

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~~July 27, 2023 was ~~20,817,702~~.

20,575,182.

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~~June 30, ~~2017~~2023 and December 31, ~~2016~~2022	4
			Condensed Consolidated Statements of Income for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022	5
			Condensed Consolidated Statements of Comprehensive Income for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022	6
			Condensed Consolidated Statements of Shareholders' Equity for the Three and Six Months Ended June 30, 2023 and 2022	7
			Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022	79
			Notes to Condensed Consolidated Financial Statements	810
Item 2.			Management's Discussion and Analysis of Financial Condition and Results of Operations	1725
Item 3.			Quantitative and Qualitative Disclosures About Market Risk	3948
Item 4.			Controls and Procedures	4048

			PART II—Other Information

Item 1.			Legal Proceedings	4049
Item 1.A.			Risk Factors	49
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds	4149
Item 4.6.			~~Mine Safety Disclosures~~Exhibits	4151
			~~Item 6.~~Signatures	~~Exhibits~~52	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)


	June 30, 2023		December 31, 2022
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	77.5	$	235.3
Short-term investments	10.3		5.4
Contracts-in-transit, net	167.2		220.8
Accounts receivable, net	175.7		171.9
Inventories, net	1,199.2		959.2
Assets held for sale	27.5		29.1
Other current assets	346.6		288.1
Total current assets	2,003.9		1,909.8
INVESTMENTS	287.3		235.0
PROPERTY AND EQUIPMENT, net	1,940.2		1,941.0
OPERATING LEASE RIGHT-OF-USE ASSETS	233.6		235.4
GOODWILL	1,783.4		1,783.4
INTANGIBLE FRANCHISE RIGHTS	1,800.1		1,800.1


OTHER LONG-TERM ASSETS	117.4		116.7
Total assets	$	8,165.9	$	8,021.4
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Floor plan notes payable—trade, net	$	49.3	$	51.0
Floor plan notes payable—non-trade, net	—		—
Current maturities of long-term debt	59.2		84.5
Current maturities of operating leases	21.2		23.6
Accounts payable and accrued liabilities	687.5		645.0
Deferred revenue—current	223.6		218.9
Liabilities associated with assets held for sale	8.8		10.5
Total current liabilities	1,049.6		1,033.4
LONG-TERM DEBT	3,181.3		3,216.8
LONG-TERM LEASE LIABILITY	218.7		218.4
DEFERRED REVENUE	490.5		495.0
DEFERRED INCOME TAXES	101.7		100.7
OTHER LONG-TERM LIABILITIES	55.6		53.5
COMMITMENTS AND CONTINGENCIES (Note 13)
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; 42,591,097 and 43,593,809 shares issued, including shares held in treasury, respectively	0.4		0.4
Additional paid-in capital	1,282.0		1,281.4
Retained earnings	2,781.1		2,610.1
Treasury stock, at cost; 22,016,267 and 22,024,479 shares, respectively	(1,066.4)		(1,063.0)
Accumulated other comprehensive income	71.4		74.4
Total shareholders' equity	3,068.6		2,903.5
Total liabilities and shareholders' equity	$	8,165.9	$	8,021.4

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 June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
REVENUE:
New vehicle	$	1,942.7	$	1,864.6	$	3,710.4	$	3,720.1
Used vehicle	1,107.3		1,362.4		2,233.9		2,713.4
Parts and service	526.1		520.2		1,041.7		1,022.1
Finance and insurance, net	166.3		203.0		338.9		406.4
TOTAL REVENUE	3,742.5		3,950.1		7,324.8		7,862.0
COST OF SALES:
New vehicle	1,757.7		1,644.1		3,346.5		3,275.7
Used vehicle	1,036.4		1,258.3		2,086.0		2,510.0
Parts and service	234.1		229.7		467.6		455.2
Finance and insurance	1.2		15.3		15.5		26.5
TOTAL COST OF SALES	3,029.4		3,147.4		5,915.5		6,267.3
GROSS PROFIT	713.1		802.7		1,409.3		1,594.7
OPERATING EXPENSES:
Selling, general, and administrative	408.6		448.2		811.6		903.7
Depreciation and amortization	16.8		18.1		33.5		36.5

Other operating expense (income), net	—		0.8		—		(1.9)
INCOME FROM OPERATIONS	287.7		335.5		564.2		656.3
OTHER EXPENSES:
Floor plan interest expense	0.8		1.5		1.5		4.1
Other interest expense, net	39.3		37.6		76.6		75.2



(Gain) loss on dealership divestitures, net	(13.5)		28.7		(13.5)		(4.4)
Total other expenses, net	26.6		67.8		64.6		74.9
INCOME BEFORE INCOME TAXES	261.1		267.7		499.6		581.4
Income tax expense	64.8		66.4		121.9		142.3


NET INCOME	$	196.4	$	201.4	$	377.7	$	439.1
EARNINGS PER SHARE:
Basic—


Net income	$	9.37	$	9.11	$	17.78	$	19.60
Diluted—


Net income	$	9.34	$	9.07	$	17.70	$	19.52
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic	20.9		22.1		21.2		22.4


Performance share units	0.1		0.1		0.1		0.1
Diluted	21.0		22.2		21.3		22.5

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 June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Net income	$	196.4	$	201.4	$	377.7	$	439.1
Other comprehensive income:
Change in fair value of cash flow swaps	17.0		28.6		(2.4)		70.9
Income tax (expense) benefit associated with cash flow swaps	(4.1)		(6.9)		0.6		(17.4)
Losses on available-for-sale debt securities	(4.2)		—		(1.7)		(2.1)
Income tax benefit associated with available-for-sale debt securities	1.0		0.2		0.5		0.4
Comprehensive income	$	206.0	$	223.3	$	374.7	$	490.9

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, 2022	43,593,809	$	0.4	$	1,281.4	$	2,610.1	22,024,479	$	(1,063.0)	$	74.4	$	2,903.5
Comprehensive Income:
Net income	—	—		—		181.4		—	—		—		181.4
Change in fair value of cash flow swaps, net of reclassification adjustment and $4.7 million tax benefit	—	—		—		—		—	—		(14.6)		(14.6)
Unrealized gain on changes in fair value of debt securities, net of reclassification adjustment and $0.5 million tax expense	—	—		—		—		—	—		2.0		2.0
Comprehensive income	—	—		—		181.4		—	—		(12.6)		168.7
Share-based compensation	—	—		8.6		—		—	—		—		8.6
Issuance of common stock, net of forfeitures, in connection with share-based payment arrangements	120,575	—		—		—		—	—		—
Share repurchases	—	—		—		—		110,323	(20.7)		—		(20.7)
Repurchase of common stock associated with net share settlement of employee share-based awards	—	—		—		—		45,613	(10.9)		—		(10.9)
Retirement of common stock	(164,527)	—		(2.0)		(28.2)		(164,527)	30.2		—		—
Balances, March 31, 2023	43,549,857	$	0.4	$	1,288.0	$	2,763.3	22,015,888	$	(1,064.3)	$	61.8	$	3,049.2
Comprehensive Income:
Net income	—	—		—		196.4		—	—		—		196.4
Change in fair value of cash flow swaps, net of reclassification adjustment and $4.1 million tax expense	—	—		—		—		—	—		12.8		12.8
Unrealized loss on changes in fair value of debt securities, net of reclassification adjustment and $1.0 million tax benefit	—	—		—		—		—	—		(3.2)		(3.2)
Comprehensive income	—	—		—		196.4		—	—		9.6		206.0

Share-based compensation	—	—		5.5		—		—	—		—		5.5
Issuance of common stock, net of forfeitures in connection with share-based payment arrangements	1,043	—		—		—		—	—		—		—
Share repurchases	—	—		—		—		959,803	(192.1)		—		(192.1)
Repurchase of common stock associated with net share settlement of employee share-based awards	—	—		—		—		379	(0.1)		—		(0.1)
Retirement of common stock	(959,803)	—		(11.6)		(178.5)		(959,803)	190.1		—		—
Balances, June 30, 2023	42,591,097	$	0.4	$	1,282.0	$	2,781.1	22,016,267	(1,066.4)		$	71.4	$	3,068.6

Table of Contents


	Common Stock			Additional Paid-in Capital		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Income (Loss)		Total
	Shares	Amount						Shares	Amount
Balances, December 31, 2021	45,052,293	$	0.4	$	1,278.6	$	1,881.3	21,914,251	$	(1,044.1)	$	(0.7)	$	2,115.5
Comprehensive Income:
Net income	—	—		—		237.7		—	—		—		237.7
Change in fair value of cash flow swaps, net of reclassification adjustment and $10.4 million tax expense	—	—		—		—		—	—		31.8		31.8
Unrealized loss on changes in fair value of debt securities, net of reclassification adjustment and $0.2 million tax benefit	—	—		—		—		—	—		(2.0)		(2.0)
Comprehensive income	—	—		—		237.7		—	—		29.8		267.5
Share-based compensation	—	—		7.0		—		—	—		—		7.0
Issuance of common stock, net of forfeitures, in connection with share-based payment arrangements	115,435	—		—		—		—	—		—		—
Share repurchases	—	—		1.4		—		1,069,203	(200.0)		—		(198.6)
Repurchase of common stock associated with net share settlements of employee share-based awards	—	—		—		—		53,810	(8.9)		—		(8.9)
Retirement of common stock	(1,069,203)	—		(12.9)		(187.1)		(1,069,203)	200.0		—		—
Balances, March 31, 2022	44,098,525	$	0.4	$	1,274.1	$	1,931.9	21,968,061	$	(1,053.0)	$	29.1	$	2,182.5
Comprehensive Income:
Net income	—			—		201.4		—	—		—		201.4
Change in fair value of cash flow swaps, net of reclassification adjustment and $6.9 million tax expense	—	—		—		—		—	—		21.7		21.7
Unrealized gain on changes in fair value of debt securities, net of reclassification adjustment $0.2 million tax benefit	—	—		—		—		—	—		0.2		0.2
Comprehensive income	—	—		—		201.4		—	—		21.9		223.3
Share-based compensation	—	—		4.7		—		—	—		—		4.7
Issuance of common stock, net of forfeitures, in connection with share-based payment arrangements	1,485	—		—		—		—	—		—		—
Repurchase of common stock associated with net share settlements of employee share-based awards	—	—		—		—		436	(0.1)		—		(0.1)


Balances, June 30, 2022	44,100,010	$	0.4	$	1,278.8	$	2,133.3	21,968,497	$	(1,053.1)	$	51.0	$	2,410.4

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 Six Months Ended June 30,
	2023		2022
CASH FLOW FROM OPERATING ACTIVITIES:
Net income	$	377.7	$	439.1
Adjustments to reconcile net income to net cash provided by operating activities—
Depreciation and amortization	33.5		36.5
Share-based compensation	14.1		11.7
Deferred income taxes	2.2		(2.7)

Unrealized (gains) losses on investments	(3.3)		12.0


Loaner vehicle amortization	13.4		5.8
Gain on divestitures, net	(13.5)		(4.4)
Change in right-of-use assets	12.4		13.8
Other adjustments, net	1.5		1.1
Changes in operating assets and liabilities, net of acquisitions and divestitures—
Contracts-in-transit	53.6		(8.9)
Accounts receivable	(3.3)		45.2

Inventories	(44.7)		54.2
Other current assets	(267.0)		(189.7)
Floor plan notes payable—trade, net	(1.7)		(9.6)
Deferred revenue	0.2		29.4
Accounts payable and accrued liabilities	64.1		82.5
Operating lease liabilities	(12.9)		(14.5)
Other long-term assets and liabilities, net	(4.6)		(4.9)
Net cash provided by operating activities	221.7		496.6
CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures—excluding real estate	(40.8)		(39.5)





Divestitures	30.7		379.7
Purchases of debt securities—available-for-sale	(124.2)		(25.9)
Purchases of equity securities	—		(8.4)
Proceeds from the sale of debt securities—available-for-sale	17.7		29.4
Proceeds from the sale of equity securities	51.8		8.9
Proceeds from the sale of assets	2.3		—
Net cash (used in) provided by investing activities	(62.5)		344.2
CASH FLOW FROM FINANCING ACTIVITIES:
Floor plan borrowings—non-trade	3,719.2		3,618.4

Floor plan repayments—non-trade	(3,722.0)		(4,115.4)
Floor plan repayments—divestitures	—		(21.6)

Repayments of borrowings	(82.8)		(24.1)
Proceeds from revolving credit facility	—		330.0
Repayments of revolving credit facility	—		(499.0)

Proceeds from issuance of common stock	—		1.4
Payment of debt issuance costs	—		(0.4)
Purchases of treasury stock	(220.3)		(200.0)
Repurchases of common stock, including amounts associated with net share settlements of employee share-based awards	(11.0)		(8.9)

Net cash used in financing activities	(316.9)		(919.6)
Net decrease in cash and cash equivalents	(157.8)		(78.8)
CASH AND CASH EQUIVALENTS, beginning of period	235.3		178.9
CASH AND CASH EQUIVALENTS, end of period	$	77.5	$	100.1

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~~Asbury Automotive Group, Inc., a Delaware corporation organized in 2002, is one of the largest automotive retailers in the United ~~States, operating 94~~States. Our store operations are conducted by our subsidiaries.

As of June 30, 2023, we owned and operated 181 new vehicle franchises ~~(80~~(138 dealership locations), representing 31 brands of automobiles, and 32 collision centers in ~~17 metropolitan markets within nine states as~~14 states. For the six months ended June 30, 2023, our new vehicle revenue brand mix consisted of ~~September 30, 2017.~~33% luxury, 39% imports and 28% domestic brands. 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;~~services (collectively referred to as "parts and services" or "P&S"); and finance and insurance ~~products. As of September 30, 2017, we offered 29 brands of new vehicles~~("F&I") products, including arranging vehicle financing through third parties and ~~our new vehicle revenue brand mix consisted of 46% imports, 33% luxury,~~aftermarket products, such as extended service contracts, guaranteed asset protection ("GAP") debt cancellation and ~~21% domestic brands. We also operated 24 collision repair centers that serve customers~~prepaid maintenance. The finance and insurance products are provided by independent third parties and Total Care Auto, Powered by Landcar ("TCA"). The Company reflects its operations 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~~two reportable segments: Dealerships and ~~Orlando, Florida;~~

~~Courtesy dealerships operating in Tampa, Florida;~~

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

~~Gray-Daniels dealerships operating in the Jackson, Mississippi area;~~

~~Hare dealerships operating in the Indianapolis, Indiana area;~~

~~McDavid dealerships operating in metropolitan Austin, Dallas and Houston, Texas;~~

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

~~Plaza dealerships operating in metropolitan St. Louis, Missouri.~~

Our operating results are generally subject to changes 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~~TCA.

Basis of Presentation

The accompanying ~~Condensed Consolidated Financial Statements~~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~~condensed consolidated financial statements as of ~~September~~June 30, ~~2017,~~2023, and for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022, have been ~~included.~~ included, unless otherwise indicated. Amounts presented in the condensed consolidated financial statements have been calculated using non-rounded amounts for all periods presented and therefore certain amounts may not compute or tie to prior year financial statements due to rounding.

The results of operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 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~~condensed consolidated financial statements should be read together with our audited consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2022.

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 in the period they are determined to be necessary. ~~Significant estimates~~Estimates made in the accompanying ~~Condensed Consolidated Financial Statements~~condensed consolidated financial statements include, but are not limited to, those relating to inventory valuation reserves, reserves for chargebacks against revenue recognized from the sale of finance and insurance products, reserves for ~~insurance~~self-insurance programs, and certain assumptions related to goodwill and dealership franchise rights intangible ~~and long-lived assets, and reserves for certain legal~~assets.

Share Repurchases

Share repurchases may be made from time-to-time in open market transactions or ~~similar proceedings relating~~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 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 ~~our business operations.~~

~~Contracts-In-Transit~~

~~Contracts-in-transit represent receivables from third-party finance companies~~amounts initially recorded for the ~~portion~~same issue, and retained earnings.

During the three months ended June 30, 2023, the Company repurchased and retired 959,803 shares of our common stock under our share repurchase program. There were no shares repurchased and retired during the three months ended June 30, 2022. During the six months ended June 30, 2023 and 2022, the Company repurchased 1,070,126 and 1,069,203 shares and retired 1,124,330 and 1,069,203 shares, of our common stock under our share repurchase program, respectively. The cash paid

Table of Contents

for these share repurchases was $210.7 million and $200.0 million for the six months ended June 30, 2023 and 2022, respectively.

On May 25, 2023, we announced that our Board of Directors approved a new ~~and used vehicle purchase price financed by customers through sources arranged by us.~~

~~Revenue Recognition~~

~~Revenue from the sale of new and used vehicles (which excludes sales tax) is recognized upon the latest of delivery, signing~~authorization to repurchase up to $250 million of the ~~sales contract or approval~~Company's common stock (the "New Share Repurchase Authorization"), which replaces our previous share repurchase authorization. As of ~~financing. Revenue from~~July 24, 2023, 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 recognized as a reduction of new vehicle cost of sales at the time the related vehicles are sold, in the accompanying Condensed Consolidated Statements of Income.

We receive commissions from third-party lending and insurance institutions for arranging customer financing and from the sale of vehicle 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 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 basedCompany had $250 million remaining 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 in the accompanying Condensed Consolidated Statements of Income. Additionally, we participate in future profits associated with the performance of the third-party held underlying portfolio 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.its share repurchase authorization.

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 714 and 473 restricted share units and 0 and 18,339 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 June 30, 2023 and 2022, respectively. During the six months ended June 30, 2023 and 2022, the Company excluded 3,947 and 1,669 restricted share units and 0 and 89 performance share units issued under the Asbury Automotive Group, Inc. 2019 Equity and Incentive Compensation Plan from its computation of diluted earnings per share, 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~~Recent Accounting Pronouncements

In September 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2022-04, Liabilities-Supplier Finance Programs. This standard serves to improve transparency about supplier finance programs. The ASU requires certain disclosures around key terms of outstanding supply chain finance programs and changes in obligations during a reporting period related to vendors participating in these programs. The new disclosure requirements do not affect the recognition, measurement or financial statement presentation of any amounts due. The guidance is effective for ~~Sale~~fiscal years beginning after December 15, 2022, except for rollforward information, which is effective in the first quarter of 2024. Early adoption is permitted. The adoption of this new guidance on January 1, 2023 did not have a material impact on our condensed consolidated financial statements. See Note 8, "Floor Plan Notes Payable."

2. REVENUE RECOGNITION

Disaggregation of Revenue

Revenue from contracts with customers for the three and ~~Liabilities Associated~~six months ended June 30, 2023 and 2022 consists of the following:


	For the Three Months Ended June 30,
	2023		2022
	(In millions)
Revenue:
New vehicle	$	1,942.7	$	1,864.6
Used vehicle retail	1,013.3		1,272.7
Used vehicle wholesale	94.0		89.7
New and used vehicle	3,050.0		3,227.0
Sale of vehicle parts and accessories	123.9		125.4
Vehicle repair and maintenance services	402.2		394.8
Parts and services	526.1		520.2
Finance and insurance, net	166.3		203.0
Total revenue	$	3,742.5	$	3,950.1

Table of Contents


	For the Six Months Ended June 30,
	2023		2022
	(In millions)
Revenue:
New vehicle	$	3,710.4	$	3,720.1
Used vehicle retail	2,034.9		2,489.7
Used vehicle wholesale	198.9		223.7
New and used vehicle	5,944.2		6,433.5
Sale of vehicle parts and accessories	250.0		255.6
Vehicle repair and maintenance services	791.7		766.5
Parts and service	1,041.7		1,022.1
Finance and insurance, net	338.9		406.4
Total revenue	$	7,324.8	$	7,862.0

Contract Assets

Changes in contract assets during the period are reflected in the table below. Contract assets related to vehicle repair and maintenance services are transferred to receivables when a repair order is completed and invoiced to the customer. Certain incremental sales commissions payable to obtain an F&I revenue contract with ~~Assets Held for Sale~~

~~Certain amounts~~a customer have been capitalized and are amortized using the same pattern of recognition applicable to the associated F&I revenue contract.


	Vehicle Repair and Maintenance Services		Finance and Insurance, net		Deferred Sales Commissions		Total
	(In millions)
Balance as of January 1, 2023	$	14.7	$	14.7	$	37.2	$	66.6
Transferred to receivables from contract assets recognized at the beginning of the period	(14.7)		(3.0)		—		(17.7)
Amortization of costs to obtain a contract with a customer	—		—		(2.0)		(2.0)
Costs incurred to obtain a contract with a customer	—		—		8.6		8.6
Increases related to revenue recognized, inclusive of adjustments to constraint, during the period	16.3		2.8		—		19.1
Balance as of March 31, 2023	$	16.3	$	14.5	$	43.8	$	74.6

Contract Assets (current), March 31, 2023	16.3		14.5		12.9		43.7
Contract Assets (long-term), March 31, 2023	—		—		30.9		30.9

Transferred to receivables from contract assets recognized at the beginning of the period	(16.3)		(2.7)		—		(19.0)
Amortization of costs to obtain a contract with a customer	—		—		(3.2)		(3.2)
Costs incurred to obtain a contract with a customer	—		—		13.5		13.5
Increases related to revenue recognized, inclusive of adjustments to constraint, during the period	17.5		2.5		—		20.0
Balance as of June 30, 2023	$	17.5	$	14.3	$	54.1	$	86.2

Contract Assets (current), June 30, 2023	17.5		14.3		15.4		47.4
Contract Assets (long-term), June 30, 2023	—		—		38.7		38.7

Table of Contents

Deferred Revenue

The condensed consolidated balance sheets reflect $714.0 million and $713.9 million of deferred revenue as of June 30, 2023 and December 31, 2022, respectively. Approximately $124.7 million of deferred revenue at December 31, 2022 was recorded in finance and insurance, net revenue in the condensed consolidated statements of income during the six months ended June 30, 2023.

3. DIVESTITURES

During the six months ended June 30, 2023, we sold one franchise (one dealership location) in Austin, Texas. The Company recorded a pre-tax gain totaling $13.5 million, which is presented in our accompanying condensed consolidated statements of income as gain on dealership divestitures, net.

During the six months ended June 30, 2022, we sold one franchise (one dealership location) in St. Louis, Missouri, three franchises (three dealership locations) and one collision center in Denver, Colorado, two franchises (two dealership locations) in Spokane, Washington and one franchise (one dealership location) in Albuquerque, New Mexico. The Company recorded a pre-tax gain totaling $4.4 million, which is presented in our accompanying condensed consolidated statements of income as gain on dealership divestitures, net.

4. ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following:


	As of
	June 30, 2023		December 31, 2022
	(In millions)
Vehicle receivables	$	51.8	$	50.4
Manufacturer receivables	43.1		43.3
Other receivables	82.4		80.5
Total accounts receivable	177.4		174.1
Less—Allowance for credit losses	(1.7)		(2.2)
Accounts receivable, net	$	175.7	$	171.9

5. INVENTORIES

Inventories consisted of the following:


	As of
	June 30, 2023		December 31, 2022
	(In millions)
New vehicles	$	706.5	$	527.7
Used vehicles	357.7		304.4
Parts and accessories	135.0		127.2
Total inventories, net (a)	$	1,199.2	$	959.2

____________________________

(a) Inventories, net as of December 31, 2022, excluded $3.4 million classified as ~~Assets Held~~assets held for ~~Sale in~~sale.

The lower of cost and net realizable value reserves reduced total inventories by $8.6 million and $10.7 million as of June 30, 2023 and December 31, 2022, respectively. As of June 30, 2023 and December 31, 2022, certain automobile manufacturer incentives reduced new vehicle inventory cost by $5.4 million and $2.7 million, respectively, and reduced new vehicle cost of sales for the ~~accompanying Condensed Consolidated Balance Sheets.~~ six months ended June 30, 2023 and 2022 by $46.4 million and $48.8 million, respectively.

Table of Contents

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 ~~any~~(iii) the related mortgage notes payable, if applicable. ~~Classification as~~

A summary of assets 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~~and liabilities associated with assets as held for sale ~~we compare the carrying value~~is as follows:


	As of
	June 30, 2023		December 31, 2022
	(In millions)
Assets:


Inventory	$	—	$	3.4
Loaners, net	—		0.9

Property and equipment, net	25.5		24.0
Operating lease right-of-use assets	2.0		—
Goodwill	—		0.9

Total assets held for sale	27.5		29.1
Liabilities:

Floor plan notes payable—non-trade	—		2.8
Loaners notes payable	—		0.8

Current maturities of long-term debt	0.4		0.6

Long-term debt	6.4		6.2
Operating lease liabilities	2.0		—
Total liabilities associated with assets held for sale	8.8		10.5
Net assets held for sale	$	18.7	$	18.7

As of ~~these~~June 30, 2023, assets ~~to estimates~~held for sale consisted 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 on the accompanying Condensed Consolidated Statements of Cash Flows, with borrowings reflected separately from repayments. The net change in floor plan notes payable to a lender affiliated with the manufacturer from which we purchase a particular new vehicle (collectively referred to as "Floor Plan Notes Payable—Trade") is classified as an operating activity on the accompanying Condensed Consolidated Statements of Cash Flows. Borrowings of floor plan notes payable associated with inventory acquired in connection with all acquisitions and repayments made in connection with all divestitures are classified as financing activities in the accompanying Condensed Consolidated Statement 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. 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 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 and the borrowings and repayments of loaner vehicle notes payable in Accounts Payable and 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 tofour used vehicle ~~inventory. These transfers are reflected as non-cash transfers between Other Current Assets and Inventories in the accompanying Condensed Consolidated Statements of Cash Flows.~~

~~Recent Accounting Pronouncements~~

In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2016-09, Compensation—Stock Compensation (Topic 718), to simplify certain aspects 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 of income as a component of the provision for income taxes when stock awards vest or are settled. 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, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory, changing the subsequent measurement 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 and apply to all entities that enter into contracts to provide goods or services to customers. The guidance also addresses the measurement 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 standard can be adopted either retrospectively to each reporting period presented or as a cumulative effect adjustment as of the date of adoption. 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 and other 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 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.

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~~

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 at 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 the cash flows directly attributable to the franchise rights, revenue growth rates, future gross margins and future selling, general, and administrative expenses. Using an estimated weighted average cost of capital, estimated residual values at the end of the forecast period and estimated future capital expenditure requirements, the Company calculates the fair value of the franchise rights.

~~During the nine months ended September 30, 2017, we acquired the assets of two franchises (two dealership locations) and~~stores, one collision center, ~~in the Indianapolis, Indiana market for a purchase price of $80.1 million. We financed these acquisitions with $55.0 million of cash~~ and ~~$25.1 million of floor plan borrowings for the purchase of the related new vehicle inventory.~~

~~Below is the preliminary allocation of purchase price for the acquisitions completed during the nine months ended September 30, 2017. We have not finished our final assessments of third party~~one real estate ~~appraisals and our internal valuation~~

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

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

~~4. ACCOUNTS RECEIVABLE~~

~~Accounts receivable consisted of the following:~~

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
September 30, 2017 December 31, 2016
(In millions)
New vehicles $ 673.7
$ 720.6
Used vehicles 128.2
132.7
Parts and accessories 41.6
41.6
Total inventories $ 843.5
$ 894.9

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

~~6. ASSETS AND LIABILITIES HELD FOR SALE~~

During the nine months ended September 30, 2017, we reclassified two vacant properties with net book values of $3.8 million to Assets Held for Sale. Additionally, during the nine months ended September 30, 2017, we sold one vacant property ~~with a net book value of $3.9 million.~~

~~Assets held for sale, comprising real estate~~ not currently used in our ~~operations, totaled $16.2 million and $16.1 million as~~operations.

As of ~~September 30, 2017 and~~ December 31, ~~2016, respectively, and there were no liabilities associated with these real estate~~2022, assets held for sale consisted of one franchise (one dealership location) in addition to one real estate property not currently used in our operations.

Table of Contents

7. INVESTMENTS

Our investment portfolio is primarily funded by product premiums from the sale of our TCA F&I products. The amortized cost, gross unrealized gains and losses and estimated fair values of debt securities available-for-sale, equity securities, and other investments measured at net asset value are as follows:


	As of June 30, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In millions)
Short-term investments	$	10.3	$	—	$	—	$	10.3
U.S. Treasury	13.4		—		(0.3)		13.1
Municipal	30.8		0.1		(0.5)		30.4
Corporate	117.2		0.2		(2.7)		114.7
Mortgage and other asset-backed securities	131.3		0.3		(2.5)		129.1
Total debt securities	303.2		0.6		(6.1)		297.6



Total investments	$	303.2	$	0.6	$	(6.1)	$	297.6


	As of December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In millions)
Short-term investments	$	5.4	$	—	$	—	$	5.4
U.S. Treasury	11.8		—		(0.2)		11.6
Municipal	22.8		—		(0.4)		22.4
Corporate	81.8		0.2		(2.3)		79.7
Mortgage and other asset-backed securities	73.8		0.3		(1.4)		72.7
Total debt securities	195.5		0.5		(4.4)		191.7
Common stock	48.7		—		—		48.7


Total investments	$	244.2	$	0.5	$	(4.4)	$	240.4

There were no equity securities held as of ~~September~~June 30, ~~2017 or~~2023. The Company had an unrealized loss of $0.4 million related to equity securities held as of December 31, ~~2016.~~2022.

As of June 30, 2023 and December 31, 2022, the Company had $2.2 million and $1.3 million of accrued interest receivable, respectively, which is included in other current assets on the condensed consolidated balance sheets. The Company does not consider accrued interest receivable in the carrying amount of financial assets held at amortized cost basis or in the allowance for credit losses.

~~During~~

Table of Contents

A summary of amortized costs and fair value of investments by time to maturity, is as follows:


	As of June 30, 2023
	Amortized Cost		Fair Value
	(In millions)
Due in 1 year or less	$	10.3	$	10.3
Due in 1-5 years	101.0		98.8
Due in 6-10 years	57.3		56.2
Due after 10 years	3.2		3.2
Total by maturity	171.8		168.5
Mortgage and other asset-backed securities	131.3		129.1



Total investment securities	$	303.2	$	297.6

There were $0.1 million and $0.2 million gross gains realized, respectively, related to the ~~nine~~sale of available-for-sale debt securities carried at fair value for the three and six months ended ~~September~~June 30, ~~2016, we recorded $1.5~~2023. There were no gross losses realized related to the sale of available-for-sale debt securities carried at fair value for the three and six months ended June 30, 2023. There were $3.7 million gross gains and $0.9 million gross losses realized, respectively, related to the sale of ~~impairment expense based~~equity securities carried at fair value for the three and six months ended June 30, 2023.

There were no gross gains realized related to the sale of available-for-sale debt securities carried at fair value for the three and six months ended June 30, 2022. There were $0.5 million and $0.8 million gross losses realized, respectively, related to the sale of available-for-sale debt securities carried at fair value for three and six months ended June 30, 2022. There were $1.4 million and $1.8 million gross gains realized, respectively, related to the sale of equity securities carried at fair value for the three and six months ended June 30, 2022. There were $1.0 million and $1.4 million gross losses realized, respectively, related to the sale of equity securities carried at fair value for the three and six months ended June 30, 2022.

The following tables summarize the amount of unrealized losses, defined as the amount by which the amortized cost exceeds fair value, and the related fair value of investments with unrealized losses. The investments were segregated into two categories: those that have been in a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position for 12 or more months. The reference point for determining how long an investment was in an unrealized loss position was June 30, 2023.


	As of June 30, 2023
	Less than 12 Months				Greater than 12 Months				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In millions)
Short-term investments	$	9.0	$	—	$	1.3	$	—	$	10.3	$	—
U.S. Treasury	9.6		0.3		1.1		0.1		10.7		0.3
Municipal	23.0		0.5		0.9		—		23.8		0.5
Corporate	90.1		2.1		8.7		0.6		98.8		2.7
Mortgage and other asset-backed securities	99.5		2.2		3.7		0.3		103.3		2.5
Total debt securities	$	231.1	$	5.1	$	15.7	$	1.0	$	246.9	$	6.1

Table of Contents


	As of December 31, 2022
	Less than 12 Months				Greater than 12 Months				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In millions)

U.S. Treasury	$	9.2	$	(0.2)	$	—	$	—	$	9.2	$	(0.2)
Municipal	19.0		(0.4)		—		—		19.0		(0.4)
Corporate	66.2		(0.1)		5.2		(0.3)		71.4		(0.4)
Mortgage and other asset-backed securities	51.4		(1.3)		1.5		(0.2)		52.9		(1.5)
Total debt securities	$	145.7	$	(2.0)	$	6.8	$	(0.5)	$	152.6	$	(2.5)

The Company reviews the investment securities portfolio at the security level on a ~~third-party broker opinion~~quarterly basis for potential credit losses, which takes into consideration numerous factors including changes in credit ratings. The decline in fair value identified in the tables above are a result of ~~value associated with~~widening market spreads and not a ~~property transferred~~result of credit quality. Additionally, the Company has determined it has both the intent and ability to ~~Assets Held for Sale. Additionally,~~hold these investments until the market price recovers or until maturity and does not believe it will be required to sell the securities before maturity. Accordingly, no credit losses were recognized on these securities during the ~~nine~~three and six months ended ~~September~~June 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.~~2023.

In addition to the above impairments, during the nine months ended September 30, 2016, we recognized a $0.9 million non-cash charge associated with a lease buyout and lease termination on real estate not classified as held for sale. This was recorded in Other Operating Expenses, net in our accompanying Condensed Consolidated Statements of Income.

7.8. FLOOR PLAN NOTES PAYABLE

Floor plan notes payable consisted of the following:


	As of							As of
	September 30, 2017			December 31, 2016				June 30, 2023		December 31, 2022
	(In millions)							(In millions)
Floor plan notes payable—trade	$	121.5		$	120.0		Floor plan notes payable—trade	$	91.0	$	65.1
Floor plan notes payable offset account	(11.8		)	(11.7		)	Floor plan notes payable offset account	(41.7)		(14.2)
Total floor plan notes payable—trade, net	$	109.7		$	108.3
Floor plan notes payable—trade, net							Floor plan notes payable—trade, net	$	49.3	$	51.0

Floor plan notes payable—non-trade	$	641.8		$	732.7
Floor plan notes payable offset account	(63.2		)	(59.2		)
Total floor plan notes payable—non-trade, net	$	578.6		$	673.5
Floor plan notes payable—new non-trade (a)							Floor plan notes payable—new non-trade (a)	$	743.8	$	613.6

Floor plan notes payable offset account (b)							Floor plan notes payable offset account (b)	(743.8)		(613.6)
Floor plan notes payable—non-trade, net							Floor plan notes payable—non-trade, net	$	—	$	—

____________________________

Table 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.Contents

New Vehicle—


	For the Six Months Ended June 30,				Increase (Decrease)		% Change
	2023		2022
	(Dollars in millions, except for per vehicle data)
As Reported:
Revenue:
Luxury	$	1,238.0	$	1,135.5	$	102.5	9	%
Import	1,435.0		1,485.4		(50.4)		(3)	%
Domestic	1,037.4		1,099.2		(61.8)		(6)	%
Total new vehicle revenue	$	3,710.4	$	3,720.1	$	(9.7)	—	%
Gross profit:
Luxury	$	141.9	$	147.3	$	(5.4)	(4)	%
Import	136.3		183.3		(46.9)		(26)	%
Domestic	85.7		113.9		(28.2)		(25)	%
Total new vehicle gross profit	$	363.9	$	444.4	$	(80.6)	(18)	%
New vehicle units:
Luxury	17,354		17,156		198		1	%
Import	37,356		40,242		(2,886)		(7)	%
Domestic	18,056		20,473		(2,417)		(12)	%
Total new vehicle units	72,766		77,871		(5,105)		(7)	%

Same Store:
Revenue:
Luxury	$	1,227.1	$	1,075.5	$	151.7	14	%
Import	1,435.0		1,361.9		73.0		5	%
Domestic	1,037.4		1,064.5		(27.1)		(3)	%
Total new vehicle revenue	$	3,699.5	$	3,501.9	$	197.6	6	%
Gross profit:
Luxury	$	140.4	$	140.6	$	(0.2)	—	%
Import	136.4		169.1		(32.8)		(19)	%
Domestic	85.7		110.4		(24.8)		(22)	%
Total new vehicle gross profit	$	362.5	$	420.2	$	(57.7)	(14)	%
New vehicle units:
Luxury	17,156		16,146		1,010		6	%
Import	37,356		36,997		359		1	%
Domestic	18,056		19,764		(1,708)		(9)	%
Total new vehicle units	72,568		72,907		(339)		—	%

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 )%

Table of Contents

New Vehicle Metrics—


	For the Six Months Ended June 30,						Increase (Decrease)			% Change
	2023			2022
As Reported:
Revenue per new vehicle sold	$	50,990		$	47,773		$	3,218		7	%
Gross profit per new vehicle sold	$	5,001		$	5,707		$	(707)		(12)	%
New vehicle gross margin	9.8		%	11.9		%	(2.1)		%

Luxury:
Gross profit per new vehicle sold	$	8,175		$	8,585		$	(410)		(5)	%
New vehicle gross margin	11.5		%	13.0		%	(1.5)		%
Import:
Gross profit per new vehicle sold	$	3,650		$	4,554		$	(905)		(20)	%
New vehicle gross margin	9.5		%	12.3		%	(2.8)		%
Domestic:
Gross profit per new vehicle sold	$	4,745		$	5,562		$	(817)		(15)	%
New vehicle gross margin	8.3		%	10.4		%	(2.1)		%

Same Store:
Revenue per new vehicle sold	$	50,980		$	48,033		$	2,947		6	%
Gross profit per new vehicle sold	$	4,995		$	5,763		$	(768)		(13)	%
New vehicle gross margin	9.8		%	12.0		%	(2.2)		%

Luxury:
Gross profit per new vehicle sold	$	8,187		$	8,708		$	(522)		(6)	%
New vehicle gross margin	11.4		%	13.1		%	(1.6)		%
Import:
Gross profit per new vehicle sold	$	3,650		$	4,571		$	(921)		(20)	%
New vehicle gross margin	9.5		%	12.4		%	(2.9)		%
Domestic:
Gross profit per new vehicle sold	$	4,746		$	5,588		$	(842)		(15)	%
New vehicle gross margin	8.3		%	10.4		%	(2.1)		%

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~~For the six months ended June 30, 2023, new vehicle revenue decreased by ~~$79.3~~$9.7 million ~~(3%)~~ as a result of a 4%7% decrease in new vehicle units sold offset partially ~~offset~~ by a 1%7% increase in revenue per new vehicle sold. Same store new vehicle revenue ~~decreased~~increased by ~~$42.4~~$197.6 million ~~(2%~~(6%) as athe result of a ~~2% decrease in new vehicle units sold, partially offset by a slight~~6% increase in revenue per new vehicle sold.

~~Same~~For the six months ended June 30, 2023, new vehicle gross profit and same store new vehicle gross profit ~~for the nine months ended September 30, 2017~~ decreased by ~~$16.1~~$80.6 million ~~(12%~~(18%) and $57.7 million (14%), ~~due to a 10% decrease in gross profit per new vehicle sold.~~respectively. Same store new vehicle gross margin for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 decreased ~~by 60~~220 basis points to ~~4.7%.~~9.8% driven by the slight easing of new vehicle inventory constraints which softened the historically high new vehicle margins seen in recent years.

The seasonally adjusted annual rate ("SAAR") for new vehicle sales in the U.S. during the six months ended June 30, 2023 was approximately 15.3 million which increased as compared to approximately 13.7 million during the six months ended June 30, 2022. The decrease in ~~our~~new vehicle sales revenue for the six months ended June 30, 2023 over the same ~~store gross profit margin was~~period in the prior year is primarily attributable to ~~a change~~the Company's dealership divestitures during 2022. The increase in ~~our revenue mix towards our generally lower margin import~~SAAR period over period reflects higher fleet inventory supply coupled with continued consumer demand for new vehicles. However, we continue to be negatively impacted by the significant variation in new vehicle days supply among brands and ~~margin pressures~~models, as ~~a result~~well as continued manufacturer production challenges arising from the semiconductor chips, parts and other key components shortage.

Table 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.~~Contents

Used Vehicle—


	For the Six Months Ended June 30,				Increase (Decrease)		% Change
	2023		2022
	(Dollars in millions, except for per vehicle data)
As Reported:
Revenue:
Used vehicle retail revenue	$	2,034.9	$	2,489.7	$	(454.7)	(18)	%
Used vehicle wholesale revenue	198.9		223.7		(24.8)		(11)	%
Used vehicle revenue	$	2,233.9	$	2,713.4	$	(479.5)	(18)	%
Gross profit:
Used vehicle retail gross profit	$	136.5	$	196.5	$	(60.1)	(31)	%
Used vehicle wholesale gross profit	11.4		6.9		4.5		66	%
Used vehicle gross profit	$	147.9	$	203.4	$	(55.5)	(27)	%
Used vehicle retail units:
Used vehicle retail units	64,612		78,154		(13,542)		(17)	%

Same Store:
Revenue:
Used vehicle retail revenue	$	2,023.6	$	2,309.0	$	(285.4)	(12)	%
Used vehicle wholesale revenue	198.1		210.6		(12.5)		(6)	%
Used vehicle revenue	$	2,221.7	$	2,519.6	$	(298.0)	(12)	%
Gross profit:
Used vehicle retail gross profit	$	135.9	$	182.6	$	(46.8)	(26)	%
Used vehicle wholesale gross profit	11.5		6.8		4.8		71	%
Used vehicle gross profit	$	147.4	$	189.4	$	(42.0)	(22)	%
Used vehicle retail units:
Used vehicle retail units	64,132		71,661		(7,529)		(11)	%

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 Six Months Ended June 30,						Increase (Decrease)			% Change
	2023			2022
As Reported:
Revenue per used vehicle retailed	$	31,495		$	31,856		$	(361)		(1)	%
Gross profit per used vehicle retailed	$	2,112		$	2,515		$	(403)		(16)	%
Used vehicle retail gross margin	6.7		%	7.9		%	(1.2)		%

Same Store:
Revenue per used vehicle retailed	$	31,553		$	32,221		$	(668)		(2)	%
Gross profit per used vehicle retailed	$	2,118		$	2,548		$	(430)		(17)	%
Used vehicle retail gross margin	6.7		%	7.9		%	(1.2)		%

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~~$479.5 million ~~(1%~~(18%) due to a ~~decrease of $9.0~~$454.7 million ~~(1%~~(18%) decrease in used vehicle retail revenue and a ~~$1.9~~$24.8 million ~~(1%~~(11%) decrease in used vehicle wholesale revenue. Same store used vehicle revenue ~~increased~~decreased by ~~$30.0~~$298.0 million ~~(2%~~(12%) due to ~~an increase of $30.4~~a $285.4 million ~~(3%~~(12%) decrease in ~~same store~~ used vehicle retail revenue ~~partially offset by~~and a ~~$0.4~~$12.5 million (6%) decrease in ~~same store~~ used vehicle wholesale ~~revenues. For~~revenue. the ~~nine~~decrease in used vehicle revenue was due to a decrease in used vehicle units sold on an all store and same store basis by 13,542 and 7,529 units, respectively for the six months ended ~~September~~June 30, ~~2017~~2023 as compared to the same ~~store used vehicle retail unit sales grew by 1,949 units (4%).~~period in the prior year.

Table of Contents

For the ~~nine~~six months ended ~~September~~June 30, ~~2017 same store~~2023, used vehicle retail gross profit margins decreased 60from 7.9% to 6.7% for all stores and on a same store basis ~~points~~when compared to ~~7.5% as~~the same period of prior year. Used vehicle retail gross profit decreased $60.1 million (31%) for the six months ended June 30, 2023 and decreased $46.8 million (26%) on a ~~result of~~same store basis. On a same store basis, our gross profit per used vehicle retailed decreased $430 (17%) when compared to the ~~8% decrease~~prior year period which was primarily driven by decreases in used vehicle ~~gross profit per vehicle retailed and a 1% decrease in revenue per used vehicle retailed.~~market prices.

Parts and Service—


	For the Six Months Ended June 30,						Increase (Decrease)			% Change
	2023			2022
	(Dollars in millions)
As Reported:
Parts and service revenue	$	1,041.7		$	1,022.1		$	19.6		2	%
Parts and service gross profit:
Customer pay	$	357.3		$	349.3		$	8.0		2	%
Warranty	72.4			67.0			5.4			8	%
Wholesale parts	39.6			40.0			(0.4)			(1)	%
Parts and service gross profit, excluding reconditioning and preparation	$	469.3		$	456.3		$	13.0		3	%
Parts and service gross margin, excluding reconditioning and preparation	45.1		%	44.6		%	0.4		%
Reconditioning and preparation *	$	104.8		$	110.6		$	(5.8)		(5)	%
Total parts and service gross profit	$	574.1		$	566.9		$	7.2		1	%
Total parts and service gross margin	55.1		%	55.5		%	(0.4)		%

Same Store:
Parts and service revenue	$	1,039.3		$	954.5		$	84.8		9	%
Parts and service gross profit:
Customer pay	$	356.3		$	324.9		$	31.4		10	%
Warranty	72.3			63.6			8.7			14	%
Wholesale parts	39.5			37.6			1.9			5	%
Parts and service gross profit, excluding reconditioning and preparation	$	468.1		$	426.2		$	42.0		10	%
Parts and service gross margin, excluding reconditioning and preparation	45.0		%	44.6		%	0.4		%
Reconditioning and preparation *	$	104.5		$	102.5		$	2.0		2	%
Total parts and service gross profit	$	572.6		$	528.7		$	44.0		8	%
Total parts and service gross margin	55.1		%	55.4		%	(0.3)		%

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 %

* 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 ~~$4.6~~$19.6 million ~~(1%~~(2%) increase in parts and service revenue was primarily ~~the result of an~~due to a $15.1 million (2%) increase ~~of $12.4~~in customer pay revenue and a $8.3 million ~~(12%~~(7%) increase in warranty revenue, partially offset by a ~~$6.7~~$3.8 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~~$84.8 million ~~(4%~~(9%) from ~~$556.1~~$954.5 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2022 to ~~$579.6~~$1,039.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~2023. The increase in same store parts and service revenue was ~~primarily~~ due to a ~~$14.4~~$60.0 million ~~(14%~~(10%) increase in customer pay revenue, a $14.3 million (12%) increase in warranty revenue and a ~~$4.7~~$10.4 million ~~(6%~~(5%) increase in wholesale parts ~~revenue, and a $4.4 million (1%) increase in~~revenue. The trend of increased aging of vehicles, which are at historically high levels, is leading to increased customer pay ~~revenue.~~while increased miles driven are contributing to growth in wholesale revenues. Consumers are owning a vehicle for longer periods of time due to the vehicle inventory constraints experienced in the automotive industry.

~~Parts~~For the six months ended June 30, 2023, parts and service gross profit, excluding reconditioning and preparation, increased by ~~$9.8~~$13.0 million ~~(4%~~(3%) to ~~$281.2~~$469.3 million, and same store gross profit, excluding reconditioning and preparation, increased by ~~$16.9~~$42.0 million ~~(7%~~(10%) to ~~$276.3 million. The increase in same store parts and service gross profit is primarily due to a shift in mix towards our higher margin warranty revenue.~~

~~Finance and Insurance, net—~~

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

%
Change
2017 2016
(Dollars in millions, except for per vehicle data)
As Reported:
Finance and insurance, net $ 202.5
$ 192.6
$ 9.9
5 %
Finance and insurance, net per vehicle sold $ 1,524
$ 1,416
$ 108
8 %

Same Store:
Finance and insurance, net $ 196.2
$ 182.5
$ 13.7
8 %
Finance and insurance, net per vehicle sold $ 1,529
$ 1,425
$ 104
7 %

~~F&I, net revenue increased by $9.9~~$468.1 million ~~(5%) during the nine months ended September 30, 2017~~ when compared to the ~~nine~~same period of prior year. The same store increase is primarily a result of increased customer pay volume which is in line with the increasing trend of aged vehicles.

Table of Contents

Finance and Insurance, net—


	For the Six Months Ended June 30,				Increase (Decrease)		% Change
	2023		2022
	(Dollars in millions, except for per vehicle data)
As Reported:
Finance and insurance, net revenue	$	338.9	$	406.4	$	(67.5)	(17)	%
Finance and insurance, net gross profit	$	323.4	$	379.9	$	(56.5)	(15)	%
Finance and insurance, net per vehicle sold	$	2,354	$	2,435	$	(81)	(3)	%

Same Store:
Finance and insurance, net revenue	$	338.5	$	384.9	$	(46.4)	(12)	%
Finance and insurance, net gross profit	$	323.0	$	358.4	$	(35.4)	(10)	%
Finance and insurance, net per vehicle sold	$	2,363	$	2,479	$	(116)	(5)	%

F&I revenue, net decreased $67.5 million (17%) during the six months ended ~~September~~June 30, ~~2016, with same store F&I, net revenue increasing by $13.7 million (8%) over~~2023 when compared to the ~~same time period. During the nine~~six months ended ~~September~~June 30, ~~2017, we benefited from the acceleration of commissions~~2022, as a result of ~~our amended agreement with our primary insurance products underwriter which became effective~~a 12% decrease in new and used retail unit sales and a 3% decrease in F&I per vehicle retailed.

On a same store basis, F&I revenue, net decreased by $46.4 million (12%) during the ~~fourth quarter~~six months ended June 30, 2023 when compared to the six months ended June 30, 2022, as a result of ~~2016.~~a 5% decrease in new and used retail unit sales and a 5% decrease in F&I per vehicle retailed.

TCA's F&I revenue, after dealership intercompany eliminations, was $67.1 million and $53.8 million for the six months ended June 30, 2023 and 2022, respectively. TCA's F&I gross profit, after dealership intercompany eliminations, was $51.6 million and $27.3 million for the six months ended June 30, 2023 and 2022, respectively.

Selling, General, and Administrative Expense—

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


	For the Six Months Ended June 30,								Increase (Decrease)		% of Gross Profit Increase (Decrease)
	2023		% of Gross Profit		2022		% of Gross Profit
	(Dollars in millions)
As Reported:
Personnel costs	$	553.1	39.2	%	$	651.2	40.8	%	$	(98.1)	(1.6)	%
Rent and related expenses	64.2		4.6	%	62.3		3.9	%	1.9		0.6	%
Advertising	21.2		1.5	%	28.4		1.8	%	(7.2)		(0.3)	%
Other	173.1		12.3	%	161.8		10.1	%	11.3		2.1	%
Selling, general, and administrative expense	$	811.6	57.6	%	$	903.7	56.7	%	$	(92.1)	0.9	%
Gross profit	$	1,409.3			$	1,594.7

Same Store:
Personnel costs	$	551.2	39.2	%	$	611.6	40.9	%	$	(60.4)	(1.6)	%
Rent and related expenses	64.0		4.6	%	59.2		4.0	%	4.8		0.6	%
Advertising	21.0		1.5	%	24.9		1.7	%	(3.9)		(0.2)	%
Other	171.9		12.2	%	153.5		10.3	%	18.4		2.0	%
Selling, general, and administrative expense	$	808.1	57.5	%	$	849.2	56.7	%	$	(41.1)	0.8	%
Gross profit	$	1,405.5			$	1,496.6

SG&A expense as a percentage of gross profit ~~was 69.7%~~increased 92 basis points from 56.7% for the ~~nine~~six months ended ~~September~~June 30, ~~2017 compared~~2022 to ~~69.2%~~57.6% for the ~~nine~~six months ended ~~September~~June 30, ~~2016. Same~~2023, while same store SG&A expense as a percentage of gross profit increased ~~by 60~~75 basis points ~~from 68.9% for~~to 57.5% over the ~~nine months ended September 30, 2016 to 69.5% for the nine months ended September 30, 2017.~~same period. The slight 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. The decrease in insurance expense foras a percentage of gross profit during the ~~nine~~six months ended ~~September~~June 30, ~~2017 compared to the nine months ended September 30, 2016~~2023 is primarily the result of ~~a reduction in insurance retention~~lower gross profits for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022. During the six months ended June 30, 2023, we incurred $4.3 million of losses related to hail ~~storm~~

Table of Contents

damage at certain ~~dealerships in 2016, coupled with lower premiums for property and casualty insurance. Included in~~dealerships. On a total company basis, SG&A expense ~~for the nine months ended September 30, 2017 is approximately $1.5 million of expense in connection with our previously disclosed CEO transition.~~

~~Other Operating Expenses, net —~~

~~Other operating expenses, 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~~decreased by $92.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 as compared ~~with other operating expenses, net of $4.2 million in~~to the ~~comparable 2016 period.~~

~~During the nine~~six months ended ~~September~~June 30, ~~2017, we recognized expenses associated with a lease termination of $2.9 million, partially offset by $0.8 million of other income and 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 and a lease termination, $0.7 million related2022 primarily due to the ~~write down~~effects of sixteen dealership divestitures during 2022, as well as lower profitability. On a ~~property classified as Assets Held for Sale, and $1.5 million related~~same store basis, we have continued to ~~a property transferred to Assets Held for Sale.~~achieve cost efficiencies.

Floor Plan Interest ~~Expense —~~Expense—

Floor plan interest expense ~~increased~~decreased by $2.7 million ~~(19%~~(65%) to ~~$17.1~~$1.5 million during the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 compared to ~~$14.4~~$4.1 million ~~for~~during the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2022 due to the increase in our floor plan offset account balances held during the six months ended June 30, 2023 as compared to six months ended June 30, 2022.

Other Interest Expense —

Other interest expense increased $1.5 million (2%) during the six months ended June 30, 2023 from $75.2 million during the six months ended June 30, 2022 to $76.6 million during the six months ended June 30, 2023.

Gain on Dealership Divestitures, net—

During the six months ended June 30, 2023, we sold one franchise (one dealership location) in Austin, Texas and recorded a pre-tax gain totaling $13.5 million. During the six months ended June 30, 2022, we sold one franchise (one dealership location) in St. Louis, Missouri and three franchises (three dealership locations) and one collision center in the Denver, Colorado market, two franchises (two dealership locations) in Spokane, Washington and one franchise (one dealership location) in Albuquerque, New Mexico, and we recorded a pre-tax gain on dealership divestitures, net of $4.4 million. There were no dealership divestitures during the three months ended June 30, 2023.

Income Tax Expense—

The $20.4 million (14%) decrease in income tax expense was primarily ~~as a~~the result of ~~higher interest rates.~~a $81.8 million (14%) decrease in income before income taxes. For the six months ended June 30, 2023 and 2022, our effective income tax rate was 24.4% and 24.5%, respectively, which differed from the U.S. statutory rate primarily due to the favorable effects of the windfall component of equity compensation, a discrete item, and unfavorable effects of various permanent tax adjustments such as executive compensation.

Table of Contents

LIQUIDITY AND CAPITAL RESOURCES

As of ~~September~~June 30, ~~2017~~,2023, we had total available liquidity of ~~$406.4 million~~,$1.59 billion, which consisted of cash and cash equivalents of ~~$2.8~~$63.6 million (excluding $13.9 million held by TCA),~~$75.0 million~~ of available funds in our floor plan offset accounts ~~$190.0~~of $818.4 million ~~of availability under our~~which $785.5 million is offset against new vehicle floor plan ~~facility that~~notes payable and $32.9 million is ~~able to be re-designated to our revolving credit facility, $46.7~~netted against loaner vehicle notes payable, $436.0 million of availability under our revolving credit facility and ~~$91.9~~$271.0 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,~~time-to-time, may be further limited by our required compliance with certain financial covenants. As of ~~September~~June 30, ~~2017~~,2023, these financial covenants did not further limit our availability under our other credit facilities. ~~For more information on our financial covenants, see "Covenants" 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.~~

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, refer to the "Long-Term Debt" footnote included in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

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

~~The 2016 Senior Credit Facility provides for the following:~~

~~Revolving Credit Facility~~—A $250.0 million revolving credit facility (the "Revolving Credit 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, we had $13.3 million in outstanding letters of credit, resulting in $46.7 million of borrowing availability as of September 30, 2017.

~~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 New Vehicle Floor Plan Facility, we established an account with Bank of America that 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, we experience a reduction in Floor Plan Interest Expense on our Condensed Consolidated Statements of Income. As of September 30, 2017, we had $578.6 million, which is net of $63.2 million in our floor plan offset account, outstanding under the New Vehicle Floor Plan Facility.

~~Used Vehicle Floor Plan Facility~~—A $150.0 million used vehicle revolving floor plan facility (the "Used Vehicle Floor Plan 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. Our borrowing capacity under the Used Vehicle Floor Plan Facility was limited to $91.9 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.

Subject to compliance with certain conditions, the agreement governing the 2016 Senior Credit Facility 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 million in the aggregate without lender consent.

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 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 $190.0 million of availability under the Revolving Credit Facility to the New Vehicle Floor Plan Facility. We re-designated this amount to take advantage of the lower commitment fee rates on the New Vehicle Floor Plan Facility when compared to the Revolving Credit Facility.

Borrowings under the 2016 Senior Credit Facility bear interest, at our option, based on the London Interbank Offered Rate ("LIBOR") or the Base Rate, in each case plus an Applicable Margin. The Base Rate is the highest of the (i) 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 the Revolving Credit Facility, ranges from 1.25% to 2.50% for LIBOR loans and 0.25% to 1.50% for Base Rate loans, in each case based on the Company's total lease adjusted leverage ratio. Borrowings under the New Vehicle Floor Plan Facility bear interest, at the option of the Company, based on LIBOR plus 1.25% or the Base Rate plus 0.25%. Borrowings under the Used Vehicle Floor Plan Facility bear interest, at the option of the Company, based on LIBOR plus 1.50% or the Base Rate plus 0.50%.

In addition to the payment of interest on borrowings outstanding under the 2016 Senior Credit Facility, we are required to pay a quarterly commitment fee on the total commitments thereunder. The fee for commitments under the Revolving Credit Facility is between 0.20% and 0.45% per year, based on the Company's total lease adjusted leverage ratio, and the fee for 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 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, we had $109.7 million, net of $11.8 million in our floor plan offset account, outstanding under our floor plan facility. Additionally, we had $80.8 million outstanding under facilities with certain manufacturers for the financing of loaner vehicles, which were presented within Accounts Payable and 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% Senior Subordinated Notes due 2024~~ — as of September 30, 2017 we had $600.0 million in aggregate principal amount outstanding related to our 6.0% Notes. We are required to pay interest on the 6.0% Notes on June 15 and December 15 of each year until maturity on December 15, 2024.

~~Mortgage notes~~ — ~~as of September 30, 2017, we had $177.6 million of mortgage note obligations. These obligations are collateralized by the associated real estate at our dealership locations.~~

~~Restated Master Loan Agreement~~ — provides for term loans to certain of our subsidiaries (the "Restated Master Loan Agreement"). Borrowings under the Restated Master Loan Agreement are guaranteed by us and are collateralized by the real property financed under the Restated Master Loan Agreement. As of September 30, 2017, the outstanding balance under the Restated Master Loan Agreement was $90.6 million. There is no further borrowing availability under this facility.

~~Real Estate Credit Agreement~~ — a real estate term loan credit agreement with borrowings collateralized by first priority liens, subject to certain permitted exceptions, on all of the real property financed thereunder (the "Real Estate Credit Agreement"). As of September 30, 2017, we had $48.3 million of mortgage note obligations outstanding under the Real Estate Credit Agreement. There is no further borrowing availability under this agreement.

foreseeable future.

Covenants

We are subject to a number of customary operating and other restrictive covenants in our various debt and lease agreements. We were in compliance with all of our covenants as of ~~September~~June 30, ~~2017.~~2023.

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 Senior Credit Facility and our indenture governing our 6.0% Notes permit us to make an unlimited amount of restricted payments 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, our Consolidated Total Leverage Ratio did not exceed 3.0 to 1.0.

~~On January 30, 2014, our Board of Directors authorized our current share repurchase program (the "Repurchase Program").~~

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

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

~~time.~~

During the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023, we repurchased ~~90,700~~959,803 and 584,696 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 million in1,070,126 shares of our common stock under ~~the~~our repurchase program for a total of $190.1 million and $210.7 million, respectively. On May 25, 2023, our Board of Directors authorized a new $250.0 million share repurchase authorization (the "New Share Repurchase ~~Program.~~Authorization"), which replaced our previous share repurchase authorization. As of June 30, 2023, we had $250.0 million remaining under our New Share Repurchase Authorization.

During the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023, we repurchased ~~541~~379 and ~~71,330~~45,992 shares ~~respectively,~~ of our common stock for ~~$30.0 thousand~~$0.1 million and ~~$4.6~~$11.0 million, respectively, from employees in connection with a net share settlement feature of employee equity-based awards.

Cash Flows

Classification of Cash Flows Associated with Floor Plan Notes Payable

Borrowings and repayments of floor plan notes payable ~~to a lender unaffiliated with the manufacturer from which we purchase a particular new vehicle~~through our 2019 Senior Credit Facility ("Non-Trade"), and all floor plan notes payable relating to used vehicles (together referred to as ~~"Floor Plan Notes Payable—Non-Trade"~~"floor plan notes payable—non-trade"), are classified as financing activities on the accompanying ~~Condensed Consolidated Statements~~condensed consolidated statements of ~~Cash Flows,~~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"~~"floor plan notes payable—trade") is classified as an operating activity on the accompanying ~~Condensed Consolidated Statements~~condensed consolidated statements of ~~Cash Flows.~~cash flows. Borrowings of floor plan notes payable associated with inventory acquired in connection with all acquisitions and repayments made in connection with all divestitures are classified as a financing activity in the accompanying ~~Condensed Consolidated Statement~~condensed consolidated statement of ~~Cash Flows.~~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~~our 2019 Senior Credit Facility that includes lenders affiliated with the manufacturers and lenders not affiliated with the ~~manufacturer~~manufacturers 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,~~2019 Senior Credit Facility, with the exception of floor plan notes payable relating to the financing of new Ford and Lincoln ~~vehicles.~~vehicles and certain loaner vehicle programs.

Floor plan borrowings are required by all vehicle manufacturers for the purchase of new vehicles, and all floor plan lenders require amounts borrowed for the purchase of a vehicle to be repaid within a short time period after the related vehicle is sold. As a result, we believe that it is important to understand the relationship between the cash flows of all of our floor plan notes

Table of Contents

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~~"Adjusted cash flow provided by operating ~~activities, as adjusted"~~activities" (defined below) to compare our results to forecasts. We believe that splitting the cash flows of floor plan notes payable between operating activities and financing activities, while all new vehicle inventory activity is included in operating activities, results in significantly different operating cash ~~flow~~flows than if all the cash flows of floor plan notes payable were classified together in operating activities.

~~Cash~~Adjusted cash flow 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~~non-trade and used floor plan notes payable borrowing base changes. Adjusted cash flow 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 believe that the adjustments related to cash flows associated with our used vehicle borrowing base, floor plan offset accounts and the impact of acquisitions and divestitures eliminates cash flow volatility and provides an adjusted operating cash flow metric that best reflects our results of operations and our management of inventory and related financing activities.

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

For the Nine Months Ended September 30,
2017 2016
(In millions)
Reconciliation of Cash provided by operating activities to Cash provided by operating activities, as adjusted
Cash provided by operating activities, as reported $ 243.2
$ 151.3
New vehicle floor plan (repayments) borrowings—non-trade, net
(120.0 ) 76.5
Cash provided by operating activities, as adjusted $ 123.2
$ 227.8


	For the Six Months Ended June 30,
	2023		2022
	(In millions)
Reconciliation of cash provided by operating activities to cash provided by operating activities, as adjusted
Cash provided by operating activities, as reported	$	221.7	$	496.6
Change in Floor Plan Notes Payable—Non-Trade, net	(2.8)		(203.0)
Change in Floor Plan Notes Payable—Non-Trade associated with floor plan offset, used vehicle borrowing base changes adjusted for acquisition and divestitures	171.8		246.2
Change in Floor Plan Notes Payable—Trade associated with floor plan offset, adjusted for acquisition and divestitures	27.6		4.1
Adjusted cash flow provided by operating activities	$	418.3	$	543.9

Operating Activities—

Net cash provided by operating activities totaled ~~$243.2~~$221.7 million and ~~$151.3~~$496.6 million, for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022, respectively. ~~Net~~Adjusted cash flow provided by operating activities ~~as adjusted,~~ totaled ~~$123.2~~$418.3 million and ~~$227.8~~$543.9 million, for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022, respectively.

~~The $104.6 million decrease in our~~ Adjusted cash flow provided by operating activities includes net income, adjustments to reconcile net income to net cash provided by operating activities, aschanges in working capital, changes in used vehicle borrowing base, changes in floor plan notes payable—non-trade and trade, excluding the impact of offsets, and excluding operating cash flows associated with acquisitions and divestitures related to loaner vehicles and new vehicle inventories financed through floor plan notes payable—trade.

The $125.6 million decrease in adjusted cash flow provided by operating activities for the ~~nine~~six months ended ~~September~~June 30, ~~2017 as~~2023 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2022, was primarily the result of the following:

•decrease in $75.0 million net income and non-cash adjustments to net income;

•$~~63.3~~77.3 million related to athe change in other current assets, net; and

•$28.9 million decrease in other long term assets and liabilities, net.

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

•$34.8 million related to an increase in inventory, net of floor plan notes payable, including both trade and non-trade, excluding offset and including used vehicle borrowing base changes adjusted for acquisitions and divestitures;

~~$34.5 million related to the change in other current and non-current assets and liabilities;~~

Table of Contents

•$~~23.3 million related to a decrease in accounts payable and accrued liabilities; and~~

~~$10.0 million related to the non-cash adjustments to net income.~~

~~The decrease in our cash provided by operating activities, as adjusted, was partially offset by $26.5~~14.0 million related to sales volume and the timing of collection of accounts receivable and contracts-in-transit during ~~2017~~2023 as compared to ~~2016.~~2022; and

•$5.1 million related to a decrease in accounts payable and accrued liabilities.

Investing Activities—

Net cash used in investing activities totaled ~~$98.0 million and $77.5~~$62.5 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017 and 2016, respectively.~~2023 compared to net cash provided by investing activities of $344.2 million for the six months ended June 30, 2022. Capital expenditures, excluding the purchase of real estate, were ~~$21.4~~$40.8 million and ~~$47.3~~$39.5 million for the

~~nine~~ six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022, respectively. We expect that capital expenditures ~~for 2017~~during 2023 will total approximately ~~$50.0~~$185.0 million to upgrade or replace our existing facilities, construct new facilities, expand our service capacity, and invest in technology and equipment. In addition, as part of our capital allocation strategy, we continually evaluate opportunities to purchase properties currently under lease and acquire properties in connection with future dealership relocations. No assurances can be provided that we will have or be able to access capital at times or on terms in amounts deemed necessary to execute this strategy.

During the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023, we ~~acquired two~~sold one franchise (one dealership location) in Austin, Texas for an aggregate purchase price of $30.7 million. During the six months ended June 30, 2022, we sold one franchise (one dealership location) in St. Louis, Missouri and three franchises ~~(two~~(three dealership locations) and one collision center in ~~the Indianapolis, Indiana market~~Denver, Colorado, two franchises (two dealership locations) in Spokane, Washington and one franchise (one dealership location) in Albuquerque New Mexico for an aggregate purchase price of ~~$80.1~~$379.7 million.

We purchased $124.2 million and $25.9 million of debt securities during the six months ended June 30, 2023 and 2022, respectively. We did not purchase equity securities during the six months ended June 30, 2023, and we purchased $8.4 million of equity securities during the six months ended June 30, 2022.

We also received proceeds of $17.7 million and $29.4 million from the sale of debt securities and $51.8 million and $8.9 million from equity securities, respectively, during the six months ended June 30, 2023 and 2022, respectively.

During the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023, we received cash proceeds of ~~$3.8~~$2.3 million from the sale of ~~a property that was included in Assets Held for Sale as of December 31, 2016.~~

real estate. During the ~~nine~~six months ended ~~September~~June 30, ~~2016, purchases of~~2022, we did not sell any real estate ~~including previously leased real estate, totaled $30.2 million.~~assets.

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~~$316.9 million and ~~$72.9~~$919.6 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022, respectively.

During the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022, we had non-trade floor plan borrowings, excluding floor plan borrowings associated with acquisitions, of ~~$2.82~~$3.72 billion and ~~$2.92~~$3.62 billion, respectively, and non-trade floor plan repayments, excluding floor plan repayments associated with divestitures, of ~~$2.94~~$3.72 billion and ~~$2.81~~$4.12 billion, respectively.

~~In addition, during~~During the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023, we had no non-trade floor plan ~~borrowings of $25.1~~repayments associated with divestitures. During the six months ended June 30, 2022, we had $21.6 million ~~related to acquisitions.~~non-trade floor plan repayments associated with divestitures.

Repayments of borrowings totaled ~~$11.5~~$82.8 million and ~~$11.2~~$24.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022, respectively.

There were no borrowings or repayments under our Revolving Credit Facility during the six months ended June 30, 2023. Proceeds of $330.0 million were received in connection with borrowings under our Revolving Credit Facility during the six months ended June 30, 2022, and $499.0 million was repaid during the same period.

During the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023, we repurchased ~~a total of 584,696~~1,070,126 shares of our common stock under our Repurchase Program for a total of ~~$34.8~~$220.3 million ~~and 71,330~~which includes $9.6 million of December 2022 share repurchases which settled in January 2023. In addition, we repurchased 45,992 shares of our common stock for ~~$4.6~~$11.0 million from employees in connection with a net share settlement feature of employee equity-based awards. During the six months ended June 30, 2022, we repurchased 1,069,203 shares of our common stock under our Repurchase Program for a total of $200.0 million and repurchased 54,246 shares of our common stock for $8.9 million from employees in connection with a net share settlement feature of employee equity-based awards.

Table of Contents

Off Balance Sheet Arrangements

We had no off balance sheet arrangements during any of the periods presented other than those disclosed in Note 1113 "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 fiscal year ended December 31, 2022. Our critical accounting policies and estimates have not changed materially during the six months ended June 30, 2023.

Guarantor Financial Information

As of June 30, 2023, the Company had outstanding $405.0 million of 4.500% Senior Notes due 2028 and $445.0 million of 4.750% Senior Notes due 2030. The Senior Notes have been fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis, by each existing and future restricted subsidiary of the Company (the “Guarantor Subsidiaries”), with the exception of Landcar Administration Company, Landcar Agency, Inc. and Landcar Casualty Company and their respective subsidiaries (collectively, the “TCA Non-Guarantor Subsidiaries). The 2028 Notes ~~hereto.~~and the 2030 Notes were required to be registered under the Securities Act of 1933 within 270 days of the closing date for the offering of each respective series. The Company completed the registration of the 2028 Notes and 2030 Notes in October 2020.

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


Summarized Balance Sheet Data of Asbury and Guarantor Subsidiaries:
	As of
	June 30, 2023		December 31, 2022
	(In millions)
Current assets	$	1,923.5	$	1,790.1
Current assets - affiliates	$	—	$	—
Non-current assets	$	5,534.2	$	5,380.7

Current liabilities	$	783.7	$	819.1
Current liabilities - affiliates	$	10.4	$	10.0
Non-current liabilities	$	3,533.6	$	3,566.3

Summarized Statement of Operations Data for Asbury and Guarantor Subsidiaries:


	For the Six Months Ended June 30,
	2023
	(In millions)
Net sales	$	7,275.1
Gross profit	$	1,365.6
Income from operations	$	513.3
Net income	$	337.5

Table of Contents

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

We are exposed to risk from changes in interest rates on a ~~significant~~ portion of our outstanding indebtedness. Based on ~~$674.3~~$50.3 million of total variable interest rate debt, which includes our floor plan notes payable and certain mortgage liabilities, outstanding as of ~~September~~June 30, ~~2017~~,2023, a 100 basis point change in interest rates could result in a change of as much as ~~$6.7~~$0.5 million to our total annual interest expense in our ~~Consolidated Statements~~condensed consolidated statements of ~~Income.~~income.

We periodically receive floor plan assistance from certain automobile manufacturers, which is accounted for primarily as a reduction in our new vehicle inventory cost. Floor plan assistance reduced our cost of sales for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022 by ~~$26.6~~$43.4 million and ~~$25.7~~$44.2 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.

We currently have seven interest rate swap agreements. In ~~June 2015,~~January 2022, we entered into antwo new interest rate swap ~~agreement~~agreements with a combined notional principal amount of ~~$100.0~~$550.0 million. ~~This swap was~~These swaps are 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. The notional value 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~~SOFR rate. All interest rate swap ~~agreement~~agreements with ~~a notional principal amount~~an inception date of ~~$75.0 million. This swap was designed~~2021 and prior were amended on June 1, 2022 to provide a hedge against changes in variable rate cash flows regarding fluctuations in SOFR as compared to the ~~one month LIBOR~~previous benchmark rate ~~through maturity in September 2023.~~of one-month LIBOR. The ~~notional values~~revisions to the interest rate swap agreements did not impact our hedge accounting. The following table provides information on the attributes of ~~this~~each swap as of ~~September~~June 30, ~~2017 was $61.2 million and will reduce over its remaining term to $38.7 million at maturity.~~2023:


Inception Date	Notional Principal at Inception		Notional Value		Notional Principal at Maturity		Maturity Date
	(In millions)		(In millions)		(In millions)
January 2022	$	300.0	$	281.3	$	228.8	December 2026
January 2022	$	250.0	$	250.0	$	250.0	December 2031
May 2021	$	184.4	$	169.6	$	110.6	May 2031
July 2020	$	93.5	$	78.8	$	50.6	December 2028
July 2020	$	85.5	$	70.7	$	57.3	November 2025
June 2015	$	100.0	$	61.4	$	53.1	February 2025
November 2013	$	75.0	$	39.6	$	38.7	September 2023

For additional information about the effect of our derivative instruments, ~~on the accompanying Condensed Consolidated Financial Statements,~~ see Note 910 "Financial Instruments and Fair Value" ofwithin the ~~Notes thereto.~~accompanying condensed consolidated financial 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 not effective, solely as a result of a previously reported material weakness.

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

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented

Table of Contents

or detected on a timely basis. Specifically, the material weakness is due to control deficiencies in the design of the user access reviews for segregation of duties ("SOD") configurations and appropriate administrative access for certain key applications at the Larry H. Miller Dealerships (“LHM”) and Total Care Auto, Powered by Landcar (“TCA”), businesses that we acquired in December 2021. Refer to ~~allow timely decisions regarding disclosure. Management necessarily applies~~Item 9A in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 for more information.

As previously described in Item 9A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, management is in the process of implementing its ~~judgment in assessing~~remediation plan. Our remediation efforts include the ~~costs and benefits~~evaluation of ~~such~~the design of user access controls and ~~procedures, which, by their nature, can provide only reasonable assurance regarding management's control objectives. Management, including~~SOD configurations for key applications at LHM and TCA. Where needed, access rights and assigned job responsibilities are being changed to resolve instances of inappropriate or excessive user access capabilities, and SOD conflicts. Additionally, key applications at LHM and TCA are beginning to adhere to the ~~principal executive officer and~~same standards of the ~~principal financial officer, does not~~Company’s legacy ITGC environment. We expect that ~~our disclosure~~the material weakness will be fully remediated in 2023, once the remediated controls ~~and procedures can prevent all possible errors or fraud. A control system, no matter how well conceived and~~have operated ~~can provide only reasonable, not absolute, assurance~~for a sufficient period for management to conclude, through testing, 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.~~operating effectively.

Changes in Internal Control Over Financial Reporting

~~There~~Other than the ongoing remediation efforts described above, there were no changes in our internal control over financial reporting during the quarter ended ~~September~~June 30, ~~2017~~2023 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~~that 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

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors that affect our business and financial results that are discussed in Part I, Item 1A, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. These factors could materially adversely affect our business, financial condition, liquidity, results of operations and capital position, and could cause our actual results to differ materially from our historical results or the results contemplated by the forward-looking statements contained in this report. There have been no material changes to such risk factors.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Share repurchases are implemented through purchases made from time to time in either the open market or private transactions. The share repurchases could include purchases pursuant to a written trading plan in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, which allows companies to repurchase shares of stock at times when they might otherwise be prevented from doing so by securities laws or under self-imposed trading blackout periods. The extent that the Company repurchases its shares, the number of shares and the timing of any repurchases will depend on general market conditions, legal requirements and other corporate considerations. The repurchase program may be modified, suspended or terminated at any time without prior notice.

Table of Contents

Information about the shares of our common stock that we repurchased during the quarter ended June 30, 2023 is set forth below:


Period	Total Number of Shares (or Units) Purchased	Average Price Paid per Share (or Unit)		Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (In millions)
04/01/2023 - 04/30/2023	199,005	$	192.53	198,880	$	151.8
05/01/2023 - 05/31/2023	761,067	$	199.47	760,923	$	250.0
06/01/2023 - 06/30/2023	110	$	240.68	—	$	250.0
Total	960,182			959,803

On ~~January 30, 2014,~~May 25, 2023, our Board of Directors ~~authorized our Repurchase Program. On January 27, 2016, our Board of Directors reset~~increased the Company's common stock share repurchase authorization ~~under our Repurchase Program~~ to ~~$300.0~~$250.0 million ~~in the aggregate,~~ for the repurchase of our common stock in open market transactions or privately negotiated ~~transactions. Any repurchases will be subject to applicable limitations~~transactions or in ~~our debt~~other manners as permitted by federal securities laws and other legal and contractual requirements.

None of the Company's directors or ~~other financing agreements that may be in existence from time to time.~~

During the three months ended September 30, 2017, we repurchased 90,700 shares of our common stock under the Repurchase Program. As of September 30, 2017, we had remaining authorization to repurchase $53.3 million in shares of our common stock under the Repurchase Program.

~~The following table sets forth information regarding stock repurchases by the Company on~~officers adopted, modified, or terminated a ~~monthly basis~~Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the ~~three month period~~Company's fiscal quarter ended ~~September~~June 30, ~~2017:~~2023.

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 —
$ —
—
$ —

Table of Contents

~~Item 4. Mine Safety Disclosures~~

~~Not applicable.~~

Item 6. Exhibits



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		~~Incorporated by reference.~~ Cover Page Interactive Data File (formatted in iXBRL Exhibit 101)

Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Asbury Automotive Group, Inc.

Date:

July 28, 2023

By:

/s/ David W. Hult

Name:

David W. Hult

Title:

Chief Executive Officer and President

~~Asbury Automotive Group, Inc.~~

Date:

July 28, 2023

By:

~~Date: October 25, 2017~~

~~By:~~

/s/ ~~Craig T. Monaghan~~

~~Name:~~

~~Craig T. Monaghan~~

~~Title:~~

~~Chief Executive Officer and President~~

Michael D. Welch

Name:

Michael D. Welch

~~Asbury Automotive Group, Inc.~~

Title:

��

~~Date: October 25, 2017~~

~~By:~~

~~/s/ Sean D. Goodman~~

~~Name:~~

~~Sean D. Goodman~~

~~Title:~~

Senior Vice President and Chief Financial Officer

~~INDEX TO EXHIBITS~~



~~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.~~


	As of
	June 30, 2023		December 31, 2022
	(In millions)
4.50% Senior Notes due 2028	$	405.0	$	405.0
4.625% Senior Notes due 2029	800.0		800.0
4.75% Senior Notes due 2030	445.0		445.0
5.00% Senior Notes due 2032	600.0		600.0
Mortgage notes payable bearing interest at fixed rates (a)	37.0		38.3
2021 Real Estate Facility (b)	634.8		660.6
2021 BofA Real Estate Facility	169.6		173.3
2018 Bank of America Facility (c)	52.4		54.5
2018 Wells Fargo Master Loan Facility	74.4		76.9
2013 BofA Real Estate Facility	—		24.9
2015 Wells Fargo Master Loan Facility	39.8		42.3

Finance lease liability	8.4		8.4
Total debt outstanding	3,266.5		3,329.2
Add—unamortized premium on 4.50% Senior Notes due 2028	0.7		0.8
Add—unamortized premium on 4.75% Senior Notes due 2030	1.4		1.6
Less—debt issuance costs	(28.1)		(30.4)
Long-term debt, including current portion	3,240.5		3,301.2
Less—current portion, net of current portion of debt issuance costs	(59.2)		(84.5)
Long-term debt	$	3,181.3	$	3,216.8



	As of
	September 30, 2017			December 31, 2016
	(In millions)
6.0% Senior Subordinated Notes due 2024	$	600.0		$	600.0
Mortgage notes payable bearing interest at fixed rates	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
Total debt outstanding	919.8			931.3
Add—unamortized premium on 6.0% Senior Subordinated Notes due 2024	7.1			7.6
Less—debt issuance costs	(11.2		)	(12.2		)
Long-term debt, including current portion	915.7			926.7
Less—current portion, net of current portion of debt issuance costs	(14.3		)	(14.0		)
Long-term debt	$	901.4		$	912.7


	As of
	June 30, 2023		December 31, 2022
	(In millions)
Carrying Value:
4.50% Senior Notes due 2028	$	402.5	$	409.5
4.625% Senior Notes due 2029	789.8		789.1
4.75% Senior Notes due 2030	442.0		441.7
5.00% Senior Notes due 2032	591.9		591.5
Mortgage notes payable (a)	1,006.0		1,061.1
Total carrying value	$	3,232.1	$	3,292.9

Fair Value:
4.50% Senior Notes due 2028	$	369.6	$	354.4
4.625% Senior Notes due 2029	710.0		672.0
4.75% Senior Notes due 2030	394.9		372.7
5.00% Senior Notes due 2032	522.0		492.0
Mortgage notes payable (a)	1,004.7		1,069.8
Total fair value	$	3,001.2	$	2,960.9



	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



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



	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


Inception Date	Notional Principal at Inception		Notional Value as of June 30, 2023		Notional Principal at Maturity		Maturity Date
	(In millions)
January 2022	$	300.0	$	281.3	$	228.8	December 2026
January 2022	$	250.0	$	250.0	$	250.0	December 2031
May 2021	$	184.4	$	169.6	$	110.6	May 2031
July 2020	$	93.5	$	78.8	$	50.6	December 2028
July 2020	$	85.5	$	70.7	$	57.3	November 2025
June 2015	$	100.0	$	61.4	$	53.1	February 2025
November 2013	$	75.0	$	39.6	$	38.7	September 2023



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 Three Months Ended June 30,	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
2023	$	8.3	Other interest expense, net	$	(8.7)
2022	$	30.3	Other interest expense, net	$	1.7


	As of June 30, 2023
	Level 1		Level 2		Level 3		Total
	(In millions)
Cash equivalents	$	13.5	$	—	$	—	$	13.5
Short-term investments	4.9		5.4		—		10.3
U.S. Treasury	13.1		—		—		13.1
Municipal	—		30.4		—		30.4
Corporate	—		114.7		—		114.7
Mortgage and other asset-backed securities	—		129.1		—		129.1
Total debt securities	18.0		279.6		—		297.6


Total	$	18.0	$	279.6	$	—	$	297.6


	Three Months Ended June 30, 2023
	Dealerships		TCA		Eliminations		Total Company
	(In millions)
Revenue	$	3,718.8	$	70.1	$	(46.4)	$	3,742.5
Gross profit	$	686.0	$	19.6	$	7.5	$	713.1


	Three Months Ended June 30, 2022
	Dealerships		TCA		Eliminations		Total Company
	(In millions)
Revenue	$	3,930.0	$	51.9	$	(31.8)	$	3,950.1
Gross profit	$	793.7	$	6.6	$	2.4	$	802.7


	Six Months Ended June 30, 2023
	Dealerships		TCA		Eliminations		Total Company
	(In millions)
Revenue	$	7,275.1	$	140.7	$	(91.0)	$	7,324.8
Gross profit	$	1,365.6	$	40.8	$	2.9	$	1,409.3


	Six Months Ended June 30, 2022
	Dealerships		TCA		Eliminations		Total Company
	(In millions)
Revenue	$	7,824.2	$	109.2	$	(71.4)	$	7,862.0
Gross profit	$	1,575.1	$	19.5	$	0.1	$	1,594.7



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	—	$	—	—	$	—