What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-29 compared with 2023-03-01 · 297 added, 312 removed, 1353 unchanged (31% of the section changed)

3 unchanged sentences

Consolidated Balance Sheets as of December 31, 2023 and 2022

Consolidated Statements of Income for the Year s Ended December 31, 2022, 2021, and 2020

Consolidated Statements of Comprehensive Income for the Year s Ended December 31, 2022, 2021, and 2020

Consolidated Statements of Shareholders' Equity for the Year s Ended December 31, 2022, 2021, and 2020

Consolidated Statements of Cash Flows for the Year s Ended December 31, 2022, 2021, and 2020

Consolidated Statements of Income for the Years Ended December 31, 2023, 2022, and 2021

Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2023, 2022, and 2021

Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 2023, 2022, and 2021

Consolidated Statements of Cash Flows for the Years Ended December 31, 2023, 2022, and 2021

Notes to Consolidated Financial Statements

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generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 1, 2023 expressed an adverse opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 29, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

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The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Valuation of Acquired Manufacturer Franchise Rights for Larry H.

Miller Dealerships

Description of the Matter At December 31, 2022, the Company's manufacturer franchise rights for car dealerships had an aggregate carrying value for franchises acquired of approximately $1,800 million, as disclosed on the Consolidated Balance Sheet.

Manufacturer franchise rights are an indefinite lived intangible asset and arise as a result of acquisitions of car dealerships accounted for under the acquisition method of accounting.

As disclosed in Note 3 to the consolidated financial statements, in 2022 the Company completed its valuation of approximately $1,310 million of acquired franchise rights resulting from the acquisition of Larry H.

Miller Dealerships (“LHM”).

Auditing the Company's estimate of fair value of the manufacturer franchise rights acquired in the LHM acquisition is complex due to the significant management judgments and estimates required.

The Company's model for estimating the fair value of these assets utilizes market participant assumptions related to the cash flows directly attributable to the franchise rights, including year-over-year and terminal revenue growth rates, weighted average cost of capital, future gross margins, and future selling, general, and administrative expenses, all of which are forward-looking and affected by expectations about economic, industry and company-specific factors.

The cash flows are derived on an individual dealership basis adding complexity to the auditor judgments required to test those assumptions.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s controls over the manufacturer franchise rights fair value estimates used in conjunction with its LHM acquisition.

Manufacturer Franchise Rights Quantitative Impairment Assessment

Description of the Matter At December 31, 2023, the Company’s manufacturer franchise rights had an aggregate carrying value for franchises acquired of approximately $2,095.8 million, as disclosed in Note 10 of the consolidated financial statements.

Manufacturer franchise rights are assessed for impairment annually as of October 1st, or more often if events or circumstances indicate that impairment may have occurred.

If the fair value of the franchise right is less than its carrying amount, an impairment loss is recognized in an amount equal to the difference.

We identified the assessment of the Company’s quantitative impairment tests over manufacturer franchise rights acquired prior to the fourth quarter of 2023 as a critical audit matter.

In connection with its annual quantitative impairment assessment during the year ended December 31, 2023, the Company recorded impairment charges of $73.1 million related to manufacturer franchise rights.

Auditing the Company's fair value estimates used in its annual impairment assessment is complex due to the significant management judgments and estimates required.

The Company's model for estimating the fair value of these assets utilizes market participant assumptions related to the cash flows directly attributable to the franchise rights, including year-over-year and terminal growth rates, weighted average cost of capital, future gross margins, and future selling, general, and administrative expenses, all of which are forward-looking and affected by expectations about economic, industry and company-specific factors.

This included testing controls over management’s review of the model, significant assumptions, other inputs and the completeness and accuracy of the data used in the measurements.

Procedures performed to test the fair value of the Company's manufacturer franchise rights as of the acquisition date included, among others, evaluating the Company's use of the discounted cash flows method, testing of the assumptions and inputs to the valuation model used to develop the projected financial information, involving our valuation specialists to assist in the testing of the weighted average cost of capital utilized and the appropriateness of the model used, and testing the completeness and accuracy of the underlying data.

We compared the assumptions to current industry, market and economic trends, as well as to the Company's historical results.

In addition, we assessed management’s ability to accurately forecast by comparing the first year forecasted cash flows to actual 2022 operating results.

We also performed a sensitivity analysis of certain assumptions to evaluate the potential change in the fair value of the manufacturer franchise rights resulting from changes in underlying assumptions.

Procedures performed to test the fair value of the Company's manufacturer franchise rights as part of the quantitative impairment assessment included, among others, testing of the significant assumptions described above and testing the completeness and accuracy of the underlying data.

We involved our valuation specialists to assist in the testing of the weighted average cost of capital and to assess the appropriateness of the model used.

We compared the significant assumptions to current industry, market and economic trends, as well as to the Company's historical results.

In addition, we assessed the accuracy of the Company’s historical projections by comparing them to actual operating results and evaluated the Company’s intent and ability to carry out a particular course of action by evaluating the Company’s past history of carrying out its stated intentions.

We also performed sensitivity analyses on the significant assumptions to evaluate the potential change in the fair value of the manufacturer franchise rights resulting from changes in underlying assumptions.

/s/ Ernst & Young LLP

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Atlanta, Georgia

March 1, 2023

February 29, 2024

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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We have audited Asbury Automotive Group, Inc.’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, because of the effect of the material weakness described below on the achievement of the objectives of the control criteria, Asbury Automotive Group, Inc.

(the Company) has not maintained effective internal control over financial reporting as of December 31, 2022, based on the COSO criteria.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The following material weakness has been identified and included in management’s assessment.

Management identified a material weakness as a result of deficiencies in information technology general controls (ITGCs) identified at the Larry H.

Miller Dealerships (LHM) and entities comprising the Finance and Insurance product provider, Total Care Auto, Powered by Landcar (TCA).

Specifically, the material weakness is due to control deficiencies in the design of the user access reviews for segregation of duties (SOD) configurations and appropriate administrative access for certain key applications at LHM and TCA.

The ineffective ITGCs limit the level of assurance over the completeness and accuracy of information used in certain automated and business process controls.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the "consolidated financial statements").

This material weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the consolidated financial statements, and this report does not affect our report dated March 1, 2023 which expressed an unqualified opinion thereon.

In our opinion, Asbury Automotive Group, Inc.

(the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.

As indicated in the accompanying Management’s Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include an evaluation of the internal controls of the Jim Koons Dealerships, which are included in the 2023 consolidated financial statements of the Company from the date of acquisition and represented approximately $1.65 billion of consolidated total assets as of December 31, 2023, and approximately $168.2 million of consolidated revenues for the year then ended.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of the Jim Koons Dealerships.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”) and our report dated February 29, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

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Atlanta, Georgia

March 1, 2023

February 29, 2024

ASBURY AUTOMOTIVE GROUP, INC.

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INTANGIBLE FRANCHISE RIGHTS 2,095.8 1,800.1

DEFERRED INCOME TAXES — 69.1

OTHER LONG-TERM ASSETS 113.3 116.7

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( 1,067.3 ) ( 1,063.0 )

Accumulated other comprehensive income (loss) 74.4 ( 0.5 )

Accumulated other comprehensive income 61.1 74.4

Total shareholders' equity 3,244.1 2,903.5

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Depreciation and amortization 67.7 69.0 41.9

Franchise rights impairment — — 23.0

Other operating (income) expense, net ( 4.4 ) ( 5.4 ) 9.2

Asset impairments 117.2 — —

Other operating income, net — ( 4.4 ) ( 5.4 )

INCOME FROM OPERATIONS 953.5 1,272.6 791.8

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Other interest expense, net 156.1 152.2 93.9

Loss on extinguishment of long-term debt, net — — 20.6

Gain on dealership divestitures, net ( 13.5 ) ( 207.1 ) ( 8.0 )

Total other (income) expenses ( 46.5 ) 94.1 32.7

Total other expenses (income), net 152.2 ( 46.5 ) 94.1

INCOME BEFORE INCOME TAXES 801.3 1,319.1 697.7

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Net income $ 602.5 $ 997.3 $ 532.4

Other comprehensive income (loss):

Other comprehensive (loss) income:

Change in fair value of cash flow swaps ( 22.6 ) 103.3 6.3

Unrealized (losses) gains on available-for-sale debt securities ( 4.0 ) 0.2 —

Income tax (expense) benefit associated with other comprehensive income items ( 24.3 ) ( 1.6 ) 0.9

Unrealized gains (losses) on available-for-sale debt securities 5.2 ( 4.0 ) 0.2

Income tax benefit (expense) associated with other comprehensive income items 4.0 ( 24.3 ) ( 1.6 )

Comprehensive income $ 589.1 $ 1,072.2 $ 537.3

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Net income — — — 532.4 — — — 532.4

Change in fair value of cash flow swaps, net of reclassification adjustment and $ 0.9 tax benefit

Unrealized gains on changes in fair value of debt securities, net of $ 0 tax expense

— — — — — — 0.2 0.2

Change in fair value of cash flow swaps, net of reclassification adjustment and $ 1.6 million tax expense

— — — — — — 4.7 4.7

Comprehensive income — — — 532.4 — — 4.9 537.3

Share-based compensation — — 16.2 — — — — 16.2

Proceeds from secondary offering of common stock, net 3,795,000 — 666.9 — — — — 666.9

Issuance of common stock, net of forfeitures, in connection with share-based payment arrangements 123,625 — — — — — — —

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Net income — — — 997.3 — — — 997.3

Unrealized gains on available-for-sale debt securities, net of $ 0 tax charge

Change in fair value of cash flow swaps, net of reclassification adjustment and $ 25.1 million tax expense

— — — — — — 78.1 78.1

Change in fair value of cash flow swaps, net of reclassification adjustment and $ 1.6 tax expense

Unrealized loss on changes in fair value of debt securities, net of $ 0.8 million tax benefit

— — — — — — ( 3.2 ) ( 3.2 )

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Share-based compensation — — 20.6 — — — — 20.6

Proceeds from secondary offering of common stock, net 3,795,000 — 666.9 — — — — 666.9

Issuance of common stock, net of forfeitures, in connection with share-based payment arrangements 122,342 — — — — — — —

Share issues (repurchases) — — 1.4 — 1,635,030 ( 297.0 ) — ( 295.6 )

Repurchase of common stock associated with net share settlements of employee share-based awards — — — — 56,024 ( 9.2 ) — ( 9.2 )

Retirement of common stock ( 1,580,826 ) — ( 19.1 ) ( 268.3 ) ( 1,580,826 ) 287.4 — —

Balances, December 31, 2022 43,593,809 $ 0.4 $ 1,281.4 $ 2,610.1 22,024,479 $ ( 1,063.0 ) $ 74.4 $ 2,903.5

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Net income — — — 602.5 — — — 602.5

Change in fair value of cash flow swaps, net of reclassification adjustment and $ 25.1 tax expense

Change in fair value of cash flow swaps, net of reclassification adjustment and $ 5.1 million tax benefit

— — — — — — ( 17.5 ) ( 17.5 )

Unrealized loss on changes in fair value of debt securities, net of $ 0.8 tax benefit

Unrealized gain on changes in fair value of debt securities, net of $ 1.1 million tax expense

— — — — — — 4.1 4.1

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Deferred income taxes 39.7 148.5 31.2

Franchise rights impairment — — 23.0

Unrealized loss (gain) on investments 14.1 ( 1.0 ) —

Loss on extinguishment of debt — — 20.6

Asset impairments 117.2 — —

Unrealized (gain) loss on investments ( 2.1 ) 14.1 ( 1.0 )

Loaner vehicle amortization 34.8 14.7 20.9

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Proceeds from the sale of assets 16.3 — 21.5

Net cash provided by (used in) investing activities 464.7 ( 3,917.0 ) ( 820.8 )

Net cash (used in) provided by investing activities ( 1,678.4 ) 464.7 ( 3,917.0 )

CASH FLOW FROM FINANCING ACTIVITIES:

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Repayments of revolving credit facility ( 329.0 ) ( 499.0 ) ( 270.0 )

Proceeds from issuance of common stock — 1.4 666.9

For the Year Ended December 31,

2023 2022 2021

Sale and leaseback transaction — — 7.3

Proceeds from issuance of common stock 1.4 666.9 —

Payment of debt issuance costs ( 1.2 ) ( 0.4 ) ( 26.2 )

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Repurchases of common stock, including amounts associated with net share settlements of employee share-based awards ( 11.4 ) ( 9.2 ) ( 10.4 )

Net cash (used in) provided by financing activities ( 1,104.3 ) 2,930.8 166.2

Net increase (decrease) in cash and cash equivalents 56.4 177.5 ( 2.1 )

Net cash provided by (used in) financing activities 1,175.8 ( 1,104.3 ) 2,930.8

Net (decrease) increase in cash and cash equivalents ( 189.6 ) 56.4 177.5

CASH AND CASH EQUIVALENTS, beginning of period 235.3 178.9 1.4

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Our store operations are conducted by our subsidiaries.

As of December 31, 2022, we owned and operated 186 new vehicle franchises, representing 31 brands of automobiles at 139 new vehicle dealership locations in 14 states.

We also operated 32 collision centers, seven stand-alone used vehicle stores, one used vehicle wholesale business, one auto auction and Total Care Auto, Powered by Landcar ("TCA"), a finance and insurance (F&I") product provider.

As of December 31, 2023, we owned and operated 208 new vehicle franchises ( 158 vehicle dealership locations), representing 31 brands of automobiles, and 37 collision centers in 16 states.

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

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

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

The finance and insurance products are provided by independent third parties and TCA.

The F&I products offered by TCA are sold through our dealerships.

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.

The finance and insurance products are provided by independent third parties and Total Care Auto, Powered by Landcar ("TCA").

The Company manages its operations in two reportable segments:

Dealerships and TCA.

On December 11, 2023, the Company completed the acquisition of substantially all of the assets, including all real property and businesses of the Jim Koons Dealerships ("Koons") pursuant to a Purchase and Sale Agreement with various entities that comprise the Jim Koons automotive dealerships group (the "Koons acquisition") for an aggregate purchase price of approximately $ 1.50 billion, which includes $ 256.1 million of new vehicle floor plan financing and $ 103.8 million of assets held for sale related to Koons Lexus of Wilmington.The acquisition was funded with borrowings under Asbury’s existing credit facility and cash on hand.

The Koons acquisition comprised 20 new vehicle dealerships and six collision centers.

See Note 3 "Acquisitions and Divestitures" for details of the Koons acquisition.

Our operating results are generally subject to seasonal variations.

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Securities held on deposit with various state regulatory authorities had a fair value of $ 3.5 million at December 31, 2023.

These securities are reflected in investments in our consolidated balance sheets.

Short-Term Investments

Short-term investments consist of debt securities that are callable or have a maturity date within the next 12 months and are classified as current assets.

Debt securities classified as short-term investments are designated as available-for-sale as

management intends to hold these securities for indefinite periods of time or may sell the securities in response to changes in interest rates, prepayments, or other similar factors.

Debt securities classified as short-term investments are designated as available-for-sale as management intends to hold these securities for indefinite periods of time or may sell the securities in response to changes in interest rates, prepayments, or other similar factors.

Available-for-sale debt securities are reported at fair market value with any unrealized gain or loss, net of applicable income tax, reported in other comprehensive income, as a separate component of shareholders’ equity.

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Manufacturer advertising credits that are reimbursements of costs associated with specific advertising programs are recognized as a reduction of advertising expense in the period they are earned.

All other manufacturer advertising and certain floor plan interest credits are accounted for as purchase discounts, and are recorded as a reduction of inventory and recognized as a reduction to new vehicle cost of sales in the accompanying consolidated statements of income in the period the related vehicle

Certain floor plan interest credits are reflected as a reduction in floor plan interest expense in the accompanying consolidated statements of income.

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If the carrying amount of the underlying assets is less than their net recoverable value, then we calculate an impairment equal to the excess of the carrying amount over the fair market value, and the impairment loss would be charged to operations in the period identified.

During the year ended December 31, 2020, we recorded a $ 0.7 million impairment charge related to a vacant property.

During the year ended December 31, 2023, we recorded a $ 1.1 million impairment charge included in selling, general and administrative expenses related to construction in progress.

We did no t record an impairment charge related to our property and equipment in 2022 and 2021.

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We have determined that, based on how we integrate acquisitions into our business, how the components of our business share resources and interact with one another, and how we review the results of our operations, that we have several geographic market-based operating segments which consist of our dealerships.

We have determined that the dealerships in each of our operating segments are components that are aggregated into several geographic market-based reporting units for the purpose of testing goodwill for impairment, as they (i) have similar economic characteristics, (ii) offer similar products and services (all of our dealerships offer new and used vehicles, service, parts and third-party finance and insurance products), (iii) have similar customers, (iv) have similar distribution and marketing practices (all of our dealerships distribute products and services through dealership facilities that market to customers in similar ways), and (v) operate under similar regulatory environments.

customers, (iv) have similar distribution and marketing practices (all of our dealerships distribute products and services through dealership facilities that market to customers in similar ways), and (v) operate under similar regulatory environments.

Our dealership operating segments are aggregated into our single dealerships reportable segment.

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The fair value of our manufacturer franchise rights are determined as of the acquisition date, by discounting the projected cash flows specific to each franchise.

We have determined that manufacturer franchise rights have an indefinite life, as there are no economic, contractual or other factors that limit their useful lives, and they are expected to generate cash flows indefinitely

due to the historically long lives of the manufacturers' brand names.

Furthermore, to the extent that any agreements evidencing our manufacturer franchise rights would expire, we expect that we would be able to renew those agreements in the ordinary course of business.

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VOBA reflects the estimated fair value of the expected future profits in unearned premium for in-force service contracts acquired in the LHM acquisition.

VOBA is based on actuarially determined projections, by each type of service contract, of future charges, premiums, claims, operating expenses, investment returns and other factors.

VOBA is reflected in other long-term assets within the consolidated balance sheets and is amortized over five years, which represents the period of the underlying contracts.

VOBA is reflected in other long-term assets within the consolidated balance sheets and is amortized over 5 years, which represents the approximate term of the underlying contracts.

Debt Issuance Costs

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Self-insurance Programs

We are self-insured for employee medical claims and maintain stop-loss insurance for large-dollar individual claims.

We are self-insured for most of our employee medical claims and maintain stop-loss insurance for large-dollar individual claims.

We have high deductible insurance programs for workers compensation, property and general liability claims.

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The Company satisfies performance obligations either over time or at a point in time as discussed in further detail below.

Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised good or performing a service.

recognized at the time the related performance obligation is satisfied by transferring a promised good or performing a service.

Sales and other taxes we collect, concurrent with revenue-producing activities, are excluded from revenue.

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Payment is generally received at the time of sale or from a third-party financial institution within a short period of time following the sale of the vehicle.

Amounts due from third-party financial institutions are reflected in contracts-in-transit or vehicle receivables

within accounts receivable, net on our consolidated balance sheets.

Amounts due from third-party financial institutions are reflected in contracts-in-transit or vehicle receivables within accounts receivable, net on our consolidated balance sheets.

Costs associated with incidental items that are immaterial in the context of the contract are accrued at the time of sale.

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Payment for services are typically received upon completion of the services or within 30 days following the completion of the services.

Certain of these services are provided by the Dealerships segment to TCA customers in connection with claims related to TCA's vehicle protection products.

Revenues recorded by the Dealerships segment and the associated claims expenses recorded by the TCA segment are eliminated upon consolidation.

Satisfaction of this performance obligation creates an asset with no alternative use for which an enforceable right to payment for performance to date exists within our contractual agreements.

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Additionally, the Company has determined that parts and labor are not individually distinct in the context of a repair order and therefore treated as a single performance obligation.

Certain of these services are provided by the Dealerships segment to TCA customers in connection with claims related to TCA's vehicle protection products.

Revenues recorded by the Dealerships segment and the associated claims expense recorded by the TCA segment are eliminated upon consolidation.

Finance and Insurance, net

Within the Dealership segment, we receive commissions from third-party lending and insurance institutions for arranging customer financing and from the sale of vehicle service contracts, guaranteed asset protection debt cancellation, and other products, to end-users.

Within the Dealerships segment, we receive commissions from third-party lending and insurance institutions for arranging customer financing and from the sale of vehicle service contracts, guaranteed asset protection debt cancellation, and other products, to end-users.

In addition, we record commissions received from our TCA segment related to the sale of TCA's various vehicle protection F&I products.

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Revenue is recognized ratably over the contract term based on earnings factors that align with the performance obligation.

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

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

Amortization of costs to obtain customer contracts is included in selling, general and administrative expenses.

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The Dealerships segment also provides vehicle repair and maintenance services to TCA customers in connection with claims related to TCA's vehicle protection products.

Revenues recorded by the Dealerships segment and the associated claims expenses recorded by the TCA segment are eliminated upon consolidation.

Revenues recorded by the Dealerships segment and the associated claims expense recorded by the TCA segment are eliminated upon consolidation.

Intersegment revenues and profits from contracts and services are eliminated in consolidation.

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In accordance with our accounting policy, we allocate any excess share repurchase price over par value between additional paid-in capital, which is limited to amounts initially recorded for the same issue, and retained earnings.

During the year ended December 31, 2022, the Company repurchased 1,635,030 and retired 1,580,826 shares of our common stock under our share repurchase program.

The Company did no t repurchase any shares under the repurchase program or retire any treasury shares during 2021 or 2020.

On January 26, 2023, our Board of Directors approved an increase in the Company’s common share repurchase authorization to $ 200.0 million.

During the year ended December 31, 2023 and 2022, the Company repurchased 1,316,167 and 1,635,030 and retired 1,370,371 and 1,580,826 shares of our common stock under our share repurchase program, respectively.

The Company did no t repurchase any shares under the repurchase program or retire any treasury shares during 2021.

On May 25, 2023, our Board of

Directors approved a new authorization to repurchase up to $ 250.0 million of the Company's common stock (the "New Share Repurchase Authorization"), which replaces our previous share repurchase authorization.

As of December 31, 2023, the Company had $ 202.6 million remaining on its share repurchase authorization.

Earnings per Common Share

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Loaner vehicles are depreciated over the service period to their estimated value.

At the end of the loaner service period, loaner vehicles are transferred from other current assets to used vehicle inventory.

At the end of the loaner service period,

loaner vehicles are transferred from other current assets to used vehicle inventory.

These transfers are reflected as non-cash transfers between other current assets and inventory in the accompanying consolidated statements of cash flows.

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Generally, amounts maintained with these financial institutions are in excess of FDIC insurance limits.

In addition, we maintain a diverse investment portfolio across various asset categories and limit our exposure through the kind, quality and concentration of these investments.

In addition, we limit our exposure through the kind, quality and concentration of these investments.

As of December 31, 2023, the Company had total investments of $ 332.9 million.

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As of December 31, 2023, we had total debt of $ 3.23 billion, which excludes floor plan notes payable, debt issuance costs, and the debt premium on the 4.5 % Senior Notes (the " 4.5 % Notes") and 4.75 % Senior Notes (the " 4.75 % Notes") due 2028 and 2030, respectively.

In addition, we and our subsidiaries have the ability to obtain additional debt from time to time to finance acquisitions, real property purchases, capital expenditures, share repurchases or for other purposes, although such borrowings are subject to the restrictions contained in the third amended and restated senior secured credit agreement with Bank of America, N.A.

In addition, we and our subsidiaries have the ability to obtain additional debt from time to time to finance acquisitions, real property purchases, capital expenditures, share repurchases or for other purposes, although such borrowings are subject to the restrictions contained in the fourth amended and restated senior secured credit agreement with Bank of America, N.A.

("Bank of America"), as administrative agent, and the other lenders party thereto (the "2023 Senior Credit Facility"), the indentures governing our 4.5 % Notes, 4.625 % Notes, 4.75 % Notes and 5.0 % Notes (the "Indentures"), and our other debt instruments.

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Mercedes-Benz USA, LLC ( Mercedes-Benz and Sprinter )

Hyundai Motor North America ( Hyundai and Genesis )

General Motors Company ( Chevrolet, Buick and GMC)

Nissan North America, Inc.

(Nissan and Infiniti)

Hyundai Motor North America ( Hyundai and Genesis )

No other manufacturers individually accounted for more than 5 % of our total new vehicle revenue for the year ended December 31, 2023.

Recent Accounting Pronouncements

I n September 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2022-04, Liabilities-Supplier Finance Programs.

The Financial Accounting Standards Board ("FASB") issued final guidance in ASU 2023-09, Improvements to Income Tax Disclosures , in December 2023 which primarily expands the disclosures related to the effective tax rate reconciliation and income taxes paid.

The guidance is effective for annual periods beginning after December 15, 2024 and should be applied prospectively with the option of retrospective application.

We are evaluating the impact of this new guidance on our consolidated financial statements.

I n November 2023, the FASB issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting:

Improvements to Reportable Segment Disclosures ("ASU 2023-07"), which enhances the disclosures primarily around segment expenses.

In addition, the amendments expand the scope of quarterly financial reporting by requiring disclosure of both existing annual segment reporting disclosures and the expanded disclosures outlined in ASU 2023-07.

The guidance should be applied retrospectively and is effective for fiscal years beginning after December 15, 2023, and for interim periods beginning after December 15, 2024.

We are evaluating the impact of this new guidance on our consolidated financial statements.

I n September 2022, the FASB issued ASU 2022-04, Liabilities-Supplier Finance Programs.

This standard serves to improve transparency about supplier finance programs.

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The new disclosure requirements do not affect the recognition, measurement or financial statement presentation of any amounts due.

The guidance is effective for fiscal

years beginning after December 15, 2022, except for rollforward information, which is effective in the first quarter of 2024.

The guidance is effective for fiscal years beginning after December 15, 2022, except for rollforward information, which is effective in the first quarter of 2024.

Early adoption is permitted.

We are evaluating the impact of this new guidance on our consolidated financial statements.

Effective October 1, 2021, the Company adopted ASU 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , which requires an acquiring entity to apply ASC Topic 606 to recognize and measure contract assets acquired and contract liabilities assumed in a business combination.

The Company applied ASC Topic 606 in recording contract assets acquired and contract liabilities assumed in business combinations that occurred in the quarter ended December 31, 2021.

We assumed contract liabilities or deferred revenue of $ 667.6 million in connection with the LHM acquisition which closed in December 2021.

The adoption of this new guidance on January 1, 2023 did not have a material impact on our condensed consolidated financial statements.

See Notes11 "Floor Plan Notes Payable-Trade" and Note 12 "Floor Plan Notes Payable-Non-Trade."

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

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ASU 2020-04 is effective upon issuance and generally can be applied to applicable contract modifications through December 31, 2022.

LIBOR benchmarking is utilized in our debt (including mortgages), revolving credit facilities, floorplan facilities, and interest rate swaps.

LIBOR benchmarking was utilized in our debt (including mortgages), revolving credit facilities, floorplan facilities, and interest rate swaps.

During the quarter ended June 30, 2022, we amended our LIBOR-based debt arrangements and related hedging financial instruments to revise their interest basis from LIBOR to a Secured Overnight Financing Rate ("SOFR").

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Contract assets related to vehicle repair and maintenance services are transferred to receivables when a repair order is completed and invoiced to the customer.

Certain incremental sales commissions payable to obtain an F&I revenue contract with a customer have been capitalized and are

amortized using the same pattern of recognition applicable to the associated F&I revenue contract.

Certain incremental sales commissions payable to obtain an F&I revenue contract with a customer have been capitalized and are amortized using the same pattern of recognition applicable to the associated F&I revenue contract.

Vehicle Repair and Maintenance Services Finance and Insurance, net Deferred Sales Commissions Total

(In millions)

Contract Assets (Current), December 31, 2020 $ 7.1 $ 13.3 $ — $ 20.4

Contract Assets, December 31, 2021 $ 12.3 $ 13.5 $ 1.4 $ 27.2

Transferred to receivables from contract assets recognized at the beginning of the period ( 12.3 ) ( 13.5 ) — ( 25.8 )

Amortization of costs incurred to obtain a contract with a customer — — ( 4.6 ) ( 4.6 )

Costs incurred to obtain a contract with a customer — — 40.3 40.3

Increases related to revenue recognized, inclusive of adjustments to constraint, during the period 14.7 14.7 — 29.4

Contract Assets (Current), December 31, 2021 $ 12.3 $ 13.5 $ 1.4 $ 27.2

Contract Assets, December 31, 2022 $ 14.7 $ 14.7 $ 37.2 $ 66.6

Transferred to receivables from contract assets recognized at the beginning of the period ( 14.7 ) ( 14.7 ) — ( 29.4 )

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Contract Liabilities

The Company acquired $ 667.6 million in deferred revenue as part of the Larry H.

Miller and TCA acquisition in December 2021.

The consolidated balance sheet reflects $ 713.9 million and $ 647.8 million as of December 31, 2022 and 2021, respectively.

The consolidated balance sheet reflects $ 736.7 million and $ 713.9 million in deferred revenue as of December 31, 2023 and 2022, respectively.

Approximately $ 227.9 million of deferred revenue at December 31, 2022 was recorded in finance and insurance, net revenue in the consolidated statement of income for the year ended December 31, 2023.

ACQUISITIONS AND DIVESTITURES

Koons Acquisition

On December 11, 2023, we completed the acquisition of the Jim Koons Dealerships.

The results of the Jim Koons Dealerships have been included in our consolidated financial statements since that date.

The Koons acquisition diversifies Asbury's geographic mix, with expansion in the greater Washington-Baltimore region of the United States.

As a result of the Koons acquisition, we acquired 20 new vehicle dealerships, six collision centers and the real property related thereto, for a total purchase price of approximately $ 1.50 billion, which includes $ 256.1 million of new vehicle floor plan financing and $ 103.8 million of assets held for sale related to Koons Lexus of Wilmington.

The preliminary purchase price was paid in cash.

The sources of the preliminary purchase consideration are as follows:

(In millions)

New vehicle floor plan facility 256.1

Used vehicle floor plan facility 307.1

Preliminary purchase price $ 1,500.0

Under the acquisition method of accounting, the tangible and intangible assets acquired and liabilities assumed are recorded at their estimated fair value based on information currently available.

The following table summarizes the amounts recorded based on preliminary estimates of fair value:

Summary of Assets Acquired and Liabilities Assumed

(In millions)

Inventories, net $ 311.6

Other current assets 10.3

Assets held for sale 103.8

Total current assets 425.7

Property and equipment, net 420.0

Goodwill 231.7

Intangible franchise rights 429.0

Operating lease right-of-use assets 11.2

Total assets acquired $ 1,517.6

Operating lease liabilities $ 11.2

Other liabilities 6.4

Total liabilities assumed 17.6

Net assets acquired $ 1,500.0

The preliminary acquisition accounting is based upon the Company’s estimates of fair value.

The estimated fair values of the assets acquired and liabilities assumed and the related preliminary acquisition accounting are based on management’s estimates and assumptions, as well as other information compiled by management, including the books and records of Koons.

Our estimates and assumptions are subject to change during the measurement period, not to exceed one year from the acquisition date.

The areas of acquisition accounting that are not yet finalized primarily relate to the following significant items:

(i) finalizing the review and valuation of inventory, land, land improvements, buildings and non-real property and equipment (including the models, key assumptions, estimates and inputs used) and assignment of remaining useful lives associated with

the depreciable assets, and (ii) finalizing the review and valuation of manufacturer franchise rights (including key assumptions, inputs and estimates).

As the initial acquisition accounting is based on our preliminary assessments, actual values may differ (possibly materially) when final information becomes available that differs from our current estimates.

Additionally, the total consideration transferred is subject to certain post-close adjustments.

We believe that the information gathered to date provides a reasonable basis for estimating the preliminary fair values of assets acquired and liabilities assumed.

We will continue to evaluate these items until they are satisfactorily resolved and adjust our acquisition accounting accordingly, within the allowable measurement period.

Approximately $ 429.0 million of the purchase price was assigned to the indefinite lived franchise rights intangible assets related to the dealer agreements applicable to each new vehicle dealership.

In addition, goodwill of $ 231.7 million was recognized and is primarily attributable to the anticipated synergies that Asbury expects to derive from the Koons acquisition as well as the acquired assembled workforce of the Koons dealerships.

The Company recorded $ 4.1 million of acquisition related costs during the year ended December 31, 2023.

These costs are included in selling, general, and administrative in the consolidated statements of income.

The Company's consolidated statements of income included revenue and net income attributable to the Jim Koons Dealerships from December 11, 2023 through December 31, 2023 of $ 168.2 million and $ 7.0 million, respectively.

The following represents the unaudited pro forma information as if the Koons acquisition had been included in the consolidated results of the Company since January 1, 2022:

For the Year Ended December 31,

(In millions)

Pro forma revenue $ 17,540.4 $ 18,516.1

Pro forma net income $ 660.8 $ 1,092.9

The above pro forma financial information adjusts the revenue and net income related to the Koons acquisition primarily for (1) depreciation and interest expense assuming that the fair value adjustments and indebtedness incurred in connection with the Koons acquisition had occurred on January 1, 2022 and (2) the exclusion of Koons Lexus of Wilmington, which is classified as assets held for sale as of December 31, 2023.

The pro forma net income for the year ended December 31, 2023 includes $ 117.2 million of asset impairments recorded by the Company during the fourth quarter of 2023.

LHM Acquisition

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The results of the LHM Dealerships and TCA business have been included in the consolidated financial statements since that date.

The acquisition diversifies Asbury's geographic mix, with entry into six Western states;

Arizona, Utah, New Mexico, Idaho, California and Washington, and adds to the Company’s growing Colorado presence.

The acquisition diversified Asbury's geographic mix, with entry into six Western states;

Arizona, Utah, New Mexico, Idaho, California and Washington, and added to the Company’s growing Colorado presence.

As a result of the LHM acquisition, we acquired 54 new vehicle dealerships, seven used car 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 approximately $ 3.48 billion.

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The following table summarizes the amounts recorded based on final estimates of fair value:

(In millions)

Summary of Assets Acquired and Liabilities Assumed

(In millions)

Cash and cash equivalents $ 287.4

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These costs are included in selling, general, and administrative in the consolidated statements of income.

The Company did not incur acquisition related costs during the year ended December 31, 2022.

The Company's consolidated statements of income included revenue and net income attributable to LHM from December 17, 2021 through December 31, 2021 of $ 256.4 million and $ 15.7 million, respectively.

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They have also been adjusted to reflect the $ 4.9 million of acquisition related costs incurred during 2021 as having occurred on January 1, 2020.

Park Place Acquisition

On December 11, 2019, we announced the proposed acquisition of substantially all of the assets of the businesses of the Park Place Dealership family of entities (collectively, "Park Place") pursuant to that certain Asset Purchase Agreement, dated as of December 11, 2019, among the Company, Park Place and the other parties thereto (the "2019 Asset Purchase Agreement"), and related agreements and transactions (collectively, the "2019 Acquisition").

On March 24, 2020, as a result of the uncertainties related to the COVID-19 pandemic we delivered notice to the sellers terminating the 2019 Acquisition pursuant to the terms of the related agreements and transactions in exchange for the payment of $ 10.0 million of liquidated damages which is reflected in our accompanying consolidated statements of income as other operating (income) expense, net.

See Note 14 "Debt" for details related to the impact on certain financing arrangements as a result of terminating the 2019 Acquisition.

On July 6, 2020, the Company, through two of its subsidiaries, entered into an Asset Purchase Agreement with certain members of the Park Place Dealership group, to acquire substantially all of the assets of, and lease the real property related to, 12 new vehicle dealership franchises ( 8 dealership locations), two collision centers and an auto auction (collectively, the "Park Place Acquisition").

The Park Place acquisition was completed on August 24, 2020 and 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.

The sources of the purchase consideration are as follows:

(In millions)

Seller notes 200.0

New vehicle floor plan facility 127.5

Used vehicle floor plan facility 35.0

Purchase price $ 889.9

Under the acquisition method of accounting, the purchase price is allocated to the tangible and intangible assets acquired and liabilities assumed.

The following table summarizes the final allocation of the purchase price:

(In millions)

Summary of Assets Acquired and Liabilities Assumed

Inventories $ 120.8

Loaner vehicles 57.0

Property and equipment 36.5

Goodwill 360.4

Manufacturer franchise rights 324.0

Operating lease right-of-use assets 202.7

Total assets acquired 1,101.4

Operating lease liabilities ( 202.2 )

Other liabilities ( 9.3 )

Total liabilities assumed ( 211.5 )

Net assets acquired $ 889.9

On May 20, 2021, we exercised the purchase option for certain Park Place real estate leases whose original operating lease right-of-use assets and liabilities totaled $ 99.5 million.

We acquired these properties for $ 217.1 million which was partly financed through the 2021 BofA Real Estate Facility.

The Company's consolidated statements of income included revenue attributable to Park Place for the year ended December 31, 2021 of $ 1.79 billion.

The Company recorded $ 1.3 million of acquisition related costs during the year ended December 31, 2020.

These costs are included in selling, general, and administrative in the consolidated statements of income.

The Company's consolidated statements of income included revenue and net income attributable to Park Place from August 24, 2020 through December 31, 2020 of $ 589.6 million and $ 27.6 million, respectively.

The following represents the unaudited pro forma information as if Park Place had been included in the consolidated results of the Company since January 1, 2019:

For the Year Ended December 31,

(In millions)

Pro forma revenue $ 7,989.6

Pro forma net income $ 276.2

This pro forma information incorporates the Company's accounting policies and adjusts the results of Park Place for depreciation, rent expense, and interest expense assuming that the fair value adjustments and indebtedness incurred in connection with the Park Place Acquisition had occurred on January 1, 2019.

They have also been adjusted to reflect the $ 1.3 million of acquisition related costs incurred during 2020 as having occurred on January 1, 2019.

The pro forma information also assumes that the September 2020 divestiture of the Lexus Greenville dealership, which was related to the Park Place Acquisition, occurred on January 1, 2019.

Other Acquisitions and Divestitures

During the year ended December 31, 2022, we did not complete any dealership acquisitions.

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.

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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.

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 $ 2.0 million for potential indemnity claims made by us with respect to the acquired franchises.

In addition to the acquisition amounts above, we released $ 2.5 million of purchase price holdbacks related to current and prior year acquisitions during the year ended December 31, 2020.

Goodwill and manufacturer franchise rights associated with our Dealership segment acquisitions is deductible for federal and state income tax purposes ratably over a 15 -year period.

Below is the allocation of the purchase price for the acquisitions (other than the LHM acquisition and the Park Place acquisition) for the years ended December 31, 2021 and 2020.

On May 20, 2021, we exercised the purchase option for certain Park Place real estate leases whose original operating lease right-of-use assets and liabilities totaled $ 99.5 million.

We acquired these properties for $ 217.1 million which was partly financed through the 2021 BofA Real Estate Facility.

Goodwill and manufacturer franchise rights associated with our Dealerships segment acquisitions is deductible for federal and state income tax purposes ratably over a 15 -year period.

Below is the allocation of the purchase price for the acquisitions (other than the LHM acquisition) for the year ended December 31, 2021.

The estimated fair values of the assets acquired and liabilities assumed and the related acquisition accounting are based on management’s estimates and assumptions, as well as other information compiled by management.

For the Year Ended December 31,

As of December 31,

(In millions)

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Total purchase price $ 485.7

During the year ended December 31, 2023, we sold one franchise ( one dealership location) in Austin, Texas.

The Company recorded a pre-tax gain totaling $ 13.5 million.

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

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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.

ACCOUNTS RECEIVABLE

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Net assets held for sale $ 340.1 $ 18.7

As of December 31, 2023, assets held for sale consisted of 11 franchise ( 11 dealership locations) in addition to one real estate property not currently used in our operations.

As of December 31, 2022, assets held for sale consisted of one franchise ( one dealership location) in addition to one real estate property not currently used in our operations.

As of December 31, 2021, assets held for sale consisted of eight franchises ( eight dealership locations) in addition to one real estate property not currently used in our operations.

During the year ended December 31, 2023, the Company sold one franchise ( one dealership location) for a pre-tax gain totaling $ 13.5 million.

During the year ended December 31, 2022, the Company sold 18 franchises ( 16 dealership locations) and three collision centers for a pre-tax gain totaling $ 207.1 million.

During the year ended December 31, 2021, the Company sold one franchise ( one dealership location) for a pre-tax gain totaling $ 8.0 million and two vacant properties with a net book value of $ 12.5 million.

OTHER CURRENT ASSETS

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Prepaid expenses 41.4 43.0

Notes receivable 12.9 6.3

Prepaid taxes 18.4 5.8

Notes receivable 5.2 12.9

Deposits 4.5 4.1

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As of December 31, 2023

Amortized Cost Allowance For Credit Losses Gross Unrealized Gains Gross Unrealized Losses Fair Value

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value

(In millions)

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Total debt securities 331.6 3.5 ( 2.2 ) 332.9

Common stock 48.7 — — — 48.7

Total investments $ 331.6 $ 3.5 $ ( 2.2 ) $ 332.9

As of December 31, 2022

Amortized Cost Allowance For Credit Losses Gross Unrealized Gains Gross Unrealized Losses Fair Value

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value

(In millions)

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Common stock 48.7 — — 48.7

Other investments measured at net asset value 4.4 — — — 4.4

Total investments $ 244.2 $ 0.5 $ ( 4.4 ) $ 240.4

The Company recorded an unrealized loss of $ 0.4 million during the year ended December 31, 2022 and an unrealized gain of $ 18.3 million for the year ended December 31, 2021 related to equity securities held as of December 31, 2022 and December 31, 2021, respectively.

As of December 31, 2022 and December 31, 2021, the Company had $ 1.3 million and $ 0.6 million of accrued interest receivable, which was included in other current assets on the consolidated balance sheets.

There were no equity securities held as of December 31, 2023.

As of December 31, 2023 and 2022, the Company had $ 2.5 million and $ 1.3 million of accrued interest receivable, which was included in other current assets on the consolidated balance sheets.

The Company does not consider accrued interest receivable in the carrying amount of financial assets held at amortized cost basis or in the allowance for credit losses.

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Mortgage and other asset-backed securities 150.1 150.9

Common stock 48.7 48.7

Total investment securities $ 331.6 $ 332.9

There were no gross gains and losses realized related to the sales of available-for-sale debt securities carried at fair value from the acquisition date of December 17, 2021 to December 31, 2021.

During the year ended December 31, 2022, we recorded $ 0.1 million gross gains and $ 2.0 million gross losses related to the sales of available-for-sale debt securities.

During the year ended December 31, 2023, we recorded $ 0.5 million gross gains and $ 1.5 million gross losses realized related to the sales of available-for-sale debt securities carried at fair value.

During the year ended December 31, 2023, we recorded $ 3.7 million gross gains and $ 0.9 million gross losses realized related to the sales of equity securities carried at fair value.

During the year ended December 31, 2022, we recorded $ 0.1 million gross gains and $ 2.0 million gross losses realized related to the sales of available-for-sale debt securities carried at fair value.

During the year ended December 31, 2022, we recorded $ 10.1 million gross gains and $ 3.6 million gross losses realized related to the sales of equity securities carried at fair value.

There were no gross gains and losses realized related to the sales of available-for-sale debt and equity securities carried at fair value from the acquisition date of December 17, 2021 to December 31, 2021.

The following tables summarize the amount of unrealized losses, defined as the amount by which the amortized cost exceeds fair value, and the related fair value of investments with unrealized losses.

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those that have been in a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position of 12 or more months.

The reference point for determining how long an investment was in

an unrealized loss position was December 31, 2022.

Investments held as of December 31, 2021 were acquired in the LHM acquisition on December 17, 2021, therefore there are no unrealized losses greater than 12 months at December 31, 2021.

The reference point for determining how long an investment was in an unrealized loss position was December 31, 2023.

As of December 31, 2023

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(In millions)

Short-term investments $ — $ — $ 6.0 $ ( 0.1 ) $ 6.0 $ ( 0.1 )

U.S Treasury 3.4 ( 0.1 ) 5.0 ( 0.1 ) 8.5 ( 0.1 )

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Total debt securities $ 145.7 $ ( 2.0 ) $ 6.8 $ ( 0.5 ) $ 152.6 $ ( 2.5 )

On January 1, 2020, the Company adopted the amendments within ASU 2016-13, which replaced the legacy GAAP other-than-temporary impairment ("OTTI") model with a credit loss model.

The credit loss model under ASC 326-30, applicable to the available-for-sale debt securities, requires the recognition of credit losses through an allowance account, but retains the concept from the OTTI model that credit losses are recognized once securities become impaired.

The credit loss model applicable to the available-for-sale debt securities, requires the recognition of credit losses through an allowance account, which are recognized once securities become impaired.

The Company reviews the investment securities portfolio at the security level on a quarterly basis for potential credit losses, which takes into consideration numerous factors as described in Note 1.

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Intangible franchise rights is an asset representing our rights under franchise agreements with vehicle manufacturers.

Goodwill and intangible franchise rights are tested annually as of October 1 st , or more frequently in the event that facts and circumstances indicate a triggering event has occurred.

In connection with the LHM acquisition, we recorded goodwill of $ 1.21 billion, franchise rights of $ 1.31 billion and VOBA of $ 5.6 million.

Approximately $ 536.6 million of goodwill was allocated to the TCA segment and $ 668.7 million was allocated to the Dealerships segment.

In connection with the Koons acquisition, we recorded goodwill of $ 231.7 million, and franchise rights of $ 429.0 million.

Goodwill related to the Koons acquisition was allocated to the Dealerships segment.

The changes in goodwill and intangible franchise rights for the years ended December 31, 2023 and 2022 are as follows:

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Balance as of December 31, 2021 (a) $ 1,561.4 $ 710.3 $ 2,271.7

Acquisitions 1,118.3 710.3 1,828.6

Reclassified from assets held for sale 118.5 — 118.5

Acquisitions - measurement period adjustments ( 337.0 ) ( 173.7 ) ( 510.7 )

Divestitures ( 95.2 ) — ( 95.2 )

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Reclassified from assets held for sale 0.9 — 0.9

Acquisitions - measurement-period adjustments ( 337.0 ) ( 173.7 ) ( 510.7 )

Acquisitions 240.8 — 240.8

Divestitures ( 0.9 ) — ( 0.9 )

Impairments ( 14.9 ) — ( 14.9 )

Reclassified to assets held for sale ( 0.3 ) — ( 0.3 )

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Balance as of December 31, 2021 $ 1,335.7

Acquisitions 1,020.5

Reclassified to assets held for sale ( 110.0 )

Balance as of December 31, 2021 $ 1,335.7

Reclassified from assets held for sale 110.0

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Balance as of December 31, 2022 $ 1,800.1

We elected to perform a qualitative assessment for our October 1, 2022 goodwill and franchise rights impairment testing and determined that it was more likely than not that the fair value of our reporting units exceeded their carrying value.

We did no t record an impairment charge for goodwill or franchise rights during the year ended December 31, 2022.

As a result of the adverse impact on our dealership operations caused by the COVID-19 pandemic in the first quarter of 2020, the Company considered the extent to which the COVID-19 impacts combined with other relevant circumstances (e.g., the results of the Company’s impairment test) could affect the significant inputs used to determine the fair value of the Company’s franchise rights and goodwill associated with the Company’s reporting units.

To the extent that we determined that the totality of events and circumstances, and their effect on the significant inputs into the fair value determination of our franchise rights and reporting units, would more likely than not lead to an impairment of the carrying value of the franchise rights or goodwill reporting units, we performed quantitative impairment tests as of March 31, 2020.

Acquisitions 429.0

Impairments ( 102.3 )

Reclassified to assets held for sale ( 31.0 )

Balance as of December 31, 2023 $ 2,095.8

Based on the underperformance of certain stores, limited primarily to two brands, along with an increase in discount rates, we performed quantitative impairment tests of franchise rights for certain stores in our Dealerships segment as of October 1, 2023.

The quantitative impairment tests for franchise rights included a comparison of the estimated fair value to the carrying value of each franchise right asset.

The Company estimates fair value by using a discounted cash flow model (income approach) based on market participant assumptions related to the cash flows directly attributable to the franchise.

These assumptions include year-over-year and terminal growth rates, working capital requirements, weighted average cost of capital, future gross margins, and future selling, general, and administrative expenses.

These assumptions include year-over-year and terminal growth rates, weighted average cost of capital, future gross margins, and future selling, general, and administrative expenses.

The results of the quantitative impairment testing identified that the carrying values of certain of our franchise rights intangible assets exceeded their fair value.

As a result, we recognized a $ 23.0 million pre-tax non-cash impairment charge during the three months ended March 31, 2020.

We also performed qualitative assessments on the remaining franchise rights and goodwill reporting units as of March 31, 2020.

The results of our quantitative and qualitative assessments indicated that the carrying value of goodwill related to all reporting units did not exceed their fair value.

As a result, we recognized a $ 73.1 million pre-tax non-cash impairment charge related to our franchise rights intangible assets during the year ended December 31, 2023.

These asset impairment charges are reflected in asset impairments in our consolidated statements of income.

Additionally, in connection with a change in reporting units in our Dealerships segment, we performed quantitative impairment tests of goodwill for the affected reporting units as of October 1, 2023, both before and after the change in reporting units.

The quantitative impairment tests of goodwill included a comparison of the estimated fair value to the carrying value of the reporting unit.

The Company estimates fair value by using a discounted cash flow model (income approach) based on market participant assumptions.

These assumptions include year-over-year and terminal growth rates, weighted average cost of capital, future gross margins, and future selling, general, and administrative expenses.The results of our quantitative goodwill impairment tests related to certain reporting units indicated that the fair value of these reporting units exceeded their carrying values.

We also performed qualitative assessments on the remaining franchise rights and goodwill reporting units as of October 1, 2023.

The results of our qualitative assessment on the remaining franchise rights indicated that the fair values of the franchise rights related to those dealerships more likely than not exceeded their carrying values.

The results of our qualitative assessments of goodwill impairment related to the remaining reporting units indicated that the fair values of the reporting units more likely than not exceeded their carrying values.

In December 2023, certain dealerships met the held for sale criteria and the assets and liabilities associated with these dealerships were reclassified as assets held for sale and liabilities associated with assets held for sale in our consolidated balance sheets.

As a result, we evaluated the disposal groups to ensure their recording at the lower of their carrying value or fair value less costs to sell.

The quantitative impairment tests of each disposal group included a comparison of the estimated fair value to the carrying value of the disposal group less costs to sell.

The Company determined the estimated fair value of each disposal group based on the estimated sales proceeds less cost to sell.

As a result of this analysis, we recorded asset impairment charges of $ 44.1 million.

These asset impairment charges are reflected in asset impairments in our consolidated statements of income.

Since the resulting impairment charges and the decision to dispose of these dealerships represented a triggering event for goodwill, we performed quantitative impairment tests of goodwill for the affected reporting units in December 2023.

The results of our quantitative goodwill impairment tests for the affected reporting units indicated that the fair value of these reporting units exceeded their carrying values.

In total, we recognized asset impairments of $ 117.2 million during the year ended December 31, 2023.

We did no t record an impairment charge for goodwill or franchise rights during the year ended December 31, 2022.

FLOOR PLAN NOTES PAYABLE—TRADE

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These transfers reduce the amount of outstanding new vehicle floor plan notes payable that would otherwise accrue interest, while retaining the ability to transfer amounts from the offset account into our operating cash accounts within one to two days.

As a result of using our floor plan offset account, we experienced a reduction in floor plan interest expense in our consolidated statements of income.

The representations and covenants contained in the agreement governing our floor plan facility with Ford Credit are customary for financing transactions of this nature.

As a result of using our floor plan offset account, we experienced a reduction in floor plan interest expense in our consolidated statements of income.The representations and covenants contained in the agreement governing our floor plan facility with Ford Credit are customary for financing transactions of this nature.

Further, the agreement governing our floor plan facility with Ford Credit also provides for events of default that are customary for financing transactions of this nature, including cross-defaults to other material indebtedness.

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__________________________

(a) Floor plan notes payable—new non-trade as of December 31, 2022 and 2021 excludes $ 2.8 million and $ 9.1 million, respectively, classified as liabilities associated with assets held for sale.

(b) In addition to the $ 613.6 million shown above, we held $ 164.0 million in the floor plan notes payable offset account of which $ 100.8 million was reflected within cash and cash equivalents and $ 63.2 million was shown as an offset to loaner vehicles notes payable which is included in accounts payable and accrued liabilities within the consolidated balance sheets.

(a) Floor plan notes payable—new non-trade as of December 31, 2022 excludes $ 2.8 million, classified as liabilities associated with assets held for sale.

(b) In addition to the $ 613.6 million shown above as of December 31, 2022, we held $ 164.0 million in the floor plan notes payable offset account of which $ 100.8 million was reflected within cash and cash equivalents and $ 63.2 million was shown as an offset to loaner vehicles notes payable which is included in accounts payable and accrued liabilities within the consolidated balance sheets.

2023 Senior Credit Facility

In connection with the LHM acquisition, on October 29, 2021, we entered into a Third Amendment (the "October 29, 2021 Amendment") to the Third Amended and Restated Credit Agreement dated September 25, 2019 with Bank of America, N.A.

On October 20, 2023, the Company and certain of its subsidiaries entered into a fourth amended and restated credit agreement with Bank of America, N.A.

("Bank of America"), as administrative agent, and the other lenders party thereto (the "2023 Senior Credit Facility").

As a result of the October 29, 2021 Amendment, among other things, the 2019 Senior Credit Facility (1) increased the aggregate commitments under the Revolving Credit Facility to $ 450.0 million (2) increased the aggregate commitments under the Used Vehicle Floorplan Facility to $ 350.0 million, (3) increased the aggregate commitments under the New Vehicle Floorplan Facility to $ 1.75 billion, (4) removed our minimum consolidated current ratio covenant, and (5) permitted the use of borrowings under the 2021 Senior Credit Facility to fund a portion of the consideration for the LHM acquisition.

The 2023 Senior Credit Facility amended and restated the Company’s pre-existing third amended and restated credit agreement, dated as of September 25, 2019, among the Company, certain of its subsidiaries, Bank of America, as administrative agent, and the other lenders party thereto.

The 2023 Senior Credit Facility provides for the following, in each case subject to limitations on availability as set forth therein:

• $ 500.0 million revolving credit facility (the “Revolving Credit Facility”);

• $ 1.93 billion new vehicle revolving floorplan facility (the “New Vehicle Floorplan Facility”);

• $ 375.0 million used vehicle revolving floorplan facility (the “Used Vehicle Floorplan Facility”).

Proceeds from borrowings under the 2023 Senior Credit Facility will be used, among other things, (i) to finance the purchase of new and used vehicles by the Company and certain of its subsidiaries, (ii) for working capital needs of the Company and certain of its subsidiaries, and (iii) for other general corporate purposes of the Company and certain of its subsidiaries.

Subject to compliance with certain conditions, the 2019 Senior Credit Agreement provides that we have the ability, at our option and subject to the receipt of additional commitments from existing or new lenders, to increase the size of the facilities by up to $ 350.0 million in the aggregate without lender consent.

Subject to compliance with certain conditions, the 2023 Senior Credit Facility provides that we have the ability, at our option and subject to the receipt of additional commitments from existing or new lenders, to increase the size of the facilities by up to $ 750.0 million in the aggregate without lender consent.

We have the ability to convert a portion of our availability under the Revolving Credit Facility to the New Vehicle Floor Plan Facility or the Used Vehicle Floor Plan Facility.

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In addition, we are able to convert any amounts moved to the New Vehicle Floor Plan Facility or Used Vehicle Floor Plan Facility back to the Revolving Credit Facility.

On May 25, 2022, we and certain of our subsidiaries, as applicable, entered into an amendment to our 2019 Senior Credit Facility to revise the benchmark reference rate of LIBOR to SOFR applicable to interest payable under the New Vehicle Floor Plan Facility and the Used Vehicle Floor Plan Facility.

See Note 14 "Debt" for further details of the revisions to the applicable facility .

On May 27, 2022, $ 389.0 million of our availability under the Revolving Credit Facility was re-designated to the New Vehicle Floor Plan Facility to take advantage of lower commitment fee rates.

On September 30, 2022, the Company and certain of its subsidiaries entered into the fifth amendment to the 2019 Senior Credit Facility.

The amendment, among other things, increased the cap that the real estate component of the Revolving Borrowing Base can contribute to the Revolving Borrowing Base from 25 % to 40 % of the Aggregate Revolving Commitments, increased the amounts that any conversion of the Aggregate Revolving Commitments to Aggregate New Vehicle Floor Plan Commitments and/or Aggregate Used Vehicle Floor Plan Commitments (each way) can contribute to Aggregate Commitments from 20 % to 40 %, removed the $ 50 million limit on the portion of the Floorplan Offset Amount that may be subtracted from certain amounts outstanding under the floorplan facility and made certain changes to the criteria for Eligible Borrowing Base Real Property and the deliverables in connection with those properties (such capitalized terms, in each case, as defined in the amendment).

The amendment did not update or amend the maturity date, interest rates or total loan commitments under the 2019 Senior Credit Agreement.

In connection with the New Vehicle Floor Plan Facility, we continue to maintain an offset account with Bank of America that allows us to transfer cash as an offset to floor plan notes payable.

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As a result of the use of our floor plan offset account, we experienced a reduction in floor plan interest expense in our consolidated statements of income.

Borrowings under the 2019 Senior Credit Facility bear interest, at our option, based on Daily Simple SOFR, as defined within the agreement, or the Base Rate, in each case plus an Applicable Rate.

The Base Rate is the highest of (i) the Federal Funds Rate plus 0.50 %, (ii) the Bank of America prime rate, and (iii) SOFR plus 0.10 %, plus 1.00 %, and (iv) 1.00 %.

Borrowings outstanding under the 2023 Senior Credit Facility bear interest, at the option of the Company, based on Daily Simple SOFR (as defined in the 2023 Senior Credit Facility) or the Base Rate, in each case plus an Applicable Rate.

Rate is the highest of (i) the Federal Funds Rate (as defined in the 2023 Senior Credit Agreement) plus 0.50 %, (ii) the Bank of America prime rate, and (iii) Daily Simple SOFR plus 1.00 % and (iv) 1.00 %.

Applicable Rate means with respect to the Revolving Credit Facility, a range from 1.00 % to 2.00 % for Daily Simple SOFR loans and 0.15 % to 1.00 % for Base Rate loans, in each case based on the Company's consolidated total lease adjusted leverage ratio.

Borrowings under the New Vehicle Floorplan Facility bear interest, at our option, based on SOFR plus 0.10 %, plus 1.10 % or the Base Rate plus 0.10 %.

Borrowings under the Used Vehicle Floorplan Facility bear interest, at our option, based on SOFR plus 0.10 %, plus 1.40 % or the Base Rate plus 0.40 %.

Borrowings under the New Vehicle Floorplan Facility bear interest, at the option of the Company, based on Daily Simple SOFR plus 1.10 %, or the Base Rate plus 0.10 %.

Borrowings under the Used Vehicle Floorplan Facility bear interest, at the option of the Company, based on Daily Simple SOFR plus 1.40 % or the Base Rate plus 0.40 %.

In addition to the payment of interest on borrowings outstanding under the 2023 Senior Credit Facility, we are required to pay a quarterly commitment fee on total unused commitments thereunder.

The fee for unused commitments under the Revolving Credit Facility is between 0.15 % and 0.40 % per year, based on the Company's total lease adjusted leverage ratio, and the fee for unused commitments under the New Vehicle Facility Floor Plan and the Used Vehicle Facility Floor Plan Facility is 0.15 % per year.

The 2019 Senior Credit Facility matures, and all amounts outstanding thereunder will be due and payable, on September 25, 2024.

The 2023 Senior Credit Facility matures, and all amounts outstanding thereunder will be due and payable, on October 20, 2028.

The representations and covenants contained in the 2023 Senior Credit Agreement are customary for financing transactions of this nature, including, among others, a requirement to comply with a minimum consolidated fixed charge coverage ratio and maximum consolidated total lease adjusted leverage ratio, in each case as set out in the 2023 Senior Credit Agreement.

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See the "Representations and Covenants" section below under our "Long-Term Debt" footnote for a description of the representations, covenants and events of default contained in the 2023 Senior Credit Facility.

2019 Senior Credit Facility

On October 29, 2021, we entered into a third amendment to the third amended and restated credit agreement dated September 25, 2019 with Bank of America, as administrative agent, and the other lenders party thereto (the "2019 Senior Credit Facility").

On September 30, 2022, the Company and certain of its subsidiaries entered into the fifth amendment to the 2019 Senior Credit Facility.

The amendment did not update or amend the maturity date, interest rates or total loan commitments under the 2019 Senior Credit Agreement.

On June 3, 2022, $ 389.0 million of our availability under the Revolving Credit Facility was re-designated to the New Vehicle Floor Plan Facility to take advantage of lower commitment fee rates.

On March 31, 2023, we designated this $ 389.0 million back to the Revolving Credit Facility.

In addition to our new and used vehicle floor plan facilities, we have loaner vehicle floor plan facilities with Bank of America and certain original equipment manufacturers (“OEMs”).

Loaner vehicles notes payable related to Bank of America was $ 127.2 million as of December 31, 2023 and $ 10.8 million, net of offsets of $ 63.2 million as of December 31, 2022.

Loaner vehicles notes payable related to OEMs as of December 31, 2023 and 2022 were $ 111.9 million and $ 83.7 million, respectively.

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

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Accrued compensation 56.8 89.0

Accrued insurance 39.2 31.5

Accrued interest 46.6 33.0

Accrued finance and insurance chargebacks 29.1 27.9

Customer deposits 30.2 23.5

Acquisition related liabilities 21.3 16.2

Unearned premium 13.6 13.0

Accrued insurance 28.4 39.2

Accrued finance and insurance chargebacks 24.7 29.1

Accrued licenses and regulatory fees 16.7 9.9

Unearned premium 14.1 13.6

Customer we owe liabilities 7.3 7.0

Accrued advertising 6.9 4.3

Acquisition related liabilities 6.4 21.3

Other 40.3 41.5

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____________________________

(a) Loaner vehicles notes payable as of December 31, 2022 and 2021 excluded $ 0.8 million and $ 4.6 million classified as liabilities associated with assets held for sale, respectively.

(a) Loaner vehicles notes payable as of December 31, 2022 excludes $ 0.8 million classified as liabilities associated with assets held for sale, respectively.

The December 31, 2022 balance also reflects a $ 63.2 million floor plan offset.

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Senior Notes issued in 2020

In connection with the 2019 Acquisition, on February 19, 2020, the Company completed its offering of senior unsecured notes (the "February 2020 Offering"), consisting of $ 525.0 million aggregate principal amount of 4.50 % Senior Notes due 2028 (the "Existing 2028 Notes") and together with the Additional 2028 Notes ((as defined below), the "2028 Notes") and $ 600.0 million aggregate principal amount of 4.75 % Senior Notes due 2030 (the "Existing 2030 Notes" and, together with the Existing 2028 Notes, the "Existing Notes") and together with the Additional 2030 Notes ((as defined below), the "2030 Notes").

In connection with the proposed acquisition of the Park Place dealerships announced in December 2019 ("2019 Acquisition"), on February 19, 2020, the Company completed its offering of senior unsecured notes (the "February 2020 Offering"), consisting of $ 525.0 million aggregate principal amount of 4.50 % Senior Notes due 2028 (the "Existing 2028 Notes") and together with the Additional 2028 Notes ((as defined below), the "2028 Notes") and $ 600.0 million aggregate principal amount of 4.75 % Senior Notes due 2030 (the "Existing 2030 Notes" and, together with the Existing 2028 Notes, the "Existing Notes") and together with the Additional 2030 Notes ((as defined below), the "2030 Notes").

The Company paid lender fees of $ 6.8 million in conjunction with the February 2020 Offering and incurred additional debt issuance costs of $ 3.1 million.

As a result of the termination of the 2019 Acquisition, the Company delivered a notice of special mandatory redemption to holders of its Existing 2028 Notes and Existing 2030 Notes pursuant to which it would redeem on a pro rata basis (1) $ 245.0 million of the Existing 2028 Notes and (2) $ 280.0 million of the 2030 Existing Notes, in each case, at 100 % of the respective principal amount plus accrued and unpaid interest to but excluding, the special mandatory redemption date.

On March 30, 2020, the Company completed the redemption and recorded a write-off of unamortized debt issuance costs of $ 1.5 million.

In September 2020, the Company completed an issuance of $ 250.0 million aggregate principal amount of additional senior unsecured notes (the "September 2020 Offering") consisting of $ 125.0 million aggregate principal amount of additional 4.50 % Senior Notes due 2028 (the "Additional 2028 Notes") at a price of 101.00 % of par, plus accrued interest from September 1, 2020, and $ 125.0 million aggregate principal amount of additional 4.75 % Senior Notes due 2030 (the "Additional 2030 Notes" and together with the Additional 2028 Notes, the "Additional Notes") at a price of 101.75 % of par, plus accrued interest from September 1, 2020.

On March 30, 2020, the Company completed the redemption.

In September 2020, following the consummation of the Park Place acquisition, the Company completed an issuance of $ 250.0 million aggregate principal amount of additional senior unsecured notes (the "September 2020 Offering") consisting of $ 125.0 million aggregate principal amount of additional 4.50 % Senior Notes due 2028 (the "Additional 2028 Notes") at a price of 101.00 % of par, plus accrued interest from September 1, 2020, and $ 125.0 million aggregate principal amount of additional 4.75 % Senior Notes due 2030 (the "Additional 2030 Notes" and together with the Additional 2028 Notes, the "Additional Notes") at a price of 101.75 % of par, plus accrued interest from September 1, 2020.

After deducting the initial purchasers' discounts of $ 2.8 million, we received net proceeds of approximately $ 250.6 million from the September 2020 Offering.

The $ 3.5 million premium paid by the initial purchasers of the Additional Notes was recorded as a component of long-term debt on our consolidated balance sheet and is being amortized as a reduction of interest expense over the remaining term of the Additional Notes.

The proceeds of the September 2020 Offering were used to redeem the Seller Notes issued in connection with the Park Place Acquisition and repay approximately $ 50.0 million in aggregate principal amount outstanding under our Revolving Credit Facility.

The proceeds of the September 2020 Offering were used to redeem certain seller notes issued in connection with the Park Place acquisition and repay approximately $ 50.0 million in aggregate principal amount outstanding under our Revolving Credit Facility.

The lender fees and other debt issuance costs incurred are being amortized over the terms of the Notes using the effective interest method.

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For all relevant periods presented, our 2028 Notes and 2030 Notes have been fully and unconditionally guaranteed, on a joint and several basis, by substantially all of our subsidiaries other than the TCA Non-Guarantor Subsidiaries.

6.0 % Senior Subordinated Notes due 2024

On February 3, 2020, we issued a conditional notice of redemption to the holders of our 6.0 % Senior Subordinated Notes due 2024, notifying such holders that we intended to redeem all of the 6.0 % Notes.

On March 4, 2020, the 6.0 % Notes were redeemed at 103 % of par, plus accrued and unpaid interest to, but excluding, the date of redemption.

We recorded a loss on extinguishment of the 6.0 % Notes of $ 19.1 million which comprised a redemption premium of $ 18.0 million and the net write-off of the unamortized premium and debt issuance costs of $ 1.1 million related to the 6.0 % Notes on the redemption date.

Mortgage Financings

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As of December 31, 2023 and 2022, we had total mortgage notes payable outstanding of $ 31.9 million and $ 38.3 million, respectively, that are collateralized by the associated real estate, which excludes amounts classified as liabilities associated with assets held for sale.

The total mortgage notes payable is due to be repaid in 2024.

2021 Real Estate Facility

On December 17, 2021, we entered into a real estate term loan credit agreement with Bank of America, N.A., as administrative agent and the various financial institutions party thereto, as lenders, which provides for term loans in an aggregate amount equal to $ 689.7 million (the "2021 Real Estate Facility").

The Company used the proceeds from these borrowings to finance the purchase of the real property in connection with the LHM acquisition as well as other recent acquisitions and other unencumbered real property.

The Company used the proceeds from these borrowings to finance the purchase of the real property in connection with the LHM acquisition as well as other acquisitions and unencumbered real property.

Term loans under the 2021 Real Estate Facility bear interest, at our option, based on (1) Daily Simple SOFR plus 1.55 % - 1.95 % per annum (as determined by the consolidated total lease adjusted leverage ratio), or (2) the Base Rate (as described below) plus 0.55 % - 0.95 % per annum (as determined by the consolidated total lease adjusted leverage ratio).

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The Company completed the purchase of the leased real property on May 20, 2021.

Term loans under our 2021 BofA Real Estate Facility bear interest, at our option, based on (1) LIBOR plus 1.65 % per annum or (2) the Base Rate (as described below) plus 0.65 % per annum.

The Base Rate is the highest of (i) the Federal Funds rate plus 0.50 %, (ii) the Bank of America prime rate, and (iii) one month LIBOR plus 1.0 %.

We will be required to make 39 consecutive quarterly principal payments of 1.00 % of the initial amount of each loan, with a balloon repayment of the outstanding principal amount of loans due on the maturity date.

The 2021 BofA Real Estate Facility matures ten years from the initial funding date.

We are required to make 39 consecutive quarterly principal payments of 1.00 % of the initial amount of each loan, with a balloon repayment of the outstanding principal amount of loans due on the maturity date.

The 2021 BofA Real Estate Facility

matures ten years from the initial funding date.

Borrowings under the 2021 BofA Real Estate Facility are guaranteed by us and each of our operating dealership subsidiaries that leased the real estate now financed under the 2021 BofA Real Estate Facility, and are collateralized by first priority liens, subject to certain permitted exceptions, on all of the real property financed thereunder.

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Our right to make draws under the 2018 BofA Real Estate Facility terminated on November 13, 2019.

Term loans under our 2018 BofA Real Estate Facility bear interest, at our option, based on LIBOR plus 1.50 % or the Base Rate (as described below) plus 0.50 %.

The Base Rate is the highest of (i) the Federal Funds rate plus 0.50 %, (ii) the Bank of America prime rate, and (iii) one month LIBOR plus 1.0 %.

We are required to make quarterly principal payments of 1.25 % of the initial amount of each loan on a twenty -year repayment schedule, with a balloon repayment of the outstanding principal amount of loans due on November 13, 2025.

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On June 1, 2022, certain of our subsidiaries entered into the second amendment to the master loan agreement that revised interest payable from a LIBOR reference rate to SOFR plus 0.10 %, plus an applicable margin based on a pricing grid ranging from 1.50 % to 1.85 % per annum based on our consolidated total lease adjusted leverage ratio.

On November 16, 2018, certain of our subsidiaries entered into a master loan agreement (the "2018 Wells Fargo Master Loan Agreement" and, together with the 2013 BofA Real Estate Credit Agreement, the 2015 Wells Fargo Master Loan Agreement and the 2018 BofA Real Estate Agreement, the "Existing Real Estate Credit Agreements") with Wells Fargo Bank, National Association, as lender, which provides for term loans to certain of our subsidiaries that are borrowers under the Wells Fargo Master Loan Agreement in an aggregate amount not to exceed $ 100.0 million (the "Wells Fargo Master Loan Facility"), subject to customary terms and conditions (the "2018 Wells Fargo Master Loan Facility" and, together with the 2013 BofA Real Estate Facility, the 2015 Wells Fargo Master Loan Facility and the 2018 BofA Real Estate Facility, the "Existing Real Estate Facilities").

Our right to make draws under the 2018 Wells Fargo Master Loan Facility terminated on June 30, 2020.

Term loans under the 2018 Wells Fargo Master Loan Facility bear interest based on LIBOR plus an applicable margin based on a pricing grid ranging from 1.50 % per annum to 1.85 % per annum based on our consolidated total lease adjusted leverage ratio.

We are required to make quarterly principal payments with respect to the initial amount of each loan in 108 equal monthly principal payments based on a hypothetical nineteen -year amortization schedule, with a balloon repayment of the outstanding principal amount of loans due on December 1, 2028.

Borrowings under the 2018 Wells Fargo Master Loan Facility can be voluntarily prepaid in whole or in part any time without premium or penalty.

Borrowings under the 2018 Wells Fargo Master

Loan Facility are guaranteed by us pursuant to an unconditional guaranty, and all of the real property financed by any of our operating dealership subsidiaries under the 2018 Wells Fargo Master Loan Facility is collateralized by first priority liens, subject to certain permitted exceptions.

On June 26, 2020, the Company borrowed an additional $ 69.4 million under the 2018 Wells Fargo Master Loan Facility.

Borrowings under the 2018 Wells Fargo Master Loan Facility are guaranteed by us pursuant to an unconditional guaranty, and all of the real property financed by any of our operating dealership subsidiaries under the 2018 Wells Fargo Master Loan Facility is collateralized by first priority liens, subject to certain permitted exceptions.

As of December 31, 2023 and 2022, we had $ 72.0 million and $ 76.9 million, respectively, outstanding borrowings under the 2018 Wells Fargo Master Loan Facility.

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Our right to make draws under the 2015 Wells Fargo Master Loan Facility terminated on February 1, 2016.

Term loans under the 2015 Wells Fargo Master Loan Facility bear interest based on LIBOR plus 1.85 %.

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("Bank of America"), as lender, providing for term loans in an aggregate amount not to exceed $ 75.0 million, subject to customary terms and conditions (the "2013 BofA Real Estate Facility").

Term loans under our 2013 BofA Real Estate Facility bear interest, at our option, based on LIBOR plus 1.50 % or the Base Rate (as described below) plus 0.50 %.

The Base Rate is the highest of (i) the Federal Funds rate plus 0.50 %, (ii) the Bank of America prime rate, and (iii) one month LIBOR plus 1.0 %.

Our right to make draws under the 2013 BofA Real Estate Facility terminated on December 26, 2013.

Borrowings under the 2013 BofA Real Estate Facility are guaranteed by each of our operating dealership subsidiaries whose real estate is financed under the 2013 BofA Real Estate Facility, and are collateralized by first priority liens, subject to certain permitted exceptions, on all of the real property financed thereunder.

As of December 31, 2022 and 2021, we had $ 24.9 million and $ 31.1 million, respectively, in term loans outstanding under the 2013 BofA Real Estate Facility.

In June 2023, the Company prepaid the aggregate principal amounts remaining under the 2013 BofA Real Estate Facility for an aggregate amount of approximately $ 23.9 million with cash on hand.

Summary of Mortgages

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Mortgage Agreement Aggregate Principal Outstanding Carrying Value of Collateralized Related Real Estate Maturity Dates Aggregate Principal Outstanding Carrying Value of Collateralized Related Real Estate Maturity Dates

Captive mortgages $ 38.3 $ 98.0 2023-2024 $ 70.9 $ 152.2 2022-2024

Other mortgage debt (a) — — N/A 0.8 42.8 2022

Captive mortgages (a) $ 31.9 $ 86.3 2024 $ 38.3 $ 98.0 2023-2024

2021 Real Estate Facility 614.4 852.4 2026 660.6 864.6 2026

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2018 Wells Fargo Master Loan Facility 72.0 103.6 2028 76.9 105.0 2028

2013 BofA Real Estate Facility 24.9 61.7 2023 31.1 71.8 2023

2013 BofA Real Estate Facility — — N/A 24.9 61.7 2023

2015 Wells Fargo Master Loan Facility 37.2 83.1 2025 42.3 84.2 2025

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liabilities associated with assets held for sale.

2019 Senior Credit Facility

On September 30, 2022, the Company and certain of its subsidiaries entered into the fifth amendment to the 2019 Senior Credit Facility.

The amendment, among other things, increased the cap that the real estate component of the Revolving Borrowing Base can contribute to the Revolving Borrowing Base from 25 % to 40 % of the Aggregate Revolving Commitments, increased the amounts that any conversion of the Aggregate Revolving Commitments to Aggregate New Vehicle Floorplan Commitments and/or Aggregate Used Vehicle Floorplan Commitments (each way) can contribute to Aggregate Commitments from 20 % to 40 %, removed the $ 50 million limit on the portion of the Floorplan Offset Amount that may be subtracted from certain amounts outstanding under the floorplan facility and made certain changes to the criteria for Eligible Borrowing Base Real Property and the deliverables in connection with those properties (such capitalized terms, in each case, as defined in the amendment).

The amendment did not update or amend the maturity date, interest rates or total loan commitments under the 2019 Senior Credit Facility.

On May 25, 2022, the Company and certain of its subsidiaries entered into the fourth amendment to the 2019 Senior Credit Facility.

The fourth amendment revised the benchmark reference rate from one-month LIBOR to SOFR.

Borrowings under the 2019 Senior Credit Facility bear interest, at our option, based on Daily Simple SOFR, as defined within the agreement, or the Base Rate, in each case, plus an Applicable Rate.

The Base Rate is the highest of (i) the Federal Funds Rate plus 0.50 %, (ii) the Bank of America prime rate, (iii) SOFR plus 0.10 %, plus 1.00 %, and (iv) 1.00 %.

Applicable Rate means with respect to the revolving credit facility under the 2019 Senior Credit Facility, a range from 1.00 % to 2.00 % for Daily Simple SOFR loans and 0.15 % to 1.00 % for Base Rate loans, in each case based on the Company's consolidated total lease adjusted leverage ratio.

Borrowings under the new vehicle floorplan facility under the 2019 Senior Credit Facility bear interest, at our option, based on SOFR plus 0.10 %, plus 1.10 % or the Base Rate plus 0.10 %.

Borrowings under the used vehicle floorplan facility under the 2019 Senior Credit Facility bear interest, at our option, based on SOFR plus 0.10 %, plus 1.40 % or the Base Rate plus 0.40 %.

Revolving Credit Facility

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Availability under the Revolving Credit Facility is limited by borrowing base calculations and is reduced on a dollar-for-dollar basis by the aggregate face amount of any outstanding letters of credit.

As of December 31, 2022, we had

$ 12.7 million in outstanding letters of credit, nothing drawn on our Revolving Credit Facility and $ 48.3 million of borrowing availability, with an additional $ 389.0 million available to convert from our new vehicle floorplan facility.

As of December 31, 2021, we had $ 10.8 million in outstanding letters of credit, $ 169.0 million drawn on our Revolving Credit Facility and $ 270.2 million of borrowing availability.

As of December 31, 2023, we had $ 14.0 million in outstanding letters of credit, nothing drawn on our Revolving Credit Facility and $ 332.1 million of borrowing availability As of December 31, 2022, we had $ 12.7 million in outstanding letters of credit, nothing drawn on our Revolving Credit Facility and $ 48.3 million of borrowing availability, with an additional $ 389.0 million available to convert from our new vehicle floorplan facility.

Proceeds from borrowings from time to time under the revolving credit facility may be used for among other things, acquisitions, working capital and capital expenditures.

Borrowings under the 2019 Senior Credit Facility bear interest, at our option, based on LIBOR or the Base Rate, in each case plus an Applicable Rate.

The Base Rate is the highest of (i) the Federal Funds Rate plus 0.50 %, (ii) the Bank of America prime rate, and (iii) one month LIBOR plus 1.00 %.

Applicable Rate means with respect to the Revolving Credit Facility, a range from 1.00 % to 2.00 % for LIBOR loans and 0.15 % to 1.00 % for Base Rate loans, in each case based on the Company's consolidated total lease adjusted leverage ratio.

Borrowings under the New Vehicle Floorplan Facility bear interest, at our option, based on LIBOR plus 1.10 % or the Base Rate plus 0.10 %.

Borrowings under the Used Vehicle Floorplan Facility bear interest, at our option, based on LIBOR plus 1.40 % or the Base Rate plus 0.40 %.

Stock Repurchase and Dividend Restrictions

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In the event that our Consolidated Total Leverage Ratio does (or would) exceed 3.0 to 1.0, the 2023 Senior Credit Facility and the Indentures would then also allow for restricted payments under mutually exclusive parameters, subject to certain exclusions.

Under the 2028 Senior Notes and 2030 Senior Notes, our most restrictive indentures, these parameters are:

• The Company may repurchase its own shares in an aggregate amount not to exceed $ 20.0 million in any fiscal year.

• The Company may otherwise make restricted payments only up the cumulative capacity above.

Our restricted payment capacity balance as of December 31, 2022 and 2021 was $ 1.11 billion and $ 958.6 million, respectively.

The Company may otherwise make restricted payments only up to the aforementioned cumulative capacity.

Our restricted payment capacity balance as of December 31, 2023 and 2022 was $ 1.18 billion and $ 1.11 billion, respectively.

Representations and Covenants

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Upon the occurrence of an event of default, the Company could be required to immediately repay all amounts outstanding under the applicable facility.

maximum consolidated total lease adjusted leverage ratio, in each case as set out in the 2021 BofA Real Estate Facility.

The representations and covenants contained in the 2021 BofA Real Estate Facility are customary for financing transactions of this nature, including, among others, a requirement to comply with a minimum consolidated fixed charge coverage ratio and maximum consolidated total lease adjusted leverage ratio, in each case as set out in the 2021 BofA Real Estate Facility.

In addition, certain other covenants could restrict our ability to incur additional debt, pay dividends or acquire or dispose of assets.

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In addition, certain other covenants could restrict our ability to incur additional debt, pay dividends or acquire or dispose of assets.

The 2015 Wells Fargo Master Loan Agreement also provides for events of default that are customary for financing transactions of this nature, including cross-defaults to other material indebtedness.

2015 Wells Fargo Master Loan Agreement also provides for events of default that are customary for financing transactions of this nature, including cross-defaults to other material indebtedness.

Upon the occurrence of an event of default, we could be required by the 2015 Wells Fargo Master Loan Facility to immediately repay all amounts outstanding thereunder.

The representations and covenants contained in the 2013 BofA Real Estate Credit Agreement are customary for financing transactions of this nature, including, among others, a requirement to comply with a minimum consolidated fixed charge coverage ratio and maximum consolidated total lease adjusted leverage ratio, in each case as set out in the 2013 BofA Real Estate Credit Agreement.

In addition, certain other covenants could restrict our ability to incur additional debt, pay dividends or acquire or dispose of assets.

The 2013 BofA Real Estate Credit Agreement also provides for events of default that are customary for financing transactions of this nature, including cross-defaults to other material indebtedness.

Upon the occurrence of an event of default, we could be required by the 2013 BofA Real Estate Credit Agreement to immediately repay all amounts outstanding thereunder.

FINANCIAL INSTRUMENTS AND FAIR VALUE

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Level 2-Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Assets and liabilities utilizing Level 2 inputs include interest rate swap instruments, exchange-traded debt securities that are not actively traded or do not have a high trading volume, mortgage notes payable, and certain real estate properties on a non-recurring basis.

Assets and liabilities utilizing Level 2 inputs include interest rate swap instruments, exchange-traded debt securities that are not actively traded or do not have a high trading volume, and certain real estate properties on a non-recurring basis.

Level 3-Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

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Financial instruments consist primarily of cash and cash equivalents, investments, contracts-in-transit, accounts receivable, cash surrender value of corporate-owned life insurance policies, accounts payable, floor plan notes payable, subordinated long-term debt, mortgage notes payable, and interest rate swap instruments.

The carrying values of our financial instruments, with the exception of subordinated long-term debt and mortgage notes payable, approximate fair value primarily due to (i) their short-term nature, (ii) recently completed market transactions, or (iii) existence of variable interest rates, which approximate market rates.

The carrying values of our financial instruments, with the exception of subordinated long-term debt, approximate fair value primarily due to (i) their short-term nature, (ii) recently completed market transactions, or (iii) existence of variable interest rates, which approximate market rates.

The fair value of our subordinated long-term debt is based on reported market prices in an inactive market that reflects Level 2 inputs.

We estimate the fair value of our mortgage notes payable using a present value technique based on current market interest rates for similar types of financial instruments that reflect Level 2 inputs.

A summary of the carrying values and fair values of our Notes and our mortgage notes payable is as follows:

A summary of the carrying values and fair values of our Notes is as follows:

As of December 31,

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5.00 % Senior Notes due 2032

Mortgage notes payable (a) 1,061.1 1,183.6

Total carrying value $ 2,227.7 $ 2,231.8

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5.00 % Senior Notes due 2032

Mortgage notes payable (a) 1,069.8 1,196.6

Total fair value $ 2,085.1 $ 1,891.1

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(a) Mortgage notes payable as of December 31, 2022, excludes $6.8 million classified as liabilities associated with assets held for sale.

Interest Rate Swap Agreements

We currently have seven interest rate swap agreements.

We currently have six interest rate swap agreements.

In January 2022, we entered into two new interest rate swap agreements with a combined notional principal amount of $ 550.0 million.

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June 2015 $ 100.0 $ 58.8 $ 53.1 February 2025

November 2013 $ 75.0 $ 41.5 $ 38.7 September 2023

The fair value of cash flow swaps is calculated as the present value of expected future cash flows, determined on the basis of forward interest rates and present value factors.

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Other than this input, all other inputs used in the valuation for these swaps are designated to be Level 2 fair values.

The fair value of our swaps for the years ended December 31, 2022 and 2021, reflect a net asset of $ 102.4 million and net liability of $ 0.9 million, respectively.

The fair value of our swaps for the years ended December 31, 2023 and 2022, reflect a net asset of $ 79.8 million and $ 102.4 million, respectively.

The following table provides information regarding the fair value of our interest rate swap agreements and the impact on the consolidated balance sheets:

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Other current assets $ 27.5 $ 29.6

Other current liabilities — ( 3.8 )

Other long-term assets 52.3 72.8

Other long-term liabilities — ( 2.6 )

Total fair value $ 79.8 $ 102.4

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Information about the effect of our interest rate swap agreements in the accompanying consolidated statements of income and consolidated statements of comprehensive income, is as follows (in millions):

For the Year Ended December 31, Results Recognized in Accumulated Other Comprehensive Loss

For the Year Ended December 31, Results Recognized in Accumulated Other Comprehensive Income (Loss)

(Effective Portion) Location of Results Reclassified from Accumulated Other Comprehensive Loss

Results Reclassified from Accumulated Other Comprehensive Loss

Results Reclassified from Accumulated Other Comprehensive Income (Loss)

2023 $ 12.1 Other interest expense, net $ ( 34.7 )

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2021 $ 11.0 Other interest expense, net $ 4.7

On the basis of yield curve conditions as of December 31, 2022 and including assumptions about future changes in fair value, we expect the amount to be reclassified out of accumulated other comprehensive loss into earnings within the next 12 months will be losses of $ 29.6 million.

On the basis of yield curve conditions as of December 31, 2023 and including assumptions about future changes in fair value, we expect the amount to be reclassified out of accumulated other comprehensive loss into earnings within the next 12 months will be gains of $ 27.5 million.

The table below presents the Company’s investment securities that are measured at fair value on a recurring basis aggregated by the level in the fair value hierarchy within which those measurements fall:

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Total debt securities 15.5 317.4 — 332.9

Common stock 48.7 — — 48.7

Total $ 15.5 $ 317.4 $ — $ 332.9

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Total $ 60.9 $ 179.5 $ — $ 240.4

Investments measured at net asset value (a) 4.4

Total Investments, at fair value $ 240.4

(a) In accordance with ASC 820-10, certain investments that are measured at fair value using the net asset value (NAV) per share (or its equivalent) as a practical expedient have not been classified in the fair value hierarchy.

The NAV is based on the fair value of the underlying assets owned by the fund, minus its liabilities, divided by the number of units outstanding and is determined by the fund investment manager or custodian.

We review the fair value hierarchy classifications each reporting period.

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Available-for-sale debt securities are recorded at fair value and any unrealized gains or losses are included in accumulated other comprehensive income and reclassified to finance and insurance, net revenue in the period or periods during which the debt securities are sold and the gains or losses are realized.

Information about the effect of our available-for-sale debt securities

in the accompanying consolidated statements of income and consolidated statements of comprehensive income, is as follows (in millions):

For the Year Ended December 31, Results Recognized in Accumulated Other Comprehensive Loss

Information about the effect of our available-for-sale debt securities in the accompanying consolidated statements of income and consolidated statements of comprehensive income, is as follows (in millions):

For the Year Ended December 31, Results Recognized in Accumulated Other Comprehensive Income (Loss)

(Effective Portion) Location of Results Reclassified from Accumulated Other Comprehensive Loss

Results Reclassified from Accumulated Other Comprehensive Loss

Results Reclassified from Accumulated Other Comprehensive Income (Loss)

2023 $ 4.1 Revenue-Finance and Insurance, net $ ( 1.1 )

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Investments, net 20.0 24.0

Deferred sales commissions 18.3 —

Other, net 1.6 3.2

Total deferred income tax liabilities $ 267.6 $ 227.8

Net deferred income tax (liabilities)/ assets $ ( 100.7 ) $ 69.1

Net deferred income tax liabilities $ ( 136.4 ) $ ( 100.7 )

There were no valuation allowances recorded against the deferred tax assets as of December 31, 2023 or 2022.

As of December 31, 2022 and 2021, we had income taxes payable of $ 21.5 million and $ 47.0 million, respectively included in accounts payable and accrued liabilities.

As of December 31, 2023, we had an income tax receivable of $ 11.5 million, included in Other current assets.

As of December 31, 2022, we had income tax payable of $ 21.5 million, included in accounts payable and accrued liabilities.

As of December 31, 2023, we had a state net operating loss ("NOL") carryforward of $ 63.8 million and a deferred tax asset of $ 2.2 million to reflect the benefit.

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Unclaimed property 5.3 5.1

Interest rate swap — 2.6

Other 0.4 0.5

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Operating cash flows from operating leases 36.2 38.1

Financing cash flows from finance lease — 0.1

Right-of-use assets obtained in exchange for new finance lease liabilities — 8.4

Right-of-use assets obtained in exchange for new operating lease liabilities 35.0 6.2

Changes to finance lease right-of-use asset resulting from lease reassessment event — ( 14.6 )

During the years ended December 31, 2023 and 2022, we obtained $ 35.0 million and $ 6.2 million, respectively, of right-of-use assets in exchange for new operating lease liabilities.

The activity during the year ended December 31, 2023 was primarily as a result of business combinations.

During the twelve months ended December 31, 2021, we reassessed and remeasured an existing real estate lease, which was previously accounted for as a finance lease due to the presence of a purchase price option which we concluded we are no longer reasonably certain to exercise.

The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the finance lease liabilities and operating lease liabilities as of December 31, 2023, including leases related to liabilities associated with assets held for sale .

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Present value of future minimum lease payments $ 8.4 $ 250.5

current obligations under leases — ( 23.6 )

Long-term lease obligation $ 8.4 $ 218.4

current obligations under leases (a) — ( 26.4 )

Long-term lease obligation (b) $ 8.4 $ 224.1

__________________________

(a) Includes $ 0.2 million of operating lease liabilities classified as liabilities associated with assets held for sale.

(b) Includes $ 1.9 million of operating lease liabilities classified as liabilities associated with assets held for sale.

Certain of our lease agreements include financial covenants and incorporate by reference the financial covenants set forth in the 2023 Senior Credit Facility.

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Our Chief Operating Decision Maker is our Chief Executive Officer who manages the business, regularly reviews financial information and allocates resources at the geographic market level for our dealerships and at the TCA segment level for our F&I product provider's operations.

The geographic dealership group operating segments have been aggregated into one reportable segment as their operations (i) have similar economic characteristics (our markets all have similar long-term average gross margins), (ii) offer similar products and services (all of our markets offer new and used vehicles, parts and service, and finance and insurance products), (iii) have similar customers, (iv) have similar distribution and marketing practices (all of our markets distribute products and services through dealership facilities that market to customers in similar ways), and (v) operate under similar regulatory environments.

Goodwill acquired in the LHM Acquisition of $ 668.7 million and $ 536.6 million was allocated to the Dealership and TCA segments, respectively.

The allocation was based on the net assets acquired in the Dealership and TCA segments.

have similar distribution and marketing practices (all of our markets distribute products and services through dealership facilities that market to customers in similar ways), and (v) operate under similar regulatory environments.

TCA's vehicle protection products are sold through affiliated dealerships and the revenue from the related commissions is included in finance and insurance, net revenue in the Dealerships segment before consolidation.

The corresponding claims expense incurred and the amortization of deferred acquisition costs is recorded as a cost of sales in the TCA segment.

The Dealerships segment also provides vehicle repair and maintenance services to TCA customers in connection with claims related to TCA's vehicle protection products.

Upon consolidation, the associated service revenue and costs recorded by the Dealerships segment are eliminated against claims expense recorded by the TCA segment.

The preliminary amount of goodwill acquired in the Koons acquisition of $ 231.7 million was allocated to the Dealerships segment.

The majority of TCA’s revenue arises from sales through our affiliated dealerships.

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COMMITMENTS AND CONTINGENCIES

On August 3, 2022, we received a Civil Investigative Demand (“CID”) from the FTC requesting information and documents concerning the Company’s corporate structure and operation of six of its dealerships.

We responded to the CID by producing information and documents for the period August 1, 2019 to April 24, 2023.

On February 8, 2024, the FTC staff counsel sent to us a proposed consent order and draft complaint, alleging that the Company and three of our dealerships had violated Section 5 of the Federal Trade Commission Act (“FTC Act”) and certain provisions of the Equal Credit Opportunity Act (“ECOA”) in connection with the sale of add-on products (e.g., vehicle service contracts, maintenance plans, etc.), and advising that it would recommend the filing of an enforcement action if the Company did not settle the FTC’s claims.

The Company disputes the FTC’s allegations that it violated the FTC Act and the ECOA, and is currently involved in discussions with the FTC staff regarding the matter.

There can be no assurance that negotiations between us and the FTC for a favorable settlement will be successful, or that we will succeed in any litigation as a result of the investigation.

At this time, we are unable to reasonably predict the possible outcome of this matter, or provide a reasonably possible range of loss, if any, as a result of the investigation.

If the FTC files a suit against us based on these allegations, whether meritorious or not, it may adversely affect our ability to attract customers, result in the loss of existing customers, harm our reputation and cause us to incur defense costs and other expenses.

Our dealerships are party to dealer and framework agreements with applicable vehicle manufacturers.

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Claims may also arise through litigation, government proceedings, and other dispute resolution processes.

Such claims, including class actions, could relate to, but may not be limited to, the practice of charging administrative fees and other fees and commissions, employment-related matters, truth-in-lending and other dealer assisted financing obligations, contractual disputes, actions brought by governmental authorities, and other matters.

governmental authorities, and other matters.

We evaluate pending and threatened claims and establish loss contingency reserves based upon outcomes we currently believe to be probable and reasonably estimable.

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During the year ended December 31, 2023, the Compensation and Human Resources Committee of the Board of Directors approved the grant of up to 70,758 performance share units, which represents 150 % of the target award.

Performance share units provide an opportunity for the employee-recipient to receive a number of shares of our common stock based on our performance during a specified year period following the grant as measured against objective performance goals as determined by the Compensation and Human Resources Committee of our Board of Directors.

Performance share

units provide an opportunity for the employee-recipient to receive a number of shares of our common stock based on our performance during a specified year period following the grant as measured against objective performance goals as determined by the Compensation and Human Resources Committee of our Board of Directors.

The actual number of units earned may range from 0 % to 150 % of the target number of units depending upon achievement of the performance goals.

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During the year ended December 31, 2023, the Compensation and Human Resources Committee of the Board of Directors approved the grant of 79,141 shares of restricted share units.

Restricted share units vest in three equal annual installments commencing on the first anniversary of the grant date.

Restricted share units generally vest in three equal annual installments commencing on the first anniversary of the grant date.

Compensation cost for restricted share units is based on the closing price of our common stock on the date of grant and is recognized on a straight-line basis over the three -year vesting period.

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Employer contributions vest on a graded basis over 4 years after the date of hire.

The Company's match was suspended during part of 2020 as a result of the economic uncertainty associated with the COVID-19 pandemic.

The Company's expense related to employer matching contributions totaled $ 16.0 million, $ 18.0 million, and $ 5.3 million for the years ended December 31, 2023, 2022, and 2021, respectively.

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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 8. Financial Statements and Supplementary Data