ASBURY AUTOMOTIVE GROUP INC

Previous wording

We are one of the largest automotive retailers in the United States. As of March 31, 2026, through our Dealerships segment, we owned and operated 202 new vehicle franchises (158 dealership locations), representing 34 brands of automobiles, within 14 states. We also operated 37 collision centers, and Total Care Auto, Powered by Asbury ("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 service; 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, 2026, our new vehicle revenue brand mix consisted of 40% imports, 35% luxury, and 26% 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, 2026, through our Dealerships segment, we owned and operated 202 new vehicle franchises (158 dealership locations), representing 34 brands of automobiles, within 14 states. We also operated 37 collision centers, and Total Care Auto, Powered by Asbury ("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 service; 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, 2026, our new vehicle revenue brand mix consisted of 41% imports, 33% luxury and 26% domestic brands. The Company manages its operations in two reportable segments: Dealerships and TCA.

Previous wording

In late January 2025, the U.S. government commenced a broad review of U.S. trade relations, following which it began issuing numerous executive orders and other public policy statements imposing or threatening to impose tariffs on certain countries, materials, and industries, including the automotive industry. Such tariffs include a 25% tariff on imports of automobiles and certain automobile parts, with different rates for some countries as a result of respective trade deals. In response, certain impacted countries have imposed or threatened various corresponding retaliatory tariffs and other actions. These tariffs and tariff investigations were implemented under several legal frameworks, including Section 232 of the Trade Expansion Act of 1962, Section 301 of the Trade Act of 1974, and the International Emergency Economic Powers Act ("IEEPA"). In February 2026, the U.S. Supreme Court held that IEEPA does not authorize the President of the United States to impose tariffs, and the U.S. government has begun to process refunds of importers’ IEEPA-based tariff payments. However, the Supreme Court’s decision did not invalidate non-IEEPA-based tariff programs or authorities, and the U.S. government has announced its intention to pursue additional tariffs and has initiated tariff measures under Section 232 and Section 301, as well as under a balance-of-payments tariff provision in Section 122 of the Trade Act of 1974. The federal government may impose further tariffs under these or other statutory regimes or legal theories, and the application and enforcement of other tariffs may prove inconsistent over time. Uncertainty regarding the timing and completeness of IEEPA tariff refunds and future trade policy actions could affect the Company's cost structure and supply chain planning, as well as the automotive industry generally, including manufacturers, distributors and retailers of vehicles, parts and supplies. We are unable to predict the ultimate outcome or effectiveness of any current or future tariff policies. Should the federal government impose further tariffs under other statutory regimes or legal theories, and such tariffs increase and be sustained, our inventory acquisition and carrying costs, and the production costs for many of our manufacturer, distributor and supplier partners, may be increased, which costs may be passed on to us and consumers through higher prices for many new vehicles and certain parts we sell. These increased prices may adversely affect our new vehicle sales and related finance and insurance sales and may adversely impact demand for such vehicles and parts, and could materially and adversely affect the results of our operations.

Current wording

We are unable to predict the ultimate outcome or effectiveness of any current or future tariff policies. Should the federal government impose further tariffs under other statutory regimes or legal theories, and such tariffs increase and be sustained, our inventory acquisition and carrying costs, and the production costs for many of our manufacturer, distributor and supplier partners, may be increased, which costs may be passed on to us and consumers through higher prices for many new vehicles and certain parts we sell. These increased prices may adversely affect our new vehicle sales and related finance and insurance sales and may adversely impact demand for such vehicles and parts, and could materially and adversely affect the results of our operations.

Previous wording

The Company's operating results for thethree months ended March 31, 2026 include the results of the Herb Chambers Businesses acquired in the third quarter of 2025. Accordingly, thethree months ended March 31, 2026, includes increases in revenue and gross profit related to the Herb Chambers Businesses, which have been offset by declines in revenues and gross profits due to several dealership divestitures in the second through fourth quarters of 2025 and February 2026.

Current wording

The Company's operating results for thethree and six months ended June 30, 2026 include the results of the Herb Chambers Businesses acquired in the third quarter of 2025. Accordingly, thethree and six months ended June 30, 2026 includes increases in revenue and gross profit related to the Herb Chambers Businesses, which have been offset by declines in revenues and gross profits due to several dealership divestitures in the second through fourth quarters of 2025 and February 2026.

Previous wording

Income from operations during the three months ended March 31, 2026 decreased by $40.4 million (17%) compared to the three months ended March 31, 2025, primarily due to a $54.0 million (12%) increase in selling, general and administrative expenses and a $3.4 million (18%) increase in depreciation and amortization expense, partially offset by a $14.3 million decrease in asset impairment expense and a $2.7 million increase in gross profit.

Current wording

Income from operations during the three months ended June 30, 2026 decreased by $37.9 million (15%) compared to the three months ended June 30, 2025, due to a $30.9 million (7%) increase in selling, general and administrative expenses, a $4.2 million increase in asset impairment expense, and a $4.0 million (21%) increase in depreciation and amortization expense, partially offset by a $1.2 million increase in gross profit.

Previous wording

Total other income, net increased by $115.6 million during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, primarily as a result of a $121.6 million increase in gain on dealership divestitures, net, offset by a $5.7 million (14%) increase in other interest expense, net and a $0.4 million (2%) increase in floor plan interest expense. Income before income taxes increased $75.2 million (43%) to $250.6 million for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. Overall, net income increased by $55.7 million (42%) during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025.

Current wording

Total other expenses, net increased by $14.5 million (27%) during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, as a result of a $5.9 million decrease in gain on dealership divestitures, net, a $5.1 million (12%) increase in other interest expense, net, and a $3.5 million (19%) increase in floor plan interest expense. Income before income taxes decreased $52.5 million (26%) to $151.3 million for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025. Overall, net income decreased by $38.2 million (25%) during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025.

Previous wording

For the three months ended March 31, 2026, both the total company and same store used vehicle retail gross profit margin increased by 58 basis points, respectively, as compared to the three months ended March 31, 2025. The used vehicle retail gross margin increased from 5.2% to 5.8% on an all store basis and increased from 5.4% to 5.9% on a same store basis. We attribute the increases in used vehicle retail gross profit margins to strong execution around sourcing and disciplined focus on profitability over units sold. Additionally, the increase in used vehicle gross margins on a total company basis was driven by the addition of the Herb Chambers Dealershipsin thethree months ended March 31, 2026 as compared to the three months ended March 31, 2025.

Current wording

For the three months ended June 30, 2026, both the total company and same store used vehicle retail gross profit margin increased by 54 basis points and 34 basis points, respectively, as compared to the three months ended June 30, 2025. The used vehicle retail gross margin increased from 5.5% to 6.1% on an all store basis and increased from 5.6% to 6.0% on a same store basis. We attribute the increases in used vehicle retail gross profit margins to our continued strong execution around sourcing and disciplined focus on profitability over units sold. Additionally, the increase in used vehicle gross margins on a total company basis was driven by the addition of the Herb Chambers Dealershipsin thethree months ended June 30, 2026 as compared to the three months ended June 30, 2025.

Previous wording

Used vehicle retail gross profit increased $5.2 million (9%) for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 and decreased $0.5 million (1%) on a same store basis for the same period. On a total company and same store basis, our gross profit per used vehicle retailed increased by $261 (16%) and $201 (12%), respectively, when compared to the prior year period. This was primarily driven by increases in used vehicle market prices due to the tight used vehicle inventory market.

Current wording

Used vehicle retail gross profit increased $3.9 million (6%) for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025 and decreased $2.7 million (5%) on a same store basis for the same period. On a total company and same store basis, our gross profit per used vehicle retailed increased by $282 (16%) and $182 (10%), respectively, when compared to the prior year period. This was primarily driven by increases in used vehicle market prices due to the tight used vehicle inventory market.

Previous wording

On a same store basis, F&I revenue, net decreased by $19.4 million (11%) during the three months ended March 31, 2026 when compared to the three months ended March 31, 2025, primarily due to a 12% decrease in total retail units sold. F&I revenue, net was negatively impacted by the deferral of commission revenue on the sale of TCA products, which we continue to roll out to all of our stores, as compared to the immediate revenue recognition on the sale of third party F&I products. In addition, customers continue to look for ways to manage lower monthly payments in a high interest rate environment.

Current wording

On a same store basis, F&I revenue, net decreased by $9.0 million (5%) during the three months ended June 30, 2026 when compared to the three months ended June 30, 2025, primarily due to a 10% decrease in total retail units sold, partially offset by a $113 (5%) increase in F&I per vehicle retailed. F&I revenue, net was negatively impacted by the deferral of commission revenue on the sale of TCA products, which we continue to roll out to all of our stores, as compared to the immediate revenue recognition on the sale of third party F&I products. In addition, customers continue to look for ways to manage lower monthly payments in a high interest rate environment.

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, 2026, TCA generated $25.2 million revenue, after dealership eliminations, consisting primarily of earned premiums and $5.5 million investment income from the investment portfolio. F&I revenue decreased by $5.8 million (19%) for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 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.

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, 2026, TCA generated $18.8 million of revenue, after dealership eliminations, consisting primarily of earned premiums and $5.4 million of investment income from the investment portfolio. F&I revenue increased by $3.2 million (21%) for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025 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, 2026, TCA recorded $12.1 million of cost of sales consisting primarily of claims expense. Commissions expense paid by TCA to our affiliated dealerships and reflected as F&I revenue in our Dealerships segment is eliminated in the TCA segment upon consolidation.

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, 2026, TCA recorded $12.4 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

Floor plan interest expense increased by $0.4 million (2%) to $21.0 million during the three months ended March 31, 2026 as compared to $20.7 million for the three months ended March 31, 2025, as a result of higher non-manufacturer floor plan balances in 2026 due to the Herb Chambers acquisition, partially offset by lower non-manufacturer floor plan balances due to store divestitures in 2025 and February 2026.

Current wording

Floor plan interest expense increased by $3.5 million (19%) to $21.6 million during the three months ended June 30, 2026 as compared to $18.1 million for the three months ended June 30, 2025, as a result of higher non-manufacturer floor plan balances in 2026 due to the Herb Chambers acquisition, partially offset by lower non-manufacturer floor plan balances due to store divestitures in 2025 and February 2026.

Previous wording

Other interest expense increased $5.7 million (14%) from $42.3 million during the three months ended March 31, 2025 to $48.0 million during the three months ended March 31, 2026. This increase was primarily due to a $1.8 million increase in our mortgage facilities interest expense and $2.1 million of credit facility interest expense as a result of borrowings incurred in connection with the Herb Chambers acquisition.

Current wording

Other interest expense increased $5.1 million (12%) from $41.4 million during the three months ended June 30, 2025 to $46.5 million during the three months ended June 30, 2026. This increase was primarily due to a $1.8 million increase in our mortgage facilities interest expense and $2.1 million of credit facility interest expense as a result of borrowings incurred in connection with the Herb Chambers acquisition.

Previous wording

The $19.4 million increase in income tax expense was primarily the result of a $75.2 million increase in income before income taxes. Our effective tax rate for the three months ended March 31, 2026 was 25.0% compared to 24.7% in the prior year comparative period, which differed from the U.S. statutory rate primarily due to the unfavorable effects of the shortfall 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, 2026 at approximately 25%. This estimated effective tax rate includes the effects of the tax benefits related to the purchase of transferable tax credits.

Current wording

The $14.3 million (28%) decrease in income tax expense was primarily the result of a $52.5 million (26%) decrease in income before income taxes and a benefit for interest income relating to tax overpayments. Our effective tax rate for the three months ended June 30, 2026 was 24.3% compared to 25.0% in the prior year comparative period, which differed from the U.S. statutory rate primarily due to the favorable effects of amended state income tax returns and the aforementioned interest income benefit offset by the unfavorable effects of the shortfall component of equity compensation, which are discrete items, and the unfavorable effects of various permanent tax adjustments such as executive compensation. We estimate our effective tax rate for the year ended December 31, 2026 at approximately 25%. This estimated effective tax rate includes the effects of the tax benefits related to the purchase of transferable tax credits.

Previous wording

Total revenue for the three months ended March 31, 2026 decreased by $35.5 million (1%) compared to the three months ended March 31, 2025, due to a $37.3 million (2%) decrease in new vehicle revenue, a $29.5 million (2%) decrease in used vehicle revenue, and a $7.9 million (4%) decrease in F&I, net revenue, offset by a $39.2 million (7%) increase in parts and service revenue. During the three months ended March 31, 2026, gross profit increased by $2.7 million driven by a $22.5 million (7%) increase in parts and service gross profit and a $1.8 million (3%) increase in used vehicle gross profit, offset by a $14.6 million (10%) decrease in new vehicle gross profit and a $7.0 million (4%) decrease in F&I gross profit.

Current wording

Total revenue for the six months ended June 30, 2026 decreased by $24.0 million compared to the six months ended June 30, 2025, due to a $79.3 million (3%) decrease in used vehicle revenue, an $11.0 million decrease in new vehicle revenue, and a $6.1 million (2%) decrease in F&I, net revenue, offset by a $72.3 million (6%) increase in parts and service revenue. During the six months ended June 30, 2026, gross profit increased by $3.9 million, driven by a $41.9 million (6%) increase in parts and service gross profit and a $2.2 million (2%) increase in used vehicle gross profit, offset by a $36.4 million (12%) decrease in new vehicle gross profit and a $3.8 million (1%) decrease in F&I gross profit.

Previous wording

For the three months ended March 31, 2026, new vehicle revenue decreased by $37.3 million (2%) due to a decrease in new vehicle units sold of 2,214 (5%), partially offset by a $1,955 (4%) increase in revenue per new vehicle sold as compared to the three months ended March 31, 2025. Same store new vehicle revenue decreased by $186.7 million (9%), driven by a decrease in new vehicles sold of 4,344 (11%), partially offset by a $1,014 (2%) increase in revenue per new vehicle sold as compared to the three months ended March 31, 2025.

Current wording

For the six months ended June 30, 2026, new vehicle revenue decreased by $11.0 million due to a decrease in new vehicle units sold of 2,406 (3%), partially offset by a $1,358 (3%) increase in revenue per new vehicle sold as compared to the six months ended June 30, 2025. Same store new vehicle revenue decreased by $319.8 million (8%), driven by a decrease in new vehicles sold of 7,033 (9%), partially offset by a $543 (1%) increase in revenue per new vehicle sold as compared to the six months ended June 30, 2025.

Previous wording

For the three months ended March 31, 2026 new vehicle gross profit and same store new vehicle gross profit decreased by $14.6 million (10%) and $26.9 million (20%), respectively. Same store new vehicle gross margin for the three months ended March 31, 2026 decreased 81 basis points to 5.9%. A 57 basis point 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, combined with affordability constraints which have also served to compress margins.

Current wording

For the six months ended June 30, 2026, new vehicle gross profit and same store new vehicle gross profit decreased by $36.4 million (12%) and $61.6 million (22%), respectively. Same store new vehicle gross margin for the six months ended June 30, 2026 decreased 105 basis points to 5.8%. An 80 basis point 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, combined with affordability constraints which have also served to compress margins.

Previous wording

The seasonally adjusted annual rate ("SAAR") for new vehicle sales in the U.S. during the three months ended March 31, 2026 was approximately 15.6 million which decreased as compared to approximately 16.5 million during the three months ended March 31, 2025. The decrease in SAAR period over period was due to higher consumer demand for new vehicles driven by automobile tariff uncertainty in the first quarter of 2025 that did not recur in the first quarter of 2026. In addition, severe weather events in January and February 2026 led to a decrease in new unit sales during the three months ended March 31, 2026 as compared to the same period in the prior year. We also 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, 2026 was approximately 15.9 million which decreased as compared to approximately 16.3 million during the six months ended June 30, 2025. The decrease in SAAR period over period was due to higher consumer demand for new vehicles driven by automobile tariff uncertainty in the first and second quarter of 2025 that did not recur in 2026. We also continue to be impacted by the significant variation in new vehicle days supply among brands and models.

Previous wording

For the three months ended March 31, 2026, used vehicle revenue decreased by $29.5 million (2%) compared to the same period of the prior year, due to a $19.3 million (2%) decrease in used vehicle retail revenue and a $10.1 million (6%) decrease in used vehicle wholesale revenue. Same store used vehicle revenue decreased by $132.8 million (12%), due to a $104.5 million (11%) decrease in used vehicle retail revenue and a $28.3 million (19%) decrease in used vehicle wholesale revenue. Total used vehicle retail unit sales decreased by 6% on an all store basis and by 12% on a same store basis during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. While revenue per used vehicle retailed increased on both an all store and same store basis by 5% and 1%, 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, 2026 as compared to the three months ended March 31, 2025. Used vehicle revenue per vehicle sold increased due to the continued tight inventory levels heightened by consumers moving to the used vehicle market due to higher new vehicle prices. Used vehicle unit volumes were negatively impacted by severe weather in January and February, lower new vehicle unit sales which reduced trade-ins, our primary source of used vehicle inventory, and the continued lack of inventory availability, especially in vehicles with lower mileage.

Current wording

For the six months ended June 30, 2026, used vehicle revenue decreased by $79.3 million (3%) compared to the same period of the prior year, due to a $54.7 million (2%) decrease in used vehicle retail revenue and a $24.5 million (8%) decrease in used vehicle wholesale revenue. Same store used vehicle revenue decreased by $263.3 million (11%) due to a $208.8 million (10%) decrease in used vehicle retail revenue and a $54.5 million (18%) decrease in used vehicle wholesale revenue. Total used vehicle retail unit sales decreased by 7% on an all store basis and by 13% on a same store basis during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025. While revenue per used vehicle retailed increased on both an all store and same store basis by 5% and 3%, respectively, the decrease in unit volumes on both an all store and same store basis negatively impacted used vehicle revenue for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025. Used vehicle revenue per vehicle sold increased due to the continued tight inventory levels heightened by consumers moving to the used vehicle market due to higher new vehicle prices. Used vehicle unit volumes were negatively impacted by lower new vehicle unit sales which reduced trade-ins, our primary source of used vehicle inventory, and the continued lack of inventory availability, especially in vehicles with lower mileage.

Previous wording

The $39.2 million (7%) increase in parts and service revenue was primarily due to a $25.1 million (8%) increase in customer pay revenue, a $15.2 million (16%) increase in warranty revenue, and a $2.0 million (2%) increase in wholesale parts revenue, partially offset by a $3.1 million (5%) decrease in collision revenue. Same store parts and service revenue increased by $2.3 million to $533.6 million during the three months ended March 31, 2026 from $531.4 million during the three months ended March 31, 2025. The increase in same store parts and service revenue was due to a $3.8 million (1%) increase in customer pay revenue, a $3.3 million (3%) increase in wholesale parts revenue, and a $1.3 million (2%) increase in warranty revenue, partially offset by a $6.1 million (10%) decrease in collision revenue. The average age of vehicles in 2026 is historically high at 12.8 years. Consumers are retaining vehicles for longer periods of time due to various factors, including the higher cost of vehicles, higher interest rates, as well as the vehicle inventory constraints experienced in the automotive industry in recent years.

Current wording

The $72.3 million (6%) increase in parts and service revenue was primarily due to a $51.3 million (8%) increase in customer pay revenue, a $24.6 million (13%) increase in warranty revenue, and a $0.9 million increase in wholesale parts revenue, partially offset by a $4.5 million (3%) decrease in collision revenue. Same store parts and service revenue increased by $7.5 million (1%) to $1,084.3 million during the six months ended June 30, 2026 from $1,076.8 million during the six months ended June 30, 2025. The increase in same store parts and service revenue was due to a $9.1 million (2%) increase in customer pay revenue, a $5.8 million (3%) increase in wholesale parts revenue, and a $1.2 million (1%) increase in warranty revenue, partially offset by an $8.6 million (7%) decrease in collision revenue. The average age of vehicles in 2026 is historically high at 13.0 years. Consumers are retaining vehicles for longer periods of time due to various factors, including the higher cost of vehicles, higher interest rates, as well as the vehicle inventory constraints experienced in the automotive industry in recent years.

Previous wording

For the three months ended March 31, 2026, total parts and service gross profit increased by $22.5 million (7%) to $365.1 million and same store total parts and service gross profit decreased by $3.8 million (1%) to $309.3 million when compared to the same period of the prior year. The all store increase is primarily due to the Herb Chambers acquisition, offset by store divestitures, while the same store decrease is primarily due to a decrease in internal work and the collision business profitability offset by increased customer pay and warranty volume, which is in line with the increasing trend of aged vehicles.

Current wording

For the six months ended June 30, 2026, total parts and service gross profit increased by $41.9 million (6%) to $739.3 million, and same store total parts and service gross profit decreased by $6.3 million (1%) to $632.1 million when compared to the same period of the prior year. The all store increase is primarily due to the Herb Chambers acquisition, offset by store divestitures, while the same store decrease is primarily due to a decrease in internal work and the collision business profitability offset by increased customer pay and warranty volume, which is in line with the increasing trend of aged vehicles.

Previous wording

SG&A expense as a percentage of gross profit increased 720 basis points from 63.0% for thethree months ended March 31, 2025 to 70.2% for thethree months ended March 31, 2026, while same store SG&A expense as a percentage of gross profit increased 635 basis points from 62.4%to 68.7% over the same period. The increase in SG&A expense as a percentage of gross profit on a total company basis during the three months ended March 31, 2026 is primarily due to the relatively flat gross profit for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 and an increase in SG&A expense driven by the Herb Chambers Businesses and offset by store divestitures in 2025 and the first quarter of 2026. The increase in SG&A expense as a percentage of gross profit on a same store basis for the three months ended March 31, 2026 is the result of higher SG&A expense and lower gross profit for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. On a same store basis, personnel costs decreased by $16.1 million (1.1%) for the three months ended March 31, 2026 as compared to the same period in the prior year due to a reduction in commissions payable on lower gross profits earned during the relevant periods. In addition, rent and related expense increased on a same store basis by $14.8 million (2.6%) primarily due to a $10.0 million cyber insurance recovery received in 2025. Lastly, other expense increased on a same store basis by $6.1 million (2.3%) due to $6.1 million of Tekion implementation costs.

Current wording

On a same store basis, SG&A expense as a percentage of gross profit increased 495 basis points from 62.6% for the six months ended June 30, 2025 to 67.5% for the six months ended June 30, 2026. The increase in SG&A expense as a percentage of gross profit on a same store basis for the six months ended June 30, 2026 is the result of a decrease in gross profit, partially offset by a decrease in SG&A expense for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025. On a same store basis, personnel costs decreased by $32.9 million (0.9%) for the six months ended June 30, 2026 as compared to the same period in the prior year due to a reduction in commissions payable on lower gross profits earned during the relevant periods. In addition, rent and related expense increased on a same store basis by $21.4 million (2.0%) primarily due to a $15.0 million insurance recovery received in the first half of 2025 and $3.8 million in costs associated with weather events. In addition, other expense increased on a same store basis by $7.8 million (1.9%) primarily due to the Tekion implementation costs and duplicative DMS costs.

Previous wording

During the three months ended March 31, 2026, we sold 14 franchises (10 dealership locations) for an aggregate purchase price of approximately $361.5 million. The Company recorded a pre-tax gain totaling $125.8 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, 2026, we sold 14 franchises (10 dealership locations) for an aggregate purchase price of approximately $361.5 million. The Company recorded a pre-tax gain totaling $125.8 million, which is presented in our accompanying condensed consolidated statements of income as a gain on dealership divestitures, net.

Previous wording

As of March 31, 2026, we had total available liquidity of $1.15 billion, which consisted of cash and cash equivalents of $6.4 million (excluding $18.9 million held by TCA), available funds in our floor plan offset accounts of $229.7 million, $779.9 million of availability under our revolving credit facility and $136.7 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, 2026, these financial covenants did not further limit our availability under our other credit facilities.

Current wording

As of June 30, 2026, we had total available liquidity of $966.5 million, which consisted of cash and cash equivalents of $4.8 million (excluding $25.6 million held by TCA), short-term investments of $5.3 million, available funds in our floor plan offset accounts of $144.3 million, $782.0 million of availability under our revolving credit facility and $30.1 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, 2026, these financial covenants did not further limit our availability under our other credit facilities. Our 2021 syndicated real estate facility is scheduled to mature in December 2026. The Company expects to complete a refinance of the full outstanding principal amount prior to the expiration date of the existing agreement.

Previous wording

On February 25, 2026, the Company announced that its Board of Directors approved an increase of $424.0 million in the Company's common share repurchase authorization to $500.0 million (the "New Share Repurchase Authorization"). As of March 31, 2026, the Company had $453.0 million remaining on its share repurchase authorization. The extent to which the Company repurchases its shares, the number of shares and the timing of any repurchases, will depend on general market conditions, legal requirements and other corporate considerations. The repurchase program may be modified, suspended or terminated at any time without prior notice.

Current wording

On February 25, 2026, the Company announced that its Board of Directors approved an increase of $424.0 million in the Company's share repurchase authorization to $500.0 million (the "New Share Repurchase Authorization"). As of June 30, 2026, the Company had $322.4 million remaining on its share repurchase authorization. The extent to which the Company repurchases its shares, the number of shares and the timing of any repurchases, will depend on general market conditions, legal requirements and other corporate considerations. The repurchase program may be modified, suspended or terminated at any time without prior notice.

Previous wording

During the three months ended March 31, 2026, the Company repurchased and retired 678,243 shares of our common stock under our share repurchase program. The cash paid for these share repurchases was $147.0 million for the three months ended March 31, 2026. There were no share repurchases during the three months ended March 31, 2025.

Current wording

During the three and six months ended June 30, 2026, the Company repurchased and retired 668,116 and 1,346,359 shares of our common stock under our share repurchase program, respectively. The cash paid for these share repurchases was $130.6 million and $277.6 million for the three and six months ended June 30, 2026, respectively. There were no share repurchases during the three and six months ended June 30, 2025.

Previous wording

During the three months ended March 31, 2026 and 2025, the Company repurchased 37,420 and 42,780 shares of our common stock for $9.8 million and $12.5 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, 2026, the Company repurchased 817 and 38,237 shares of our common stock for $0.1 million and $9.9 million, respectively, from employees in connection with a net share settlement feature of employee equity-based awards.

Previous wording

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

Current wording

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

Previous wording

Net cash provided by operating activities totaled $223.2 million and $225.0 million, for the three months ended March 31, 2026 and 2025, respectively. Adjusted cash flow provided by operating activities totaled $166.5 million and $187.4 million for the three months ended March 31, 2026 and 2025, 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 $352.6 million and $316.4 million, for the six months ended June 30, 2026 and 2025, respectively. Adjusted cash flow provided by operating activities totaled $305.2 million and $334.0 million for the six months ended June 30, 2026 and 2025, 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 $20.9 million decrease in adjusted cash flow provided by operating activities for the three months ended March 31, 2026 compared to the three months ended March 31, 2025, was primarily the result of the following:

Current wording

The $28.8 million decrease in adjusted cash flow provided by operating activities for the six months ended June 30, 2026 compared to the six months ended June 30, 2025, was primarily the result of the following:

Previous wording

•decrease of $67.1 million in net income and non-cash adjustments to net income; and

Current wording

•decrease of $89.9 million in net income and non-cash adjustments to net income; and

Previous wording

•increase of $12.0 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; and

Current wording

•decrease of $15.7 million related to 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

•decrease of $12.4 million in other current assets, net.

Current wording

•$36.4 million increase related to other current assets, net;

Previous wording

•decrease of $30.8 million related to accounts payable and accrued liabilities; and

Current wording

•$16.7 million increase related to accounts payable and accrued liabilities;

Previous wording

•$74.1 million increase related to sales volume and the timing of collection of accounts receivable and contracts-in-transit during 2026 as compared to 2025;

Current wording

•$19.3 million increase related to sales volume and the timing of collection of accounts receivable and contracts-in-transit during 2026 as compared to 2025; and

Previous wording

•$4.1 million increase related to other long term assets and liabilities, net.

Current wording

•$5.0 million increase related to other long term assets and liabilities, net.

Previous wording

Net cash provided by investing activities totaled $312.4 million for the three months ended March 31, 2026 compared to net cash used in investing activities of $0.5 million for the three months ended March 31, 2025.

Current wording

Net cash provided by investing activities totaled $186.5 million for the six months ended June 30, 2026 compared to net cash provided by investing activities of $129.1 million for the six months ended June 30, 2025.

Previous wording

Capital expenditures, excluding the purchase of real estate, were $46.4 million and $21.4 million for the three months ended March 31, 2026 and 2025, respectively.

Current wording

Capital expenditures, excluding the purchase of real estate, were $117.4 million and $59.5 million for the six months ended June 30, 2026 and 2025, respectively.

Previous wording

During the three months ended March 31, 2026, we acquired real estate properties for $2.5 million and did not purchase previously leased real estate properties. We did not acquire real estate properties during the three months ended March 31, 2025.

Current wording

During the six months ended June 30, 2026, we acquired real estate properties for $51.9 million and did not purchase previously leased real estate properties. We did not acquire real estate properties during the six months ended June 30, 2025.

Previous wording

During the three months ended March 31, 2026, we sold 14 franchises (10 dealership locations) for an aggregate purchase price of $361.5 million. The Company recorded a pre-tax gain totaling $125.8 million, which is presented in our accompanying consolidated statements of income as a gain on dealership divestitures, net.

Current wording

During the six months ended June 30, 2026, we sold 14 franchises (10 dealership locations) for an aggregate purchase price of $361.5 million. The Company recorded a pre-tax gain totaling $125.8 million, which is presented in our accompanying consolidated statements of income as a gain on dealership divestitures, net.

Previous wording

During the three months ended March 31, 2025, we sold two franchises (two dealership locations) for an aggregate purchase price of $33.5 million. The company recorded a pre-tax gain totaling $4.1 million, which is presented in our accompanying consolidated statements of income as a gain on dealership divestitures, net.

Current wording

During the six months ended June 30, 2025, we sold nine franchises (seven dealership locations) for an aggregate purchase price of $222.3 million. The company recorded a pre-tax gain totaling $10.1 million, which is presented in our accompanying consolidated statements of income as a gain on dealership divestitures, net.