What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2025-02-26 compared with 2024-02-29 · 113 added, 62 removed, 315 unchanged (36% of the section changed)

23 unchanged sentences

Accordingly, we believe that our future growth depends in part on our ability to manage expansion, control costs in our operations and acquire and effectively integrate acquired dealerships into our organization.

For example, with the recent consummation of the Koons acquisition, we will experience significantly more sales, and have more assets and employees than we did prior to the transaction.

The integration processes require us to expend significant capital and significantly expand the scope of our operations and financial systems.

Integration also requires support or other actions by third-parties such as vendors, suppliers, and licensing agencies and the untimely or inadequate responses from such third-parties can delay or otherwise negatively impact the integration process.

For example, with the consummation of the Koons acquisition in 2023 and the pending Herb Chambers acquisition, we have experienced, and expect to continue to experience, significantly more sales, and have more assets and employees than we did previously.

However, there can be no assurance that there will be sufficient revenue from such acquisitions to offset increased expenses and costs arising out of such acquisitions.

When seeking to acquire other dealerships, we often compete with several other national, regional and local dealership groups, and other strategic and financial buyers, some of which may have greater financial resources than us.

Competition for attractive acquisition targets may result in fewer acquisition opportunities for us and we may have to forgo acquisition opportunities to the extent we cannot negotiate such acquisitions on acceptable terms.

The integration processes require us to expend significant capital and significantly expand the scope of our operations and financial systems.

Integration also requires

support or other actions by third parties such as vendors, suppliers, and licensing agencies, and the untimely or inadequate responses from such third parties can delay or otherwise negatively impact integration processes.

We also face additional risks commonly encountered with growth through acquisitions.

1 unchanged sentence

(i) failing to obtain manufacturers’ consents to acquisitions of additional franchises;

(ii) incurring significant transaction-related costs for both completed and failed acquisitions;

(iii) incurring significantly higher capital expenditures and operating expenses;

(iv) failing to integrate the operations and personnel of the acquired dealerships and impairing relationships with employees;

(v) incorrectly valuing entities to be acquired or incurring undisclosed liabilities at acquired dealerships;

(vi) disrupting our ongoing business and diverting our management resources to newly acquired dealerships;

(vii) failing to achieve expected performance levels;

(viii) impairing relationships with manufacturers and customers as a result of changes in management;

(ix) failing to realize expected benefits and synergies from the transaction;

and (ix) failing to implement or improve controls, policies and information systems and related security measures in the acquired businesses.

(ii) manufacturers' requirements to divest certain franchises when acquiring additional franchises;

(iii) incurring significant transaction-related costs for completed, failed and pending acquisitions;

(iv) incurring significantly higher capital expenditures and operating expenses;

(v) the inability to obtain the necessary financing in order to complete acquisitions;

(vi) failing to successfully integrate the operations and personnel of the acquired dealerships and impairing relationships with employees;

(vii) impairing relationships with employees of the acquired dealerships;

(viii) incorrectly valuing entities to be acquired or incurring undisclosed liabilities at acquired dealerships;

(ix) disrupting our ongoing business and diverting our management resources to newly acquired dealerships;

(x) failing to achieve expected performance levels and financial results on a same store basis after integration;

(xi) impairing relationships with manufacturers and customers as a result of changes in management;

(xii) delays or difficulties related to our ability to obtain future necessary regulatory approvals for TCA in jurisdictions applicable to acquired dealerships;

(xiii) difficulties in entering geographic markets in which we have no or limited direct prior experience;

(xiv) failing to realize expected benefits and synergies from the transaction;

and (xv) failing to implement or improve controls, policies and information systems and related security measures in the acquired businesses.

We may not adequately anticipate all the demands that our growth will impose on our personnel, procedures and structures, including our financial and reporting control systems, information technology systems, data processing systems, and management structure.

10 unchanged sentences

Our inability to execute a substantial portion of our business strategy, could adversely affect our business, results of operations, financial condition and cash flows.

We seek to execute on our strategic plan using a variety of growth efforts including, driving same-store revenue growth and acquiring additional revenue through strategic acquisitions.

We seek to execute on our strategic plan using a variety of growth efforts, which includes driving same-store revenue growth and acquiring additional revenue through strategic acquisitions.

Many of the factors that impact our ability to execute our strategic vision, such as the advancement of certain technologies, general economic conditions and legal and regulatory obstacles are beyond our control.

24 unchanged sentences

If we are unable to retain our key personnel, we may be unable to successfully execute our business plans, which may have a material adverse effect on our business.

The Herb Chambers Dealerships acquisition may not occur at all or may not occur in the expected time frame, which may negatively affect the trading price of our common stock and our future business and financial results.

No assurance can be provided that the Herb Chambers Dealerships acquisition will be completed in the manner and on the time frame currently anticipated, or at all.

Completion of the Herb Chambers Dealerships acquisition is subject to the satisfaction or waiver of a number of conditions beyond our control that may prevent, delay or otherwise materially adversely affect its completion.

If the Herb Chambers Dealerships acquisition is not completed, if there are significant delays in completing the Herb Chambers Dealerships acquisition or if the Herb Chambers Dealerships acquisition involves an unexpected amount of remedies required by regulatory authorities, it could negatively affect the trading price of our common stock and our future business and financial results.

The following are some but not all of the factors that could cause the Herb Chambers Dealerships acquisition to be delayed or not successfully be completed:

(i) the occurrence of any event, change or other circumstances that could give rise to the termination of the Transaction Agreement;

(ii) the risk that the necessary manufacturer approvals may not be obtained;

(iii) the risk that the necessary regulatory approvals may not be obtained or may be obtained subject to conditions that are not anticipated;

(iv) the inability to obtain the necessary financing in order to complete the acquisition;

(v) the risk that the proposed acquisition will not be consummated in a timely manner;

and (vi) the risk that any of the closing conditions to the proposed acquisition may not be satisfied or may not be satisfied in a timely manner.

We may not realize the strategic benefits and cost synergies that are anticipated from the planned Herb Chambers Dealerships acquisition.

Our future growth depends in part on our ability to acquire and effectively integrate acquired dealerships into our organization, such as the pending Herb Chambers Dealerships acquisition.

The benefits that are expected to result from the Herb Chambers Dealerships acquisition will depend, in part, on our ability to consummate the Herb Chambers Dealerships acquisition within the anticipated time period, or at all, and to integrate and realize the anticipated cost synergies from the Herb Chambers Dealerships acquisition.

There is a significant degree of difficulty and management distraction inherent in the process of integrating an acquisition.

Some members of our management may be required to devote considerable time to this integration process, which will decrease the time they will have to manage the Company, service existing customers, attract new customers

and develop new businesses or strategies.

If management is not able to effectively manage the integration process, or if any significant business activities are interrupted as a result of the integration process, our business, financial condition and results of operations could suffer.

We also cannot guarantee that the benefits and cost synergies that we currently expect to realize as a result of the Herb Chambers Dealerships acquisition will be achieved within our anticipated time frames or at all.

Additionally, we may incur substantial expenses in connection with the integration of the Herb Chambers Dealerships, which may exceed expectations and offset certain anticipated benefits.

The following are some but not all of the factors that could cause actual results or events to differ materially from those anticipated in connection with the Herb Chambers Dealerships acquisition:

(i) risks related to disruption of management time from ongoing business operations due to the proposed acquisition;

(ii) the failure to realize the benefits expected from the proposed acquisition;

(iii) the failure to promptly and effectively integrate the operations, including information technology systems and security, and personnel, including applicable pay plans;

(iv) the effect of the announcement of the proposed Transaction on the ability of the Company to retain and hire key personnel, and maintain relationships with suppliers;

and (v) our ability to execute our business strategy and accelerate same store growth after integration.

Risks Related to Macroeconomic and Market Conditions

5 unchanged sentences

levels of discretionary personal income;

and interest rates.

interest rates;

and changes in U.S.

trade policy, including the imposition of tariffs and resulting consequences.

Recently, inflation has increased throughout the U.S.

9 unchanged sentences

Retail vehicle sales are cyclical and historically have experienced periodic downturns characterized by oversupply and weak demand, which could result in a need for us to lower the prices at which we sell vehicles, which would reduce our revenue per vehicle sold and our margins.

Additionally, a shift in consumer’s vehicle preferences driven by pricing, fuel costs or other factors may have a material adverse effect on our revenues, margins and results of operations.

Additionally, a shift in consumer vehicle preferences driven by pricing, fuel costs or other factors may have a material adverse effect on our revenues, margins and results of operations.

Changes in general economic conditions may make it difficult for us to execute our business strategy.

6 unchanged sentences

Our ability to sell new vehicles is dependent on manufacturers’ ability to design and produce, and willingness to allocate and deliver to our dealerships, a desirable mix of popular new vehicles that consumers demand.

For example, improvements in electric, battery-powered and hybrid gas/electric vehicles have increased consumer demand for such vehicles.

example, improvements in electric, battery-powered and hybrid gas/electric vehicles have increased consumer demand for such vehicles.

If consumer demand increases for certain types of vehicles, including electric, battery-powered and hybrid gas/electric, and our manufacturers are not able to adapt and produce such vehicles that meet consumer demands, our new and used vehicle sales volumes, parts and service revenue and our results of operations may be adversely affected.

7 unchanged sentences

( Toyota and Lexus )

Stellantis N.V.

( Chrysler, Dodge, Jeep, Ram and Fiat )

Ford Motor Company ( Ford and Lincoln )

American Honda Motor Co., Inc.

( Honda and Acura )

Ford Motor Company ( Ford and Lincoln )

Stellantis N.V.

( Chrysler, Dodge, Jeep, Ram and Fiat )

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

9 unchanged sentences

(v) changes in their respective management;

(vi) disruptions in the production and delivery of vehicles and parts due to natural disasters, pandemics or other reasons;

and (vii) issues with respect to labor relations.

(vi) disruptions in the production and delivery of vehicles and parts due to natural disasters, pandemics, wars, conflicts or other reasons;

(vii) issues with respect to labor relations;

and (viii) consolidation among manufacturers.

Our business is highly dependent on consumer demand and brand preferences for our manufacturers’ products.

2 unchanged sentences

Vehicle manufacturers that produce vehicles outside of the U.S.

are subject to additional risks including changes in quotas, tariffs or

duties, fluctuations in foreign currency exchange rates, regulations governing imports and the costs related thereto, and foreign governmental regulations.

are subject to additional risks including changes in quotas, tariffs or duties, fluctuations in foreign currency exchange rates, regulations governing imports and the costs related thereto, and foreign governmental regulations.

Adverse conditions that materially affect a vehicle manufacturer and its ability to profitably design, market, produce or distribute desirable new vehicles could in turn materially adversely affect our ability to (i) sell vehicles produced by that manufacturer, (ii) obtain or finance our new vehicle inventories, (iii) access or benefit from manufacturer financial assistance programs, (iv) collect in full or on a timely basis any amounts due therefrom, and/or (v) obtain other goods and services provided by the impacted manufacturer.

1 unchanged sentence

Our business, results of operations, financial condition, and cash flows could be materially adversely affected as a result of any event that has an adverse effect on any vehicle manufacturer.

In addition, if a vehicle manufacturer’s financial condition worsens and it seeks protection from creditors in bankruptcy or similar proceedings, or otherwise under the laws of its jurisdiction of organization, (i) the manufacturer could seek to terminate or reject all or certain of our franchises, (ii) if the manufacturer is successful in terminating all or certain of our franchises, we may not receive adequate compensation for those franchises, (iii) our cost to obtain financing for our new vehicle inventory may increase or no longer be available from such manufacturer’s captive finance subsidiary, (iv) consumer demand for such manufacturer’s products could be materially adversely affected, especially if costs related to improving such manufacturer’s financial condition are factored into the price of its products, (v) there may be a significant disruption in the availability of consumer credit to purchase or lease that manufacturer’s vehicles or negative changes in the terms of such financing, which may negatively impact our sales, or (vi) there may be a reduction in the value of receivables and inventory associated with that manufacturer, among other things.

may increase or no longer be available from such manufacturer’s captive finance subsidiary, (iv) consumer demand for such manufacturer’s products could be materially adversely affected, especially if costs related to improving such manufacturer’s financial condition are factored into the price of its products, (v) there may be a significant disruption in the availability of consumer credit to purchase or lease that manufacturer’s vehicles or negative changes in the terms of such financing, which may negatively impact our sales, or (vi) there may be a reduction in the value of receivables and inventory associated with that manufacturer, among other things.

The occurrence of any one or more of these events could have a material adverse effect on our business, results of operations, financial condition, and cash flows.

Furthermore, the automotive manufacturing supply chain spans the globe.

As such, supply chain disruptions resulting from natural disasters, adverse weather, pandemics, labor stoppages and other events may affect the flow of vehicle and parts inventories to us or our manufacturing partners.

As such, supply chain disruptions resulting from natural disasters, adverse weather, pandemics, tariffs, labor stoppages, wars, conflicts and other events may affect the flow of vehicle and parts inventories to us or our manufacturing partners.

If we experience disruptions in the supply of vehicle and parts inventories, such disruptions could have a material adverse effect on our business, results of operations, financial condition, and cash flows.

19 unchanged sentences

However, many states have recently passed or introduced legislation to permit direct to consumer sales of electric vehicles by certain companies, such as Tesla and Rivian, without the requirements of establishing a dealer network.

traditional dealers, which could have a material adverse effect on our sales in those states, which in turn, could have a material adverse effect on our business, financial condition, results of operations and cash flows.

If the state franchise laws are repealed, weakened or amended to permit vehicle manufacturers to sell vehicles (whether electric or not) directly to consumers, they may be able to have a competitive advantage over the traditional dealers, which could have a material adverse effect on our sales in those states, which in turn, could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We are dependent upon our relationships with the manufacturers of vehicles that we sell and are subject to restrictions imposed by, and significant influence from, these vehicle manufacturers.

21 unchanged sentences

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

Restrictions on any unapproved changes of ownership or management may adversely impact our value, as they may prevent or deter prospective acquirers from gaining

control of us.

Restrictions on any unapproved changes of ownership or management may adversely impact our value, as they may prevent or deter prospective acquirers from gaining control of us.

In addition, actions taken by a manufacturer to exploit its bargaining position in negotiating the terms of renewals of franchise agreements or otherwise could also have a material adverse effect on our revenues and profitability.

15 unchanged sentences

While most major vehicle manufacturers have announced plans to electrify some or all of their new vehicle offerings, the eventual timing of widespread availability of electric, battery powered and hybrid gas/electric vehicles and driverless vehicles is uncertain due to regulatory requirements, additional technological requirements, and uncertain consumer acceptance of these vehicles.

We expect to continue to sell electric, battery powered and hybrid gas/electric vehicles through our dealerships, however, the effect of these vehicles on the automotive retail business is uncertain and could include changes in the level of the new and used vehicle sales, the price of new and used vehicles and the levels of service required for such vehicles and the profitability of our parts and service business, our finance and insurance business, including our TCA business, and the role of franchised dealers, any of which could materially adversely affect our business, financial condition, results of operations and cash flows.

We expect to continue to sell electric, battery powered and hybrid gas/electric vehicles through our dealerships;

however, the effect of these vehicles on the automotive retail business is uncertain and could include changes in the level of the new and used vehicle sales, the price of new and used vehicles and the levels of service required for such vehicles and the profitability of our parts and service business, our finance and insurance business, including our TCA business, and the role of franchised dealers, any of which could materially adversely affect our business, financial condition, results of operations and cash flows.

Risks Related to Our Indebtedness and Financial Matters

3 unchanged sentences

We will continue to have substantial debt service obligations, consisting of required cash payments of principal and interest, for the foreseeable future.

We anticipate the completion of the Herb Chambers Dealerships acquisition will cause us to (i) use a substantial portion of our cash resources;

(ii) incur additional debt, which will increase our interest expense, leverage and debt service requirements;

(iii) assume certain liabilities;

(iv) record goodwill and intangible assets that are subject to impairment testing on a regular basis and potential periodic impairment charges;

(v) incur tax expenses in connection with the acquisition and related to the effect of the acquisition on our legal structure;

(vi) incur financing, restructuring and other related expenses;

and (vii) be subject to certain litigation of the acquired company.

We also expect that the completion of the Herb Chambers Dealerships acquisition will impact our debt service obligations.

Our debt service obligations could have important consequences to us for the foreseeable future, including the following:

4 unchanged sentences

In addition to our ability to incur additional debt in the future, there are operating and financial restrictions and covenants, such as leverage covenants, in certain of our debt and mortgage agreements, including the agreement governing our 2023 Senior Credit Facility and our mortgage agreements and related mortgage guarantees, as well as certain other agreements to which we are a party that may adversely affect our ability to finance our future operations or capital needs or to pursue certain business activities.

These limit, among other things, our ability to incur certain additional debt, create certain liens or other

encumbrances and make certain payments (including dividends and repurchases of our common stock and for investments).

These limit, among other things, our ability to incur certain additional debt, create certain liens or other encumbrances and make certain payments (including dividends and repurchases of our common stock and for investments).

Certain of these agreements also require us to maintain compliance with certain financial ratios, including, but not limited to, our adjusted net leverage ratio.

1 unchanged sentence

(ii) require us to repay those borrowings;

(iii) entitle the creditors under such agreement to foreclose on the property securing the relevant indebtedness;

(iii) entitle the creditors under such agreement to foreclose on the property securing the relevant

indebtedness;

or (iv) prevent us from making debt service payments on certain of our other indebtedness, any of which would have a material adverse effect on our business, financial condition, results of operations and cash flows.

20 unchanged sentences

If market conditions cause subprime lenders to tighten credit standards, or if interest rates increase, the ability to obtain financing from subprime lenders for these consumers to purchase vehicles could become limited, resulting in a decline in our vehicle sales, which in turn, could have a material adverse effect on our financial condition and results of operations.

We may identify a material weakness in our internal control over financial reporting in the future or otherwise fail to maintain an effective system of internal controls, which may result in material misstatements or otherwise adversely affect the accuracy, reliability or timeliness of our financial statements.

We have identified a material weakness in our internal control over financial reporting and may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, which may result in material misstatements or otherwise adversely affect the accuracy, reliability or timeliness of our financial statements.

As described under Item 9A.

"Controls and Procedures" below, we previously concluded that a material weakness in our internal control over financial reporting existed as of December 31, 2022 and, accordingly, internal control over financial reporting and our disclosure controls and procedures were not effective as of such date.

"Controls and Procedures" below, we have concluded that a material weakness in our internal control over financial reporting existed as of December 31, 2024 and, accordingly, internal control over financial reporting and our disclosure controls and procedures were not effective as of such date.

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

Management identified the material weakness as a result of deficiencies in information technology general controls ("ITGCs") at LHM and TCA, businesses that we acquired in December 2021.

During 2023, we completed the remediation measures related to the material weakness and we have concluded that our internal control over financial reporting is effective as of December 31, 2023.

Completion of remediation does not provide assurance that our remediation or other controls will continue to operate properly.

Failure to maintain effective internal control over financial reporting may adversely affect the accuracy and reliability of our financial statements and have other consequences that may materially and adversely affect our business.

As a result of management's evaluation, management identified the material weakness as a result of deficiencies in information

technology general controls ("ITGCs") at a third-party software vendor who supports the Dealer Management System ("DMS") utilized by the Koons dealership group that we acquired in December 2023.

Management has developed its remediation plan and plans to implement it during 2025.

Until the remediation plan is fully implemented, tested and deemed effective, we cannot provide assurance that our actions will adequately remediate the material weakness or that additional material weaknesses in our internal controls will not be identified in the future.

Effective internal control over financial reporting is necessary for us to provide reliable and timely financial reports and, together with adequate disclosure controls and procedures, are designed to reasonably detect and prevent fraud.

The occurrence of, or failure to remediate, this material weakness and any future material weaknesses in our internal control over financial reporting may adversely affect the accuracy, reliability and timeliness of our financial statements and have other consequences that could materially and adversely affect our business.

Risks Related to Legal and Regulatory Matters

15 unchanged sentences

Significant increases in fuel economy requirements or new federal or state restrictions on emissions of carbon dioxide that may be imposed on vehicles and automobile fuels could adversely affect demand for vehicles, annual miles driven or the products we sell or lead to changes in automotive technology.

A failure of any of our information systems or those of our third-party service providers, or a data security breach with regard to personally identifiable information ("PII") about our customers or employees, could have a material adverse effect on our business, results of operations, financial condition and cash flows.

A failure of any of our information systems or those of our third-party service providers, the inability to successfully transition from one key information system platform to a different platform, or a data security breach with regard to personally identifiable information ("PII") about our customers or employees, could have a material adverse effect on our business, results of operations, financial condition and cash flows.

We depend on the efficient operation of our information systems and those of our third-party service providers.

We rely on information systems at our dealerships in all aspects of our sales and service efforts, as well in the preparation of our consolidated financial and operating data.

All of our dealerships currently operate on two dealer management systems ("DMS").

We rely on information systems at our dealerships in all aspects of our sales and service efforts, as well as in the preparation of our consolidated financial and operating data.

All of our dealerships currently operate on three dealer management systems ("DMS").

We have piloted a new DMS, and the inability to successfully transition from our existing DMS to a new DMS could

have a material adverse effect on the management of our day-to-day business activities.

Additionally, in the ordinary course of business, we and our partners receive significant PII about our customers in order to complete the sale or service of a vehicle and related products.

5 unchanged sentences

Changes to our business, processes, systems, or technology, if not implemented properly, can increase our vulnerability to cyber incidents.

Our business could be significantly disrupted if (i) the DMS fails to integrate with other third-party information systems, customer relations management tools or other software, or to the extent that any of these systems become unavailable to us or fail to perform as designed for an extended period of time or (ii) our relationship with our DMS providers or any other third-party provider deteriorates.

Our business could be significantly disrupted if (i) the DMS fails to integrate with other third-party information systems, customer relations management tools or other software, or to the extent that any of these systems become unavailable to us or fail to perform as designed for an extended period of time for any reason or (ii) our relationship with our DMS providers or any other third-party provider deteriorates.

Additionally, any disruption to access and connectivity of our information systems due to natural disasters, power loss or other reasons could disrupt our business operations, impact sales and results of operations, expose us to customer or third-party claims, or result in adverse publicity.

In addition, we believe the automotive dealership industry is a particular target of identity thieves, as there are numerous opportunities for a data security breach, including cybersecurity breaches, burglary, lost or misplaced data, malware, ransomware, computer viruses or other malicious software code, corruption of data, exfiltration of data to malicious sites, the dark web or other locations or threat actors, or misappropriation of data by employees, vendors or unaffiliated third parties.

Because of the increasing number and sophistication of cyber-attacks, and despite the security measures we have in place and any additional measures we may implement or adopt in the future, our facilities and systems, and those of our third-party service providers, could be vulnerable to security breaches, computer viruses, lost or misplaced data, programming errors, scams, burglary, human errors, acts of vandalism and/or other events.

While we have experienced cyber incidents in the past, and may experience additional incidents in the future, we are not aware of any incident having a material adverse effect on our business, results of operations or financial condition to date.

However, there can be no assurance that we will not experience future cyber incidents that may be material.

Although we believe we have systems and processes in place to protect against risks associated with cyber incidents in the future, depending on the nature of an incident, these protections may not be fully sufficient.

In addition, because techniques used in cybersecurity attacks change frequently and may not be recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures.

In addition, we believe the automotive dealership industry is a particular target of identity thieves and other threat actors, as there are numerous opportunities for cybersecurity incidents, including cybersecurity breaches, burglary, lost or misplaced data, malware, ransomware, computer viruses or other malicious software code, corruption of data, exfiltration of data to malicious sites, the dark web or other locations or threat actors, or misappropriation of data by employees, vendors or unaffiliated third parties.

Because of the increasing number and sophistication of some cybersecurity incidents and cyber-attacks, and despite the security measures we have in place and any additional measures we may implement or adopt in the future, our facilities and systems, and those of our third-party service providers and business partners, could be vulnerable to cybersecurity incidents, security breaches, computer viruses, lost or misplaced data, programming errors, scams, burglary, human errors, acts of vandalism and/or other events.

While we and the business partners and service providers on which we rely have experienced cybersecurity incidents in the past, and may experience additional incidents in the future, we are not aware of any incident having a material adverse effect on our business, results of operations or financial condition to date.

However, there can be no assurance that we or the business partners and service providers on which we rely will not experience future cybersecurity incidents that may be material.

Although we believe we have systems and processes in place to protect against risks associated with cybersecurity incidents in the future, depending on the nature of an incident, these protections may not be fully sufficient.

In addition, because techniques used in cybersecurity attacks and incidents change frequently and may not be recognized until launched against a target, we or our business partners and service providers may be unable to anticipate these techniques or to implement adequate preventative measures.

An incident may not be detected until well after it occurs and the severity and potential impact may not be fully known for a substantial period of time after it has been discovered.

3 unchanged sentences

The automotive retail industry, including our facilities and operations, is subject to a wide range of federal, state, and local laws and regulations, such as those relating to motor vehicle sales, retail installment sales, leasing, finance and insurance, marketing, licensing, consumer protection, consumer privacy, escheatment, anti-money laundering, environmental, vehicle emissions and fuel economy, and health and safety.

In addition, with respect to employment practices, we are subject to various

laws and regulations, including complex federal, state, and local wage and hour and anti-discrimination laws.

In addition, with respect to employment practices, we are subject to various laws and regulations, including complex federal, state, and local wage and hour and anti-discrimination laws.

The violation of the laws or regulations to which we are subject could result in administrative, civil, or criminal sanctions against us, which may include a cease and desist order against the subject operations or even revocation or suspension of our license to operate the subject business, as well as significant fines and penalties.

Violation of certain laws and regulations to which we are subject may also subject us to consumer class action or other lawsuits or governmental investigations and adverse publicity.

We currently devote significant resources to comply with applicable federal, state, and local regulation of health, safety, environmental, zoning and land use regulations, and we may need to spend additional time, effort, and money to keep our operations and existing or acquired facilities in compliance therewith.

currently devote significant resources to comply with applicable federal, state, and local regulation of health, safety, environmental, zoning and land use regulations, and we may need to spend additional time, effort, and money to keep our operations and existing or acquired facilities in compliance therewith.

In addition, there is a risk that our employees could engage in misconduct that violates the laws or regulations to which we are subject.

8 unchanged sentences

In January 2024, the FTC published the Combatting Auto Retail Scams Final Rule (the "CARS Rule"), which prohibits a broad range of current accepted industry sales and marketing practices and imposes significant new dealer disclosure obligations and record-keeping requirements throughout the vehicle-buying process.

The FTC has stayed the CARS Rule’s original effective date of July 30, 2024 pending the resolution of a judicial challenge to the CARS Rule.

Compliance with the CARS Rule, if it becomes effective, would be burdensome and cause us to incur increased costs.

The FTC stayed the CARS Rule’s original effective date of July 30, 2024 pending the resolution of a judicial challenge to the CARS Rule.

On January 27, 2025, the United States Court of Appeals for the Fifth Circuit ruled to vacate the CARS Rule on the basis that the FTC violated procedural rules by not providing advance notice of the planned regulation.

Although currently nullified based on the Fifth Circuit's ruling, compliance with the CARS Rule, if it becomes effective, would be burdensome and cause us to incur increased costs.

A failure to comply with the CARS Rule would expose us to potential significant damages, penalties and adverse publicity, which could have a material adverse effect on our business, operations and financial results.

3 unchanged sentences

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.

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 advised that it would recommend the filing of an enforcement action if the Company did not settle the FTC’s claims.

The Company vigorously disputed, and continues to vigorously dispute, the FTC’s allegations that it violated the FTC Act and the ECOA.

As a result, on August 16, 2024, the FTC initiated an administrative proceeding by filing an enforcement action against the Company;

David McDavid Honda Frisco, David McDavid Honda Irving, and David McDavid Ford Fort Worth, three of the Company’s dealerships;

and an individual general manager at one of the dealerships pursuant to the allegations set forth above.

On October 4, 2024, the Company filed a lawsuit against the FTC in the United States District Court for the Northern District of Texas, seeking to enjoin the FTC’s administrative proceeding on the ground that the administrative proceeding was unconstitutional.

Among other things, the Company’s lawsuit asserts that the FTC’s administrative proceeding violates Asbury’s constitutional rights by denying it the right to a jury trial and by allowing the FTC to serve as both prosecutor and judge in the same proceeding.

The Company’s lawsuit also contends that FTC commissioners and in-house administrative law judges are effectively insulated from removal by the President in contravention of the Constitution’s requirements.

At this time, we are unable to reasonably predict the possible outcome of the Company’s dispute with the FTC, or provide a reasonably possible range of loss, if any.

There can be no assurance that the Company will succeed in either the FTC’s administrative proceeding against the Company or in the Company’s lawsuit against the FTC, and the FTC’s allegations, whether meritorious or not, 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.

Environmental laws and regulations govern, among other things, discharges into the air and water, storage of petroleum substances and chemicals, the handling and disposal of solid and hazardous wastes, investigation and remediation of contamination.

30 unchanged sentences

We are involved and expect to continue to be involved in numerous legal proceedings arising out of the conduct of our business, including litigation with customers, employment-related lawsuits, class actions, purported class actions, and actions brought by governmental authorities.

We do not believe that the ultimate resolution of any known matters will have a material

adverse effect on our business, reputation, financial condition, results of operations, cash flows or prospects.

We do not believe that the ultimate resolution of any known matters will have a material adverse effect on our business, reputation, financial condition, results of operations, cash flows or prospects.

However, the results of these matters cannot be predicted with certainty, and an unfavorable resolution of one or more of these matters could have a material adverse effect on our business, financial condition, results of operations and cash flows.

7 unchanged sentences

As a result, our operations are subject to risks of doing business outside of the United States and importing merchandise, including import duties, exchange rates, trade restrictions, work stoppages, natural or man-made disasters, and general political and socio-economic conditions in other countries.

The United States or the countries from which our products are imported may, from time to time, impose new quotas, duties, tariffs or other restrictions or limitations, or adjust presently prevailing quotas, duties or tariffs.

The imposition of new, or adjustments to prevailing, quotas, duties, tariffs or other restrictions or limitations could have a material adverse effect on our business, financial condition, results of operations and cash flows.

2 unchanged sentences

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

What changed 10-K

Item 1A. Risk Factors