~~,March 31, 2021, these ~~financial~~ covenants did not further limit our availability under our credit facilities. For more information on our ~~financial~~ covenants, see "Covenants" and "Share Repurchases and Dividend Restrictions" below.

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 ~~2016~~2019 Senior Credit Facility, our other floor plan facilities, our Real Estate Credit Agreement, our Restated Master Loan Agreement, and our mortgage financings (each, as defined below), (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.

Material Indebtedness

We currently are party to the following material credit facilities and agreements, and have the following material indebtedness outstanding. For a more detailed description of the material terms of these agreements and facilities, and this indebtedness, please refer to ~~the "Long-Term Debt" footnote included~~Note 13 "Debt" in ~~this Quarterly Report on Form 10-Q and~~ our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016.~~2020.

~~2016~~•2019 Senior Credit Facility—On ~~July~~September 25, ~~2016,~~2019, the Company and certain of its subsidiaries entered into anthe third amended and restated ~~senior secured~~ credit agreement with Bank of America, as administrative agent, and the other lenders party ~~thereto.~~

~~The 2016~~thereto (the "2019 Senior Credit ~~Facility~~Facility"). The 2019 Senior Credit Agreement provides for the following:

Revolving Credit Facility—A $250.0 million ~~revolving credit facility (the "Revolving~~Revolving Credit ~~Facility")~~Facility for, among other things, acquisitions, working capital and capital expenditures, including a $50.0 million sub-limit for letters of credit. As described below, as of September 30, 2017, we re-designated $190.0 million of availability from the Revolving Credit Facility to the New Vehicle Floor Plan Facility (as defined below), resulting in $60.0 million of borrowing capacity. In addition, weWe had ~~$13.3~~$10.8 million in outstanding letters of credit as of March 31, 2021, resulting in ~~$46.7~~$239.2 million ofadditional borrowing availability as of ~~September 30, 2017.~~March 31, 2021.

New Vehicle Floor Plan Facility—A ~~$900.0 million new vehicle revolving floor plan facility (the "New Vehicle Floor Plan Facility"). In connection with the~~$1.04 billion New Vehicle Floor Plan Facility ~~we established an account with Bank of America that~~which allows us to transfer cash as an offset to floor plan notes payable. These transfers reduce the amount of outstanding new vehicle floor plan notes payable that would otherwise accrue interest, while retaining the ability to transfer amounts from the offset account into our operating cash accounts within one to two days. As a result of the use of our floor plan offset account and the reduction in LIBOR rates, we ~~experience~~experienced a reduction in Floor Plan Interest Expense on our Condensed Consolidated Statements of Income. As of ~~September 30, 2017,~~March 31, 2021, we had ~~$578.6~~$480.9 million ~~which is net of $63.2 million in our floor plan offset account,~~ outstanding under the New Vehicle Floor Plan ~~Facility.~~Facility, which included $2.8 million classified as Liabilities associated with assets held for sale on our Condensed Consolidated Balance Sheet and is net of $139.6 million in our floor plan offset account.

Used Vehicle Floor Plan Facility—A ~~$150.0~~$160.0 million ~~used vehicle revolving floor plan facility (the "Used~~Used Vehicle Floor Plan ~~Facility")~~Facility to finance the acquisition of used vehicle inventory and for, among other things, working capital and capital expenditures, as well as to refinance used vehicles. We began the year with nothing drawn on our used vehicle floor plan facility and there was no activity during the three months ended March 31, 2021. Our borrowing capacity under the Used Vehicle Floor Plan Facility was limited to ~~$91.9~~$138.9 million based on our borrowing base calculation as of ~~September 30, 2017. We have with nothing drawn on our used vehicle floor plan facility as of September 30, 2017.~~

March 31, 2021.

Subject to compliance with certain conditions, the ~~agreement governing the 2016~~2019 Senior Credit ~~Facility~~Agreement provides that we have the ability, at our option and subject to the receipt of additional commitments from existing or new lenders, to increase the size of the facilities by up to ~~$325.0~~$350.0 million in the aggregate without lender consent.

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At our option, we have the ability to re-designate a portion of our availability under the Revolving Credit Facility to the New Vehicle Floor Plan Facility or the Used Vehicle Floor Plan Facility. The maximum amount we are allowed to re-designate is determined based on ~~our current borrowing availability~~aggregate commitments under the Revolving Credit Facility, less $50.0 million. In addition, we are able to re-designate any amounts moved to the New Vehicle Floor Plan Facility or the Used Vehicle Floor Plan Facility back to the Revolving Credit Facility. ~~As of September 30, 2017, we re-designated~~On April 6, 2021, $190.0 million of our availability under the Revolving Credit Facility was re-designated to the New Vehicle Floor Plan ~~Facility. We re-designated this amount~~Facility to take advantage of ~~the~~ lower commitment fee ~~rates on the New Vehicle Floor Plan Facility when compared to the Revolving Credit Facility.~~

rates.

Borrowings under the ~~2016~~2019 Senior Credit Facility bear interest, at our option, based on ~~the London Interbank Offered Rate ("LIBOR")~~LIBOR or the Base Rate, in each case, plus an Applicable ~~Margin.~~Rate. The Base Rate is the highest of (i) the ~~(i)~~Federal Funds Rate plus 0.50%, (ii) the Bank of America prime rate, ~~(ii) Federal Funds rate plus 0.50%,~~ and (iii) one month LIBOR plus 1.00%. ~~The~~ Applicable ~~Margin, for borrowings under~~Rate means with respect to the Revolving Credit Facility, ~~ranges~~a range from ~~1.25%~~1.00% to ~~2.50%~~2.00% for LIBOR loans and ~~0.25%~~0.15% to ~~1.50%~~1.00% for Base Rate loans, in each case based on the Company's consolidated total lease adjusted leverage ratio. Borrowings under the New Vehicle ~~Floor Plan~~Floorplan Facility bear interest, at ~~the~~our option, ~~of the Company,~~ based on LIBOR plus ~~1.25%~~1.10% or the Base Rate plus ~~0.25%~~0.10%. Borrowings under the Used Vehicle ~~Floor Plan~~Floorplan Facility bear interest, at ~~the~~our option, ~~of the Company,~~ based on LIBOR plus ~~1.50%~~1.40% or the Base Rate plus ~~0.50%~~0.40%.

In addition to the payment of interest on borrowings outstanding under the ~~2016~~2019 Senior Credit Facility, we are required to pay a quarterly commitment fee on ~~the~~ total unused commitments thereunder. The fee for unused commitments under the Revolving Credit Facility is between ~~0.20%~~0.15% and ~~0.45%~~0.40% per year, based on the Company's total lease adjusted leverage ratio, and the fee for unused commitments under the New Vehicle Facility Floor Plan and the Used Vehicle Facility Floor Plan Facility is 0.15% per year.

•Manufacturer affiliated new vehicle floor plan and other financing facilities—We have a floor plan facility with the Ford Motor Credit Company ("Ford Credit") to purchase new Ford and Lincoln vehicle ~~inventory, which matures on December 5, 2019. During August 2016, we~~inventory. Our floor plan facility with Ford Credit was amended in July 2020 to extend the maturity date to July 31, 2021. We have also established a floor plan offset account with Ford Credit, which operates in a similar manner to our floor plan offset account with Bank of America. As of ~~September 30, 2017,~~March 31, 2021, we had ~~$109.7~~$48.7 million, which is net of ~~$11.8~~$5.8 million in our floor plan offset account, outstanding under our floor plan facility. Additionally, we had ~~$80.8~~$134.9 million outstanding under our 2019 Senior Credit Facility and facilities with certain manufacturers for the financing of loaner vehicles, which ~~were~~are presented within Accounts ~~Payable~~payable and ~~Accrued Liabilities~~accrued liabilities in our Condensed Consolidated

Balance Sheets. Neither our floor plan facility with Ford Credit nor our facilities for loaner vehicles have stated borrowing limitations.

~~6.0%~~•The New Senior ~~Subordinated~~ Notes ~~due 2024~~ —asOn February 19, 2020, the Company completed its offering of ~~September 30, 2017 we had $600.0~~senior unsecured notes, consisting of $525.0 million in aggregate principal amount ~~outstanding related~~of the Existing 2028 Notes and $600.0 million aggregate principal amount of the Existing 2030 Notes. The Existing 2028 Notes and Existing 2030 Notes mature on March 1, 2028 and March 1, 2030, respectively.

On March 24, 2020, the Company delivered notice to ~~our 6.0% Notes. We are required~~the sellers terminating the 2019 Asset Purchase Agreement and the Real Estate Purchase Agreement. As a result, the Company redeemed $245.0 million aggregate principal million of the Existing 2028 Notes and $280.0 million aggregate principal amount of the Existing 2030 Notes pursuant to ~~pay~~the Special Mandatory Redemption.

In September 2020, the Company completed an add-on issuance of $250.0 million aggregate principal amount of additional senior notes consisting of $125.0 million aggregate principal amount of additional Existing 2028 Notes at a price of 101.00% of par, plus accrued interest onfrom September 1, 2020, and $125.0 million aggregate principal amount of additional Existing 2030 Notes (together with the ~~6.0%~~additional 2028 Notes, ~~on June 15 and December 15~~the "Additional Notes") at a price of ~~each year until maturity on December 15, 2024.~~

101.75% of par, plus accrued interest from September 1, 2020.

•Mortgage notes— asAs of ~~September 30, 2017,~~March 31, 2021, we had ~~$177.6~~$78.0 million of mortgage note ~~obligations.~~obligations which included $2.3 million classified as Liabilities associated with assets held for sale. These obligations are collateralized by the associated real estate at our dealership locations.

•2013 BofA Real Estate Facility—On September 26, 2013, we entered into a real estate term loan credit agreement (the "2013 BofA Real Estate Credit Agreement") with Bank of America, N.A. ("Bank of America"), as lender, providing for term loans in an aggregate amount not to exceed $75.0 million, subject to customary terms and conditions (the "2013 BofA Real Estate Facility"). As of March 31, 2021, we had $32.9 million of outstanding borrowings under the 2013 BofA Real Estate Facility. There is no further borrowing availability under this agreement.

~~Restated~~

•2015 Wells Fargo Master Loan ~~Agreement~~ Facility—On February 3, 2015, certain of our subsidiaries entered into an amended and restated master loan agreement (the "2015 Wells Fargo Master Loan Agreement") with Wells Fargo Bank,

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National Association ("Wells Fargo"), as lender, which provides for term loans to certain of our subsidiaries ~~(the "Restated~~that are borrowers under the 2015 Wells Fargo Master Loan ~~Agreement"~~Agreement in an aggregate amount not to exceed $100.0 million (the "2015 Wells Fargo Master Loan Facility"). Borrowings under the ~~Restated~~2015 Wells Fargo Master Loan ~~Agreement~~Facility are guaranteed by us and are collateralized by the real property financed under the ~~Restated~~2015 Wells Fargo Master Loan ~~Agreement.~~Facility. As of ~~September 30, 2017,~~March 31, 2021, the outstanding balance under ~~the Restated Master Loan Agreement~~this agreement was ~~$90.6~~$60.5 million. There is no further borrowing availability under this ~~facility.~~

agreement.

~~Real Estate Credit Agreement~~ •2018 Bank of America Facility—On November 13, 2018, we entered into a real estate term loan credit agreement (as amended, restated or supplemented from time to time, the "2018 BofA Real Estate Credit Agreement") with ~~borrowings~~Bank of America, as lender, providing for term loans in an aggregate amount not to exceed $128.1 million, subject to customary terms and conditions (the "2018 BofA Real Estate Facility"). Our right to make draws under the 2018 BofA Real Estate Facility terminated on November 13, 2019. All of the real property financed by an operating dealership subsidiary of the Company under the 2018 BofA Real Estate Facility is collateralized by first priority liens, subject to certain permitted ~~exceptions, on all~~exceptions. As of March 31, 2021, we had $82.8 million of outstanding borrowings under the ~~real property financed thereunder~~2018 Bank of America Facility.

•2018 Wells Fargo Master Loan Facility—On November 16, 2018, certain of our subsidiaries entered into a master loan agreement (the ~~"Real Estate Credit~~"2018 Wells Fargo Master Loan Agreement") with Wells Fargo as lender, which provides for term loans to certain of our subsidiaries that are borrowers under the 2018 Wells Fargo Master Loan Agreement in an aggregate amount not to exceed $100.0 million (the "2018 Wells Fargo Master Loan Facility"). As of ~~September 30, 2017,~~March 31, 2021, we had ~~$48.3~~$85.6 million, ~~of mortgage note obligations~~ outstanding borrowings under the ~~Real Estate Credit Agreement.~~2018 Wells Fargo Master Loan Facility. There is no further borrowing availability under this agreement.

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, 2017.~~March 31, 2021.

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.

Our ~~2016~~2019 Senior Credit Facility and our ~~indenture governing our 6.0% Notes~~Indentures permit us to make an unlimited amount of restricted payments, such as share repurchases or dividends, so long as our Consolidated Total Leverage Ratio, as defined in those agreements, does not exceed 3.0 to 1.0 on a pro forma basis after giving effect to any proposed payments. As of ~~September 30, 2017,~~March 31, 2021, our Consolidated Total Leverage Ratio did not exceed 3.0 to 1.0.

On January ~~30, 2014, our~~27, 2021, the Board of Directors ~~authorized~~increased the Company’s share repurchase authorization under our current share repurchase program (the "Repurchase Program").

~~On January 27, 2016, our Board of Directors reset the authorization under our Repurchase Program~~ by $33.7 million to ~~$300.0~~$100 million, ~~in the~~

~~aggregate,~~ for the repurchase of our common stock in open market transactions or privately negotiated transactions from time to

time. The extent to which 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 the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2021, we ~~repurchased 90,700 and 584,696~~did not repurchase any shares ~~respectively,~~ of our common stock under the Repurchase Program ~~for a total of $5.1 million~~ and ~~$34.8 million, respectively. As of September 30, 2017, we~~ had remaining authorization to repurchase ~~$53.3~~$100.0 million in shares of our common stock under the Repurchase Program.

During the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2021, we repurchased ~~541 and 71,330~~61,893 shares, ~~respectively,~~ of our common stock for ~~$30.0 thousand and $4.6~~$9.6 million, respectively, from employees in connection with a net share settlement feature of employee equity-based awards.

Classification of Cash Flows Associated with Floor Plan Notes Payable

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 a lender not affiliated with the manufacturer from which we purchased the related inventory. The majority of our floor plan notes are payable to parties unaffiliated with the entities from which we purchase our new vehicle inventory, with the exception of floor plan notes payable relating to the financing of new Ford and Lincoln vehicles.

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 "cash provided by operating activities, as adjusted" (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.

Cash provided by operating activities, as adjusted, includes borrowings and repayments of floor plan notes payable to lenders not affiliated with the manufacturer from which we purchase the related new vehicles. Cash provided by operating activities, as adjusted, has material limitations, and therefore, 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 have provided below a reconciliation of cash flow from 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, were classified as an operating activity.

New vehicle floor plan (repayments) borrowings—non-trade, net

New vehicle floor plan (repayments) borrowings —non-trade, net

Operating Activities—

Net cash provided by operating activities totaled ~~$243.2~~$210.8 million and ~~$151.3~~$127.7 million, for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016,~~2020, respectively. Net cash provided by operating activities, as adjusted, totaled ~~$123.2~~$54.4 million and ~~$227.8~~$164.9 million for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016,~~2020, respectively.

The ~~$104.6~~$110.5 million decrease in our net cash provided by operating activities, as adjusted, for the ~~nine~~three months ended ~~September 30, 2017 as~~March 31, 2021 compared to the ~~nine~~three months ended ~~September 30, 2016~~March 31, 2020 was primarily the result of ~~the following:~~

~~The decrease in our cash provided by operating activities, as adjusted, was partially offset by $26.5 million related to sales volume and the timing~~income of ~~collection of accounts receivable and contracts-in-transit during 2017 as compared to 2016.~~$67.0 million.

Investing Activities—

Net cash used in investing activities totaled ~~$98.0 million and $77.5~~$3.7 million for the ~~nine~~three months ended ~~September 30, 2017 and 2016, respectively.~~March 31, 2021 compared to cash provided by investing activities of $45.2 million, for the three months ended March 31, 2020. Capital expenditures, excluding the purchase of real estate, were ~~$21.4~~$11.2 million and ~~$47.3~~$9.1 million for the

~~nine~~ three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016,~~2020, respectively. We expect that capital expenditures for ~~2017~~2021 will total approximately ~~$50.0~~$55.0 million to upgrade or replace our existing facilities, construct new facilities, expand our service capacity, and invest in technology and equipment.

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2021, we released $1.0 million of purchase price holdbacks related to a prior year acquisition.

During the three months ended March 31, 2020, we acquired ~~two~~the assets of three franchises ~~(two~~(one dealership location) in the Denver, Colorado market for a purchase price of $63.6 million. We funded this acquisition with an aggregate $34.5 million of cash and $27.1 million of floor plan borrowings for the purchase of the related new vehicle inventory. In the aggregate, this acquisition included purchase price holdbacks of $2.0 million for potential indemnity claims made by us with respect to the acquired franchises. In addition to the acquisition amounts above, we released $1.5 million of purchase price holdbacks related to a prior year acquisition.

During the three months ended March 31, 2021, we received cash proceeds of $14.0 million from the sale of vacant properties.

During the three months ended March 31, 2020, we sold one franchise (one dealership location) in the Atlanta, Georgia market, six franchises (five dealership locations) and one collision center in the ~~Indianapolis, Indiana~~Jackson, Mississippi market for an aggregate purchase price of ~~$80.1~~$115.5 million.

~~During~~ In addition, during the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, we received cash proceeds of ~~$3.8~~$4.2 million from the sale of ~~a property that was included in Assets Held for Sale as of December 31, 2016.~~vacant properties.

During the ~~nine~~three months ended ~~September 30, 2016,~~March 31, 2021 and 2020, purchases of real estate, including previously leased real estate, totaled ~~$30.2 million.~~$5.5 million and $2.3 million, respectively.

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 used in financing activities totaled ~~$145.8 million and $72.9~~$180.7 million for the ~~nine~~three months ended ~~September 30, 2017 and 2016, respectively.~~March 31, 2021. Net cash provided by financing activities totaled $212.2 million for the three months ended March 31, 2020.

During the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016,~~2020, we had non-trade floor plan borrowings, excluding floor plan borrowings associated with acquisitions, of ~~$2.82~~$1.22 billion and ~~$2.92~~$1.12 billion, respectively, and non-trade floor plan repayments, excluding floor plan repayments associated with a divestiture, of ~~$2.94~~$1.38 billion and ~~$2.81~~$1.09 billion, respectively.

~~In addition, during~~During the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020, we had floor plan borrowings of $27.1 million, related to acquisitions.

During the three months ended March 31, 2020, we had non-trade floor plan ~~borrowings~~repayments associated with divestitures of ~~$25.1 million related to acquisitions.~~and $50.5 million.

Repayments of borrowings totaled ~~$11.5~~$14.7 million and ~~$11.2~~$1.16 billion for the three months ended March 31, 2021 and 2020, respectively. In addition, payments of debt issuance costs totaled $3.1 million for the ~~nine~~three months ended ~~September 30, 2017 and 2016, respectively.~~March 31, 2020.

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, we ~~repurchased~~had proceeds of $7.3 million related to a ~~total~~sale and leaseback of ~~584,696~~real estate in Plano, Texas.

During the three months ended March 31, 2021, we did not repurchase any shares of our common stock under our Repurchase Program ~~for a total of $34.8 million and 71,330~~but repurchased 61,893 shares of our common stock for ~~$4.6~~$9.6 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 1112 "Commitments and Contingencies" within the accompanying Condensed Consolidated Financial Statements.

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 ~~Notes hereto.~~fiscal year ended December 31, 2020. Our critical accounting policies and estimates have not changed materially during the three months ended March 31, 2021.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to risk from changes in interest rates on a significant portion of our outstanding indebtedness. Based on ~~$674.3~~$496.4 million of total variable interest rate debt, which includes our floor plan notes payable and certain mortgage liabilities, outstanding as of ~~September 30, 2017~~,March 31, 2021, a 100 basis point change in interest rates could result in a change of as much as ~~$6.7~~$5.0 million to our total annual interest expense in our Consolidated Statements of Income.

We periodically receive floor plan assistance from certain automobile manufacturers, which is accounted for as a reduction in our new vehicle inventory cost. Floor plan assistance reduced our cost of sales for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020 by ~~$26.6~~$13.8 million and ~~$25.7~~$9.4 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.

~~In June 2015, we entered into an~~We currently have four interest rate swap ~~agreement with a notional principal amount of $100.0 million. This swap was~~agreements. These swaps were designed to provide a hedge against changes in variable rate cash flows regarding fluctuations in the one month ~~LIBOR rate, through maturity in February 2025.~~LIBOR. The ~~notional value~~following table provides information on the attributes of ~~this swap was $91.7 million as of September 30, 2017 and is reducing over its remaining term to $53.1 million at maturity.~~

In November 2013, we entered into an interest rate swap agreement with a notional principal amount of $75.0 million. This swap was designed to provide a hedge against changes in variable rate cash flows regarding fluctuations in the one month LIBOR rate, through maturity in September 2023. The notional values of thiseach swap as of ~~September 30, 2017 was $61.2 million and will reduce over its remaining term to $38.7 million at maturity.~~March 31, 2021:


Inception Date	Notional Principal at Inception		Notional Value		Notional Principal at Maturity		Maturity Date
	(In millions)		(In millions)		(In millions)
July 2020	$	93.5	$	90.5	$	50.6	December 2028
July 2020	$	85.5	$	82.8	$	57.3	November 2025
June 2015	$	100.0	$	73.7	$	53.1	February 2025
November 2013	$	75.0	$	48.0	$	38.7	September 2023

For additional information about the effect of our derivative instruments, onplease refer to Note 10 "Financial Instruments and Fair Value" within the accompanying Condensed Consolidated Financial ~~Statements, see Note 9 "Financial Instruments and Fair Value" of the Notes thereto.~~Statements.

Item 4. Controls and Procedures

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 effective to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act is (i) recorded, processed, summarized, and reported within the time period specified in the rules and forms of the U.S. Securities and Exchange Commission, and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding disclosure. Management necessarily applies its judgment in assessing the costs and benefits of such controls and procedures, which, by their nature, can provide only reasonable assurance regarding management's control objectives. Management, including the principal executive officer and the principal financial officer, does not expect that our disclosure controls and procedures can prevent all possible errors or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that objectives of the control system are met. There are inherent limitations in all control systems, including the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple errors or mistakes. Additionally, controls can be circumvented by the intentional acts of one or more persons. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and while our disclosure controls and procedures are designed to be effective under circumstances where they should reasonably be expected to operate effectively, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of the inherent limitations in any control system, misstatements due to possible errors or fraud may occur and not be detected.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended ~~September 30, 2017~~March 31, 2021 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we and our dealerships may become involved in various claims relating to, and arising out of our business and our operations. These claims may involve, but are not limited to, financial and other audits by vehicle manufacturers or lenders, and certain federal, state, and local government authorities, which relate primarily to (i) incentive and warranty payments received from vehicle manufacturers, or allegations of violations of manufacturer agreements or policies, (ii) compliance with lender rules and covenants and (iii) payments made to government authorities relating to federal, state, and local taxes, as well as compliance with other government regulations. Claims may also arise through litigation, government proceedings, and other dispute resolution processes. Such claims, including class actions, can relate to, but are not limited to, the practice of charging administrative fees, employment-related matters, truth-in-lending practices, contractual disputes, actions brought by governmental authorities, and other matters. We evaluate pending and threatened claims and establish loss contingency reserves based upon outcomes we currently believe to be probable and reasonably estimable.

We currently do not anticipate that any known claim will materially adversely affect our financial condition, liquidity or results of operations. However, the outcome of any matter cannot be predicted with certainty, and an unfavorable resolution of one or more matters presently known or arising in the future could have a material adverse effect on our financial condition, liquidity or results of operations.

Item 1A. Risk Factors

Historically, we have generated a significant portion of our revenue through new vehicle sales, and new vehicle sales also tend to lead to sales of higher-margin products and services, such as finance and insurance products and vehicle-related parts and service. We rely exclusively on the various vehicle manufacturers for our new vehicle inventory and maintenance and replacement parts inventory. As a result, our profitability is dependent to a great extent on various aspects of vehicle manufacturers’ operations and timely delivery of new vehicles and parts.


								As of
	As of							March 31, 2021			December 31, 2020
	September 30, 2017			December 31, 2016				(In millions)
							4.50% Senior Notes due 2028	$	405.0		$	405.0
4.75% Senior Notes due 2030							4.75% Senior Notes due 2030	445.0			445.0
Mortgage notes payable bearing interest at fixed rates(a)							75.7			79.2
2018 Bank of America Facility							2018 Bank of America Facility	82.8			84.2
2018 Wells Fargo Master Loan Facility (b)							2018 Wells Fargo Master Loan Facility (b)	85.6			86.9
2013 BofA Real Estate Facility							2013 BofA Real Estate Facility	32.9			33.6
2015 Wells Fargo Master Loan Facility (c)							2015 Wells Fargo Master Loan Facility (c)	60.5			61.7
	(In millions)
	$	600.0		$	600.0
	177.6			182.8
Real estate credit agreement	48.3			51.5
Restated master loan agreement	90.6			93.6
Capital lease obligations	3.3			3.4
Finance lease liability							Finance lease liability	16.5			16.6
Total debt outstanding	919.8			931.3			Total debt outstanding	1,204.0			1,212.2
Add—unamortized premium on 6.0% Senior Subordinated Notes due 2024	7.1			7.6
Add—unamortized premium on 4.50% Senior Notes due 2028							Add—unamortized premium on 4.50% Senior Notes due 2028	1.2			1.2
Add—unamortized premium on 4.75% Senior Notes due 2030							Add—unamortized premium on 4.75% Senior Notes due 2030	2.0			2.1
Less—debt issuance costs	(11.2		)	(12.2		)	Less—debt issuance costs	(13.1)			(13.7)
Long-term debt, including current portion	915.7			926.7			Long-term debt, including current portion	1,194.1			1,201.8
Less—current portion, net of current portion of debt issuance costs	(14.3		)	(14.0		)	Less—current portion, net of current portion of debt issuance costs	(36.4)			(36.6)
Long-term debt	$	901.4		$	912.7		Long-term debt	$	1,157.7		$	1,165.2



x☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the Three Months Ended September 30,	Results Recognized in Accumulated Other Comprehensive Loss (Effective Portion)			Location of Results Reclassified from Accumulated Other Comprehensive Loss to Earnings	Results Reclassified from Accumulated Other Comprehensive Loss to Earnings
2017	$	(0.1	)	Swap interest expense	$	(0.4	)
2016	$	0.2		Swap interest expense	$	(0.8	)



Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (in millions)
07/01/2017 - 07/31/2017	90,700	$	56.15	90,700	$	53.3
08/01/2017 - 08/31/2017	—	$	—	—	$	—
09/01/2017 - 09/30/2017	—	$	—	—	$	—



Exhibit Number		Description of Documents
~~10.1~~ 31.1		First Amendment to Employment Agreement between Asbury Automotive Group, Inc. and David W. Hult, dated as of August 21, 2017 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on August 22, 2017)*
~~10.2~~	Transition and Separation Agreement between Asbury Automotive Group, Inc. and Craig T. Monaghan, dated as of August 21, 2017 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on August 22, 2017)*
~~31.1~~	Certificate of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certificate of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certificate of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certificate of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document
*104		Cover Page Interactive Data File (formatted in iXBRL Exhibit 101)
*		Incorporated by ~~reference.~~ reference



~~Exhibit~~ ~~Number~~		~~Description of Documents~~
~~10.1~~		First Amendment to Employment Agreement between Asbury Automotive Group, Inc. and David W. Hult, dated as of August 21, 2017 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on August 22, 2017)*
~~10.2~~		Transition and Separation Agreement between Asbury Automotive Group, Inc. and Craig T. Monaghan, dated as of August 21, 2017 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on August 22, 2017)*
~~31.1~~		~~Certificate of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~
~~31.2~~		~~Certificate of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~
~~32.1~~		~~Certificate of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~
~~32.2~~		~~Certificate of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~
~~101.INS~~		~~XBRL Instance Document~~
~~101.SCH~~		~~XBRL Taxonomy Extension Schema Document~~
~~101.CAL~~		~~XBRL Taxonomy Extension Calculation Linkbase Document~~
~~101.DEF~~		~~XBRL Taxonomy Extension Definition Linkbase Document~~
~~101.LAB~~		~~XBRL Taxonomy Extension Label Linkbase Document~~
~~101.PRE~~		~~XBRL Taxonomy Extension Presentation Linkbase Document~~
*		~~Incorporated by reference.~~