What changed in this filing

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Item 1A. Risk Factors

2026-02-20 compared with 2025-02-26 · 87 added, 113 removed, 315 unchanged (39% of the section changed)

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We are subject to substantial risk of property loss due to the significant concentration of property at dealership locations, including vehicles and parts.

We have historically experienced business interruptions from time to time at several of our dealerships, due to actual or threatened adverse weather conditions or natural disasters, such as hurricanes, earthquakes, tornadoes, floods, hail storms, fires or other extraordinary events.

For example, in 2024, Hurricanes Helene and Milton impacted store operations in Florida, Georgia, and South Carolina, leading to temporary store closures and reduced customer traffic.

Concentration of property at dealership locations also makes the automotive retail business particularly vulnerable to theft, fraud and misappropriation of assets.

Illegal or unethical conduct by employees, customers, vendors, and unaffiliated third parties can result in loss of assets, disrupt operations, impact brand reputation, jeopardize manufacturer and other relationships, result in the imposition of fines or penalties, and subject us to governmental investigations or lawsuits.

While we maintain insurance to protect against a number of losses, this insurance coverage often contains significant deductibles.

While we maintain insurance to protect against various losses, this insurance coverage often contains significant deductibles.

In addition, we "self-insure" a portion of our potential liabilities, meaning we do not carry insurance from a third party for such liabilities, and are wholly responsible for any related losses including for certain potential liabilities that some states prohibit the maintenance of insurance to protect against.

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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 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.

For example, with the consummation of the Koons acquisition in 2023 and the Herb Chambers acquisition in 2025, we have experienced, and expect to continue to 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.

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.

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

(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.

(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.

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.

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Our inability to execute a substantial portion of our business strategy, including our mission to grow and transform our business, could have an adverse effect on our business, results of operations, financial condition and cash flows .

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, which includes driving same-store revenue growth and acquiring additional revenue through strategic acquisitions.

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

We seek to execute on our strategic plan using a variety of growth efforts, which include 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.

Consumers are increasingly shopping for new and used vehicles, automotive repair and maintenance service and other automotive products and services online and through mobile applications, including through third-party online and mobile sales platforms, with which we compete, that are designed to generate consumer sales that are sold to automotive dealers.

Consumers are increasingly shopping for new and used vehicles, automotive repair and maintenance services and other automotive products and services online and through mobile applications, including through third-party online and mobile sales platforms, with which we compete.

We have invested and will continue to invest in our omni-channel and other online applications in furtherance of our strategic vision.

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Changes to the business mix or declining cash flows in a dealership increase the risk of impairment.

During the year ended December 31, 2024, we recognized asset impairment charges of $149.5 million associated with manufacturer franchise rights recorded at certain dealerships and goodwill associated with certain asset disposal groups.

During the year ended December 31, 2025, we recognized asset impairment charges of $141.0 million associated with manufacturer franchise rights recorded at certain dealerships and goodwill associated

with certain asset disposal groups.

We cannot accurately predict the amount and timing of any additional impairment charges at this time;

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See Note 10 "Goodwill and Intangible Franchise Rights" of the notes to the consolidated financial statements for more information.

The loss of key personnel and limited management and personnel resources could adversely affect our business.

Our success depends, to a significant degree, upon the continued contributions of our management team, and service and sales personnel.

In addition, manufacturer dealer or framework agreements may require the prior approval of the applicable manufacturer before any change is made in dealership general managers or other management positions.

The loss or transition of key personnel and limited management and personnel resources could adversely affect our business.

Our success depends, to a significant degree, upon the continued contributions of our management team and service and sales personnel, and the ability of the Company to establish an effective succession plan to ensure leadership continuity when key personnel leave, retire or unexpectedly depart.

In addition, dealer and framework agreements may require the prior approval of the applicable manufacturer before any change is made in dealership general managers or other management positions.

The loss of the services of one or more of these key employees may materially impair the profitability of our operations or may result in a violation of an applicable dealer or framework agreement.

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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.

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

The benefits that are expected to result from the Herb Chambers acquisition will depend, in part, on our ability to integrate and realize the anticipated revenue and cost synergies from the Herb Chambers acquisition.

If management is not able to effectively manage the integration process, including without limitation the rollout of our TCA products to the Herb Chambers dealerships and the transition of the Herb Chambers platform to Tekion,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 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, and in connection with certain ongoing obligations under the Herb Chambers Transaction Agreement.

Risks Related to Macroeconomic and Market Conditions

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

Recently, inflation has increased throughout the U.S.

Inflation continues to be an issue throughout the U.S.

Inflation can adversely affect us by increasing the costs of labor, fuel and other costs as well as by reducing demand for automobiles.

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We also are subject to economic, competitive, and other conditions prevailing in the various markets in which we operate, even if those conditions are not prominent nationally.

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.

revenue per vehicle sold and our margins.

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.

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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.

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

For 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.

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(Chrysler, Dodge, Jeep, Ram and Fiat) 8 %

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

General Motors Company (Chevrolet, Buick and GMC) 7 %

Hyundai Motor North America ( Hyundai and Genesis )

Mercedes-Benz USA, LLC (Mercedes-Benz, Smart and Sprinter) 7 %

Hyundai Motor America (Hyundai) 6 %

Similar to automotive retailers, vehicle manufacturers may be affected by the long-term U.S.

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Manufacturer recall campaigns are a common occurrence that have accelerated in frequency and scope.

Manufacturer recall campaigns could (i) adversely affect our new and used vehicle sales or customer residual trade-in valuations, (ii) cause us to temporarily remove vehicles from our inventory, (iii) force us to incur increased costs, and (iv) expose us to litigation and adverse publicity related to the sale of recalled vehicles, which could have a material adverse effect on our business, results of operations, financial condition and cash flows.

adverse publicity related to the sale of recalled vehicles, which could have a material adverse effect on our business, results of operations, financial condition and cash flows.

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

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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.

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.

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.

In addition, the automotive manufacturing supply chain spans the globe.

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.

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These laws have historically restricted the ability of automobile manufacturers to directly enter the retail market and sell vehicles directly to consumers.

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.

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.

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.

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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.

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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:

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and (iv) we may be or become substantially more leveraged than some of our competitors, which may place us at a relative competitive disadvantage and make us more vulnerable to changes in market conditions and governmental regulations.

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.

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).

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(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.

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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 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.

A decline in our credit rating or a general disruption in the credit markets could negatively impact our liquidity and ability to conduct our operations.

A deterioration of our credit rating, or a general disruption in the credit markets, could limit our ability to obtain credit on terms acceptable to us, or at all.

In addition, uncertain economic conditions or the re-pricing of certain credit risks may make it more difficult for us to obtain one or more types of funding in the amounts, or at rates considered acceptable to us, at any given time.

Our inability to access necessary or desirable funding, or to enter into certain related transactions, at times and at costs deemed appropriate by us, could have a negative impact on our liquidity and our ability to conduct our operations.

Any of these developments could also reduce the ability or willingness of the financial institutions that have extended credit commitments to us, or that have entered into hedge or similar transactions with us, to fulfill their obligations to us, which also could have a material adverse effect on our liquidity, our ability to conduct our operations and our prospects.

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.

As described under Item 9A.

"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.

"Controls and Procedures" below, we previously 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.

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.

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 DMS utilized by the Koons dealership group that we acquired in December 2023.

During 2025, 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, 2025.

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.

Risks Related to Legal and Regulatory Matters

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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, 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.

A failure of any of our information systems or those of our third-party service providers, or a security breach with regard to personally identifiable information ("PII") about our customers or employees, or other cybersecurity incident, 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 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.

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

We also receive PII from our employees.

The regulatory environment surrounding information security and privacy is increasingly demanding, with numerous state and federal regulations, as well as payment card industry and other vendor standards, governing the collection and maintenance of PII from consumers and other individuals.

Cyber incidents can result from human error or intentional (or deliberate) attacks or unintentional events by insiders (e.g., employees) or third parties, including cybercriminals, competitors, nation-states and "hacktivists," among others.

Cyber incidents can include, for example, phishing, credential harvesting or use of stolen access credentials, unauthorized access to systems, networks or devices (for example, through hacking activity), structured query language attacks, infection from or spread of 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, the use of fraudulent or fake websites, and other attacks (including, but not limited to, denial-of-service attacks on websites), which shut down, disable, slow, impair or otherwise disrupt operations, business processes, technology, connectivity or website or internet access, functionality or performance.

In addition to intentional cyber incidents, unintentional cyber incidents can occur (for example, the inadvertent release of confidential or non-public personal information).

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

Cybersecurity incidents can result from human error or intentional (or deliberate) attacks or unintentional events by insiders (e.g., employees) or third parties, including cybercriminals, competitors, nation-states and “hacktivists,” among others.

Cybersecurity incidents can include, for example, phishing, credential harvesting or use of stolen access credentials, unauthorized access to systems, networks or devices (for example, through hacking activity), structured query language attacks, infection from or spread of 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, the use of fraudulent or fake websites, and other attacks (including, but not limited to, denial-of-service attacks on websites), which shut down, disable, slow, impair or otherwise disrupt operations, business processes, technology, connectivity or website or internet access, functionality or performance.

In addition to intentional cybersecurity incidents, unintentional cybersecurity incidents can occur (for example, the inadvertent release of confidential or non-public personal information).

Changes to our business, processes, systems, or technology, if not implemented properly, can increase our vulnerability to cybersecurity 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 for any reason or (ii) our relationship with our DMS providers or any other third-party provider deteriorates.

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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.

Because of the increasing number and sophistication of some cybersecurity incidents and cyber-attacks, including increased artificial intelligence driven "deep fake" and social engineering, 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, which include but are not limited to vehicle manufacturers, 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.

Advances and the increased use and availability of artificial intelligence by the Company and others, including but not limited to business partners, service providers and threat actors, may make cyber incidents more difficult to identify, contain and mitigate.

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, as of the date of this Annual Report on Form 10-K, 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.

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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.

A cybersecurity 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.

Any such alleged or actual incident can increase costs of doing business, negatively affect customer satisfaction and loyalty, expose us to negative publicity, individual claims or consumer class actions, administrative, civil or criminal investigations or actions, and infringe on proprietary information, any of which could have a material adverse effect on our business, financial condition, results of operations or cash flows.

The failure of a key information system, the inability to successfully transition between key information systems, or our ability to successfully incorporate new technologies could have a material adverse effect on our business, results of operations, financial condition and cash flows.

As part of our business strategy, we invest in technologies and partner with leading software platform vendors to develop applications that drive a more efficient guest experience at a lower cost to serve.

A key information system is our dealer management system, which acts as a centralized platform to manage day-to-day operations, including inventory, sales, service, finance, and customer relations.

The management of our day-to-day business activities could be significantly disrupted if the DMS fails or 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, which failure could have a material adverse effect on our business, results of operations, financial condition and cash flows.

Our dealerships currently operate on two dealer management systems.

We are transitioning to a new DMS, and as of December 31, 2025 we had transitioned 38 stores from CDK, our existing DMS provider which has a fragmented "bolt-on" solution architecture, to Tekion, a cloud-based DMS with a unified solution that is expected to make it easier to enhance technology.

The benefits that are expected to result from the Tekion transition will depend on our ability to transition all of our dealerships to the new DMS.

Additionally, we may incur substantial expenses in connection with the Tekion transition, including without limitation paying for both dealer management systems at times, which may exceed expectations and offset certain anticipated benefits.

Additionally, there is a significant degree of difficulty and management distraction inherent in the process of transitioning a key information system, and there are short-term productivity losses at the store level due to learning a new information system.

There can be no assurances that the benefits and cost synergies that we expect to realize as a result of the Tekion transition will be achieved within our anticipated time frames or at all, which failure could have a material adverse effect on our business, results of operations, financial condition and cash flows.

Our dealership operations and facilities are subject to extensive governmental laws and regulations.

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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.

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.

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.

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

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Our failure to comply with the consent order may result in the imposition of significant fines and/or penalties, which could have a material adverse effect on our results of operations.

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 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.

Continued pressure from the CFPB, FTC, and other federal agencies could lead to significant changes in the manner that dealers are compensated for arranging customer financing and vehicle protection products, and while it is difficult to predict how any such changes might impact us, any adverse changes could have a material adverse impact on our finance and insurance business and results of operations.

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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 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.

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 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.

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

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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.

Among other things, the Company’s lawsuit asserts that the FTC’s administrative proceeding violates the Company’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.

The FTC’s administrative proceeding and the Company’s lawsuit remain pending.

We are unable to reasonably predict the possible outcome of the Company’s dispute with the FTC at this time, 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.

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For example, vehicle manufacturers are subject to government-mandated fuel economy and greenhouse gas emission standards, which continue to change and become more stringent over time.

Failure of a manufacturer to develop passenger vehicles and light trucks that meet these and other government standards could subject the manufacturer to substantial penalties, increase the cost of vehicles sold to us, and adversely affect our ability to market and sell vehicles to meet consumer needs and desires, which could have a material adverse effect on our business, results of operations, financial condition or cash flows.

Failure of a manufacturer

to develop passenger vehicles and light trucks that meet these and other government standards could subject the manufacturer to substantial penalties, increase the cost of vehicles sold to us, and adversely affect our ability to market and sell vehicles to meet consumer needs and desires, which could have a material adverse effect on our business, results of operations, financial condition or cash flows.

Our TCA business is subject to a wide range of federal, state, and local laws and regulations, some of which we may not have previously been subject.

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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.

A decline in our credit rating or a general disruption in the credit markets could negatively impact our liquidity and ability to conduct our operations.

A deterioration of our credit rating, or a general disruption in the credit markets, could limit our ability to obtain credit on terms acceptable to us, or at all.

We are subject to risks associated with imported product restrictions or limitations, foreign trade and currency valuations.

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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, including recently proclaimed and possible future 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.

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.

Relative weakness of the U.S.

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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 1A. Risk Factors