ASBURY AUTOMOTIVE GROUP INC

Previous wording

•the ability to acquire and successfully integrate acquired businesses into our existing operations and realize expected benefits and synergies from such acquisitions;

Current wording

•the ability to acquire and successfully integrate acquired businesses into our existing operations, realize expected benefits and synergies from such acquisitions, and identify and remediate insufficient control activities of the acquired businesses, if any, given that substantially all of our acquired businesses are private companies;

Previous wording

•significant disruptions in the production and delivery of vehicles and parts for any reason, including supply shortages, the ongoing conflict in Russia and Ukraine and any government sanctions imposed in connection therewith, natural disasters, severe weather, civil unrest, both at home and abroad, product recalls, work stoppages or other occurrences that are outside of our control;

Current wording

•significant disruptions in the production and delivery of vehicles and parts for any reason, including supply shortages, natural disasters, severe weather, civil unrest, both at home and abroad, product recalls, work stoppages or other occurrences that are outside of our control;

Previous wording

•failure of our management information systems and our ability to successfully transition between key information systems, including our ability to successfully transition from our existing dealer management systems to a new DMS;

Current wording

•failure of our management information systems and our ability to successfully transition between key information systems, including our ability to successfully incorporate new technologies and transition to Tekion, a dealer management systems provider, from CDK, our existing DMS provider;

Previous wording

We are one of the largest automotive retailers in the United States. As of March 31, 2025, through our Dealerships segment, we owned and operated 196 new vehicle franchises (150 dealership locations), representing 31 brands of automobiles, within 14 states. We also operated 37 collision centers, and Total Care Auto, Powered by Landcar ("TCA"), our F&I product provider. Our stores offer an extensive range of automotive products and services, including new and used vehicles; parts and service, which include repair and maintenance services, replacement parts and collision repair services; and finance and insurance products. The finance and insurance products are provided by both TCA and independent third parties. The F&I products offered by TCA are sold through affiliated dealerships. For the three months ended March 31, 2025, our new vehicle revenue brand mix consisted of 30% luxury, 41% imports and 30% domestic brands. The Company manages its operations in two reportable segments: Dealerships and TCA.

Current wording

We are one of the largest automotive retailers in the United States. As of June 30, 2025, through our Dealerships segment, we owned and operated 189 new vehicle franchises (146 dealership locations), representing 31 brands of automobiles, within 13 states. As of June 30, 2025, we also operated 37 collision centers, and Total Care Auto, Powered by Landcar ("TCA"), our F&I product provider. Our stores offer an extensive range of automotive products and services, including new and used vehicles; parts and service, which include repair and maintenance services, replacement parts and collision repair services; and finance and insurance products. The finance and insurance products are provided by both TCA and independent third parties. The F&I products offered by TCA are sold through affiliated dealerships. For the six months ended June 30, 2025, our new vehicle revenue brand mix consisted of 30% luxury, 40% imports and 30% domestic brands. The Company manages its operations in two reportable segments: Dealerships and TCA.

Previous wording

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

Current wording

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

Previous wording

On February 14, 2025, the Company, through one of its subsidiaries, entered into a Purchase and Sale Agreement (the "Transaction Agreement") with various entities that comprise the Herb Chambers automotive group (the "Herb Chambers Dealerships"). Pursuant to the Transaction Agreement, the Company is expected to acquire substantially all of the assets, including all real property and businesses of the Herb Chambers Dealerships (collectively, the "Businesses") for an aggregate purchase price of approximately $1.34 billion, which includes $750 million for goodwill, and approximately $590 million for the real estate and leasehold improvements. In addition, the Company will acquire new vehicles, used vehicles, service loaner vehicles, fixed assets, parts and supplies for a purchase price to be determined at the closing (the “Closing”) of the transactions set forth in the Transaction Agreement and will reimburse the Herb Chambers Dealerships for certain dealership construction and development costs incurred prior to the Closing. The Businesses include 33 dealerships, 52 franchises and three collision centers. Herb Chambers will retain ownership of the Mercedes-Benz of Boston dealership in Somerville, Massachusetts (the "MB Boston Dealership"). The Transaction Agreement includes certain restrictions and obligations regarding the sale of the MB Boston Dealership, including a put right obligating the Company to purchase the MB Boston Dealership during the five-year period following the Closing, absent certain circumstances. The Company's acquisition of the Businesses is anticipated to close in the second quarter of 2025 and is subject to various customary closing conditions, including approval from the applicable automotive manufacturers.

Current wording

On July 21, 2025 the Company completed its previously announced acquisition of substantially all of the assets, including real property and businesses of The Herb Chambers Companies (the "Herb Chambers Dealerships") pursuant to a Purchase and Sale Agreement (the "Transaction Agreement") with various entities that comprise the Herb Chambers automotive group (the "Herb Chambers acquisition") for an aggregate purchase price of approximately $1.82 billion which includes $750 million for goodwill, approximately $610 million for the real estate and leasehold improvements and approximately $460.0 million for new vehicles, used vehicles, service loaner vehicles, fixed assets and parts and supplies. The acquisition was primarily funded with borrowings under Asbury’s existing senior credit facility, borrowings under the 2025 Real Estate Facility and cash on hand. The Herb Chambers acquisition comprised 33 dealerships, 52 franchises and three collision centers and real property and businesses of the Herb Chambers Dealerships (collectively, the "Businesses").

Previous wording

•Consolidated revenue for the three months ended March 31, 2025, decreased to $4.15 billion, compared to $4.20 billion for the prior year.

Current wording

•Consolidated revenue for the six months ended June 30, 2025, increased to $8.52 billion, compared to $8.45 billion for the prior year.

Previous wording

•Consolidated gross profit for the three months ended March 31, 2025, decreased to $724.2 million, compared to $750.0 million for the prior year.

Current wording

•Consolidated gross profit for the six months ended June 30, 2025, decreased marginally to $1,476.1 million, compared to $1,480.7 million for the prior year.

Previous wording

•The decrease in consolidated revenue is primarily due to a decrease in used vehicles units sold offset by an increase in new vehicle units sold, while the decrease in consolidated gross profit is primarily due to lower gross profit per vehicle sold for both new and used as margins continue to shift downward from the historic highs in recent years. The decrease in new and used vehicle gross profit was partially offset by the growth in parts and services gross profit.

Current wording

•The increase in consolidated revenue is primarily due to an increase in new vehicles units sold offset partially by a decrease in used vehicle units sold. The decrease in consolidated gross profit is primarily due to lower gross profit per vehicle sold for new vehicles as margins continue to shift downward from the historic highs in recent years as well as a decrease in F&I gross profit.. The lower new vehicle gross profit per vehicle sold and F&I gross profit was partially offset by an increase in growth in our parts and services gross profit and a slight increase in used vehicle gross profit per vehicle sold.

Previous wording

For the three months ended March 31, 2025, new vehicle gross profit and same store new vehicle gross profit decreased by $19.8 million (12%) and $17.2 million (11%), respectively. Same store new vehicle gross margin for the three months ended March 31, 2025 decreased 123 basis points to 6.7% driven by the continued easing of new vehicle inventory constraints which softened the historically high new vehicle margins seen in recent years.

Current wording

For the three months ended June 30, 2025, new vehicle gross profit and same store new vehicle gross profit increased by $4.9 million (3%) and $6.0 million (4%), respectively. Same store new vehicle gross margin for the three months ended June 30, 2025 decreased 31 basis points to 6.9%. A similar decrease was seen in new vehicle gross profit margins, as reported. The decrease in our new vehicle gross profit margin was primarily attributable to the continued easing of new vehicle inventory constraints which softened the historically high new vehicle margins seen in recent years.

Previous wording

Used vehicle revenue decreased by $121.1 million (9%) due to a $112.5 million (9%) decrease in used vehicle retail revenue and an $8.6 million (5%) decrease in used vehicle wholesale revenue. Same store used vehicle revenue decreased by $93.4 million (7%) due to an $87.5 million (8%) decrease in used vehicle retail revenue and a $5.9 million (4%) decrease in used vehicle wholesale revenue. Total used vehicle retail unit sales decreased by 10% on an all store basis and by 8% on a same store basis, during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. While revenue per used vehicle retailed increased by 1% on both an all store and same store basis, respectively, the decrease in unit volumes on both an all store and same store basis, negatively impacted used vehicle revenue for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. Used vehicle revenue has also been negatively impacted by the lack of inventory availability, especially in vehicles with lower mileage.

Current wording

For the three months ended June 30, 2025, used vehicle revenue decreased by $22.3 million (2%) compared to the same period of the prior year, due to a $37.8 million (3%) decrease in used vehicle retail revenue offset by a $15.5 million (11%) increase in used vehicle wholesale revenue. Same store used vehicle revenue increased by $2.2 million, largely due to a $17.0 million (12%) increase in used vehicle wholesale revenue, offset by a $14.8 million (1%) decrease in used vehicle retail revenue. Total used vehicle retail unit sales decreased by 6% while same store used vehicle retail unit sales decreased by 4% during the three months ended June 30, 2025 as compared to the three months ended June 30, 2024. Used vehicle revenue and unit volumes have been negatively impacted by the lack of inventory availability, especially in vehicles with lower mileage. Revenue per used vehicle retailed increased in the second quarter of 2025, along with gross profit margins on both an all store and same store basis.

Previous wording

For the three months ended March 31, 2025, used vehicle retail gross profit margins decreased from 5.5% to 5.2%, for all stores and on a same store basis, respectively, when compared to the same period of the prior year. All store used vehicle retail gross profit decreased $8.8 million (14%) for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 and decreased $8.1 million (13%) on a same store basis for the same period. On a total company basis, our gross profit per used vehicle retailed for the three months ended March 31, 2025 decreased $59 (4%), and on a same store basis, our gross profit per used vehicle retailed decreased $83 (5%) when compared to the prior year period which was primarily driven by decreases in used vehicle market prices. Decreases in used vehicle gross margins, on both a total Company and same store basis, was largely driven by a tighter market for used vehicles during the three months ended March 31, 2025, as compared to the three months ended March 31, 2024.

Current wording

For the three months ended June 30, 2025, used vehicle retail gross profit margins increased from 4.8% to 5.5% and 4.9% to 5.5% respectively, for all stores and on a same store basis when compared to the same period of the prior year. Used vehicle retail gross profit increased $5.9 million (11%) for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024 and increased $6.0 million (11%) on a same store basis for the same periods. On a total company basis, our gross profit per used vehicle retailed increased $257 (18%), and on a same store basis, our gross profit per used vehicle retailed increased $226 (15%) when compared to the prior year period, which was primarily driven by increases in used vehicle market prices due to the increase in demand in the quarter as a result of tariff uncertainty.

Previous wording

Revenue generated by TCA is earned over the period of the related product contract. The method for recognizing revenue is assigned based on contract type and expected claim patterns. Premium revenues are supplemented with investment gains or losses and income earned associated with the performance of TCA's investment portfolio. During the three months ended March 31, 2025, TCA generated $31.0 million of revenue, consisting primarily of earned premium and $4.7 million investment income from the investment portfolio.

Current wording

Revenue generated by TCA is earned over the period of the related product contract. The method for recognizing revenue is assigned based on contract type and expected claim patterns. Premium revenues are supplemented with investment gains or losses and income earned associated with the performance of TCA's investment portfolio. During the three months ended June 30, 2025, TCA generated $15.6 million revenue, after dealership eliminations, consisting primarily of earned premiums and $5.0 million investment income from the investment portfolio. F&I revenue decreased by $16.3 million (51%) for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024 due to the continued roll-out of TCA products across Asbury dealerships resulting in the deferral of F&I revenue over the TCA contract term as opposed to the immediate recognition of revenue associated with third-party F&I product sales.

Previous wording

Direct expenses incurred for the acquisition of F&I contracts on which revenue has not yet been recognized have been deferred and are amortized over the related contract period. During the three months ended March 31, 2025, TCA recorded $13.1 million of cost of sales consisting primarily of claims expense, after the elimination of claims paid to affiliated dealerships. Commissions expense paid by TCA to our affiliated dealerships and reflected as F&I revenue in our Dealerships segment is eliminated in the TCA segment upon consolidation.

Current wording

Direct expenses incurred for the acquisition of F&I contracts on which revenue has not yet been recognized have been deferred and are amortized over the related contract period. During the three months ended June 30, 2025, TCA recorded $13.8 million of cost of sales consisting primarily of claims expense. Commissions expense paid by TCA to our affiliated dealerships and reflected as F&I revenue in our Dealerships segment is eliminated in the TCA segment upon consolidation.

Previous wording

SG&A expense as a percentage of gross profit increased 54 basis points from 62.5% for the three months ended March 31, 2024 to 63.0% for the three months ended March 31, 2025, while same store SG&A expense as a percentage of gross profit increased 71 basis points to 62.9% over the same period. The increase in SG&A as a percentage of gross profit on a total company and same store basis during the three months ended March 31, 2025 is primarily the result of lower gross profits for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. In addition, higher other costs related to an increase in professional and other outside services. Offsetting these negative impacts was the cyber insurance recovery of $10.0 million in March 2025 related to the CDK outage that occurred in June 2024. On a total company basis, SG&A expense decreased by $12.2 million for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.

Current wording

SG&A expense as a percentage of gross profit decreased 198 basis points from 65.2% for the three months ended June 30, 2024 to 63.2% for thethree months ended June 30, 2025, while same store SG&A expense as a percentage of gross profit decreased 183 basis points to 62.9% over the same period in 2025. The decrease in SG&A expense as a percentage of gross profit on a total company and same store basis during thethree months ended June 30, 2025 is primarily the result of lower rent and related expenses (inclusive of a $5.0 million insurance recovery in the period)and higher gross profits for thethree months ended June 30, 2025 as compared to the three months ended June 30, 2024. On a total company basis, SG&A expense decreased by $1.1 million for thethree months ended June 30, 2025 as compared to the three months ended June 30, 2024 primarily due to a decrease in rent and related expenses of$7.5 million offset by an increase in other expenses arising from transaction costs of $2.2 million associated with an acquisition.

Previous wording

Floor plan interest expense decreased by $2.1 million (9%) to $20.7 million during the three months ended March 31, 2025 compared to $22.8 million during the three months ended March 31, 2024 primarily due to higher balances held in our floor plan offset accounts during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.

Current wording

Floor plan interest expense decreased by $2.9 million to $18.1 million during the three months ended June 30, 2025 as compared to $21.0 million floor plan interest expense for the three months ended June 30, 2024 primarily due to lower interest rates and higher balances held in our floor plan offset accounts during the three months ended June 30, 2025 as compared to the same period in the prior year.

Previous wording

Total revenue for the three months ended March 31, 2025 decreased by $52.8 million (1%) compared to the three months ended March 31, 2024, due to a $121.1 million (9%) decrease in used vehicle revenue, a $2.8 million (1%) decrease in F&I, net revenue, and a $2.7 million decrease in parts and service revenue, offset by a $73.8 million (4%) increase in new vehicle revenue. The $25.8 million (3%) decrease in gross profit during the three months ended March 31, 2025, compared to the three months ended March 31, 2024, was driven by a $19.8 million (12%) decrease in new vehicle gross profit, a $7.2 million (4%) decrease in F&I, net gross profit, a $7.4 million (10%) decrease in used vehicle gross profit, offset by an $8.5 million (3%) increase in parts and service gross profit.

Current wording

Total revenue for the six months ended June 30, 2025 increased by $74.2 million (1%) compared to the six months ended June 30, 2024, due to a $212.9 million (5%) increase in new vehicle revenue and a $17.9 million (2%) increase in parts and service revenue, offset by a $143.4 million (5%) decrease in used vehicle revenue and a $13.2 million (3%) decrease in F&I, revenue, net. The $4.6 million decrease in gross profit during the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, was driven by a $14.8 million (5%) decrease in new vehicle gross profit and a $13.8 million (4%) decrease in F&I gross profit, offset by a $23.4 million (3%) increase in parts and service gross profit and a $0.6 million increase in used vehicle gross profit.

Previous wording

Income from operations during the three months ended March 31, 2025 decreased by $28.4 million (11%), compared to the three months ended March 31, 2024, primarily due to a $25.8 million (3%) decrease in gross profit, a $14.3 million increase in asset impairments, and a $0.6 million (3%) increase in depreciation and amortization expense, partially offset by a $12.2 million (3%) decrease in SG&A expense.

Current wording

Income from operations during the six months ended June 30, 2025 increased by $128.4 million (35%), compared to the six months ended June 30, 2024, primarily due to a $121.1 million decrease in asset impairment charges and a $13.3 million (1%) decrease in SG&A expense, partially offset by a $4.6 million decrease in gross profit and a $1.3 million (4%) increase in depreciation and amortization expense.

Previous wording

Total other expenses, net decreased by $8.0 million (12%), primarily as a result of a $4.1 million increase in gain on dealership divestitures, a $2.1 million (9%) decrease in floor plan interest expense, and a decrease of $1.8 million (4%) in other interest expense, net recorded during the three months ended March 31, 2025 when compared to the same period of the prior year. Income before income taxes decreased $20.4 million (10%) to $175.4 million for the three months ended March 31, 2025. Overall, net income decreased by $15.0 million (10%) during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.

Current wording

Total other expenses, net decreased by $16.9 million (13%) as a result of a $6.4 million increase in gain on dealership divestitures, net, a decrease of $5.4 million (6%) in other interest expense, net, and a $5.0 million (11%) decrease in floor plan interest expense recorded during the six months ended June 30, 2025 when compared to the same period of the prior year. Income before income taxes increased $145.3 million (62%) to $379.2 million for the six months ended June 30, 2025. Overall, net income increased by $109.7 million (63%) during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.

Previous wording

The seasonally adjusted annual rate ("SAAR") for new vehicle sales in the U.S. during the three months ended March 31, 2025 was approximately 16.5 million which increased as compared to approximately 15.4 million during the three months ended March 31, 2024. The increase in SAAR period over period reflects reflects higher inventory supply and higher consumer demand for new vehicles in anticipation of increasing new vehicle selling prices due to automotive vehicle and parts tariffs. However, we continue to be impacted by the significant variation in new vehicle days supply among brands and models.

Current wording

The seasonally adjusted annual rate ("SAAR") for new vehicle sales in the U.S. during the six months ended June 30, 2025 was approximately 16.3 million which increased as compared to approximately 15.5 million during the six months ended June 30, 2024. The increase in SAAR period over period reflects higher inventory supply coupled with the effects of the CDK outage in June 2024, which negatively impacted sales in the prior year. Consumer demand for new vehicles was driven by automobile tariff uncertainty. We also continue to be impacted by the significant variation in new vehicle days supply among brands and models.

Previous wording

The $2.7 million decrease in parts and service revenue was primarily due to decreases of $7.8 million (6%) in wholesale parts revenue, $5.2 million (7%) in collision revenue, and $2.8 million (1%) in customer pay revenue, offset by a $13.0 million (16%) increase in warranty revenue. Same store parts and service revenue increased slightly by $8.7 million (2%) from $578.8 million for the three months ended March 31, 2024 to $587.5 million for the three months ended March 31, 2025. The increase in same store parts and service revenue was due to a $14.6 million (18%) increase in warranty revenue and a $4.7 million (2%) increase in customer pay revenue, partially offset by a $5.3 million (4%) decrease in wholesale parts revenue and a $5.2 million (7%) decrease in collision revenue. Consumers are owning a vehicle for longer periods of time due to various factors, including the higher cost of vehicles, higher interest rates, as well as the vehicle inventory constraints experienced in the automotive industry in recent years.

Current wording

The $17.9 million (2%) increase in parts and service revenue was primarily due to a $25.0 million (15%) increase in warranty revenue and a $10.3 million (2%) increase in customer pay revenue, offset by a $9.1 million (4%) decrease in wholesale parts revenue and an $8.3 million (6%) decrease in collision revenue. Same store parts and service revenue increased by $39.2 million (3%) from $1.13 billion for the six months ended June 30, 2024 to $1.17 billion for the six months ended June 30, 2025. The increase in same store parts and service revenue was due to a $26.9 million (17%) increase in warranty revenue and a $25.5 million (4%) increase in customer pay revenue, offset by an $8.3 million (6%) decrease in collision revenue and a $4.9 million (2%) decrease in wholesale parts revenue. Consumers are owning a vehicle for longer periods of time due to various factors, including the higher cost of vehicles, higher interest rates, as well as the vehicle inventory constraints experienced in the automotive industry in recent years.

Previous wording

For the three months ended March 31, 2025, total parts and service gross profit increased by $8.5 million (3%) to $342.7 million, and same store total parts and service gross profit increased by $14.9 million (5%) to $342.6 million when compared to the same period of the prior year. The all store and same store increases are primarily a result of increased customer pay and warranty volume and reconditioning and preparation, which is in line with the increasing trend of aged vehicles.

Current wording

For the six months ended June 30, 2025, total parts and service gross profit increased by $23.4 million (3%) to $697.5 million, and same store total parts and service gross profit increased by $36.5 million (6%) to $685.8 million when compared to the same period of the prior year. The all store and same store increases are primarily a result of increased customer pay and warranty volume and reconditioning and preparation, which is in line with the increasing trend of aged vehicles; however these increases were offset by decreases in body shop and wholesale parts activity.

Previous wording

On a same store basis, F&I revenue, net increased by $0.6 million during the three months ended March 31, 2025 when compared to the three months ended March 31, 2024. F&I gross profit, net, on a same store basis decreased by $3.9 million (2%) for the three months ended March 31, 2025 when compared to the three months ended March 31, 2024 as a result of a 2% decrease in new and used retail unit sales and an $11 decrease in F&I per vehicle retailed. We are seeing slightly lower penetration rates in our F&I products as customers look for ways to manage lower monthly payments in a higher interest rate environment.

Current wording

On a same store basis, F&I revenue, net decreased by $6.4 million during the six months ended June 30, 2025 when compared to the six months ended June 30, 2024 as a result of a a $50 decrease in F&I per vehicle retailed. We are seeing slightly lower gross profit in our F&I products as customers look for ways to manage lower monthly payments in a higher interest rate environment.

Previous wording

During the three months ended March 31, 2025, we recognized asset impairment charges of $14.3 million as compared to no impairment charges during the three months ended March 31, 2024. The asset impairment charges related to five dealerships that met the criteria to be reflected as assets held for sale as of March 31, 2025 and whose franchise rights carrying values exceeded the Company's estimate of the franchise rights fair value less costs to sell.

Current wording

During the six months ended June 30, 2025, we recognized asset impairment charges of $14.3 million as compared to $135.4 million asset impairment charges during the six months ended June 30, 2024. For the six months ended June 30, 2025, asset impairment charges related to five dealerships that met the criteria to be reflected as assets held for sale in March 2025, and whose franchise rights carrying values exceeded the Company's estimate of the franchise rights fair value less costs to sell. For the six months ended June 30, 2024, the asset impairments resulted from our interim franchise rights impairment tests for certain underperforming stores, limited primarily to one brand.

Previous wording

Other interest expense, net decreased $1.8 million (4%) from $44.1 million during the three months ended March 31, 2024 to $42.3 million during the three months ended March 31, 2025. This decrease was primarily due to the $2.1 million decrease in our credit facility interest expense resulting from lower interest rates during the three months ended March 31, 2025 as compared to the same period in the prior year.

Current wording

Other interest expense, net decreased $5.4 million (6%) from $89.2 million during the six months ended June 30, 2024 to $83.7 million during the six months ended June 30, 2025. This decrease was primarily due to the $4.2 million decrease in our credit facility interest expense and a $0.7 million decrease in loaner payable interest expense driven by lower interest rates applicable during the six months ended June 30, 2025 as compared to the same period in the prior year.

Previous wording

During the three months ended March 31, 2025, we sold one Nissan franchise (one dealership location) in Denver, Colorado and one Volvo franchise (one dealership location) in Greenville, South Carolina. The Company recorded a pre-tax gain totaling $4.1 million, which is presented in our accompanying condensed consolidated statements of income as a gain on dealership divestitures, net.

Current wording

During the six months ended June 30, 2025, we sold two Toyota franchises (two dealership locations) in San Diego, California, and Los Angeles, California, one Nissan franchise (one dealership location) in Denver, Colorado, one Volvo franchise (one dealership location) in Greenville, South Carolina, and three franchises in Salt Lake City, Utah, comprising one Chevrolet franchise (one dealership location), one Chrysler Jeep Dodge Ram franchise (one dealership location) and one Ford franchise (one dealership location). The Company recorded a pre-tax gain totaling $10.1 million, which is presented in our accompanying condensed consolidated statements of income as a gain on dealership divestitures, net.

Previous wording

During the three months ended March 31, 2024, we sold one Lexus franchise (one dealership location) in Wilmington, Delaware due to OEM requirements in connection with the Koons acquisition. The carrying value of assets, net of liabilities sold, approximated the sales price.

Current wording

During the six months ended June 30, 2024, we sold one Lexus franchise (one dealership location) in Wilmington, Delaware due to OEM requirements in connection with the Koons acquisition, one Nissan franchise (one dealership location) in Denver, Colorado, and one Nissan franchise (one dealership location) in Atlanta, Georgia. The Company recorded a pre-tax gain totaling $3.6 million, which is presented in our accompanying condensed consolidated statements of income as a gain on dealership divestitures, net.

Previous wording

The $5.4 million (11%) decrease in income tax expense was primarily the result of a $20.4 million (10%) decrease in income before income taxes. For the three months ended March 31, 2025 and 2024, our effective income tax rate was 24.7% and 24.9%, 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. We currently estimate our effective tax rate for the year ended December 31, 2025 at approximately 25.2%.

Current wording

The $35.7 million (61%) increase in income tax expense was primarily the result of a $145.3 million (62%) increase in income before income taxes. For the six months ended June 30, 2025, our effective income tax rate was 24.9% compared to 25.1% in the comparative period, respectively, which differed from the U.S. statutory rate primarily due to the favorable effects of the windfall component of equity compensation as well as the favorable effects of amended state income tax returns, which are discrete items, and unfavorable effects of various permanent tax adjustments such as executive compensation. We estimate our effective tax rate for the year ended December 31, 2025 at 25.5%. This estimated effective tax rate includes the effects of the deferred tax impact related to an increase in our estimated future state effective tax rate due to the acquisition of the Herb Chambers Dealerships.

Previous wording

As of March 31, 2025, we had total available liquidity of $963.7 million, which consisted of cash and cash equivalents of $87.4 million (excluding $37.2 million held by TCA), available funds in our floor plan offset accounts of $116.7 million, $485.9 million of availability under our revolving credit facility and $273.7 million of availability under our used vehicle floor plan facility. The borrowing capacities under our revolving credit facility and our used vehicle revolving floor plan facility are limited by borrowing base calculations and, from time to time, may be further limited by our required compliance with certain financial covenants. As of March 31, 2025, these financial covenants did not further limit our availability under our other credit facilities.

Current wording

As of June 30, 2025, we had total available liquidity of $1.12 billion, which consisted of cash and cash equivalents of $20.5 million (excluding $34.2 million held by TCA), available funds in our floor plan offset accounts of $297.7 million, $474.8 million of availability under our revolving credit facility and $323.1 million of availability under our used vehicle floor plan facility. The borrowing capacities under our revolving credit facility and our used vehicle revolving floor plan facility are limited by borrowing base calculations and, from time to time, may be further limited by our required compliance with certain financial covenants. As of June 30, 2025, these financial covenants did not further limit our availability under our other credit facilities.

Previous wording

There were no share repurchases or retirements during the three months ended March 31, 2025. During the three months ended March 31, 2024, the Company repurchased and retired 239,790 shares of our common stock under our share repurchase program. The cash paid for these share repurchases was $50.0 million for the three months ended March 31, 2024.

Current wording

There were no share repurchases or retirements during the three and six months ended June 30, 2025 under our share repurchase program. During the three and six months ended June 30, 2024, the Company repurchased 192,599 and 432,389 shares of our common stock under our repurchase program for a total of $43.2 million and $93.2 million.

Previous wording

During the three months ended March 31, 2025 and 2024, the Company repurchased 42,780 and 45,399 shares of our common stock for $12.5 million and $9.8 million, respectively, from employees in connection with a net share settlement feature of employee equity-based awards.

Current wording

During the three and six months ended June 30, 2025, the Company repurchased 646 and 43,426 shares of our common stock for $0.2 million and $12.7 million, respectively, from employees in connection with a net share settlement feature of employee equity-based awards.

Previous wording

Adjusted cash flow provided by operating activities includes borrowings and repayments of floor plan notes payable non-trade and used floor plan notes payable borrowing base changes. Adjusted cash flow provided by operating activities may not be comparable to similarly titled measures of other companies and should not be considered in isolation, or as a substitute for analysis of our operating results in accordance with GAAP. In order to compensate for these potential limitations, we also review the related GAAP measures. 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.

Current wording

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

Previous wording

Net cash provided by operating activities totaled $225.0 million and $177.1 million, for the three months ended March 31, 2025 and 2024, respectively. Adjusted cash flow provided by operating activities totaled $187.4 million and $208.7 million, for the three months ended March 31, 2025 and 2024, respectively. Adjusted cash flow provided by operating activities includes net income, adjustments to reconcile net income to net cash provided by operating activities, changes in working capital, changes in used vehicle borrowing base, changes in floor plan notes payable—non-trade and trade, excluding the impact of offsets, and excluding operating cash flows associated with acquisitions and divestitures related to loaner vehicles and new vehicle inventories financed through floor plan notes payable—trade.

Current wording

Net cash provided by operating activities totaled $316.4 million and $22.7 million, for the six months ended June 30, 2025 and 2024, respectively. Adjusted cash flow provided by operating activities totaled $334.0 million and $402.0 million, for the six months ended June 30, 2025 and 2024, respectively. Adjusted cash flow provided by operating activities includes net income, adjustments to reconcile net income to net cash provided by operating activities, changes in working capital, changes in used vehicle borrowing base, changes in floor plan notes payable—non-trade and trade, excluding the impact of offsets, and excluding operating cash flows associated with acquisitions and divestitures related to loaner vehicles and new vehicle inventories financed through floor plan notes payable—trade.

Previous wording

The $21.3 million decrease in adjusted cash flow provided by operating activities for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, was primarily the result of the following:

Current wording

The $68.0 million decrease in adjusted cash flow provided by operating activities for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, was primarily the result of the following:

Previous wording

•decrease of $10.8 million in net income and non-cash adjustments to net income;

Current wording

•decrease of $19.8 million in net income and non-cash adjustments to net income;

Previous wording

•increase of $99.2 million related to accounts payable and accrued liabilities.

Current wording

•decrease of $162.3 million related to accounts payable and accrued liabilities; and

Previous wording

•decrease of $70.2 million in other current assets, net;

Current wording

•decrease of $35.9 million in other current assets, net.

Previous wording

•decrease of $0.4 million in inventory, net of floor plan notes payable, including both trade and non-trade, excluding offset and including used vehicle borrowing base changes adjusted for acquisitions and divestitures.

Current wording

•increase of $123.9 million in inventory, net of floor plan notes payable, including both trade and non-trade, excluding offset and including used vehicle borrowing base changes adjusted for acquisitions and divestitures;

Previous wording

•$35.7 million decrease related to sales volume and the timing of collection of accounts receivable and contracts-in-transit during 2025 as compared to 2024;

Current wording

•$16.8 million increase related to sales volume and the timing of collection of accounts receivable and contracts-in-transit during 2025 as compared to 2024; and

Previous wording

•$3.0 million decrease related to other long term assets and liabilities, net and

Current wording

•$10.1 million increase related to other long term assets and liabilities, net.