[Executive Summary](index=1&type=section&id=1.%20Executive%20Summary) [Second Quarter 2025 Financial Highlights](index=1&type=section&id=1.1%20Second%20Quarter%202025%20Financial%20Highlights) The company reported strong Q2 2025 results with significant net income growth driven by revenue and gross profit increases Second Quarter 2025 Key Financial Highlights (vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :-------------------------------- | :------ | :------ | :--------- | | Net Income | $153M | $28M | 443% | | Adjusted Net Income (non-GAAP) | $146M | $129M | 13% | | Diluted EPS | $7.76 | $1.39 | 458% | | Adjusted Diluted EPS (non-GAAP) | $7.43 | $6.40 | 16% | | Revenue | $4.4B | $4.246B | 3% | | Gross Profit | $752M | $730.7M | 3% | - Achieved an all-time record **Parts & Service gross profit of $355 million** in Q2 2025[4](index=4&type=chunk) - Reported **fourth consecutive quarter of sequential improvement** in same store Used Retail gross profit per unit[4](index=4&type=chunk) [Strategic Business Updates](index=1&type=section&id=1.2%20Strategic%20Business%20Updates) The company advanced its portfolio optimization through a major acquisition and several store divestitures - Completed the acquisition of The Herb Chambers Automotive Group, which was the sixteenth largest privately-owned dealership group with approximately **$3 billion in annual revenue**[3](index=3&type=chunk)[4](index=4&type=chunk) - Divested nine stores between April 1, 2025, and July 28, 2025, generating net proceeds of **$250 - $270 million** as part of ongoing capital allocation and portfolio optimization[4](index=4&type=chunk) [Consolidated Financial Results](index=2&type=section&id=2.%20Consolidated%20Financial%20Results) [Income Statement Overview](index=6&type=section&id=2.1%20Income%20Statement%20Overview) Q2 2025 net income grew significantly due to higher revenue, gross profit, and a sharp reduction in asset impairments Consolidated Statements of Income (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | % Change | | :-------------------------- | :----------------- | :----------------- | :--------- | | Total Revenue | $4,373.1 | $4,246.2 | 3% | | Gross Profit | $751.9 | $730.7 | 3% | | Income from Operations | $257.4 | $100.5 | NM | | Income Before Income Taxes | $203.8 | $38.0 | NM | | Net Income | $152.8 | $28.1 | NM | | Diluted EPS | $7.76 | $1.39 | NM | Consolidated Statements of Income (Six Months Ended June 30, 2025 vs. 2024) | Metric | YTD 2025 (Millions) | YTD 2024 (Millions) | % Change | | :-------------------------- | :------------------ | :------------------ | :--------- | | Total Revenue | $8,521.6 | $8,447.4 | 1% | | Gross Profit | $1,476.1 | $1,480.7 | NM | | Income from Operations | $491.7 | $363.3 | 35% | | Income Before Income Taxes | $379.2 | $233.9 | 62% | | Net Income | $284.9 | $175.2 | 63% | | Diluted EPS | $14.46 | $8.64 | 67% | - Asset impairments **significantly decreased from $135.4 million in Q2 2024 to $0 in Q2 2025**, contributing to the improved income from operations[24](index=24&type=chunk) [Balance Sheet and Liquidity](index=3&type=section&id=2.2%20Balance%20Sheet%20and%20Liquidity) The company maintained strong liquidity and an improved net leverage ratio while effectively managing inventory levels Selected Balance Sheet Data (June 30, 2025 vs. Dec 31, 2024) | Metric | June 30, 2025 (Millions) | Dec 31, 2024 (Millions) | Change (Millions) | | :-------------------------- | :----------------------- | :---------------------- | :---------------- | | Cash and cash equivalents | $54.8 | $69.4 | $(14.7) | | Inventory, net | $1,942.2 | $1,978.8 | $(36.6) | | Total current assets | $3,129.6 | $3,137.9 | $(8.3) | | Floor plan notes payable | $1,288.6 | $1,694.7 | $(406.1) | | Total current liabilities | $2,403.1 | $2,836.3 | $(433.3) | | Long-term debt | $3,045.0 | $3,138.6 | $(93.6) | | Shareholders' equity | $3,777.0 | $3,502.1 | $274.9 | Inventory Days Supply | Category | June 30, 2025 | Dec 31, 2024 | June 30, 2024 | | :-------------------- | :------------ | :----------- | :------------ | | New vehicle inventory | 59 | 49 | 72 | | Used vehicle inventory | 37 | 37 | 38 | - Total liquidity as of June 30, 2025, was **$1.1 billion**, comprising $318 million in cash and floorplan offset accounts and $798 million availability under the used vehicle floorplan line and revolver, with a transaction adjusted net leverage ratio of **2.46x**[10](index=10&type=chunk) [Detailed Operating Performance](index=9&type=section&id=2.3%20Detailed%20Operating%20Performance) Q2 2025 operating performance showed growth in new vehicle and parts & service, with mixed results in used vehicles [Revenue and Gross Profit by Category](index=9&type=section&id=2.3.1%20Revenue%20and%20Gross%20Profit%20by%20Category) Revenue growth was driven by new vehicles and parts & service, with the latter being the largest gross profit contributor Revenue by Category (Q2 2025 vs. Q2 2024) | Category | Q2 2025 (Millions) | Q2 2024 (Millions) | % Change | | :------------------------ | :----------------- | :----------------- | :--------- | | New vehicle | $2,303.9 | $2,164.9 | 6% | | Used vehicle retail | $1,129.4 | $1,167.2 | (3)% | | Used vehicle wholesale | $156.3 | $140.9 | 11% | | Parts and service | $601.5 | $580.9 | 4% | | Finance and insurance, net | $182.0 | $192.4 | (5)% | | **Total Revenue** | **$4,373.1** | **$4,246.2** | **3%** | Gross Profit by Category (Q2 2025 vs. Q2 2024) | Category | Q2 2025 (Millions) | Q2 2024 (Millions) | % Change | | :------------------------ | :----------------- | :----------------- | :--------- | | New vehicle | $160.0 | $155.1 | 3% | | Used vehicle retail | $62.3 | $56.4 | 11% | | Used vehicle wholesale | $6.6 | $4.6 | 43% | | Parts and service | $354.8 | $339.9 | 4% | | Finance and insurance, net | $168.1 | $174.7 | (4)% | | **Total Gross Profit** | **$751.9** | **$730.7** | **3%** | Revenue Mix (Q2 2025 vs. Q2 2024) | Category | Q2 2025 | Q2 2024 | | :------------------------ | :------ | :------ | | New vehicle | 52.7% | 51.0% | | Used vehicle retail | 25.8% | 27.5% | | Used vehicle wholesale | 3.6% | 3.3% | | Parts and service | 13.8% | 13.7% | | Finance and insurance, net | 4.2% | 4.5% | | **Total Revenue** | **100.0%** | **100.0%** | Gross Profit Mix (Q2 2025 vs. Q2 2024) | Category | Q2 2025 | Q2 2024 | | :------------------------ | :------ | :------ | | New vehicle | 21.3% | 21.2% | | Used vehicle retail | 8.3% | 7.7% | | Used vehicle wholesale | 0.9% | 0.6% | | Parts and service | 47.2% | 46.5% | | Finance and insurance, net | 22.4% | 23.9% | | **Total Gross Profit** | **100.0%** | **100.0%** | [Unit Sales and Average Selling Price](index=11&type=section&id=2.3.2%20Unit%20Sales%20and%20Average%20Selling%20Price) New vehicle unit sales rose while used vehicle sales declined, with modest price increases for both categories Unit Sales (Q2 2025 vs. Q2 2024) | Category | Q2 2025 | Q2 2024 | % Change | | :-------------------- | :------ | :------ | :--------- | | New vehicle: Luxury | 9,318 | 8,719 | 7% | | New vehicle: Import | 22,884 | 22,663 | 1% | | New vehicle: Domestic | 12,235 | 11,297 | 8% | | **Total new vehicle** | **44,437** | **42,679** | **4%** | | Used vehicle retail | 36,233 | 38,534 | (6)% | | Used to new ratio | 81.5% | 90.3% | - | | **Total new vehicle (YTD)** | **85,933** | **83,356** | **3%** | | **Used vehicle retail (YTD)** | **71,648** | **78,023** | **(8)%** | Average Selling Price (Q2 2025 vs. Q2 2024) | Category | Q2 2025 | Q2 2024 | % Change | | :-------------------- | :------ | :------ | :--------- | | New vehicle | $51,846 | $50,725 | 2% | | Used vehicle retail | $31,171 | $30,289 | 3% | | **New vehicle (YTD)** | **$51,691** | **$50,736** | **2%** | | **Used vehicle retail (YTD)** | **$30,822** | **$30,229** | **2%** | [Gross Profit Per Unit and Margins](index=11&type=section&id=2.3.3%20Gross%20Profit%20Per%20Unit%20and%20Margins) Used vehicle GPPU increased significantly while new vehicle GPPU slightly declined, maintaining a stable total gross margin Average Gross Profit Per Unit (Q2 2025 vs. Q2 2024) | Category | Q2 2025 | Q2 2024 | % Change | | :-------------------- | :------ | :------ | :--------- | | New vehicle: Luxury | $7,214 | $6,830 | 6% | | New vehicle: Import | $2,490 | $2,590 | (4)% | | New vehicle: Domestic | $2,927 | $3,260 | (10)% | | **Total new vehicle** | **$3,601** | **$3,633** | **(1)%** | | Used vehicle retail | $1,720 | $1,463 | 18% | | Finance and insurance | $2,084 | $2,151 | (3)% | | Front end yield | $4,840 | $4,755 | 2% | Gross Margin (Q2 2025 vs. Q2 2024) | Category | Q2 2025 | Q2 2024 | Change (bps) | | :-------------------- | :------ | :------ | :----------- | | Total new vehicle | 6.9% | 7.2% | (22) bps | | Used vehicle retail | 5.5% | 4.8% | 69 bps | | Parts and service | 59.0% | 58.5% | 47 bps | | **Total gross profit margin** | **17.2%** | **17.2%** | **(1) bps** | [Operating Expenses](index=11&type=section&id=2.3.4%20Operating%20Expenses) Stable SG&A expenses led to a significant reduction in SG&A as a percentage of gross profit Operating Expenses (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | % Change | | :------------------------------------ | :----------------- | :----------------- | :--------- | | Selling, general and administrative | $475.5 | $476.5 | NM | | SG&A as a % of gross profit | 63.2% | 65.2% | (198) bps | | Adjusted SG&A as a % of gross profit | 63.6% | 64.8% | (119) bps | | Income from operations as a % of revenue | 5.9% | 2.4% | 352 bps | | Adjusted income from operations as a % of revenue | 5.8% | 5.6% | 18 bps | [Same Store Financial Results](index=2&type=section&id=3.%20Same%20Store%20Financial%20Results) [Same Store Revenue and Gross Profit](index=2&type=section&id=3.1%20Same%20Store%20Revenue%20and%20Gross%20Profit) Q2 2025 same store results showed robust growth in revenue and gross profit, led by new vehicles and parts & service Same Store Revenue (Q2 2025 vs. Q2 2024) | Category | Q2 2025 (Millions) | Q2 2024 (Millions) | % Change | | :------------------------ | :----------------- | :----------------- | :--------- | | New vehicle | $2,268.0 | $2,087.6 | 9% | | Used vehicle retail | $1,114.1 | $1,128.8 | (1)% | | Used vehicle wholesale | $154.3 | $137.4 | 12% | | Parts and service | $590.8 | $559.3 | 6% | | Finance and insurance, net | $180.1 | $187.6 | (4)% | | **Total Revenue** | **$4,307.3** | **$4,100.7** | **5%** | Same Store Gross Profit (Q2 2025 vs. Q2 2024) | Category | Q2 2025 (Millions) | Q2 2024 (Millions) | % Change | | :------------------------ | :----------------- | :----------------- | :--------- | | New vehicle | $157.6 | $151.6 | 4% | | Used vehicle retail | $61.6 | $55.7 | 11% | | Used vehicle wholesale | $6.5 | $4.7 | 40% | | Parts and service | $349.5 | $327.9 | 7% | | Finance and insurance, net | $166.2 | $169.9 | (2)% | | **Total Gross Profit** | **$741.5** | **$709.8** | **4%** | [Same Store Unit Sales and Average Selling Price](index=12&type=section&id=3.2%20Same%20Store%20Unit%20Sales%20and%20Average%20Selling%20Price) Same store new vehicle unit sales increased while used vehicle sales decreased, with price growth in both segments Same Store Unit Sales (Q2 2025 vs. Q2 2024) | Category | Q2 2025 | Q2 2024 | % Change | | :-------------------- | :------ | :------ | :--------- | | New vehicle: Luxury | 9,318 | 8,719 | 7% | | New vehicle: Import | 22,306 | 21,174 | 5% | | New vehicle: Domestic | 12,019 | 10,947 | 10% | | **Total new vehicle** | **43,643** | **40,840** | **7%** | | Used vehicle retail | 35,648 | 37,027 | (4)% | | Used to new ratio | 81.7% | 90.7% | - | Same Store Average Selling Price (Q2 2025 vs. Q2 2024) | Category | Q2 2025 | Q2 2024 | % Change | | :-------------------- | :------ | :------ | :--------- | | New vehicle | $51,967 | $51,116 | 2% | | Used vehicle retail | $31,252 | $30,487 | 3% | [Same Store Gross Profit Per Unit and Margins](index=12&type=section&id=3.3%20Same%20Store%20Gross%20Profit%20Per%20Unit%20and%20Margins) Same store used vehicle GPPU rose significantly, offsetting a slight decline in new vehicle GPPU for a stable total margin Same Store Average Gross Profit Per Unit (Q2 2025 vs. Q2 2024) | Category | Q2 2025 | Q2 2024 | % Change | | :-------------------- | :------ | :------ | :--------- | | New vehicle: Luxury | $7,221 | $6,838 | 6% | | New vehicle: Import | $2,479 | $2,645 | (6)% | | New vehicle: Domestic | $2,914 | $3,284 | (11)% | | **Total new vehicle** | **$3,611** | **$3,711** | **(3)%** | | Used vehicle retail | $1,729 | $1,503 | 15% | | Finance and insurance | $2,096 | $2,182 | (4)% | | Front end yield | $4,861 | $4,844 | NM | Same Store Gross Margin (Q2 2025 vs. Q2 2024) | Category | Q2 2025 | Q2 2024 | Change (bps) | | :-------------------- | :------ | :------ | :----------- | | Total new vehicle | 6.9% | 7.3% | (31) bps | | Used vehicle retail | 5.5% | 4.9% | 60 bps | | Parts and service | 59.2% | 58.6% | 53 bps | | **Total gross profit margin** | **17.2%** | **17.3%** | **(9) bps** | [Same Store Operating Expenses](index=12&type=section&id=3.4%20Same%20Store%20Operating%20Expenses) A slight increase in same store SG&A expenses was offset by improved operational efficiency as a percentage of gross profit Same Store Operating Expenses (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | % Change | | :------------------------------------ | :----------------- | :----------------- | :--------- | | Selling, general and administrative | $466.2 | $459.3 | 2% | | Adjusted selling, general and administrative | $469.0 | $456.2 | 3% | | SG&A as a % of gross profit | 62.9% | 64.7% | (183) bps | | Adjusted SG&A as a % of gross profit | 63.2% | 64.3% | (103) bps | [Segment Reporting](index=14&type=section&id=4.%20Segment%20Reporting) [Dealerships and Total Care Auto (TCA) Performance](index=14&type=section&id=4.1%20Dealerships%20and%20Total%20Care%20Auto%20(TCA)%20Performance) Both Dealerships and TCA segments contributed to revenue and operating income growth, with dealerships as the primary driver Segment Revenue from External Customers (Q2 2025 vs. Q2 2024) | Segment | Q2 2025 (Millions) | Q2 2024 (Millions) | | :------------------------ | :----------------- | :----------------- | | Dealerships | $4,293.6 | $4,170.8 | | TCA | $79.5 | $75.4 | | **Total Consolidated Revenue** | **$4,373.1** | **$4,246.2** | Segment Operating Income (Q2 2025 vs. Q2 2024) | Segment | Q2 2025 (Millions) | Q2 2024 (Millions) | | :------------------------ | :----------------- | :----------------- | | Dealerships | $232.1 | $193.3 | | TCA | $18.5 | $18.3 | | **Total Segment Operating Income** | **$250.6** | **$211.7** | Segment Revenue from External Customers (YTD June 30, 2025 vs. 2024) | Segment | YTD 2025 (Millions) | YTD 2024 (Millions) | | :------------------------ | :------------------ | :------------------ | | Dealerships | $8,358.0 | $8,297.9 | | TCA | $163.6 | $149.5 | | **Total Consolidated Revenue** | **$8,521.6** | **$8,447.4** | Segment Operating Income (YTD June 30, 2025 vs. 2024) | Segment | YTD 2025 (Millions) | YTD 2024 (Millions) | | :------------------------ | :------------------ | :------------------ | | Dealerships | $440.5 | $413.8 | | TCA | $39.6 | $37.6 | | **Total Segment Operating Income** | **$480.1** | **$451.4** | [Non-GAAP Financial Measures and Reconciliations](index=4&type=section&id=5.%20Non-GAAP%20Financial%20Measures%20and%20Reconciliations) [Non-GAAP Financial Disclosure Principles](index=4&type=section&id=5.1%20Non-GAAP%20Financial%20Disclosure%20Principles) The company uses non-GAAP measures to provide insight into core operational performance by excluding non-recurring items - Management evaluates results using non-GAAP measures like 'Adjusted income from operations,' 'Adjusted net income,' 'Adjusted operating margins,' 'Adjusted EBITDA,' 'Adjusted diluted EPS,' 'Adjusted SG&A,' 'Adjusted operating cash flow,' 'Transaction adjusted EBITDA,' and 'Transaction adjusted net leverage ratio' to assess strategic decisions and initiatives[18](index=18&type=chunk) - Non-GAAP measures are not defined under GAAP and may not be comparable to similarly titled measures used by other companies; they are presented for more complete and consistent comparisons of operational performance but should not receive undue reliance[20](index=20&type=chunk) - Transaction Adjusted Metrics are used to reflect the effects of dealership acquisitions and divestitures as if they occurred on the first day of the last twelve-month periods, providing a more meaningful comparison of performance[21](index=21&type=chunk) [Adjusted Financial Performance](index=16&type=section&id=5.2%20Adjusted%20Financial%20Performance) Reconciliations detail adjustments to GAAP metrics, offering a clearer view of underlying operational performance Q2 2025 GAAP to Non-GAAP Adjusted Metrics | Metric | GAAP (Millions) | Adjustments (Millions) | Non-GAAP Adjusted (Millions) | | :------------------------------------ | :-------------- | :--------------------- | :--------------------------- | | Selling, general and administrative | $475.5 | $5.0 (Insurance recovery) - $2.2 (Professional fees) | $478.2 | | Income from operations | $257.4 | -$5.0 (Insurance recovery) + $2.2 (Professional fees) | $254.6 | | Net income | $152.8 | -$5.9 (Divestitures) - $5.0 (Insurance recovery) + $2.2 (Professional fees) + $2.2 (Tax effect) | $146.3 | | Diluted EPS | $7.76 | -$0.23 (Divestitures) - $0.19 (Insurance recovery) + $0.09 (Professional fees) | $7.43 | | SG&A as a % of gross profit | 63.2% | - | 63.6% | | Income from operations as a % of revenue | 5.9% | - | 5.8% | Q2 2024 GAAP to Non-GAAP Adjusted Metrics | Metric | GAAP (Millions) | Adjustments (Millions) | Non-GAAP Adjusted (Millions) | | :------------------------------------ | :-------------- | :--------------------- | :--------------------------- | | Selling, general and administrative | $476.5 | -$3.1 (Hail damage) | $473.5 | | Income from operations | $100.5 | $3.1 (Hail damage) + $135.4 (Asset impairments) | $238.9 | | Net income | $28.1 | -$3.6 (Divestitures) + $3.1 (Hail damage) + $135.4 (Asset impairments) - $33.8 (Tax effect) | $129.1 | | Diluted EPS | $1.39 | -$0.13 (Divestitures) + $0.11 (Hail damage) + $5.02 (Asset impairments) | $6.40 | | SG&A as a % of gross profit | 65.2% | - | 64.8% | | Income from operations as a % of revenue | 2.4% | - | 5.6% | YTD June 30, 2025 GAAP to Non-GAAP Adjusted Metrics | Metric | GAAP (Millions) | Adjustments (Millions) | Non-GAAP Adjusted (Millions) | | :------------------------------------ | :-------------- | :--------------------- | :--------------------------- | | Net income | $284.9 | -$10.1 (Divestitures) + $14.3 (Asset impairments) - $15.0 (Insurance recovery) + $5.1 (Professional fees) + $1.4 (Tax effect) | $280.6 | | Diluted EPS | $14.46 | -$0.38 (Divestitures) + $0.54 (Asset impairments) - $0.57 (Insurance recovery) + $0.19 (Professional fees) | $14.25 | [Adjusted Leverage and EBITDA](index=16&type=section&id=5.3%20Adjusted%20Leverage%20and%20EBITDA) The company's improved adjusted leverage ratio and positive EBITDA trends reflect effective debt and operational management Adjusted Leverage Ratio (June 30, 2025 vs. March 31, 2025) | Metric | June 30, 2025 (Millions) | March 31, 2025 (Millions) | | :------------------------------------ | :----------------------- | :------------------------ | | Long-term debt | $3,045.0 | $3,128.5 | | Cash and floor plan offset | $(352.4) | $(241.2) | | TCA cash | $34.2 | $37.2 | | Availability under used vehicle floor plan facility | $(323.1) | $(273.7) | | **Adjusted long-term net debt** | **$2,403.7** | **$2,650.7** | | **Transaction adjusted net leverage ratio** | **2.46** | **2.75** | EBITDA Reconciliation (Twelve Months Ended June 30, 2025 vs. March 31, 2025) | Metric | June 30, 2025 (Millions) | March 31, 2025 (Millions) | | :------------------------------------ | :----------------------- | :------------------------ | | Net income | $540.0 | $415.4 | | Depreciation and amortization | $76.3 | $75.6 | | Income tax expense | $180.6 | $139.5 | | Swap and other interest expense | $174.0 | $177.5 | | **EBITDA** | **$971.0** | **$808.0** | | Total non-core items | $11.9 | $155.4 | | **Adjusted EBITDA** | **$982.9** | **$963.4** | | Impact of dealership acquisitions and divestitures | $(6.9) | $(1.1) | | **Transaction adjusted EBITDA** | **$976.0** | **$962.4** | [Adjusted Cash Flow from Operations](index=19&type=section&id=5.4%20Adjusted%20Cash%20Flow%20from%20Operations) Adjusted cash flow from operations was $334.0 million for the first half of 2025 after floor plan adjustments Adjusted Cash Flow from Operations (Six Months Ended June 30, 2025 vs. 2024) | Metric | YTD 2025 (Millions) | YTD 2024 (Millions) | | :------------------------------------ | :------------------ | :------------------ | | Cash provided by operating activities | $316.4 | $22.7 | | Change in Floor Plan Notes Payable—Non-Trade, net | $(206.7) | $59.9 | | Change in Floor Plan Notes Payable—Non-Trade associated with floor plan offset, used vehicle borrowing base changes adjusted for acquisition and divestitures | $220.8 | $170.7 | | Change in Floor Plan Notes Payable—Trade associated with floor plan offset, adjusted for acquisition and divestitures | $3.5 | $148.7 | | **Adjusted cash flow provided by operating activities** | **$334.0** | **$402.0** | [Company Overview and Outlook](index=3&type=section&id=6.%20Company%20Overview%20and%20Outlook) [About Asbury Automotive Group](index=3&type=section&id=6.1%20About%20Asbury%20Automotive%20Group) Asbury Automotive Group is a Fortune 500 company and one of the largest U.S. automotive retailers - Asbury Automotive Group, Inc (NYSE: ABG) is a **Fortune 500 company** headquartered in Duluth, GA, and one of the largest automotive retailers in the U.S[13](index=13&type=chunk) - As of June 30, 2025, Asbury operated **146 new vehicle dealerships** (189 franchises representing 31 domestic and foreign brands), Total Care Auto, Powered by Landcar, and 37 collision repair centers[13](index=13&type=chunk) - The company's multi-year plan focuses on increasing revenue and profitability through **organic operations, acquisitive growth, and innovative technologies**[13](index=13&type=chunk) [Forward-Looking Statements](index=3&type=section&id=6.2%20Forward-Looking%20Statements) The report includes forward-looking statements concerning future operations and strategy, subject to significant risks - Forward-looking statements include projections regarding financial position, liquidity, results of operations, cash flows, leverage, market position, and business strategy[15](index=15&type=chunk)[16](index=16&type=chunk) - Key risks and uncertainties include adverse litigation, integration challenges, supply chain disruptions, market factors, competition, and governmental regulations[16](index=16&type=chunk) - The company undertakes **no obligation to publicly update** any forward-looking statement[17](index=17&type=chunk) [Earnings Call Details](index=3&type=section&id=6.3%20Earnings%20Call%20Details) An earnings call to discuss Q2 results is scheduled for July 29, 2025, accessible via webcast and phone - An earnings conference call will be held on **Tuesday, July 29, 2025, at 10:00 a.m. ET**[11](index=11&type=chunk) - The call will be simulcast live on the internet via https://investors.asburyauto.com, where a replay and supplemental materials will also be available[11](index=11&type=chunk) Earnings Call Dial-in Information | Type | Number | | :----------- | :------------- | | Domestic | (877) 407-2988 | | International | +1 (201) 389-0923 | | Passcode | 13754714 |

Wall Street expects a year-over-year increase in earnings on higher revenues when Asbury Automotive Group (ABG) reports results for the quarter ended June 2025. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates. The earnings report, which is expected to be released on July 29, might help the stock move higher if these key numbers are better than e ...

Core Insights - Auto retail ecosystem companies have shown strong performance year-to-date despite the announcement of auto tariffs and weakening industry fundamentals [1] - JPMorgan analyst Rajat Gupta has made several rating changes for key automotive stocks [1] Cars.com - JPMorgan upgraded Cars.com Inc (CARS) from Neutral to Overweight with a price target of $14 [2] - The company has made significant progress in developing new products that integrate into dealers' workflows, which is expected to help retain dealer customers [3] Sonic Automotive - Sonic Automotive Inc (SAH) was downgraded from Overweight to Underweight, with a price target increase from $65 to $72 [4] - Despite a strong luxury brand mix and exposure to key markets like California and Texas, Sonic has underperformed its peers and trades at a premium [4] Group 1 Automotive - Group 1 Automotive Inc (GPI) was downgraded from Overweight to Neutral, with a price target reduction from $435 to $415 [5] - The company's solid execution has been aided by favorable Texas exposure, but regional concentration increases volatility [5] Asbury Automotive Group - Asbury Automotive Group Inc (ABG) was downgraded from Neutral to Underweight, with a price target cut from $235 to $225 [5] - While the company is positioned for long-term growth through strategic acquisitions and digital investments, risks related to integration, execution, and elevated leverage are concerning [6]

Core Viewpoint - Carvana and Asbury Automotive represent two distinct approaches in the auto retail sector, with Carvana focusing on a fully digital used-car buying experience and Asbury blending traditional dealership strengths with digital initiatives [2][3]. Group 1: Carvana (CVNA) - Carvana is the second-largest used car retailer in the U.S., leveraging a digital platform that allows for a leaner operation compared to traditional retailers [4]. - The company has consistently exceeded earnings expectations for four consecutive quarters, selling over 100,000 vehicles per quarter, with a year-over-year EPS increase and a 46% rise in retail unit sales [5]. - Carvana's adjusted EBITDA reached a record $488 million with an 11.5% margin, leading all auto retailers in adjusted EBITDA margin [6]. - Rising tariffs on new vehicles may drive more consumers to the used car market, where Carvana is well-positioned [7]. - Despite over $5 billion in long-term debt, Carvana's scalable model and growth targets present a compelling narrative for investors [7]. Group 2: Asbury Automotive (ABG) - Asbury combines traditional dealership operations with a growing digital presence, selling both new and used vehicles and generating additional revenue from finance and insurance products [10]. - The Clicklane platform has shown growth, selling over 51,000 units in 2024, a 13% increase year-over-year [11]. - Strategic acquisitions have been a key growth strategy, with the latest acquisition expected to add $3 billion in annualized revenues [12]. - Asbury faces near-term challenges, including deferred revenues impacting earnings and rising SG&A costs, which reached 63.9% of gross profit [14]. - The company's adjusted EBITDA margin is below 6%, significantly lower than Carvana's, and high capital expenditures could limit free cash flow [14]. Group 3: Market Performance and Valuation - Year-to-date, Carvana shares have increased by over 70%, while Asbury's stock has gained 7% [16]. - Carvana's forward sales multiple is 3.67, significantly above its five-year median of 1.95, reflecting high growth expectations [18]. - Asbury's forward sales multiple stands at 0.27, indicating a more conservative valuation [18].

Group 1 - The automotive retail market has shown a mixed performance, with some calls being successful while others have not yet proven effective [1] - Crude Value Insights focuses on cash flow and companies that generate it, highlighting value and growth prospects in the oil and natural gas sector [1] - The service offers a 50+ stock model account and in-depth cash flow analyses of exploration and production (E&P) firms [2] Group 2 - Subscribers can engage in live chat discussions about the oil and gas sector, enhancing community interaction and information sharing [2] - A two-week free trial is available for new subscribers, promoting access to insights in the oil and gas industry [3]

Core Viewpoint - Asbury Automotive Group (ABG) shares have increased by approximately 4.8% since the last earnings report, underperforming the S&P 500, raising questions about the sustainability of this trend leading up to the next earnings release [1] Estimates Movement - Estimates for Asbury Automotive have trended upward over the past month, indicating positive sentiment among analysts [2] VGM Scores - Asbury Automotive holds a strong Growth Score of A, but has a lower Momentum Score of D. The stock also received an A grade for value, placing it in the top quintile for this investment strategy. The aggregate VGM Score for the stock is A, which is significant for investors not focused on a single strategy [3] Outlook - The upward trend in estimates suggests a promising outlook for Asbury Automotive, with a Zacks Rank of 3 (Hold), indicating expectations for an in-line return in the coming months [4] Industry Performance - Asbury Automotive is part of the Zacks Automotive - Retail and Wholesale industry. Sonic Automotive (SAH), a competitor in the same industry, has seen a 15.2% increase in its stock over the past month. Sonic Automotive reported revenues of $3.65 billion for the last quarter, reflecting a year-over-year increase of 7.9% [5] Sonic Automotive Estimates - Sonic Automotive is projected to report earnings of $1.59 per share for the current quarter, representing a year-over-year increase of 8.2%. The Zacks Consensus Estimate for Sonic has changed by +1.6% over the last 30 days, maintaining a Zacks Rank of 3 (Hold) and a VGM Score of A [6]

Financial Performance - Consolidated revenue for Q1 2025 decreased to $4.15 billion, down from $4.20 billion in the prior year[105]. - Consolidated gross profit for Q1 2025 decreased to $724.2 million, compared to $750.0 million for the prior year[105]. - Total revenue for the three months ended March 31, 2025 decreased by $52.8 million (1%) to $4,148.5 million compared to the same period in 2024, primarily due to a $121.1 million (9%) decrease in used vehicle revenue[109]. - Net income for the three months ended March 31, 2025 decreased by $15.0 million (10%) to $132.1 million, with diluted net income per share falling to $6.71[111]. - Total gross profit decreased by $25.8 million (3%) to $724.2 million, with a notable $19.8 million (12%) decrease in new vehicle gross profit[109]. - Operating income decreased by $28.4 million (11%) to $234.3 million, primarily due to a decrease in gross profit and an increase in asset impairments[110]. - Selling, general, and administrative expenses decreased by $12.2 million (3%) to $456.4 million, contributing to the overall reduction in operating expenses[110]. - Total other expenses, net decreased by $8.0 million (12%), primarily due to a decrease in floor plan interest expense and other interest expense[111]. - Income tax expense decreased by $5.4 million (11%) due to a $20.4 million (10%) decrease in income before income taxes, with an effective tax rate of 24.7% for the three months ended March 31, 2025[135]. Vehicle Sales and Revenue - The decrease in consolidated revenue was primarily due to a decrease in used vehicle units sold, offset by an increase in new vehicle units sold[105]. - New vehicle revenue increased by $73.8 million (4%) to $2,138.1 million, driven by a 2% increase in new vehicle units sold[113]. - Used vehicle revenue decreased by $121.1 million (9%) to $1,235.8 million for the three months ended March 31, 2025, compared to $1,356.9 million in the same period of 2024[116]. - Used vehicle retail revenue fell by $112.5 million (9%) to $1,078.9 million, while wholesale revenue decreased by $8.6 million (5%) to $156.9 million[116]. - Total used vehicle retail unit sales decreased by 10% on an all store basis and by 8% on a same store basis[116]. - The revenue mix for new vehicles increased to 51.5% from 49.1% year-over-year, while used vehicle retail revenue decreased to 26.0% from 28.4%[109]. Gross Profit and Margins - The gross profit margin for new vehicles decreased to 6.7% from 7.9% in the prior year, reflecting a decrease in gross profit per new vehicle sold by $555 (14%) to $3,448[113]. - The gross profit per vehicle sold for both new and used vehicles declined, contributing to the overall decrease in gross profit[105]. - Used vehicle retail gross profit margins decreased from 5.5% to 5.2% for all stores and on a same store basis[117]. - Parts and service gross profit experienced growth, partially offsetting the declines in vehicle gross profit[105]. - Total parts and service gross profit increased by $8.5 million (3%) to $342.7 million, driven by increased customer pay and warranty volume[122]. Acquisitions and Expansion - The company is expected to acquire the Herb Chambers automotive group for approximately $1.34 billion, including $750 million for goodwill[103][104]. - The acquisition includes 33 dealerships, 52 franchises, and three collision centers, anticipated to close in Q2 2025[104]. - The company operates 196 new vehicle franchises across 150 dealership locations, representing 31 brands within 14 states as of March 31, 2025[94]. Economic and Market Conditions - The company’s vehicle sales are influenced by economic conditions, consumer confidence, and availability of desirable vehicles from manufacturers[98]. - The automotive retail industry is facing challenges from macroeconomic factors such as rising interest rates and inflation, which may impact demand[100]. - The seasonally adjusted annual rate (SAAR) for new vehicle sales in the U.S. increased to approximately 16.5 million, up from 15.4 million in the same period last year, indicating higher inventory supply and consumer demand[115]. Cash Flow and Liquidity - Net cash provided by operating activities was $225.0 million for the three months ended March 31, 2025, compared to $177.1 million for the same period in 2024[148]. - Adjusted cash flow provided by operating activities decreased by $21.3 million to $187.4 million for the three months ended March 31, 2025, primarily due to changes in working capital[149]. - For the three months ended March 31, 2025, total available liquidity was $963.7 million, consisting of cash and cash equivalents of $87.4 million, available funds in floor plan offset accounts of $116.7 million, and $485.9 million under the revolving credit facility[136]. Expenses and Impairments - Asset impairment charges recognized during the three months ended March 31, 2025, totaled $14.3 million, compared to no impairment charges in the same period of 2024[130]. - Floor plan interest expense decreased by $2.1 million (9%) to $20.7 million for the three months ended March 31, 2025, primarily due to higher balances in floor plan offset accounts[131]. - Other interest expense decreased by $1.8 million (4%) to $42.3 million, attributed to a $2.1 million decrease in credit facility interest expense due to lower interest rates[132]. Capital Expenditures - Capital expenditures, excluding real estate purchases, were $21.4 million for the three months ended March 31, 2025, down from $25.7 million in the same period of 2024[150]. - The company expects capital expenditures of approximately $260.3 million in 2025 for facility upgrades and technology investments[155].

Core Insights - Asbury Automotive (ABG) reported first-quarter 2025 adjusted earnings per share of $6.82, missing the Zacks Consensus Estimate of $6.84 and down from $7.21 in the previous year [1] - Total revenues for the quarter were $4.15 billion, a decrease of 1.2% year over year, and also below the Zacks Consensus Estimate of $4.4 billion [1] Segment Details - New vehicle revenues increased by 4% year over year to $2.14 billion, but fell short of the Zacks Consensus Estimate of $2.24 billion due to lower unit sales [2] - Retail units sold in the new vehicle segment totaled 41,496, up 2% year over year, but below the consensus mark of 43,854 units [2] - The average selling price (ASP) for new vehicles was $51,525, up 2% year over year, exceeding the consensus estimate of $51,133 [2] - Gross profit from the new vehicle segment was $143.1 million, down 12% from the prior-year quarter and missing the consensus estimate of $151 million [2] Used Vehicle Performance - Used vehicle retail revenues declined by 9% year over year to $1.08 billion, missing the Zacks Consensus Estimate of $1.2 billion due to lower ASP and unit sales [3] - Retail used vehicle units sold totaled 35,415, down 10% year over year, lagging behind the consensus mark of 39,161 units [3] - The ASP for used vehicles was $30,465, up 1% year over year, but missed the consensus estimate of $30,476 [3] - Gross profit from the used vehicle segment was $56.2 million, down 14% year over year and below the consensus estimate of $59 million [3] Other Business Segments - Revenues from the used vehicle wholesale business fell by 5% to $157 million, meeting the consensus mark [4] - Gross profit from the wholesale unit increased by 21% to $8.4 million, surpassing the consensus estimate of $2.75 million [4] - Finance and insurance business net revenues were $187 million, down 1% year over year and below the consensus estimate of $189 million [4] - Gross profit from finance and insurance was $173.9 million, down 4% year over year but exceeding the consensus estimate of $165 million [4] Parts and Service Business - Revenues from the parts and service business were $587.6 million, slightly down from $590.4 million in the previous year and missing the Zacks Consensus Estimate of $630 million [5] - Gross profit from this segment was $342.7 million, which lagged the consensus mark of $359 million but rose 3% year over year [5] Financial Position - As of March 31, 2025, the company had cash and cash equivalents of $124.6 million, up from $69.4 million as of December 31, 2024 [6] - Long-term debt was $3.13 billion, down from $3.14 billion as of December 31, 2024 [6] - The company did not repurchase any shares in the first quarter of 2025 [6]

Financial Performance - First quarter 2025 net income was $132 million ($6.71 per diluted share), a decrease of 10% from $147 million ($7.21 per diluted share) in Q1 2024[2] - Revenue for Q1 2025 was $4.1 billion, a decrease of 1% compared to the same period in 2024[10] - Adjusted net income for Q1 2025 was $134 million ($6.82 per diluted share), down 9% from $147 million ($7.21 per diluted share) in Q1 2024[2] - Gross profit for Q1 2025 was $724 million, a decrease of 3% from the previous year[10] - Total revenue for Q1 2025 was $4,148.5 million, a decrease of 1% compared to $4,201.2 million in Q1 2024[25] - Net income decreased by 10% to $132.1 million, with diluted earnings per share at $6.71, down 7% from $7.21[25] - Adjusted EBITDA for the twelve months ended March 31, 2025, was $963.4 million, down from $982.0 million for the previous year, indicating a decline of 1.7%[39] - The diluted EPS for the three months ended March 31, 2025, was $6.71, compared to $6.82 for the same period in 2024, reflecting a decrease of 1.6%[40] Revenue Breakdown - New vehicle revenue increased by 4% to $2,138.1 million, while total used vehicle revenue decreased by 9% to $1,235.8 million[25] - New vehicle unit volume increased by 2% in Q1 2025, while used vehicle retail unit volume decreased by 10%[10] - The average selling price of new vehicles rose by 2% to $51,525, while the average selling price of used vehicles increased by 1% to $30,465[33] - Total unit sales of new vehicles increased by 2% to 41,496 units compared to 40,677 units in the prior year[33] Expenses and Margins - Operating margin for Q1 2025 was 5.6%, with an adjusted operating margin of 5.8%[10] - Selling, general and administrative expenses decreased by 3% to $456.4 million from $468.6 million year-over-year[33] - The income from operations as a percentage of revenue decreased to 5.6% from 6.3% in the previous year[33] - The gross margin for total new vehicles decreased by 120 basis points to 6.7% from 7.9%[33] - Selling, general and administrative (SG&A) expenses for the three months ended March 31, 2025, were $456.4 million, with SG&A as a percentage of gross profit at 63.0%[40] Liquidity and Debt - As of March 31, 2025, the company had total liquidity of $964 million, including cash and availability under credit lines[9] - Cash and cash equivalents increased by 80% to $124.6 million compared to $69.4 million in Q1 2024[27] - Long-term debt decreased slightly to $3,128.5 million from $3,138.6 million in Q4 2024[27] - The adjusted long-term net debt as of March 31, 2025, was $2,650.7 million, compared to $2,796.9 million as of December 31, 2024, showing a reduction of 5.2%[39] - The transaction adjusted net leverage ratio as of March 31, 2025, was 2.75, slightly down from 2.85 as of December 31, 2024[39] Inventory and Supply Chain - Inventory decreased by 8% to $1,822.4 million from $1,978.8 million in Q1 2024[27] - Days supply of new vehicle inventory improved to 44 days from 49 days in Q4 2024, while used vehicle inventory days supply decreased to 31 days from 37 days[28] Acquisitions and Divestitures - The company completed two divestitures in Q1 2025, contributing estimated annualized revenue of $79 million[2] - The company announced a definitive agreement to acquire The Herb Chambers Automotive Group, which has approximately $3 billion in annual revenue[4] Other Financial Metrics - The company reported a 52% increase in finance and insurance costs, rising to $13.1 million from $8.6 million in Q1 2024[25] - Total non-core items for the twelve months ended March 31, 2025, amounted to $155.4 million, compared to $152.4 million in the previous year[39] - The impact of dealership acquisitions and divestitures on transaction adjusted EBITDA was a negative $1.1 million for the twelve months ended March 31, 2025[39] - Cash provided by operating activities for the three months ended March 31, 2025, was $225.0 million, an increase from $177.1 million in the same period of 2024, representing a growth of 27.0%[40] - Adjusted cash flow provided by operating activities for the three months ended March 31, 2025, was $187.4 million, compared to $208.7 million in the same period of 2024, indicating a decline of 10.6%[40]

Financial Data and Key Metrics Changes - The company generated $4.1 billion in revenue, with a gross profit of $724 million and a gross profit margin of 17.5% [12] - Adjusted operating margin was 5.8%, and adjusted earnings per share (EPS) was $6.82 [12] - Adjusted net income for Q1 2025 was $134 million, excluding certain non-cash items [21] - Adjusted SG&A as a percentage of gross profit was 64% [22] Business Line Data and Key Metrics Changes - Same store revenue for new vehicles was up 6% year over year, with units up 4% [14] - New average gross profit per vehicle was $3,449 [14] - Used vehicle unit volume was down 8% year over year, with used retail gross profit per unit at $15.87 [15] - Parts and service gross profit was up 5% for the quarter, with a gross profit margin of 58.3% [17] Market Data and Key Metrics Changes - Approximately 56% of new vehicle units sold in Q1 were produced in America, insulating them from tariffs [7] - The company experienced a wide range of approaches from OEMs regarding tariff impacts, making predictions challenging [7] Company Strategy and Development Direction - The company is focused on a disciplined growth strategy, highlighted by the pending acquisition of the Herb Chambers Automotive Group [10] - Plans to reduce leverage over the next 18 to 24 months following the acquisition [11] - The implementation of Techeon is expected to improve productivity and guest experience [9] Management's Comments on Operating Environment and Future Outlook - Management noted that the first quarter faced challenges due to weather-related disruptions and tariff uncertainties [42] - The company remains optimistic about long-term growth, particularly in parts and service due to an aging vehicle fleet [19] - Management emphasized the importance of focusing on gross profit rather than volume during uncertain market conditions [42] Other Important Information - The company expects to close the Herb Chambers acquisition by the end of Q2 2025, pending OEM approval [10] - Free cash flow for Q1 2025 was $166 million, with liquidity at $964 million [25] Q&A Session Summary Question: Regarding TCA and tariff impacts - Management indicated that tariffs could slow down deferral impacts, affecting future earnings [30] Question: Integration of Techeon and SG&A savings - The rollout of Techeon is progressing well, with expectations of significant SG&A savings through reduced software costs and improved productivity [32] Question: Gross profit performance compared to peers - Management acknowledged weather impacts and emphasized a focus on maximizing returns rather than chasing volume [42] Question: Impact of tariffs on the Herb Chambers acquisition - The asset purchase agreement does not include a breakup fee for the company, and management sees no reason to walk away from the deal [50] Question: Front end gross outlook - Management believes the company is reaching a floor on front end gross, focusing on profitability rather than volume [56] Question: Parts and service growth outlook - Management maintains a mid-single-digit growth outlook for parts and service, with expectations of increased traffic as weather conditions improve [60] Question: Techeon and revenue opportunities - The integration of Techeon is expected to enhance communication and marketing efficiency, leading to potential revenue growth [66]