What changed in this filing

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Item 1. Business

2023-03-01 compared with 2022-03-01 · 91 added, 96 removed, 258 unchanged (42% of the section changed)

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.

Asbury Automotive Group, Inc., a Delaware corporation organized in 2002, is a Fortune 500 company and one of the largest franchised automotive retailers in the United States with 139 new vehicle dealerships across 14 states.

Our mission and vision is to put the guest experience first and follow our "North Star" to 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;

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

(2) be great brand 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 strong organizational culture and purposeful mission allow us to continuously deliver best-in-class experiences to our guests.

As of December 31, 2022, we owned and operated 186 new vehicle franchises, representing 31 brands of automobiles at 139 dealership locations, 32 collision centers, seven stand-alone used vehicle dealerships, one used vehicle wholesale business, one auto auction, and Total Care Auto, Powered by Landcar ("TCA" or "TCA Business"), our finance and insurance ("F&I") product provider, within 14 states.

Our store operations are conducted by our subsidiaries.

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 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 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.

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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.

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

On December 17, 2021, the Company completed the acquisition of the businesses of the Larry H.

Miller ("LHM") Dealerships and TCA (collectively, the "LHM acquisition"), 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 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.

As a result of the transaction, the Company now operates in two reportable segments, 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 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 these acquisitions 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, these acquisitions included purchase price holdbacks of $21.0 million for potential indemnity claims made by us with respect to the acquired franchises.

On August 24, 2020, the Company, through two of its subsidiaries, acquired substantially all of the assets of, and leased the real property related to, 12 new vehicle dealership franchises (eight dealership locations), two collision centers and an auto auction (collectively, the "Park Place acquisition").

The Park Place acquisition was financed through a combination of cash, floor plan facilities and seller financing.

The seller financing comprised $150.0 million in aggregate principal amount of a 4.00% promissory note due August 2021 and $50.0 million in aggregate principal amount of a 4.00% promissory note due

February 2022 (collectively, the "Seller Notes").

In September 2020, the Company redeemed the Seller Notes with proceeds from the offering of 4.50% Notes due 2028 and 4.75% Notes due 2030.

In addition to the Park Place 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.

We funded this acquisition with an aggregate of $34.5 million of cash and $27.1 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 within our Dealerships segment is made up of dealerships located in fifteen states operating primarily under 15 locally-branded dealership groups.

There were no acquisitions during the year ended December 31, 2022.

During the year ended December 31, 2022, we sold one franchise (one dealership location) in St.

Louis, Missouri, three franchises (three dealership locations) and one collision center in Denver, Colorado, two franchises (two dealership locations) in Spokane, Washington, one franchise (one dealership location) in Albuquerque, New Mexico and 11 franchises (nine dealership locations) and two collision centers in North Carolina.

The Company recorded a pre-tax gain totaling $207.1 million.

During the year ended December 31, 2021, we sold one franchise (one dealership location) in the Charlottesville, Virginia market.

The Company recorded a pre-tax gain totaling $8.0 million.

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

The Company recorded a pre-tax gain totaling $62.3 million.

Four Key Components of Our Business

The following chart presents the contribution to total revenue and gross profit by each line of business for the year ended December 31, 2022.

Our new vehicle franchise retail network within our Dealerships segment is made up of dealerships located in 14 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, 2022:

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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

Crown Automotive Company South Carolina Nissan

Virginia Acura, BMW(a), MINI

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

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

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

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California Toyota(a)

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

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

Idaho Chrysler, Dodge, Honda, Jeep, Subaru

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

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

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)

Washington Honda

Mike Shaw, Stevinson & Arapahoe Automotive Groups Colorado Subaru(a), Chevrolet, Chrysler, Dodge, 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)

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

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

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Vehicle Revenues

Lexus 10 12 %

Mercedes-Benz 8 8

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Total Import 64 40 %

Chrysler 17 *

Chevrolet 9 4

Chrysler, Dodge, Jeep, Ram 49 15 %

Chevrolet, Buick, GMC 13 5

Total Domestic 71 29 %

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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").

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").

Gross profit from the sale of used vehicles depends primarily on our dealerships' ability to obtain a high quality supply of used vehicles and our use of technology to manage our inventory.

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In addition, our franchised dealerships benefit from manufacturer policies requiring that warranty and recall related repairs be performed at a franchised dealership.

We believe our collision repair centers provide us with an attractive opportunity to grow our business due to the high margins provided by collision repair services and the fact we are able to source original equipment manufacturer parts from our franchised dealerships.

We believe our collision repair centers provide us with an attractive opportunity to grow our business due to the high margins provided by collision repair services and the fact that we are able to source original equipment manufacturer parts from our franchised dealerships.

Finance and Insurance

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

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.

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 compensation we receive.

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 .

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

These F&I products are sold to our customers via our network of dealerships.

In addition to the TCA F&I products, 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.

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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, either through TCA or independent third parties:

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

• GAP debt cancellation – covers the customer after a total loss for the difference between the value of the vehicle and the outstanding loan or lease obligation after insurance proceeds;

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

• 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.

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.

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

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.

This F&I revenue is presented net of third-party chargebacks.

F&I revenue in our TCA segment represents the premium revenue earned from customers for F&I products primarily sold in connection with the purchase of vehicles at our dealerships.

The premium revenue is recognized over the life of the F&I product contract as services are provided.

We capitalize costs to obtain customer contracts, employee sales commissions, and amortize those costs over the life of the contract.

Amortization of costs to obtain customer contracts is included in selling,

general and administrative expenses in the consolidated statements of income.

The portion of commissions that are paid to affiliated dealerships are eliminated in the TCA segment upon consolidation.

Claims paid related to the contracts are recognized in F&I cost of sales.

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

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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.

Our Clicklane platform provides our customers with the ability to (i) select a new or used vehicle, (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 by signing the transaction documents and scheduling in-store pickup or home delivery, with each step performed entirely online.

We have implemented Clicklane across all of our stores.

The 2021 acquisitions have extended 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.

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

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.

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

We are positioned to leverage the acquisition of LHM 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.

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

We expect to complete the rollout of TCA's service offerings to all of our dealerships in 2023.

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

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We are able to improve financial controls and lower servicing costs by maintaining key store-level accounting and administrative activities in our shared service centers, and we leverage our scale to reduce costs related to purchasing certain equipment, supplies, and services through national vendor relationships.

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.

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.

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 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 target a 2.5x to 3.5x adjusted net leverage ratio in a normal business environment.

The Company’s adjusted net leverage ratio was 1.7x at December 31, 2022, compared to 2.7x at December 31, 2021.

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.

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In December 2020, we announced our five-year strategic plan, targeting an increase in our revenue to $20 billion by 2025.

In April 2022, the Company announced an update to this plan by increasing the annual revenue target to $32 billion by 2025.

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.

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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

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.

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.

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Industry Regulations

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.

The Federal Trade Commission ("FTC") 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.

Our financing activities with customers are subject to federal truth-in-lending, consumer leasing, and equal credit opportunity laws and regulations, as well as state and local motor vehicle finance laws, leasing laws, installment finance laws, usury laws, and other installment state and leasing laws and regulations.

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Our financing activities, as well as our sale of finance and insurance products, may also be impacted indirectly by laws and regulations that govern automotive finance companies and other financial institutions, including regulations adopted by the Consumer Financial Protection Bureau (the "CFPB").

For additional information, please refer to the risk factor captioned "Our operations are subject to extensive governmental laws and regulations.

Our TCA Business involves the offer and sale of extended vehicle service contracts, debt protection products, vehicle protection plans and other miscellaneous vehicle protection products, which are subject to a wide range of federal, state and local laws and regulations.

The Departments of Insurance of U.S.

states have regulatory authority over our TCA Business.

Our TCA Business is subject to state licensing and registration requirements, and financial responsibility and security requirements.

For additional information, please refer to the risk factors captioned:

"Our operations are subject to extensive governmental laws and regulations.

If we are found to be in purported violation of or subject to liabilities under any of these laws or regulations, or if new laws or regulations are enacted that adversely affect our operations, our business, our reputation, financial condition, results of operations, and prospects could suffer" and "Our TCA Business is subject to a wide range of federal, state and local laws and regulations, some of which we may have not have been previously been subject.

If we are found to be in purported violation of or subject to liabilities under any of these laws or regulations, or if new laws or regulations are enacted that adversely affect our TCA Business, our business, results of operations, financial condition, cash flows, reputation and prospects could suffer."

Environmental, Health and Safety Laws and Regulations

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The Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") and similar state statutes, can impose strict and joint and several liability for cleanup costs on those that are considered to have contributed to the release of a "hazardous substance." We also are subject to the Clean Water Act, analogous state statutes, and their implementing regulations which, among other things, prohibit discharges of pollutants into regulated waters without permits, require containment of potential discharges of oil or hazardous substances, and require preparation of spill contingency plans.

In response to the COVID-19 global pandemic, various federal agencies issued mandates and recommendations intended to minimize the spread of infectious disease;

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.

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

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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, 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.

Our employees work at locations in Colorado, Florida, Georgia, Indiana, Missouri, 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.

As a result, a critical part of our business strategy is investing in supporting and developing our employees so that they are trained and incentivized to provide best-in-class service to our guests.

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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.

In May 2022, we hired a Vice President, Chief Diversity Equity and Inclusion Officer to help develop and guide our DEI strategy and practices.

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.

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

Community Outreach

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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.

A significant 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").

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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.

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.

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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 2022, we launched a training curriculum for all store positions.

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.

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• 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.

Health and Safety;

Proactive Covid-19 Actions

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;

• Additional hand sanitizing stations at our dealerships and offices;

• Remote work arrangements offered where appropriate;

• Guaranteed pay to commissioned employees;

• Free health benefits for furloughed employees.

Self-Insurance Programs

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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