What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2022-03-01 compared with 2021-03-01 · 150 added, 103 removed, 204 unchanged (55% of the section changed)

Asbury Automotive Group, Inc., a Delaware corporation organized in 2002, is one of the largest automotive retailers in the United States.

Asbury Automotive Group, Inc., a Delaware corporation organized in 2002, is a Fortune 500 company and the 6th largest franchised automotive retailer in the United States.

Our mission and vision is to put guest experience as our “North Star” and be the most guest-centric automotive retailer in the industry.

We follow three key principles to guide us:

(1) foster a fun and supportive culture where team members thrive personally, while building meaningful bonds with one another;

(2) be great ambassadors and exceptional stewards of capital for our partners who fuel our mission;

and (3) be caring professionals who strive to delight our guests and foster love for the brand.

Our strong organizational culture and purposeful mission allows us to continuously deliver best-in-class experiences to our guests.

As of December 31, 2021, we owned and operated 205 new vehicle franchises, representing 31 brands of automobiles at 155 dealership locations, 35 collision centers, seven stand-alone used vehicle dealerships, one used vehicle wholesale business and one auto auction within fifteen states.

Our store operations are conducted by our subsidiaries.

As of December 31, 2020, we owned and operated 112 new vehicle franchises, representing 31 brands of automobiles at 91 dealership locations, 25 collision centers and one auto auction in 16 metropolitan markets within nine states.

Our stores offer an extensive range of automotive products and services, including new and used vehicles;

parts and service, which includes vehicle repair and maintenance services, replacement parts and collision repair services (collectively referred to as "parts and services" or "P&S");

and finance and insurance products ("F&I"), including arranging vehicle financing through third parties and aftermarket products, such as extended service contracts, guaranteed asset protection ("GAP") debt cancellation, prepaid maintenance, and credit life and disability insurance.

Park Place Acquisition

As previously announced, on December 11, 2019, the Company entered into transaction agreements with certain members of the Park Place Dealership family of entities, Park Place Mid-Cities, Ltd., a Texas limited partnership, and the identified principal (collectively, "Park Place") to acquire substantially all of the assets of, and certain real property related to, the Park Place business including the purchase of 19 franchises, two collision centers and an auto auction.

On March 24, 2020, Asbury delivered notice to the sellers terminating the Transaction Agreements pursuant to the terms thereof in exchange for the payment of $10.0 million of liquidated damages.

Please refer to Liquidity and Capital Resources for additional details regarding the impact on financing transactions.

As a result of the Company's efforts to attempt to mitigate the financial impact of COVID-19, along with a strong May and June 2020 performance, the Company reengaged on the Park Place Dealership group acquisition under more favorable pricing and more flexible financing terms, including limiting the purchase of luxury dealership franchises to those most aligned with the Company's core strategic business.

On July 6, 2020, the Company entered into an Asset Purchase Agreement (the "Revised Asset Purchase Agreement") with Park Place to acquire substantially all of the assets of, and lease the real property related to, 12 new vehicle dealership franchises (3 Mercedes-Benz, 3 Sprinter, 2 Lexus, 1 Jaguar, 1 Land Rover, 1 Porsche, and 1 Volvo), two collision centers and an auto auction comprising the Park Place Dealership group (collectively, the "Revised Transaction") for a purchase price of $889.9 million.

The Revised Transaction was completed on August 24, 2020.

The purchase price was financed through a combination of cash, floor plan facilities and seller financing.

In addition to the Park Place Dealership group acquisition, during the year ended December 31, 2020, we acquired the assets of three franchises (one dealership location) in the Denver, Colorado market for a combined purchase price of $63.6 million.

During the year ended December 31, 2020, we sold two franchises (two dealership locations) in the Atlanta, Georgia market, we sold six franchises (five dealership locations) and one collision center in the Jackson, Mississippi market, and we sold one franchise (one dealership location) in the Greenville, South Carolina market.

In connection with these divestitures the Company recorded a pre-tax gain totaling $62.3 million, which is presented in our accompanying Consolidated Statements of Income as Gain on dealership divestitures, net.

We offer an extensive range of automotive products and services fulfilling the entire vehicle ownership lifecycle including new and used vehicles, parts and service, which includes vehicle repair and maintenance services, replacement parts and collision repair services (collectively referred to as “parts and services” or “P&S”), and finance and insurance (“F&I”) products, including arranging vehicle financing through third parties and aftermarket products, such as extended service contracts, guaranteed asset protection (“GAP”) debt cancellation and prepaid maintenance.

We strive for a diversified mix of products, services, brands and geographic locations which allows us to reduce our reliance on any one manufacturer, minimize the impact from changes in customer preference and maintain profitability across fluctuations in new vehicle sales.

Our diverse revenue base, along with our commitment to operational excellence across our dealership portfolio, provides a resilient business model and strong profit margins.

Our omni-channel platform is designed to engage with customers where and when they want to interact and to increase our market share through digital innovation.

We are focused on providing a high level of customer service and have designed our dealerships’ services to meet the increasingly sophisticated needs of customers throughout the vehicle ownership lifecycle.

Our digital capabilities further enhance our physical dealership network and drive additional revenue.

Our ability to provide a low friction experience across our omni-channel platform drives customer satisfaction and repeat business across our dealership portfolio.

In December 2020, we introduced Clicklane, the automotive retail industry’s first, end-to-end, 100% online vehicle retail tool.

This differentiated platform offers our customers an easy, seamless and transparent approach to completing the purchase or sale of vehicles completely online inclusive of all documentation, loan origination and everything in between.

We believe the Clicklane tool will further enhance our physical dealership network and creates a sustainable competitive advantage as the vehicle buying process evolves in a digital environment.

Miller Acquisition

On September 28, 2021, Asbury Automotive Group, LLC (“Purchaser”), a Delaware limited liability company and a wholly-owned subsidiary of Asbury Automotive Group, Inc., a Delaware corporation (the “Company”), entered into (i) a Purchase Agreement (the “Equity Purchase Agreement”) with certain members of the Larry H.

Miller Dealership family of entities;

(ii) a Real Estate Purchase and Sale Agreement (the “Real Estate Purchase Agreement”) with Miller Family Real Estate, L.L.C.

and (iii) a Purchase Agreement (the “TCA Purchase Agreement” and together with the Equity Purchase Agreement and the Real Estate Purchase Agreement, the “Transaction Agreements”) with certain equity owners of the TCA business (an F&I product provider) affiliated with the Larry H.

Miller Dealership family of entities.

Pursuant to the Transaction Agreements, Purchaser acquired the equity interests of, and the real property related to (collectively, the “Transactions”), the businesses of the Larry H.

Miller ("LHM") Dealerships and TCA (collectively, the “Businesses”), each described in the Equity Purchase Agreement, the Real Estate Purchase Agreement and the TCA Purchase Agreement, for an aggregate purchase price of approximately $3.48 billion, comprising approximately $2.51 billion of goodwill and franchise rights intangible assets, $792.6 million of property and equipment, and $285.0 million in inventories less $105.6 million of liabilities assumed, net of other assets acquired.

On December 17, 2021, the Company completed the acquisition of the Businesses, thereby acquiring 54 new vehicle dealerships, seven used cars stores, 11 collision centers, a used vehicle wholesale business, the real property related thereto, and the entities comprising the TCA Business for a total purchase price of $3.48 billion.

The real property was acquired in escrow, to be released, together with the related portion of the purchase price, subject to the satisfaction of certain title related conditions.

The purchase price was financed through a combination of cash, debt, including senior notes, real estate facilities, new and used vehicle floor plan facilities and the proceeds from the issuance of common stock.

As a result of the Transactions, the Company now operates in two reportable segments, namely the Dealerships and TCA segments.

In addition to the LHM Acquisition, during the year ended December 31, 2021, we acquired the assets of 11 franchises (10 dealership locations) in in the Denver, Colorado market and three franchises (one dealership location) in the Indianapolis, Indiana market for a combined purchase price of $485.7 million.

We funded this acquisition with an aggregate of $455.1 million of cash and $9.6 million of floor plan borrowings for the purchase of the related new vehicle inventory.

In the aggregate, this acquisition included purchase price holdbacks of $21.0 million for potential indemnity claims made by us with respect to the acquired franchises.

Asbury Automotive

The following charts present the contribution to total revenue and gross profit by each line of business for the year ended December 31, 2021:

Our new vehicle franchise retail network is made up of dealerships located in 16 metropolitan markets in nine states operating primarily under 11 locally-branded dealership groups.

The following chart provides a detailed breakdown of our markets, brand names, and franchises as of December 31, 2020:

Dealership Group Brand Name Market Franchise

Coggin Automotive Group Fort Pierce, FL Acura, BMW, Honda, Mercedes-Benz

Jacksonville, FL Buick, Chevrolet, Ford, GMC, Honda(a), Nissan(a), Toyota

Orlando, FL Ford, Honda(a), Hyundai

Courtesy Autogroup Tampa, FL Chrysler, Dodge, Genesis, Honda, Hyundai, Infiniti, Jeep, Kia, Mercedes-Benz, Nissan, Sprinter, Toyota

Crown Automotive Company Durham, NC Honda

Fayetteville, NC Dodge, Ford

Greensboro, NC Acura, BMW, Chrysler, Dodge, Honda, Jeep, Nissan, Volvo

Charlottesville, VA BMW

Richmond, VA Acura, BMW(a), MINI

David McDavid Auto Group Austin, TX Acura

Dallas/Fort Worth, TX Acura, Ford, Honda(a), Lincoln

Hare & Bill Estes Automotive Groups Indianapolis, IN Buick, Chevrolet(b), Chrysler, Dodge, Ford, GMC, Honda, Isuzu, Jeep, Toyota

Greenville Automotive Group Greenville, SC Jaguar, Land Rover, Nissan, Porsche, Toyota, Volvo

Mike Shaw Denver, CO Subaru, Chrysler, Dodge, Jeep

Nalley Automotive Group Atlanta, GA Acura, Audi, Bentley, BMW, Chevrolet, Honda, Hyundai, Infiniti(a), Kia, Lexus(a), Nissan, Toyota(b), Volkswagen

Park Place Automotive Dallas/Fort Worth, TX Jaguar, Lexus(a), Land Rover, Mercedes-Benz(b), Porsche, Volvo, Sprinter(b)

Plaza Motor Company St.

Louis, MO Audi, BMW, Infiniti, Jaguar, Land Rover, Lexus, Mercedes-Benz(a), Sprinter(a)

Our new vehicle franchise retail network within our Dealerships segment is made up of dealerships located in fifteen states operating primarily under 15 locally-branded dealership groups.

The following chart provides a detailed breakdown of our states, brand names, and franchises as of December 31, 2021:

Dealership Group Brand Name State Franchise

Coggin Automotive Group Florida Acura, BMW, Buick, Chevrolet, Ford(a), GMC, Honda(d), Hyundai, Mercedes-Benz, Nissan(a), Toyota

Courtesy Autogroup Florida Chrysler, Dodge, Genesis, Honda, Hyundai, Infiniti, Jeep, Kia, Mercedes-Benz, Nissan, Sprinter, Toyota

Crown Automotive Company North Carolina Acura, BMW, Chrysler, Dodge(a), Ford, Honda(a), Jeep, Nissan, Volvo

South Carolina Nissan

Virginia Acura, BMW(a), MINI

David McDavid Auto Group Texas Acura(a), Ford, Honda(a), Lincoln

Greenville Automotive Group South Carolina Jaguar, Land Rover, Porsche, Toyota, Volvo

Hare, Bill Estes & Kahlo Automotive Groups Indiana Buick, Chevrolet(b), Chrysler(a), Dodge(a), Ford, GMC, Honda, Isuzu, Jeep(a), Toyota

Miller Dealerships Arizona Chrysler(b), Dodge(c), Fiat, Ford, Genesis, Hyundai, Jeep(b), Nissan, Toyota, Volkswagen(a)

California Toyota(a)

Colorado Chrysler(a), Dodge(b), Fiat, Ford, Jeep(a), Nissan(b), Toyota(b), Volkswagen

Idaho Chrysler, Dodge, Honda, Jeep, Subaru

New Mexico Chevrolet, Chrysler(a), Dodge, Genesis, Hyundai(a), Jeep(a), Toyota(a)

Utah Chevrolet(a), Chrysler(c), Dodge(c), Ford(b), Honda, Jeep(c), Lexus(a), Lincoln(a), Mercedes-Benz, Toyota, Sprinter

Washington Honda, Lexus, Toyota

Mike Shaw, Stevinson & Arapahoe Automotive Groups Colorado Subaru(a), Chevrolet, Chrysler, Dodge, Genesis, Hyundai(a), Jaguar, Jeep, Lexus(a), Porsche, Toyota(a)

Nalley Automotive Group Georgia Acura, Audi, Bentley, BMW, Chevrolet, Honda, Hyundai, Infiniti(a), Kia, Lexus(a), Nissan, Toyota(b), Volkswagen

Park Place Automotive Texas Jaguar, Lexus(a), Land Rover, Mercedes-Benz(b), Porsche, Volvo, Sprinter(b)

Plaza Motor Company Missouri Audi, BMW, Infiniti, Jaguar, Land Rover, Lexus, Mercedes-Benz(a), Sprinter(a)

_____________________________

(a) This market has two of these franchises.

(b) This market has three of these franchises.

(a) This state has two of these franchises.

(b) This state has three of these franchises.

(d) This state has five of these franchises.

New Vehicle Sales

3 unchanged sentences

Vehicle Revenues

Lexus 10 12 %

Mercedes-Benz 8 12

1 unchanged sentence

Total Luxury 57 44 %

Honda 12 16 %

Toyota 19 12 %

Volkswagen 4 1

Total Import 72 39 %

Chrysler 17 *

Chevrolet 9 4

5 unchanged sentences

Used Vehicle Sales

We sell used vehicles at all of our franchised dealership locations.

We sell used vehicles at all our franchised dealership locations, seven stand-alone used vehicle dealerships, one used vehicle wholesale business and one auto auction.

Used vehicle sales include the sale of used vehicles to individual retail customers ("used retail") and the sale of used vehicles to other dealers at auction ("wholesale") (the terms "used retail" and "wholesale" collectively referred to as "used").

16 unchanged sentences

We offer a wide variety of automotive F&I products to our customers.

We arrange third-party financing for the sale or lease of vehicles to our customers in exchange for a fee paid to us by the third-party financial institution.

We do not directly finance our customers' vehicle purchases or leases, therefore our exposure to losses in connection with those third-party financing arrangements is limited generally to the fees we receive.

The fees we receive are subject to chargeback, or repayment, to the finance company if a customer defaults or prepays the retail installment contract typically during some limited time period at the beginning of the contract term.

We have negotiated agreements with certain lenders pursuant to which we receive additional fees upon reaching a certain volume of business.

We offer our customers a variety of vehicle protection products in connection with the purchase of vehicles.

These products are underwritten and administered by independent third-parties.

Through the addition of the TCA Business in December 2021, we offer extended vehicle service contracts, prepaid maintenance contracts, vehicle theft assistance contracts, key replacement contracts, guaranteed asset protection contracts, paintless dent repair contracts, appearance protection contracts, tire and wheel, DrivePur vehicle sanitation product, and lease wear and tear contracts.

These F&I products are sold to our customers via our network of recently acquired LHM Dealerships.

In addition to the TCA F&I products, we also arrange third-party financing for the sale or lease of vehicles to our customers in exchange for compensation paid to us by the third-party financial institution.

The compensation we receive is subject to chargeback, or repayment, to the third-party finance company if a customer defaults or prepays the retail installment contract typically during some limited time period at the beginning of the contract term.

We have negotiated agreements with certain lenders pursuant to which we receive additional compensation upon reaching a certain volume of business.

We offer our customers a variety of vehicle protection products through independent third parties in connection with the purchase of vehicles .

These products are underwritten and administered by these third parties.

Under our arrangements with the providers of these products, we primarily sell the products on a straight commission basis.

We are subject to chargebacks for insurance contracts as a result of early termination, default, or prepayment of the contract.

We are subject to chargebacks for service and other contracts as a result of early termination, default, or prepayment of the contract.

In addition, we participate in future profits associated with the performance of the third-party held underlying portfolio for certain products pursuant to retrospective commission arrangements.

The following is a brief description of some of the vehicle protection products we offer to our customers:

The following is a brief description of some of the vehicle protection products we offer to our customers, either through TCA or independent third parties:

• Extended service contracts – covers certain repair work after the expiration of the manufacturer warranty;

1 unchanged sentence

• Prepaid maintenance – covers certain routine maintenance work, such as oil changes, cleaning and adjusting of brakes, multi-point vehicle inspections, and tire rotations;

• Credit life and disability – covers the remaining amounts due on an auto loan or a lease in the event of death or disability.

• Road hazard protection - repairs or replaces tires damaged by road hazards, road surface conditions such as potholes, cracks and breaks, and debris on the road surface.

F&I Revenue in our Dealerships segment represents the commissions earned from both TCA and independent third parties related to a broad range of F&I products.

This F&I Revenue is presented net of chargebacks.

The commission fees, net of chargebacks received by our dealerships from TCA, are eliminated upon consolidation along with other inter-company transactions.

F&I Revenue in our TCA segment represents the premium revenue earned from customers related to F&I products in connection with the purchase of vehicles, primarily at LHM Business dealerships.

In addition, F&I Revenue includes investment income and other gains and losses related to the performance of our investment portfolio.

The commissions expense paid by TCA to our affiliated dealerships is presented in F&I Cost of Sales in our TCA segment and eliminated upon consolidation along with other inter-company transactions.

In addition to the commissions paid to the dealerships, claims paid related to the contracts are recognized in F&I cost of sales as well.

The premium revenue and cost of sales is recognized over the life of the F&I product contract.

Business Strategy

We seek to create long-term value for our stockholders by striving to drive operational excellence and deploy capital to its highest risk adjusted returns.

We seek to be the most guest-centric automotive retailer and to create long-term value for our stockholders by striving to drive operational excellence and deploy capital to its highest risk adjusted returns.

To achieve these objectives, we employ the strategies described below.

Provide an exceptional customer experience in our stores and through our omni-channel strategy

We are focused on providing a high level of customer service and have designed our dealerships' services to meet the needs of an increasingly sophisticated and demanding automotive consumer.

Provide an exceptional customer experience in our stores.

We are guided by our mission and vision to be the most guest-centric automotive retailer in the industry and use that framework as our North Star.

We have designed our dealerships’ services to meet the needs of an increasingly sophisticated and demanding automotive consumer.

We endeavor to establish relationships that we believe will result in both repeat business and additional business through customer referrals.

Furthermore, we provide our dealership managers with appropriate incentives to employ efficient selling approaches, engage in extensive follow-up to develop long-term relationships with customers, and extensively train our sales staff to meet customer needs.

As part of our omni-channel strategy, we implemented Clicklane TM , a communications technology ecosystem, which offers our customers an easy, convenient and seamless approach to purchase new and used vehicles completely online.

Our Clicklane platform provides our customers the ability to (i) select a new or used vehicle for lease or purchase, (ii) arrange for and obtain financing from a variety of lenders, (iii) obtain an offer on their trade-in vehicle, (iv) obtain an exact pay-off amount on any existing loan on a trade-in vehicle, (v) select and purchase finance and insurance products designed for the customer’s vehicle and then (vi) complete the vehicle purchase and financing or lease by signing the transaction documents and scheduling in-store pickup or home delivery with each step performed entirely online.

As of February 19, 2021, we have implemented Clicklane across approximately one-third of our stores and expect to complete the rollout across all of our stores by the end of the first quarter of 2021.

Further develop digital and omni-channel capabilities and drive Clicklane penetration across our coast-to-coast footprint .

As part of our omni-channel strategy, we implemented Clicklane, the automotive retail industry’s first, end-to-end, 100% online vehicle retail tool, which offers our customers a convenient, seamless and transparent approach to purchase and sell vehicles completely online.

Our Clicklane platform provides our customers with the ability to (i) select a new or used vehicle for lease or purchase, (ii) arrange for and obtain financing from a variety of lenders, (iii) obtain an offer on their trade-in vehicle, (iv) obtain an exact pay-off amount on any existing loan on a trade-in vehicle, (v) select and purchase F&I products designed for the customer’s vehicle and then (vi) complete the vehicle purchase and financing or lease by signing the transaction documents and scheduling in-store pickup or home delivery, with each step performed entirely online.

We implemented Clicklane across all of our legacy stores by the end of the first quarter of 2021.

The 2021 acquisitions further extend our footprint across seven western U.S.

states including Arizona, California, Idaho, New Mexico, Colorado, Utah, and Washington.

We intend to implement Clicklane across these new stores to further solidify the national reach of our Clicklane platform and drive additional revenue.

Although we developed our Clicklane platform together with a third-party vendor, certain technology elements of the platform were developed solely by us and are subject to trade secret protection.

1 unchanged sentence

We continue to invest in and develop omni-channel initiatives designed to deliver an exceptional customer experience.

Invest in and attract top talent to improve backend operations and front-line service

Grow F&I product penetration and expand the TCA Business’s service offerings across the full dealership portfolio.

We are positioned to leverage the acquisition of the LHM Dealership Business to improve profitability via the ownership of TCA, a highly-scalable provider of a full-suite of F&I products.

TCA’s key offerings include vehicle service contracts, prepaid maintenance, protection plans, key and remote replacement, leased vehicle protection and tire and wheel protection.

We aim to integrate TCA’s service offerings across our full dealership portfolio to increase our F&I product penetration and profitability.

Attract, retain and invest in top talent to drive growth and optimize operations .

We believe the core of our business success lies in our talent pool, so we are focused on attracting, hiring and retaining the best people.

3 unchanged sentences

The general manager of each of our dealerships is responsible for the operations, personnel and financial performance of that dealership as well as other day-to-day operations.

Implement best practices and improve productivity

We have discipline-specific executives who focus on increasing the penetration of current services and expanding the breadth of our offerings to customers through the implementation of best practices and continuous training on our technology solutions throughout our dealership network.

In addition, we have marketing initiatives designed to attract customers to our online channels and mobile applications.

We tie management and employee compensation at various operational levels to performance through incentive-based pay systems based on various metrics, including dealership profitability, departmental profitability, customer satisfaction and individual performance, as appropriate.

In addition, a portion of management's compensation is variable-based in nature, including an annual cash bonus based on achieving certain earnings before interest, taxes, depreciation and amortization ("EBITDA") targets and a component of equity compensation tied to our financial performance in comparison to our peer group.

Centralize, streamline, and automate processes

Our Dealership Support Center ("DSC") management is responsible for our capital expenditure and operating strategy, while the implementation of our operating strategy rests with our market-based management teams and each dealership management team based on the policies and procedures established by DSC management.

DSC management and our market-based management teams continuously evaluate the financial and operating results of our dealerships, as well as each dealership's geographical location, and from time to time, make decisions to evaluate new technologies and/or processes to further refine our operational processes.

We also leverage our scale when implementing new technologies and processes.

Leverage our scale and cost structure to improve our operating efficiencies

Leverage scale and cost structure to improve operating efficiencies.

We are positioned to leverage our significant scale so that we are able to achieve competitive operating margins by centralizing and streamlining various back-office functions.

1 unchanged sentence

Similarly, we are able to leverage our scale to implement these best practices when integrating newly acquired dealerships allowing us to continue to improve our operating efficiencies.

Successfully integrate Park Place and maximize the benefits of this transformational Acquisition

We have a well-defined integration plan for Park Place.

Park Place already performed at a high level and is operated by seasoned general managers, with an average tenure of approximately 20 years.

Our integration strategy is focused on achieving cost savings at a corporate level from duplicative functions and implementing our training programs and F&I product offerings at Park Place to achieve higher F&I income per vehicle sold.

Park Place utilized the same operational, human resources and accounting information technology systems as Asbury prior to the acquisition, which supported the integration process.

Additionally, we have ample internal resources at Asbury to manage the integration process.

Deploy capital to highest risk adjusted returns

Deploy capital to highest returns and continue to invest in the business.

Our capital allocation decisions are made within the context of maintaining sufficient liquidity and a prudent capital structure.

We believe our cash position and borrowing capacity, combined with our current and expected future cash generation capability, provides us with financial flexibility to enhance shareholder value through capital deployment by reinvesting in our business, acquiring dealerships as well as repurchasing shares, when prudent while targeting a net leverage ratio of less than 3.0X.

Continue to invest in our business

We target a 3.0x net leverage ratio, and our primary focus for capital allocation will be to decrease our debt levels;

however, we believe our cash position and borrowing capacity, combined with our current and expected future cash generation capability, provides us with financial flexibility to, among other things, reinvest in our business, acquire dealerships and repurchase our stock, when prudent.

We continually evaluate our existing dealership network and seek to make strategic investments that will increase the capacity of our dealerships and improve the customer experience.

In addition, we continue to execute on our strategy of selectively acquiring our leased properties where financing rates make it attractive to be an owner and provide us a further means to finance our business.

Evaluate opportunities to refine our dealership portfolio

Evaluate opportunities to refine the dealership portfolio.

We continually evaluate the financial and operating results of our dealerships, as well as each dealership’s geographical location and, based on various financial and strategic rationales, may make decisions to dispose of dealerships to refine our dealership and real estate portfolio.

We also evaluate dealership acquisition opportunities based on market position and geography, brand representation and availability, key personnel and other factors.

Our approach to dispositions and acquisitions is highly disciplined with a focus on long-term strategic value to stockholders.

Execute our five-year strategic plan to target an increase in our annual revenue to $20 billion by 2025.

2 unchanged sentences

We intend to execute on this strategic plan by focusing on a variety of growth efforts including, driving same-store revenue growth, acquiring additional revenue through strategic acquisitions and adding incremental revenue through our Clicklane platform.

During 2021, we exceeded our five-year plan target for acquisitions with the purchase of $6.6 billion in acquired revenue and made significant progress on our same store and Clicklane targets and will provide an update to our five-year plan in 2022.

The automotive retail and service industry is highly competitive with respect to price, service, location, and selection.

1 unchanged sentence

Our new vehicle store competitors also have franchise agreements with the various vehicle manufacturers, and as such, generally obtain new vehicle inventory from vehicle manufacturers on the same terms as us.

The franchise agreements grant the franchised dealership a non-exclusive right to sell the manufacturer's (or distributor's) brand of vehicles and offer related parts and service within a specified market area.

The franchise agreements grant the franchised dealership a non-exclusive right to sell the manufacturer's (or distributor's) brand of vehicles and offer related parts and service within a specified

State automotive franchise laws restrict competitors from relocating their stores or establishing new stores of a particular vehicle brand within a specified area that is served by our dealership of the same vehicle brand.

39 unchanged sentences

• material breach of other provisions of a dealer agreement.

Notwithstanding the terms of any dealer agreement, the states in which we operate have automotive dealership franchise laws that provide that it is unlawful for a manufacturer to terminate or not renew a franchise unless "good cause" exists.

Notwithstanding the terms of any dealer agreement, the states in which we operate have automotive dealership franchise laws which provide that it is unlawful for a manufacturer to terminate or not renew a franchise unless "good cause" exists.

In addition to requirements under dealer agreements, we are subject to provisions contained in supplemental agreements, framework agreements, dealer addenda and manufacturers' policies, collectively referred to as "framework agreements." Framework agreements impose requirements on us in addition to those described above.

6 unchanged sentences

• conditions for consent to proposed acquisitions, including sales and customer satisfaction criteria, as well as limitations on the total local, regional, and national market share percentage that would be represented by a particular manufacturer's franchises owned by us after giving effect to a proposed acquisition.

Some dealer agreements and framework agreements grant the manufacturer the right to terminate or not renew our dealer and framework agreements, or to compel us to divest our dealerships, for a number of reasons, including default under the agreement, any unapproved change of control (which specific changes vary from manufacturer to manufacturer, but which include material changes in the composition of our Board of Directors during a specified time period, the acquisition of 5% or more of our voting stock by another vehicle manufacturer or distributor, the acquisition of 20% or more of our voting stock by third parties, and the acquisition of an ownership interest sufficient to direct or influence management and policies), or certain other unapproved events (including certain extraordinary corporate transactions such as a merger or sale of all or substantially all of our assets).

Some dealer agreements and framework agreements grant the manufacturer the right to terminate or not renew our dealer and framework agreements, or to compel us to divest our dealerships, for a number of reasons, including default under the agreement, any unapproved change of control (specific changes vary from manufacturer to manufacturer, but which include material changes in the composition of our Board of Directors during a specified time period, the acquisition of 5% or more of our voting stock by another vehicle manufacturer or distributor, the acquisition of 20% or more of our voting stock by third parties, and the acquisition of an ownership interest sufficient to direct or influence management and policies), or certain other unapproved events (including certain extraordinary corporate transactions such as a merger or sale of all or substantially all of our assets).

Triggers of the clauses are often based upon actions by our stockholders and are generally outside of our control.

7 unchanged sentences

Changes in laws that provide manufacturers the ability to terminate our dealer agreements could materially adversely affect our business, financial condition and results of operations.

Furthermore, if a manufacturer seeks protection from creditors in bankruptcy, courts have held that the federal bankruptcy laws may supersede these laws, resulting in either the termination,

non-renewal or rejection of franchises by such manufacturers, which, in turn, could materially adversely affect our business, financial condition, and results of operations.

Furthermore, if a manufacturer seeks protection from creditors in bankruptcy, courts have held that the federal bankruptcy laws may supersede these laws, resulting in either the termination, non-renewal or rejection of franchises by such manufacturers, which, in turn, could materially adversely affect our business, financial condition, and results of operations.

For additional information, please refer to the risk factor captioned "If state laws that protect automotive retailers are repealed, weakened, or superseded by our framework agreements with manufacturers, our dealerships will be more susceptible to termination, non-renewal or renegotiation of their dealer agreements which could have a materially adverse effect on our business, financial condition, and results of operations."

5 unchanged sentences

Industry Regulations

The Federal Trade Commission has regulatory authority over automotive dealers pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Gramm-Leach-Bliley Act, and other legislation, and has implemented enforcement initiatives relating to the marketing practices of automotive dealers.

The Federal Trade Commission has regulatory authority over automotive dealers and has implemented enforcement initiatives relating to the marketing practices of automotive dealers.

Our operations are also subject to the National Traffic and Motor Vehicle Safety Act, Federal Motor Vehicle Safety Standards and other product standards promulgated by the United States Department of Transportation, and the rules and regulations of various state motor vehicle regulatory agencies.

15 unchanged sentences

similar mandates and recommendations have been issued by several state and local governments where we conduct business.

Currently, we are not aware of any non-compliance with these or any other

environmental requirements applicable to our operations, nor are we aware of any material remedial liabilities to which we are subject.

Currently, we are not aware of any non-compliance with these or any other environmental requirements applicable to our operations, nor are we aware of any material remedial liabilities to which we are subject.

We have incurred, and will continue to incur, costs and capital expenditures to comply with these laws and regulations.

8 unchanged sentences

Our success depends on our employees and their commitment to delivering a consistent and exceptional guest experience.

Our employees work at locations in Colorado, Florida, Georgia, Indiana, Missouri, North Carolina, South Carolina, Texas and Virginia.

Our employees work at locations in Colorado, Florida, Georgia, Indiana, Missouri, North Carolina, South Carolina, Texas, California, Arizona, New Mexico, Idaho, Utah, Washington and Virginia.

We believe that our employees help to set us apart from our competitors, and, therefore, we understand they are our greatest asset.

4 unchanged sentences

We strive to recruit new employees based on their diversity of thought, background and experience as well as diversity of personal characteristics to best reflect our guests and communities we serve.

With the help and guidance of an outside consulting firm, we developed a diversity and inclusion ("D&I") initiative and launched a company-wide effort in November 2020 to identify our strengths and areas of opportunity related to our D&I initiative.

The goal of our D&I initiative is to create more welcoming and inclusive workplaces throughout our dealerships and offices.

Based on the results of this effort, each store and support location is expected to develop action plans to drive improvements in both employee behaviors and corporate systems that support our D&I initiative.

With the help and guidance of an outside consulting firm, we developed a diversity, equity and inclusion ("DE&I") initiative and launched a company-wide effort in November 2020 to identify our strengths and areas of opportunity related to our DE&I initiative.

The goal of our DE&I initiative is to create more welcoming and inclusive workplaces throughout our dealerships and offices to enable us to attract, retain and develop the careers of diverse, highly-talented team members.

Since launching our DE&I Initiative, we have surveyed our employees about their dealership and support center cultures.

Our general managers and site leaders have taken those survey findings and built action plans with their teams to enhance DE&I at their stores and across Asbury.

With the themes from the surveys and action plans, our DE&I Collaborative teams provided recommendations to our executive team on programs and processes that Asbury can implement to improve DE&I at our company.

One of these suggestions we will implement is the designation of a DE&I Officer who will be dedicated to the strategy and development of our programs.

We will continue to learn and develop - working towards building a workplace where every Asbury team member feels included and welcomed.

Community Outreach

In 2020, we established the Asbury Cares program to support selected community partner organizations to focus on reducing social inequality.

To ensure widespread support for our outreach program, we awarded all of our employees with an additional 40 hours of paid time off per year that can only be used to volunteer with our community partners.

Through our Asbury Cares program, we support selected community partner organizations to focus on reducing social inequality.

In 2021, to ensure widespread support for our outreach program, we awarded all of our employees with an additional 40 hours of paid time off per year that can only be used to volunteer with our local community partners.

A big portion of our Asbury Cares Community Initiative revolves around education and making sure that young people in underserved communities have access to a quality education.

We formed a partnership with HBCU Change, an app-based organization that lets users round up their spending and donate to historical black colleges and universities ("HBCU").

We learned that many HBCUs historically lag in funding and resources compared to other public or private universities and many have closed their doors in recent years.

Many of our Asbury team members are proud HBCU alumni and these institutions provide a unique community of support and understanding for not only African-American students, but students of all races and backgrounds.

In partnership with HBCU Change, we launched a campaign to help raise funds for HBCUs across the country and in the local communities where we operate.

All the point-of-sale credit card machines in all our locations show a prompt asking our

guests if they would like to round up their change or donate $1, $3, $5, or a custom amount to HBCUs in their communities.

At the end of each quarter, the funds raised are donated to the HBCUs across the country.

Recruitment and Talent Development

3 unchanged sentences

Our goal is to promote employees from within to career growth opportunities whenever possible.

In support of this goal, we invest resources to train and develop our employees to reach their career goals.

For example, our employees have access to an online career path tool, which helps them plan their desired career path and see the required performance goals and milestones to be considered for a promotion.

We invest resources to train and develop our employees to reach their career goals.

In 2021, a group of high performing store employees collaborated to build a training curriculum for all store positions to be launched in 2022.

In addition, we offer our employees access to an online career path tool, which helps them plan their desired career path and see the required performance goals and milestones to be considered for a promotion.

Our fixed operations organization encourages technicians to obtain and maintain certification status with our vehicle manufacturers, and in most cases, our dealership pays for the training.

1 unchanged sentence

We pride ourselves on rewarding and developing talented and tenured employees.

We also expect to make significant additional investments into building a training continuum for team members in every store position and preparing them for greater opportunities within our organization.

Compensation and Benefits

We offer competitive compensation and benefits to attract and retain the best people, including the following benefits for our full-time team employees:

We offer competitive compensation and benefits to attract and retain the best people, including the following benefits for our full-time employees:

Health, dental, and vision benefits

• Discount on healthcare premium for completing biometric screening and premium-free healthcare for frontline team members in certain positions;

• Up to 4 weeks paid time off;

• Choice of multiple health, dental and vision plans;

• Discount for biometric screening and completion of health survey;

• Employee assistance program.

Saving and retirement

• Holiday match;

• 401(k) match.

Paid time off

• Up to 4 weeks paid time off;

• Paid pregnancy leave;

• Paid parental leave.

Disability and accident insurance

• Short term disability and long term disability insurance;

2 unchanged sentences

• Supplemental life insurance.

• Employee Assistance Program;

Scholarships for education

• Annual scholarship program.

Broad employee equity ownership

• We also lead the industry by offering equity awards to frontline employees because we want them to be owners of our Company and committed to our long-term success.

1 unchanged sentence

Proactive Covid-19 Actions

The health and safety of our team members and guests is of the utmost importance.

In 2020, as the Covid-19 global pandemic impacted our dealerships and business, Asbury implemented the following actions:

• Mandatory mask-wearing for team members, guests and vendors in all locations;

The health and safety of our employees and guests is of the utmost importance.

In 2020 and continuing into 2021, Asbury implemented the following actions:

• Mandatory mask-wearing for employees, guests and vendors in all locations;

• Personal protective equipment such as steering wheel covers and seat covers for guest cars in for service;

1 unchanged sentence

• Remote work arrangements offered where appropriate;

• Guaranteed pay to commissioned team members;

• Free health benefits for furloughed team members.

• Guaranteed pay to commissioned employees;

• Free health benefits for furloughed employees.

Self-Insurance Programs

Due to the inherent risk in the automotive retail industry, our operations expose us to a variety of liabilities.

10 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business