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Item 7. Management’s Discussion and Analysis

2026-02-20 compared with 2025-02-26 · 169 added, 450 removed, 459 unchanged (57% of the section changed)

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Risk Factors for a discussion of these risks and uncertainties.

The discussion of our financial condition and results of operations for the year ended December 31, 2022 is included in Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2023.

An analysis of our consolidated results of operations for 2024 and 2023 and year-to-year comparisons between 2024 and 2023 can be found in MD&A in Part II, Item 7 of the Company’s Form 10-K for the year ended December 31, 2024.

We are one of the largest automotive retailers in the United States.

As of December 31, 2025, through our Dealerships segment, we owned and operated 223 new vehicle franchises (171 dealership locations), representing 36 brands of automobiles, within 15 states.

We also operated 37 collision centers, and Total Care Auto, Powered by Landcar ("TCA"), our F&I product provider.

We also operated 39 collision centers, and Total Care Auto, Powered by Asbury ("TCA"), our F&I product provider.

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

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Amounts presented have been calculated using non-rounded amounts for all periods presented and therefore certain amounts may not compute due to rounding.

Our dealerships gross profit margin varies with our revenue mix.

Our Dealerships segment gross profit margin varies with our revenue mix.

Historically, the sales of new vehicles generally results in a lower gross profit margin than used vehicle sales, sales of parts and service, and sales of F&I products.

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Commissions expense paid by TCA to our affiliated dealerships and reflected as F&I revenue in our Dealerships segment is eliminated in the consolidated financial statements.

Our continued organic growth is dependent upon the execution of our balanced automotive retailing and service business strategy, the continued strength of our brand mix, and the production and allocation of desirable vehicles from the automobile manufacturers whose brands we sell.

manufacturers whose brands we sell.

Our vehicle sales have historically fluctuated with product availability as well as local and national economic conditions, including consumer confidence, availability of consumer credit, fuel prices, and employment levels.

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Recent Events

Pending acquisition

On February 14, 2025, the Company, through one of its subsidiaries, entered into a Purchase and Sale Agreement (the "Transaction Agreement") with various entities that comprise the Herb Chambers automotive group (the "Herb Chambers Dealerships").

Pursuant to the Transaction Agreement, the Company is expected to acquire substantially all of the assets, including all real property and businesses of the Herb Chambers Dealerships (collectively, the "Businesses") for an aggregate purchase price of approximately $1.34 billion, which includes $750 million for goodwill, and approximately $590 million for the real estate and leasehold improvements.

In addition, the Company will acquire new vehicles, used vehicles, service loaner vehicles, fixed assets, parts and supplies for a purchase price to be determined at the closing (the “Closing”) of the transactions set forth in the Transaction Agreement and will reimburse the Herb Chambers Dealerships for certain dealership construction and development costs incurred prior to the Closing.

The Businesses include 33 dealerships, 52 franchises and three collision centers.

Herb Chambers will retain ownership of the Mercedes-Benz of Boston dealership in Somerville, Massachusetts (the "MB Boston Dealership").

The Transaction Agreement includes certain restrictions and obligations regarding the sale of the MB Boston Dealership, including a put right obligating the Company to purchase the MB Boston Dealership during the five-year period following the Closing, absent certain circumstances.

The Company's acquisition of the Businesses is anticipated to close in the second quarter of 2025 and is subject to various customary closing conditions, including approval from the applicable automotive manufacturers.

Hurricanes Helene and Milton

In September 2024, Hurricane Helene affected our store operations in Florida, Georgia and South Carolina.

With Hurricane Helene, stores in the path of the storm closed their doors early and many remained offline even after the storm passed due to power outages.

Temporary store closures and reduced customer traffic in the days leading up to the storm and immediately afterwards resulted in fewer new and used vehicle unit sales along with lost business in fixed operations.

As previously disclosed, we estimated the impact of the storm on diluted earnings per share for the quarter ended September 30, 2024 to be between $0.07 and $0.09 per diluted share.

In October 2024, the size and path of Hurricane Milton placed it over a larger section of our store footprint and the damage to our dealership locations was more extensive.

A higher number of stores closed for a longer period compared to Helene.

Additionally, several locations experienced flooding, partial loss of vehicle inventories and extended power outages.

Other locations had varying degrees of wind and water damage preventing them from reopening in a timely manner.

As a result of Hurricane Milton, we incurred losses of $6.4 million, or $0.25 per diluted share during the quarter ended December 31, 2024.

Hurricanes Helene and Milton are not expected to have a continuing impact on the Company's operations and results in future periods.

Stop sale orders for certain Toyota, Lexus and BMW models

The stop sale orders for certain Toyota, Lexus and BMW models during the second half of 2024 impacted volumes on some of our most profitable and in-demand vehicles.

A stop sale order is a notification from a manufacturer or the National Highway Traffic Safety Administration that prohibits the sale or lease of a new or used vehicle due to a safety recall, defect or noncompliance.

The Toyota Grand Highlander and Lexus TX models have been popular vehicles with healthy gross profit margins.

Based on the pre-stop sale trends for these models, we estimated the impact from this event resulted in approximately 2,100 fewer new units sold during the second half of 2024.

As a result, we estimated the impact of the Toyota, Lexus and BMW stop sale orders to be between $0.48 and $0.52 per diluted share during the six months ended December 31, 2024.

The stop sale orders were subsequently lifted during the fourth quarter and are not expected to have a continuing impact on the Company's operations and results in future periods.

During June 2024, one of the Company’s vendors (CDK Global) experienced a cyber-incident impacting certain services provided to the Company and many other automotive retailers, including the Company’s sales, service, inventory, customer relationship management, and accounting functions.

Upon discovery of the incident, we took immediate precautionary steps to protect our systems.

Beginning on June 19, 2024, the outage affected all Asbury locations, with the exception of our Koons stores which utilize a different dealer management system.

All functions of CDK were not fully restored for us until July 8, 2024, with other plug-ins and bolt-on applications coming back online in the weeks thereafter.

The CDK outage had a negative impact on our financial results during the quarter ended June 30, 2024 as a result of fewer new and used vehicle sales, which also impacted our F&I business, a reduction in parts and service volumes and certain incremental expenses related to our recovery efforts.

As previously disclosed, we estimated the earnings per share for the quarter ended June 30, 2024 was negatively impacted between $0.95 and $1.15 per share, without taking into account any potential recoveries related to the incident.

The CDK Global cyber-incident is not expected to continue to impact the Company's operations and results in future periods.

We have cybersecurity insurance coverage of $15.0 million, with a $2.5 million deductible.

The timing of recovering some portion of our losses through insurance or other recoveries is difficult to predict.

The insurance recoveries we receive, if any, may not occur for several quarters or longer.

Jim Koons Acquisition

On December 11, 2023, the Company completed the acquisition of substantially all of the assets, including all real property and businesses of the Jim Koons Dealerships ("Koons") pursuant to a Purchase and Sale Agreement with various entities that comprise the Jim Koons automotive dealerships group (the "Koons acquisition").

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

Herb Chambers acquisition

On July 21, 2025, the Company completed the Herb Chambers acquisition, thereby acquiring substantially all of the assets including the real property related thereto, for a total purchase price of approximately $1.76 billion.

The acquisition was financed by borrowings under our new vehicle floor plan and used vehicle floor plan facilities, revolving credit facility and borrowings under a real estate facility.

The Herb Chambers acquisition comprised 33 dealerships and three collision centers.

Macroeconomic and geopolitical considerations

The demand and availability for and pricing of our products and services may be adversely impacted by economic conditions and financial developments, including increasing interest rates, rising inflation, high energy prices, a potential recessionary environment and other factors.

The automotive retail industry is influenced by general economic conditions, particularly consumer confidence and consumer spending, interest rates, fuel prices, exchange rates, technology and business model changes, supply conditions, consumer transportation preferences, credit availability, and the unemployment rate.

Consumer spending can be materially and adversely impacted by periods of economic uncertainty or by consumer concern regarding manufacturer viability.

In addition, local economic, competitive and other conditions affect the performance of our dealerships.

Our results of operations depend substantially on general economic conditions and consumer spending in those regions where we maintain operations.

Tariffs and trade risks

A significant portion of our business involves the sale of vehicles, parts, or vehicles composed of, or maintenance and repair services including, parts that are manufactured outside the U.S.

Changes or increases in tariffs, trade restrictions, fluctuations in foreign currency exchange rates, the negotiation of new trade agreements, non-tariff trade barriers, local content requirements, uncertainty surrounding global trade policies, and the imposition of new or retaliatory tariffs against certain countries or covering certain products, including vehicles and parts, may affect our competitive position and impair our ability to sell and service vehicles and parts, and have a material adverse effect on our results of operations.

In late January 2025, the U.S.

government commenced a broad review of U.S.

trade relations, following which it began issuing numerous executive orders and other public policy statements imposing or threatening to impose tariffs on certain countries, materials, and industries, including the automotive industry.

Such tariffs include a 25% tariff on imports of automobiles and certain automobile parts, with different rates for some countries as a result of respective trade deals.

In response, certain impacted countries have imposed or threatened various corresponding retaliatory tariffs and other actions.

If maintained, these and other newly announced tariffs and actions and the potential escalation of trade disputes are expected to affect the automotive industry generally, including manufacturers, distributors and retailers of vehicles, parts and supplies.

The extent of the tariffs and the resulting impact on general economic conditions and on our business are uncertain and depend on various factors, such as negotiations between the U.S.

and affected countries, the duration of such tariffs, the responses of other countries or regions to such tariffs, the actual increases in the costs of vehicles, products and raw materials, and exemptions or exclusions that may be granted.

Should tariffs increase and be sustained, our inventory acquisition and carrying costs, and the production costs for many of our manufacturer, distributor and supplier partners, may be increased, which costs may be passed on to us and consumers through higher prices for many new vehicles and certain parts we sell.

These increased prices may adversely affect our new vehicle sales and related finance and insurance sales and may adversely impact demand for such vehicles and parts, and could materially and adversely affect the results of our operations.

See “Item 1A.

Risk Factors” in Part I of this report for additional information about risks and uncertainties facing our Company.

Financial Highlights

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• Consolidated gross profit for the year ended December 31, 2025 increased to $3.07 billion, compared to $2.95 billion for the prior year.

• The increase in consolidated revenue and consolidated gross profit is primarily due to the effects of the Koons acquisition and growth in parts and services gross profit.

This increase was offset by lower gross profit per vehicle sold for both new and used as margins continue to shift downward from the historic highs in recent years.

• The increase in consolidated revenue and consolidated gross profit was primarily due to the effects of the Herb Chambers acquisition and growth in parts and services gross profit.

This increase was offset by lower gross profit per vehicle sold for new vehicles as margins continue to shift downward from the historic highs in recent years.

• The effects of dealership divestitures also impacted consolidated revenue and gross profit.

During the year ended December 31, 2024, we divested five franchises (five dealership locations).

These divested dealerships contributed $121.2 million of revenue during the year ended December 31, 2024.

• Our capital allocation priorities were supported by share repurchases of approximately 830,297 million shares for $183.0 million during the year ended December 31, 2024.

During the year ended December 31, 2025, we divested 24 franchises (15 dealership locations).

These divested dealerships contributed approximately $436.3 million of revenue during the year ended December 31, 2025.

• Our capital allocation priorities were supported by share repurchases of approximately 432,752 shares for $99.9 million during the year ended December 31, 2025.

CONSOLIDATED RESULTS OF OPERATIONS

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Additionally, amounts related to divested dealerships are excluded from each comparative period for same store reporting.

The Company's full year results for 2024 include the results of the Koons dealerships acquired in the fourth quarter of 2023.

Accordingly, the significant increases in revenue, gross profit and income from operations for 2024 compared to 2023 are largely a result of this acquisition.

The Company's full year results for 2025 include the results of the Herb Chambers dealerships acquired in July 2025.

Accordingly, the increases in revenue, gross profit and income from operations for 2025 compared to 2024 are largely a result of this acquisition.

The Year Ended December 31, 2025 Compared to the Year Ended December 31, 2024

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New vehicle $ 9,496.2 $ 8,849.7 $ 646.5 7 %

Used vehicle 5,218.2 4,414.3 803.9 18 %

Used vehicle 5,225.4 5,218.2 7.2 NM

Parts and service 2,506.8 2,354.7 152.1 6 %

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OTHER (INCOME) EXPENSES:

Floor plan interest expense 89.9 9.6 80.2 NM

Floor plan interest expense 91.2 89.9 1.3 1 %

Other interest expense, net 187.5 179.1 8.3 5 %

Gain on dealership divestitures, net (8.6) (13.5) 4.9 (36) %

Gain on dealership divestitures, net (80.2) (8.6) (71.6) NM

Total other expenses, net 198.4 260.3 (61.9) (24) %

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SG&A EXPENSES AS A PERCENTAGE OF GROSS PROFIT 64.7 % 64.0 %

Total revenue during 2024 increased by $2,385.9 million (16%) compared to 2023, due to a $1,219.0 million (16%) increase in new vehicle revenue, an $803.9 million (18%) increase in used vehicle revenue, a $273.2 million (13%) increase in parts and service revenue and an $89.8 million (13%) increase in F&I revenue.

The $192.8 million (7%) increase in gross profit during 2024 was the result of a $200.6 million (17%) increase in parts and service gross profit and a $73.4 million (11%) increase in F&I gross profit, partially offset by a $62.6 million (9%) decrease in new vehicle gross profit and an $18.6 million (7%) decrease in used vehicle gross profit.

Total revenue during 2025 increased by $810.4 million (5%) compared to 2024, due to a $646.5 million (7%) increase in new vehicle revenue, a $152.1 million (6%) increase in parts and service revenue, a $7.2 million increase in used vehicle revenue and a $4.6 million (1%) increase in F&I revenue.

The $123.0 million (4%) increase in gross profit during 2025 was the result of a $121.3 million (9%) increase in parts and service gross profit, a $13.6 million (6%) increase in used vehicle gross profit and a $6.5 million (1%) increase in F&I gross profit, partially offset by an $18.4 million (3%) decrease in new vehicle gross profit.

Our total gross profit margin decreased 9 basis points from 17.2% in 2024 to 17.1% in 2025.

Income from operations during 2024 decreased by $117.9 million (12%) compared to 2023, primarily due to a $271.2 million (17%) increase in selling, general and administrative expenses and a $32.3 million (28%) increase in asset impairments, partially offset by a $192.8 million (7%) increase in gross profit.

Total other expenses, net increased by $108.1 million (71%) from expenses of $152.2 million in 2023 to $260.3 million of expenses in 2024, primarily due to an $80.2 million (NM) increase in floor plan interest expense, a $23.0 million (15%) increase in other interest expense, net and a $4.9 million (36%) decrease in gain on dealership divestitures, net.

As a result, income before income taxes decreased by $226.0 million (28%) to $575.3 million in 2024.

The $53.8 million (27%) decrease in income tax expense was primarily attributable to the 28% decrease in income before taxes, partially offset by a 40 basis point increase in the 2024 effective tax rate.

Overall, net income decreased by $172.2 million (29%) from $602.5 million in 2023 to $430.3 million in 2024.

Income from operations during 2025 increased by $25.0 million (3%) compared to 2024, primarily due to a $123.0 million (4%) increase in gross profit and an $8.5 million (6%) decrease in asset impairments, partially offset by a $99.0 million (5%) increase in selling, general and administrative expenses and an $8.5 million (6%) increase in depreciation and amortization expense.

Total other expenses, net decreased by $61.9 million (24%) from expenses of $260.3 million in 2024 to $198.4 million of expenses in 2025, primarily due to a $71.6 million (828%) increase in gain on dealership divestitures, net, partially offset by an $8.3 million (5%) increase in other interest expense, net and a $1.3 million (1%) increase in floor plan interest expense.

As a result, income before income taxes increased by $86.9 million (15%) to $662.2 million in 2025.

The $25.3 million (17%) increase in income tax expense was primarily attributable to the 15% increase in income before taxes, and a 50 basis point increase in the 2025 effective tax rate.

Overall, net income increased by $61.6 million (14%) from $430.3 million in 2024 to $492.0 million in 2025.

For the Year Ended December 31, Increase

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New vehicle units:

Luxury 35,775 34,947 828 2 %

Luxury 34,845 34,990 (145) NM

Import 88,404 85,178 3,226 4 %

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New vehicle gross margin 4.7 % 5.7 % (0.9) %

During 2024, new vehicle revenue increased by $1,219.0 million (16%) when compared to 2023, as a result of a 16% increase in new vehicle unit sales.

Same store new vehicle revenue increased by $28.5 million driven by an increase in same store revenue per new vehicle sold from $51,251 for the year ended December 31, 2023 to $51,484 for the year ended December 31, 2024.

New vehicle gross profit decreased by $62.6 million (9%) in 2024 when compared to 2023, as a result of a 21% decrease in gross profit per new vehicle sold partially offset by a 16% increase in unit volumes.

Same store new vehicle gross profit decreased by $149.9 million (22%) in 2024 as a result of a 22% decrease in gross profit per new vehicle sold.

Same store new vehicle gross margin decreased 205 basis points to 7.2% in 2024.

The decrease in our new vehicle gross profit margin was primarily attributable to the continued easing of new vehicle inventory constraints which softened the historically high new vehicle margins seen in recent years.

During 2025, new vehicle revenue increased by $646.5 million (7%) when compared to 2024, as a result of a 5% increase in new vehicle unit sales, combined with a 3% increase in revenue per new vehicle sold which increased to $52,406 for the year ended December 31, 2025, from $51,090 for the year ended December 31, 2024.

Same store new vehicle revenue increased by $316.0 million (4%) mainly driven by an increase in the number of units sold which increased by 4,392 (3%) for the year ended December 31, 2025 as compared to the same period in the prior year.

In addition, same store revenue per new vehicle sold increased from $51,285 for the year ended December 31, 2024 to $51,830 for the year ended December 31, 2025.

New vehicle gross profit decreased by $18.4 million (3%) for the year ended December 31, 2025 when compared to the same period in the prior year, as a result of a 7% decrease in gross profit per new vehicle sold which decreased from $3,697 for the year ended December 31, 2024 to $3,432 for the year ended December 31, 2025, partially offset by a 5% increase in unit volumes sold.

Same store new vehicle gross profit decreased by $49.0 million (8%) in 2025 as a result of an 11% decrease in gross profit per new vehicle sold.

Same store new vehicle gross margin decreased 83 basis points from 7.3% for the year ended December 31, 2024 to 6.4% for the year ended December 31, 2025.

The decrease in our new vehicle gross profit margin was primarily attributable to the softening of the historically high new vehicle margins seen in recent years.

The seasonally adjusted annual rate ("SAAR") for new vehicle sales in the U.S.

during the year ended December 31, 2025 was approximately 16.2 million which increased as compared to approximately 15.8 million during the year ended December 31, 2024.

The increase in new vehicle sales revenue on a same store basis for the year ended December 31, 2024 over the same period in the prior year is primarily attributable to an increase of $234 of revenue per new vehicle sold, while new vehicle units sold remained relatively flat for the year ended December 31, 2024 as compared to the same period in the prior year.

The increase in SAAR period over period reflects higher inventory supply, including fleet, coupled with continued consumer demand for new vehicles.

However, we continue to be negatively impacted by the significant variation in new vehicle

days supply among brands and models.

The increase in SAAR period over period reflects higher inventory supply, including fleet, coupled with increased consumer demand due to concerns with respect to rising vehicle prices in light of, among other things, tariffs.

addition, we saw increased demand for new electric vehicles before the expiration of federal tax credits in September 2025.

We ended the year with approximately 52 days of supply of new vehicle inventory which reflects an increase from 49 days of supply as of December 31, 2024, but remains well below historical levels.

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Used vehicle wholesale revenue 675.7 612.3 63.5 10 %

Used vehicle revenue $ 5,218.2 $ 4,414.3 $ 803.9 18 %

Used vehicle revenue $ 5,225.4 $ 5,218.2 $ 7.2 NM

Gross profit:

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Used vehicle retail gross margin 5.3 % 5.1 % 0.2 %

Used vehicle revenue increased by $803.9 million (18%), due to a $588.4 million (15%) increase in used vehicle retail revenue and a $215.5 million (54%) increase in used vehicle wholesale revenue.

Same store used vehicle revenue decreased by $140.5 million (3%) due to a $211.2 million (5%) decrease in used vehicle retail revenue, partially offset by a $70.7 million (19%) increase in used vehicle wholesale revenue.

Used vehicle revenues and unit volume have continued to contract during

2024, along with margins on both an all store and same store basis.

Used vehicle revenue and unit volumes have been negatively impacted by the affordability headwinds and lack of inventory availability, especially in vehicles with lower mileage.

In 2024, total Company and same store used vehicle retail gross profit margins decreased 122 and 101 basis points, respectively, to 5.0% and 5.2%.

We attribute the decreases in used vehicle retail gross profit margin to a softening in the used vehicle market, which was at record highs in 2021 and, to a lesser extent 2022, as a result of new vehicle inventory shortages initially caused by COVID-19 disruptions followed by supply chain issues.

Used vehicle revenue increased by $7.2 million, due to a $63.5 million (10%) increase in used vehicle wholesale revenue, partially offset by a $56.3 million (1%) decrease in used vehicle retail revenue.

Same store used vehicle revenue decreased by $185.0 million (4%) due to a $210.9 million (5%) decrease in used vehicle retail revenue, partially offset by a $25.9 million

(4%) increase in used vehicle wholesale revenue.

Used vehicle revenues and unit volume have continued to contract during 2025, on both an all store and same store basis.

Used vehicle revenue and unit volumes continue to be negatively impacted by the affordability headwinds and lack of inventory availability, especially in vehicles with lower mileage.

Offsetting volume declines, we reported higher used vehicle retail gross profit margins for the year ended December 31, 2025 as compared to the same period in the prior year.

Total Company and same store used vehicle retail gross profit margins increased 30 and 22 basis points, respectively, to 5.3% for the year ended December 31, 2025 as compared to the same period in the prior year.

We attribute the increases in used vehicle retail gross profit margins to improved sourcing and disciplined execution focused on profitability over units sold.

We believe that our used vehicle inventory continues to be well-aligned with current consumer demand, with approximately 38 days of supply as of December 31, 2025.

Parts and Service—

For the year ended December 31, 2024, we are presenting "Collision" as a separate line item within parts and service gross profit.

In periods ending prior to June 30, 2024, "Collision" was included within "Customer pay".

We reclassified the corresponding amounts for the year ended December 31, 2023 to conform to current year presentation.

For the Year Ended December 31, Increase

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Parts and service revenue

$ 2,506.8 $ 2,354.7 $ 152.1 6 %

Parts and service gross profit:

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Collision 126.4 128.6 (2.2) (2) %

Wholesale parts 77.5 78.7 (1.2) (2) %

Wholesale parts 77.5 77.5 0.1 NM

Parts and service gross profit, excluding reconditioning and preparation 1,211.9 1,104.0 107.9 10 %

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Collision 121.5 127.3 (5.8) (5) %

Wholesale parts 74.8 77.1 (2.3) (3) %

Wholesale parts 72.6 72.3 0.2 NM

Parts and service gross profit, excluding reconditioning and preparation 1,100.1 1,042.9 57.2 5 %

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* Reconditioning and preparation represents the gross profit earned by our parts and service departments for internal work performed and is included as a reduction of Parts and service cost of sales within the accompanying consolidated statements of income upon the sale of the vehicle.

The $273.2 million (13%) increase in parts and service revenue was due to a $185.6 million (17%) increase in customer pay revenue, a $65.7 million (24%) increase in warranty revenue, a $15.3 million (3%) increase in wholesale parts revenue and a $6.6 million (2%) increase in collision revenue.

Same store parts and service revenue increased $35.9 (2%) from $2.03 billion in 2023 to $2.06 billion in 2024.

The increase in same store parts and service revenue was due to a $42.7 million (4%) increase in customer pay revenue and a $33.0 million (12%) increase in warranty revenue, partially offset by a $15.6 million (4%) decrease in wholesale parts revenue and a $24.2 million (9%) decrease in collision revenue.

Parts and service gross profit, excluding reconditioning and preparation, increased by $167.4 million (18%) to $1.10 billion and same store gross profit, excluding reconditioning and preparation, increased by $55.4 million (6%) to $968.2 million.

The $55.4 million increase in same store gross profit, excluding reconditioning and preparation, is primarily due to a $44.5 million (8%) increase in customer pay gross profit and a $21.3 million (15%) increase in warranty gross profit, partially offset by an $8.1 million (7%) decrease in collision gross profit and a $2.3 million (3%) decrease in wholesale parts gross profit.

The $152.1 million (6%) increase in parts and service revenue was due to a $95.8 million (8%) increase in customer pay revenue, a $66.4 million (19%) increase in warranty revenue, partially offset by a $4.9 million (1%) decrease in wholesale parts revenue and a $5.1 million (2%) decrease in collision revenue.

Same store parts and service revenue increased $73.7 million

(3%) from $2,212.70 million in 2024 to $2,286.4 million in 2025.

The increase in same store parts and service revenue was due to a $52.0 million (4%) increase in customer pay revenue and a $38.2 million (12%) increase in warranty revenue, partially offset by a $13.8 million (5%) decrease in collision revenue and a $2.7 million (1%) decrease in wholesale parts revenue.

Parts and service gross profit, excluding reconditioning and preparation, increased by $107.9 million (10%) to $1,211.9 million and same store gross profit, excluding reconditioning and preparation, increased by $57.2 million (5%) to $1,100.1 million.

The $57.2 million increase in same store gross profit, excluding reconditioning and preparation, is primarily due to a $41.0 million (6%) increase in customer pay gross profit and a $21.7 million (12%) increase in warranty gross profit, partially offset by a $5.8 million (5%) decrease in collision gross profit.

Wholesale parts gross profit held steady on a same store basis for the year ended year ended December 31, 2025 as compared to the same period in the prior year.

As a result of the shortage of new vehicle inventory in recent years, coupled with inflationary headwinds, many customers have elected to keep their current vehicles longer which has generated additional customer pay gross profit for the service departments.

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Finance and insurance, net per vehicle sold $ 2,224 $ 2,238 $ (14.0) (1) %

F&I revenue, net increased by $89.8 million (13%) in 2024 when compared to 2023 primarily as a result of a 17% increase in new and used retail unit sales, partially offset by a $107 (5%) decrease in F&I per vehicle retailed.

F&I revenue, net increased by $4.6 million (1%) in 2025 when compared to 2024 primarily as a result of a $17 (1%) increase in F&I per vehicle retailed which was partially offset by a decline in new and used retail unit sales.

On a same store basis, F&I revenue, net decreased by $17.6 million (2%) in 2025 when compared to 2024 primarily as a result of a 2% decrease in new and used retail unit sales and a $14 (1%) decrease in F&I per vehicle retailed.

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The method for recognizing revenue is assigned based on contract type and expected claim patterns.

Premium revenues are supplemented with investment gains or

losses and income earned associated with the performance of TCA's investment portfolio.

During the years ended December 31, 2024 and 2023, TCA generated $120.6 million and $138.3 million, respectively, of revenue, consisting primarily of earned premium and $17.8 million and $15.7 million, respectively, from the investment portfolio.

Premium revenues are supplemented with investment gains or losses and income earned associated with the performance of TCA's investment portfolio.

During the years ended December 31,

2025 and 2024, TCA generated $91.1 million and $120.6 million, respectively, of revenue, consisting primarily of earned premium and $20.7 million and $17.8 million, respectively, from the investment portfolio.

Direct expenses incurred for the acquisition of F&I contracts on which revenue has not yet been recognized have been deferred and are amortized over the related contract period.

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Commissions expense paid by TCA to our affiliated dealerships and reflected as F&I revenue in our Dealerships segment is eliminated upon consolidation.

As we continue to integrate TCA, we currently expect a rollout of TCA products in our Florida market during the first quarter of 2025 and the Koons platform in the second quarter of 2025;

however, no assurance can be given that the rollout will be completed within the timeframe contemplated.

With the ownership of TCA, while the combined profitability of the transaction is higher, the timing of revenue and cost recognition is deferred and amortized over the life of the contract.

We expect that this rollout will result in lower F&I revenue and gross profit over the next two to three years due to the change in how these contracts are earned.

We completed the rollout of TCA's service offerings in our Florida market and the Koons platform during the year ended December 31, 2025.

We expect to complete the rollout to all of our dealerships in 2026 by offering TCA products on our Herb Chambers platform;

however, no assurance can be given that the rollout will be completed with the timeframe contemplated.

S elling, General and Administrative Expense—

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The increase in SG&A as a percentage of gross profit is primarily the result of higher cost in personnel and other categories in SG&A expense partially offset by higher gross profits for 2025 as compared to 2024.

SG&A expense for the year ended December 31, 2024 includes $7.1 million of expense related to hail damage and $6.4 million of expense related to Hurricane Milton.

SG&A expense for the year ended December 31, 2023 includes $4.3 million of expense related to hail damage, a $3.6 million gain from the sale of real estate and $4.1 million of professional fees related to the Koons acquisition.

SG&A expense as reported for the year ended December 31, 2025 increased by $99.0 million (0.7%) as compared to the year ended December 31, 2024 primarily due to the acquisition of the Herb Chambers stores in July 2025 and an increase in professional and legal fees including those related to the Herb Chambers acquisition ($15.4 million) and the Tekion implementation project ($8.6 million) which was partially offset by an insurance recovery of $15.0 million.

On a same store basis, the increase in SG&A expense for the year ended December 31, 2025 as compared to the year ended December 31, 2024 is due to an increase in professional and legal fees offset by the insurance recovery of $15.0 million and the decrease in personnel costs of $5.5 million.

Asset Impairments —

During the year ended December 31, 2025, we recognized asset impairment charges of $141.0 million as compared to $149.5 million of impairment charges during the year ended December 31, 2024.

The asset impairment charges resulted from our interim and annual franchise rights impairment tests and the classification of certain asset disposal groups as held for sale which resulted in additional franchise rights and goodwill impairment charges.

The asset impairment charges resulted from our annual franchise rights impairment tests and the classification of certain asset disposal groups as held for sale which resulted in additional franchise rights impairment charges.

Floor Plan Interest Expense —

Floor plan interest expense increased by $80.2 million to $89.9 million during 2024 compared to $9.6 million during 2023 due to less cash held in the floor plan offset account during the year ended December 31, 2024 as a result of funding the Koons acquisition in December 2023.

Floor plan interest expense increased by $1.3 million to $91.2 million during 2025 compared to $89.9 million during 2024 due to floor plan interest expense related to the Herb Chambers stores acquired in July 2025 and an increase in unused credit facility fees of $2.5 million.

These increases were offset by a reduction in interest rates year over year.

Other Interest Expense —

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Gain on Dealership Divestitures, Net —

During the year ended December 31, 2024, we sold 1 Lexus franchise (1 dealership location) in Wilmington, Delaware due to OEM requirements in connection with the Koons acquisition, 1 Nissan franchise (1 dealership location) in Denver, Colorado, 1 Nissan franchise (1 dealership location) in Atlanta, Georgia, 1 Chevrolet franchise (1 dealership location) in Atlanta, Georgia and 1 Honda franchise (1 dealership location) in Spokane, Washington.

During the year ended December 31, 2025, we sold 24 franchises (15 dealership locations) for an aggregate purchase price of approximately $566.5 million.

The Company recorded a pre-tax gain totaling $80.2 million, which is presented in our accompanying consolidated statements of income as a gain on dealership divestitures, net.

During the year ended December 31, 2023, we sold 1 franchise (1 dealership location) in Austin, Texas.

During the year ended December 31, 2024, we sold five franchises (5 dealership locations) for an aggregate purchase price of approximately $196.3 million.

The Company recorded a pre-tax gain totaling $8.6 million, which is presented in our accompanying consolidated statements of income as a gain on dealership divestitures, net.

During the year ended December 31, 2023, we sold one franchise (one dealership location) for proceeds of $30.7 million.

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

Income Tax Expense —

The $53.8 million (27%) decrease in income tax expense was primarily the result of a $226.0 million (28%) decrease in income before income taxes.

The $25.3 million (17%) increase in income tax expense was primarily the result of a $86.9 million (15%) increase in income before income taxes.

Our effective tax rate increased 50 basis points from 25.2% in 2024 to 25.7% in 2025.

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Refer to Note 16 "Income Taxes" for additional information regarding income taxes.

CONSOLIDATED RESULTS OF OPERATIONS

We assess the organic growth of our revenue and gross profit on a same store basis.

We believe that our assessment on a same store basis represents an important indicator of comparative financial performance and provides relevant information to assess our performance.

As such, for the following discussion, same store amounts consist of information from dealerships for identical months in each comparative period, commencing with the first full month we owned the dealership.

Additionally, amounts related to divested dealerships are excluded from each comparative period for same store reporting.

During 2022, the Company completed sixteen divestitures that contributed $683 million in revenue for the year.

The Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022

For the Year Ended December 31, Increase

(Dollars in millions, except per share data)

New vehicle $ 7,630.7 $ 7,365.6 $ 265.1 4 %

Used vehicle 4,414.3 5,197.1 (782.8) (15) %

Parts and service 2,081.5 2,074.2 7.3 — %

Finance and insurance, net 676.2 797.0 (120.8) (15) %

TOTAL REVENUE 14,802.7 15,433.8 (631.2) (4) %

GROSS PROFIT:

New vehicle 703.0 844.0 (141.0) (17) %

Used vehicle 264.0 353.2 (89.2) (25) %

Parts and service 1,150.6 1,152.6 (2.1) — %

Finance and insurance, net 638.2 750.7 (112.5) (15) %

TOTAL GROSS PROFIT 2,755.8 3,100.6 (344.8) (11) %

OPERATING EXPENSES:

Selling, general and administrative 1,617.4 1,763.4 (146.0) (8) %

Depreciation and amortization 67.7 69.0 (1.3) (2) %

Asset impairments 117.2 — 117.2 NM

Other operating income, net — (4.4) 4.4 (100) %

INCOME FROM OPERATIONS 953.5 1,272.6 (319.1) (25) %

OTHER (INCOME) EXPENSES:

Floor plan interest expense 9.6 8.4 1.3 15 %

Other interest expense, net 156.1 152.2 3.9 3 %

Gain on dealership divestitures, net (13.5) (207.1) 193.6 NM

Total other expenses (income), net 152.2 (46.5) 198.8 NM

INCOME BEFORE INCOME TAXES 801.3 1,319.1 (517.8) (39) %

Income tax expense 198.8 321.8 (123.0) (38) %

NET INCOME $ 602.5 $ 997.3 $ (394.8) (40) %

Net income per common share—Diluted $ 28.74 $ 44.61 $ (15.87) (36) %

______________________________

NM — Not Meaningful

For the Year Ended December 31,

REVENUE MIX PERCENTAGES:

New vehicles 51.5 % 47.7 %

Used retail vehicles 27.1 % 31.3 %

Used vehicle wholesale 2.7 % 2.4 %

Parts and service 14.1 % 13.4 %

Finance and insurance, net 4.6 % 5.2 %

Total revenue 100.0 % 100.0 %

GROSS PROFIT MIX PERCENTAGES:

New vehicles 25.5 % 27.2 %

Used retail vehicles 9.0 % 11.2 %

Used vehicle wholesale 0.6 % 0.2 %

Parts and service 41.8 % 37.2 %

Finance and insurance, net 23.2 % 24.2 %

Total gross profit 100.0 % 100.0 %

GROSS PROFIT MARGIN 18.6 % 20.1 %

SG&A EXPENSES AS A PERCENTAGE OF GROSS PROFIT 58.7 % 56.9 %

Total revenue during 2023 decreased by $631.2 million (4%) compared to 2022, due to a $782.8 million (15%) decrease in used vehicle revenue, a $120.8 million (15%) decrease in F&I revenue, offset by a $265.1 million (4%) increase in new vehicle revenue and a $7.3 million increase in parts and service revenue.

The $344.8 million (11%) decrease in gross profit during 2023 was the result of a $141.0 million (17%) decrease in new vehicle gross profit, an $89.2 million (25%) decrease in used vehicle gross profit, a $2.1 million decrease in parts and service gross profit and a $112.5 million (15%) decrease in F&I gross profit.

Our total gross profit margin decreased 147 basis points from 20.1% in 2022 to 18.6% in 2023.

Income from operations during 2023 decreased by $319.1 million (25%) compared to 2022, primarily due to a $344.8 million (11%) decrease in gross profit and a $117.2 million increase in asset impairments, partially offset by a $146.0 million (8%) decrease in selling, general and administrative expenses.

Total other expenses (income), net increased by $198.8 million from income of $46.5 million in 2022 to $152.2 million of expenses in 2023, primarily due to a $193.6 million decrease in gain on dealership divestitures, a $3.9 million (3%) increase in other interest expense, net and a $1.3 million (15%) increase in floor plan interest expense.

As a result, income before income taxes decreased by $517.8 million (39%) to $801.3 million in 2023.

The $123.0 million (38%) decrease in income tax expense was primarily attributable to the 39% decrease in income before taxes, partially offset by a 41 basis point increase in the 2023 effective tax rate.

Overall, net income decreased by $394.8 million (40%) from $997.3 million in 2022 to $602.5 million in 2023.

For the Year Ended December 31, Increase

(Dollars in millions, except for per vehicle data)

Luxury $ 2,524.1 $ 2,315.7 $ 208.4 9 %

Import 3,002.6 2,914.9 87.7 3 %

Domestic 2,104.1 2,135.0 (30.9) (1) %

Total new vehicle revenue $ 7,630.7 $ 7,365.6 $ 265.1 4 %

Gross profit:

Luxury $ 274.3 $ 293.0 $ (18.7) (6) %

Import 265.8 338.7 (72.9) (22) %

Domestic 162.9 212.3 (49.5) (23) %

Total new vehicle gross profit $ 703.0 $ 844.0 $ (141.0) (17) %

New vehicle units:

Luxury 35,300 33,904 1,396 4 %

Import 77,740 78,388 (648) (1) %

Domestic 36,469 38,887 (2,418) (6) %

Total new vehicle units 149,509 151,179 (1,670) (1) %

Luxury $ 2,503.2 $ 2,210.4 $ 292.8 13 %

Import 2,967.3 2,744.2 223.1 8 %

Domestic 2,059.0 2,074.3 (15.4) (1) %

Total new vehicle revenue $ 7,529.5 $ 7,028.9 $ 500.6 7 %

Gross profit:

Luxury $ 272.0 $ 281.6 $ (9.6) (3) %

Import 262.0 319.5 (57.5) (18) %

Domestic 159.6 206.5 (46.9) (23) %

Total new vehicle gross profit $ 693.6 $ 807.6 $ (114.0) (14) %

New vehicle units:

Luxury 34,947 32,154 2,793 9 %

Import 76,896 73,845 3,051 4 %

Domestic 35,700 37,699 (1,999) (5) %

Total new vehicle units 147,543 143,698 3,845 3 %

New Vehicle Metrics—

For the Year Ended December 31, Increase

Revenue per new vehicle sold $ 51,038 $ 48,721 $ 2,318 5 %

Gross profit per new vehicle sold $ 4,702 $ 5,583 $ (881) (16) %

New vehicle gross margin 9.2 % 11.5 % (2.2) %

Gross profit per new vehicle sold $ 7,770 $ 8,642 $ (871) (10) %

New vehicle gross margin 10.9 % 12.7 % (1.8) %

Gross profit per new vehicle sold $ 3,419 $ 4,320 $ (901) (21) %

New vehicle gross margin 8.9 % 11.6 % (2.8) %

Gross profit per new vehicle sold $ 4,466 $ 5,460 $ (994) (18) %

New vehicle gross margin 7.7 % 9.9 % (2.2) %

Revenue per new vehicle sold $ 51,033 $ 48,915 $ 2,118 4 %

Gross profit per new vehicle sold $ 4,701 $ 5,620 $ (919) (16) %

New vehicle gross margin 9.2 % 11.5 % (2.3) %

Gross profit per new vehicle sold $ 7,783 $ 8,758 $ (975) (11) %

New vehicle gross margin 10.9 % 12.7 % (1.9) %

Gross profit per new vehicle sold $ 3,407 $ 4,326 $ (919) (21) %

New vehicle gross margin 8.8 % 11.6 % (2.8) %

Gross profit per new vehicle sold $ 4,472 $ 5,479 $ (1,007) (18) %

New vehicle gross margin 7.8 % 10.0 % (2.2) %

During 2023, new vehicle revenue increased by $265.1 million (4%) when compared to 2022, as a result of a 5% increase in revenue per new vehicle sold partially offset by a 1% decrease in new vehicle unit sales.

Same store new vehicle revenue increased by $500.6 million (7%) as a result of a 4% increase in revenue per new vehicle sold and a 3% increase in new vehicle units sold.

New vehicle gross profit decreased by $141.0 million (17%) in 2023 when compared to 2022, as a result of a 16% decrease in gross profit per new vehicle sold and a 1% decrease in unit volumes.

Same store new vehicle gross profit decreased by $114.0 million (14%) in 2023, as a result of a 16% decrease in gross profit per new vehicle sold partially offset by a 3% increase in unit volumes.

Same store new vehicle gross margin decreased 228 basis points to 9.2% in 2023.

The decrease in our new vehicle gross profit margin was primarily attributable to the easing of new vehicle inventory constraints which softened the historically high new vehicle margins seen in recent years.

The seasonally adjusted annual rate ("SAAR") for new vehicle sales in the U.S.

during the year ended December 31, 2023 was approximately 15.4 million which increased as compared to approximately 13.7 million during the year ended December 31, 2022.

The increase in new vehicle sales revenue on a same store basis for the year ended December 31, 2023 over the same period in the prior year is primarily attributable to an increase of $2,118 of revenue per new vehicle sold and an increase of 3,845 in new vehicle units sold.

The increase in SAAR period over period reflects higher inventory supply, including fleet, coupled with continued consumer demand for new vehicles.

However, we continue to be negatively impacted by the significant variation in new vehicle days supply among brands and models.

We ended the year with approximately 43 days of supply of

new vehicle inventory which reflects an increase from 26 days of supply as of December 31, 2022 but remains well below historical levels.

Used Vehicle—

For the Year Ended December 31, Increase (Decrease) %

(Dollars in millions, except for per vehicle data)

Used vehicle retail revenue $ 4,017.5 $ 4,828.8 $ (811.3) (17) %

Used vehicle wholesale revenue 396.7 368.3 28.5 8 %

Used vehicle revenue $ 4,414.3 $ 5,197.1 $ (782.8) (15) %

Gross profit:

Used vehicle retail gross profit $ 248.5 $ 347.1 $ (98.5) (28) %

Used vehicle wholesale gross profit 15.5 6.2 9.3 151 %

Used vehicle gross profit $ 264.0 $ 353.2 $ (89.2) (25) %

Used vehicle retail units:

Used vehicle retail units 127,507 151,464 (23,957) (16) %

Used vehicle retail revenue $ 3,949.1 $ 4,503.7 $ (554.6) (12) %

Used vehicle wholesale revenue 389.7 348.9 40.8 12 %

Used vehicle revenue $ 4,338.8 $ 4,852.6 $ (513.7) (11) %

Gross profit:

Used vehicle retail gross profit $ 243.7 $ 323.7 $ (80.0) (25) %

Used vehicle wholesale gross profit 15.3 7.1 8.3 117 %

Used vehicle gross profit $ 259.1 $ 330.8 $ (71.7) (22) %

Used vehicle retail units:

Used vehicle retail units 125,124 139,446 (14,322) (10) %

Used Vehicle Metrics—

For the Year Ended December 31, Increase (Decrease) %

Revenue per used vehicle retailed $ 31,508 $ 31,881 $ (372) (1) %

Gross profit per used vehicle retailed $ 1,949 $ 2,291 $ (342) (15) %

Used vehicle retail gross margin 6.2 % 7.2 % (1.0) %

Revenue per used vehicle retailed $ 31,562 $ 32,297 $ (735) (2) %

Gross profit per used vehicle retailed $ 1,948 $ 2,321 $ (374) (16) %

Used vehicle retail gross margin 6.2 % 7.2 % (1.0) %

Used vehicle revenue decreased by $782.8 million (15%), due to an $811.3 million (17%) decrease in used vehicle retail revenue, partially offset by a $28.5 million (8%) increase in used vehicle wholesale revenue.

Same store used vehicle revenue decreased by $513.7 million (11%) due to a $554.6 million (12%) decrease in used vehicle retail revenue, partially offset by a $40.8 million (12%) increase in used vehicle wholesale revenue.

Used vehicle revenues and unit volume have continued to contract during 2023, along with margins on both an all store and same store basis.

Used vehicle revenue and unit volumes have

been negatively impacted by the affordability headwinds and lack of inventory availability, especially in vehicles with lower mileage.

In 2023, total Company and same store used vehicle retail gross profit margins decreased 100 and 102 basis points, respectively, to both 6.2%.

We believe that our used vehicle inventory continues to be well-aligned with current consumer demand, with approximately 32 days of supply as of December 31, 2023.

This level of days of supply is in line with our historic targeted range of 30 to 35 days.

Parts and Service—

For the Year Ended December 31, Increase

(Dollars in millions)

Parts and service revenue $ 2,081.5 $ 2,074.2 $ 7.3 — %

Parts and service gross profit:

Customer pay 709.5 709.7 (0.1) — %

Warranty 148.4 142.4 5.9 4 %

Wholesale parts 78.7 79.4 (0.7) (1) %

Parts and service gross profit, excluding reconditioning and preparation 936.6 931.5 5.1 1 %

Parts and service gross margin, excluding reconditioning and preparation 45.0% 44.9% 0.1 %

Reconditioning and preparation * 214.0 221.1 (7.1) (3) %

Total parts and service gross profit $ 1,150.6 $ 1,152.6 $ (2.1) — %

Total parts and service gross margin 55.3% 55.6% (0.3) %

Parts and service revenue $ 2,063.2 $ 1,960.5 $ 102.6 5 %

Parts and service gross profit:

Customer pay 702.3 668.4 33.8 5 %

Warranty 147.5 136.2 11.3 8 %

Wholesale parts 78.3 75.9 2.5 3 %

Parts and service gross profit, excluding reconditioning and preparation 928.1 880.5 47.6 5 %

Parts and service gross margin, excluding reconditioning and preparation 45.0% 44.9% 0.1 %

Reconditioning and preparation * 212.7 207.3 5.4 3 %

Total parts and service gross profit $ 1,140.7 $ 1,087.8 $ 52.9 5 %

Total parts and service gross margin 55.3% 55.5% (0.2) %

The $7.3 million increase in parts and service revenue was due to a $6.3 million increase in customer pay revenue and a $10.2 million (4%) increase in warranty revenue, partially offset by a $9.2 million (2%) decrease in wholesale parts revenue.

Same store parts and service revenue increased $102.6 million (5%) from $1.96 billion in 2022 to $2.06 billion in 2023.

The increase in same store parts and service revenue was due to a $72.1 million (6%) increase in customer pay revenue, a $19.8 million (8%) increase in warranty revenue and a $10.7 million (2%) increase in wholesale parts revenue.

Parts and service gross profit, excluding reconditioning and preparation, increased by $5.1 million (1%) to $936.6 million and same store gross profit, excluding reconditioning and preparation, increased by $47.6 million (5%) to $928.1 million.

$47.6 million increase in same store gross profit, excluding reconditioning and preparation, is primarily due to a $33.8 million (5%) increase in customer pay gross profit, an $11.3 million (8%) increase in warranty gross profit and a $2.5 million (3%) increase in wholesale parts gross profit.

As a result of the shortage of new vehicle inventory, many customers have elected to keep their current vehicles longer which has generated additional customer pay and wholesale parts gross profit for the parts and service departments.

We continue to focus on increasing our customer pay parts and service revenue over the long-term by improving the customer experience, providing competitive benefits to our technicians, capitalizing on our dealership training programs and upgrading equipment.

Finance and Insurance, net—

For the Year Ended December 31, Increase

(Dollars in millions, except for per vehicle data)

Finance and insurance, net revenue $ 676.2 $ 797.0 $ (120.8) (15) %

Finance and insurance, net gross profit $ 638.2 $ 750.7 $ (112.5) (15) %

Finance and insurance, net per vehicle sold $ 2,304 $ 2,480 $ (177) (7) %

Finance and insurance, net revenue $ 667.3 $ 761.7 $ (94.4) (12) %

Finance and insurance, net gross profit $ 629.4 $ 715.5 $ (86.1) (12) %

Finance and insurance, net per vehicle sold $ 2,308 $ 2,527 $ (219) (9) %

F&I revenue, net decreased by $120.8 million (15%) in 2023 when compared to 2022 primarily as a result of an 8% decrease in new and used retail unit sales and an 7% decrease in F&I per vehicle retailed.

On a same store basis F&I revenue, net decreased by $94.4 million (12%) in 2023 when compared to 2022 primarily as a result of a 4% decrease in new and used retail unit sales and a 9% decrease in F&I per vehicle retailed.

The financial results of the TCA segment, after dealership eliminations, are as follows:

For the Year Ended December 31, Increase

(Dollars in millions)

Finance and insurance, revenue $ 138.3 $ 126.0 $ 12.3 10 %

Finance and insurance, cost of sales $ 37.9 $ 46.3 $ (8.4) (18) %

Finance and insurance, gross profit $ 100.4 $ 79.8 $ 20.7 26 %

TCA offers a variety of F&I products, such as extended vehicle service contracts, prepaid maintenance contracts, GAP, appearance protection contracts and lease wear-and-tear contracts.

TCA's products are sold through our automobile dealerships.

Revenue generated by TCA is earned over the period of the related product contract.

The method for recognizing revenue is assigned based on contract type and expected claim patterns.

Premium revenues are supplemented with investment gains or losses and income earned associated with the performance of TCA's investment portfolio.

During the year ended December 31, 2023, TCA generated $138.3 million of revenue, consisting primarily of earned premium and $15.7 million from the investment portfolio.

Direct expenses incurred for the acquisition of F&I contracts on which revenue has not yet been recognized have been deferred and are amortized over the related contract period.

During the year ended December 31, 2023, TCA recorded $37.9 million of cost of sales consisting primarily of claims expense, after the elimination of claims paid to affiliated dealerships.

Commissions expense paid by TCA to our affiliated dealerships and reflected as F&I revenue in our Dealerships segment is eliminated in the TCA segment upon consolidation.

S elling, General and Administrative Expense—

For the Year Ended December 31, Increase

(Decrease) % of Gross

Profit Increase (Decrease)

2023 % of Gross

Profit 2022 % of Gross

(Dollars in millions)

Personnel costs $ 1,081.7 39.3 % $ 1,247.4 40.2 % $ (165.7) (1.0) %

Rent and related expenses 119.0 4.3 % 121.7 3.9 % (2.7) 0.4 %

Advertising 47.5 1.7 % 50.1 1.6 % (2.6) 0.1 %

Other 369.2 13.4 % 344.2 11.1 % 25.0 2.3 %

Selling, general and administrative expense $ 1,617.4 58.7 % $ 1,763.4 56.9 % $ (146.0) 1.8 %

Gross profit $ 2,755.8 $ 3,100.6

Personnel costs $ 1,068.5 39.2 % $ 1,181.8 40.2 % $ (113.3) (0.9) %

Rent and related expenses 117.9 4.3 % 116.3 4.0 % 1.6 0.4 %

Advertising 45.6 1.7 % 43.8 1.5 % 1.8 0.2 %

Other 361.6 13.3 % 329.0 11.2 % 32.6 2.1 %

Selling, general and administrative expense $ 1,593.6 58.5 % $ 1,670.9 56.8 % $ (77.3) 1.7 %

Gross profit $ 2,722.8 $ 2,941.7

SG&A expense as a percentage of gross profit increased 182 basis points from 56.9% in 2022 to 58.7% in 2023.

Same store SG&A expense as a percentage of gross profit increased 173 basis points from 56.8% in 2022 to 58.5% in 2023.

The increase in SG&A as a percentage of gross profit is primarily the result of lower gross profits for 2023 when compared to 2022.

SG&A expense for the year ended December 31, 2022 includes $2.7 million of professional fees related to acquisition due diligence.

Asset Impairments —

During the year ended December 31, 2023, we recognized asset impairment charges of $117.2 million as compared to no impairment charges during the year ended December 31, 2022.

Floor Plan Interest Expense —

Floor plan interest expense increased by $1.3 million (15%) to $9.6 million during 2023 compared to $8.4 million during 2022 due to less cash held in the floor plan offset account in December 2023 as a result of funding the Koons acquisition.

Other Interest Expense —

Other interest expense increased $3.9 million (3%) from $152.2 million in 2022 to $156.1 million in 2023.

The increase is primarily due to higher loaner payable interest expense driven by higher loaner vehicle balances, as well as interest expense on our revolving credit agreement in December 2023.

Gain on Dealership Divestitures —

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

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

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

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

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

Income Tax Expense —

The $123.0 million (38%) decrease in income tax expense was primarily the result of a $517.8 million (39%) decrease in income before income taxes.

Our effective tax rate increased 41 basis points from 24.4% in 2022 to 24.8% in 2023.

The increase in our effective tax rate was primarily due to lower income before taxes and our acquisition and divestiture activity.

Stores acquired are located in relatively high tax rate states while the stores divested are located in relatively low or no tax rate states.

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2024, we had total available liquidity of $827.7 million , which consisted of cash and cash equivalents of $38.9 million (excluding $30.5 million held by TCA), available funds in our floor plan offset accounts of $116.7 million million and $486.0 million of availability under our revolving credit facility and $186.1 million of availability under our used vehicle floor plan facility.

As of December 31, 2025, we had total available liquidity of $927.1 million, which consisted of cash and cash equivalents of $28.2 million (excluding $12.2 million held by TCA), available funds in our floor plan offset accounts of $151.6 million and $747.3 million of availability under our revolving credit facility.

The borrowing capacities under our revolving credit facility and our used vehicle revolving floor plan facility are limited by borrowing base calculations and, from time to time, may be further limited by our required compliance with certain financial covenants.

12 unchanged sentences

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

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

As amended, the 2023 Senior Credit Agreement provides for the following:

Revolving Credit Facility — A $500.0 million Revolving Credit Facility for, among other things, acquisitions, working capital and capital expenditures, including a $50.0 million sub-limit for letters of credit.

The 2023 Senior Credit Facility amended and

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

On April 9, 2025, the Company obtained an amendment to the 2023 Senior Credit Facility by and among the Company, as a borrower, certain of its subsidiaries, as vehicle borrowers, Bank of America, as administrative agent, and the other lenders party thereto.

The Amendment, among other things, provided for the following, subject to satisfaction of certain other customary conditions in each case:

Revolving Credit Facility — An increase of the aggregate commitments from $500.0 million to $925.0 million under the Revolving Credit Facility for, among other things, acquisitions, working capital and capital expenditures, including a $50.0 million sub-limit for letters of credit.

As of December 31, 2025, we had $25.2 million in outstanding letters of credit, resulting in $747.3 million of borrowing availability.

We began the year wit h no am ounts drawn on our revolving credit facility.

During the year ended December 31, 2024, we had borrowings of $1.21 billion and $1.21 billion in repayment s, resulting in no outstanding borrowings as of December 31, 2024.

New Vehicle Floor Plan Facility — A $1.93 billion New Vehicle Floor Plan Facility which allows us to transfer cash as an offset to floor plan notes payable.

We began the year with no amounts drawn on our revolving credit facility.

During the year ended December 31, 2025, we had borrowings of $2.15 billion and $2.03 billion in repayments, resulting in $120.0 million of outstanding borrowings as of December 31, 2025.

New Vehicle Floor Plan Facility — An increase of the aggregate commitments from $1.93 billion to $2.25 billion under the New Vehicle Floor Plan Facility which allows us to transfer cash as an offset to floor plan notes payable.

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

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We began the year with $100.7 million amounts drawn on our Used Vehicle Floor Plan Facility.

During the year ended December 31, 2024, we had additional borrowings of $376.4 million and $582.8 million

in repayments resulting in $100.7 million outstanding borrowings as of December 31, 2024.

We had $186.1 million borrowing capacity under the Used Vehicle Floor Plan Facility based on our borrowing base calculation as of December 31, 2024.

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

During the year ended December 31, 2025, we had additional borrowings of $650.0 million and $425.7 million in repayments resulting in $325.0 million outstanding borrowings as of December 31, 2025.

We had fully utilized our borrowing capacity under the Used Vehicle Floor Plan Facility based on our borrowing base calculation as of December 31, 2025.

At our option, we have the ability to re-designate a portion of our availability under the Revolving Credit Facility to the New Vehicle Floor Plan Facility or the Used Vehicle Floor Plan Facility.

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

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

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

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

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The 2029 Senior Notes and 2032 Senior Notes mature on November 15, 2029 and February 15, 2032, respectively.

Interest is payable semiannually, on November 15 and May 15 of each year.

Interest is payable semiannually, on

November 15 and May 15 of each year.

The 2029 Senior Notes and the 2032 Senior Notes were offered, together with additional borrowings and cash on hand, to (i) fund the LHM Acquisition and (ii) pay related fees and expenses.

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As of December 31, 2025 we had total mortgage notes payable outstanding of $27.2 million which are collateralized by the associated real estate.

• 2025 Wells Fargo Real Estate Facility —On July 21, 2025, certain subsidiaries of the Company borrowed $546.5 million (the “2025 Real Estate Facility”) under a real estate term loan credit agreement, dated as of July 21, 2025 (the “Real Estate Credit Agreement”) by and among the Company, certain of the Company’s subsidiaries that own or lease the real estate financed thereunder, as borrowers, Wells Fargo Bank, National Association, as administrative agent, and the various financial institutions parties thereto, as lenders.

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

The Company used the proceeds from these borrowings, together with other available funds, to finance the Herb Chambers acquisition.

As of December 31, 2025, we had $537.4 million of outstanding borrowings under the 2025 Real Estate Facility.

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

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• 2021 BofA Real Estate Facility —On May 10, 2021, we entered into a real estate term loan credit agreement (the "2021 BofA Real Estate Credit Agreement"), by and among the Company and certain of its subsidiaries, Bank of America, N.A., as administrative agent and the various financial institutions party thereto, as lenders, which provided for term loans in an aggregate amount equal to $184.4 million, subject to customary terms and conditions (the "2021 BofA Real Estate Facility").

As of December 31, 2024, we had $158.6 million of outstanding borrowings under the 2021 BofA Real Estate Facility.

As of December 31, 2025, we had $151.2 million of outstanding borrowings under the

2021 BofA Real Estate Facility.

There is no further borrowing availability under the 2021 BofA Real Estate Credit Agreement.

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• 2018 BofA Real Estate Facility —On November 13, 2018, we entered into a real estate term loan credit agreement (as amended, restated or supplemented from time to time, the "2018 BofA Real Estate Credit Agreement") with Bank of America, as lender, providing for term loans in an aggregate amount not to exceed $128.1 million, subject to customary terms and conditions (the "2018 BofA Real Estate Facility").

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

All of the real property financed by an operating dealership subsidiary of the Company under the 2018 BofA Real Estate Facility is collateralized by first priority liens, subject to certain permitted exceptions.

As of December 31, 2024, we had $37.9 million, of outstanding borrowings under the 2018 BofA Real Estate Facility.

There is no further borrowing availability under the 2018 BofA Real Estate Facility.

On May 25, 2022, certain of our subsidiaries entered into an amendment to the 2018 BofA Real Estate Credit Agreement to replace the benchmark reference rate of LIBOR to SOFR, effective June 1, 2022.

See Note 14 "Debt" for further details.

In November 2025, we paid off the aggregate principal amounts remaining under the 2018 BofA Real Estate Facility for an aggregate amount of approximately $34.2 million.

• 2018 Wells Fargo Master Loan Facility — On November 16, 2018, certain of our subsidiaries entered into a master loan agreement (the "2018 Wells Fargo Master Loan Agreement") with Wells Fargo as lender, which provides for term loans to certain of our subsidiaries that are borrowers under the 2018 Wells Fargo Master Loan Agreement in an aggregate amount not to exceed $100.0 million (the "2018 Wells Fargo Master Loan Facility").

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• 2015 Wells Fargo Master Loan Facility —On February 3, 2015, certain of our subsidiaries entered into an amended and restated master loan agreement (the "2015 Wells Fargo Master Loan Agreement") with Wells Fargo Bank, National Association ("Wells Fargo"), as lender, which provides for term loans to certain of our subsidiaries that are borrowers under the 2015 Wells Fargo Master Loan Agreement in an aggregate amount not to exceed $100.0 million (the "2015 Wells Fargo Master Loan Facility").

Borrowings under the 2015 Wells Fargo Master Loan Facility are guaranteed by us and are collateralized by the real property financed under the 2015 Wells Fargo Master Loan Facility.

As of December 31, 2024, the outstanding balance under this agreement was $32.0 million.

There is no further borrowing availability under the 2015 Wells Fargo Master Loan Facility.

On and with effect from June 1, 2022, certain

of our subsidiaries entered into an amendment to our 2015 Wells Fargo Master Loan Agreement to replace the benchmark reference rate of LIBOR to SOFR.

See Note 14 "Debt" for further details.

The outstanding balance under this agreement in the amount of $31.6 million was paid off in May 2025.

• 2013 BofA Real Estate Facility —On September 26, 2013, we entered into a real estate term loan credit agreement (the "2013 BofA Real Estate Credit Agreement") with Bank of America, N.A., as lender, providing for term loans in an aggregate amount not to exceed $75.0 million, subject to customary terms and conditions (the "2013 BofA Real Estate Facility").

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We cannot give any assurance that we would be able to successfully take any of these actions on terms, or at times, that may be necessary or desirable.

The representations and covenants contained in the 2021 Real Estate Facility, 2021 BofA Real Estate Credit Agreement, 2018 BofA Real Estate Credit Agreement, 2018 Wells Fargo Master Loan Agreement, 2015 Wells Fargo Master Loan Agreement, and the related documents are customary for financing transactions of this nature, including, among others, requirements to comply with a minimum consolidated fixed charge coverage ratio and maximum consolidated total lease adjusted leverage ratio, in each case, as applicable.

The representations and covenants contained in the 2021 Real Estate Facility, 2021 BofA Real Estate Credit Agreement, 2018 BofA Real Estate Credit Agreement, 2018 Wells Fargo Master Loan Agreement, the 2025 Real Estate Facility, and the related documents are customary for financing transactions of this nature, including, among others, requirements to comply with a minimum consolidated fixed charge coverage ratio and maximum consolidated total lease adjusted leverage ratio, in each case, as applicable.

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

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Upon the occurrence of an event of default, we could be required by the applicable agreement to immediately repay all amounts outstanding thereunder.

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

governing the 2023 Senior Credit Facility.

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

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Our ability to repurchase shares or pay dividends on our common stock is subject to our compliance with the covenants and restrictions described in "Covenants and Defaults" above.

During the year ended December 31, 2024, we repurchased 830,297 shares of our common stock under our repurchase program for a total of $183.0 million and an additional 46,941 shares of our common stock for $10.2 million from employees in connection with a net share settlement feature of employee equity-based awards.

As of December 31, 2024, we had remaining authorization to repurchase up to an additional $275.9 million of our common stock.

Any repurchases will be subject to applicable limitations in our debt or other financing agreements that may be in existence from time to time.

On May 15, 2024, the Company announced that its Board of Directors approved an increase of $256.2 million in the Company's common share repurchase authorization to $400.0 million (the "New Share Repurchase Authorization"), for the repurchase of our common stock in open market transactions or privately negotiated transactions or in other manners as permitted by federal securities laws and other legal and contractual requirements.

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The repurchase program may be modified, suspended or terminated at any time without prior notice.

On August 16, 2022, the U.S.

government enacted the Inflation Reduction Act (the "IRA") into law.

The IRA, among other things, im plements a 1% excise tax on share repurchases, which takes effect in tax years beginning after December 31, 2022.

In 2024, we recorded a total of $1.7 million exci se tax on our share repurchases.

During the year ended December 31, 2025, we repurchased 432,752 shares of our common stock under our repurchase program for a total of $99.9 million and an additional 44,212 shares of our common stock for $13.7 million from employees in connection with a net share settlement feature of employee equity-based awards.

As of December 31, 2025, we had remaining authorization to repurchase up to an additional $175.9 million of our common stock.

Any repurchases will be subject to applicable limitations in our debt or other financing agreements that may be in existence from time to time.

Contractual Obligations

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The net change in floor plan notes payable to a lender affiliated with the manufacturer from which we purchase a particular new vehicle (collectively referred to as "Floor Plan Notes Payable—Trade") is classified as an operating activity on the accompanying consolidated statements of cash flows.

Borrowings of floor plan notes payable associated with inventory acquired in connection with all acquisitions and repayments made in connection with all divestitures are classified as a financing activity in the accompanying consolidated statement of cash flows.

Cash flows related to floor plan notes payable included in operating activities differ from cash flows related to floor plan notes payable included in financing activities only to the extent that the former are payable to a lender affiliated with the manufacturer from which we purchased the related inventory, while the latter are payable to our 2023 Senior Credit Facility that includes lenders affiliated with the manufacturers and lenders not affiliated with the manufacturers from which we purchased the related inventory.

Borrowings of non-trade floor plan notes payable associated with inventory acquired in connection with all acquisitions and repayments made in connection with all divestitures are classified as a financing activity in the accompanying consolidated statements of cash flows.

Cash flows related

to floor plan notes payable included in operating activities differ from cash flows related to floor plan notes payable included in financing activities only to the extent that the former are payable to a lender affiliated with the manufacturer from which we purchased the related inventory, while the latter are payable to our 2023 Senior Credit Facility that includes lenders affiliated with the manufacturers and lenders not affiliated with the manufacturers from which we purchased the related inventory.

The majority of our floor plan notes are payable to our 2023 Senior Credit Facility, with the exception of floor plan notes payable relating to the financing of new Ford and Lincoln vehicles and certain loaner vehicle programs.

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Adjusted cash flow provided by operating activities includes borrowings and repayments of floor plan notes payable non-trade and used floor plan notes payable borrowing base changes.

Adjusted cash flow provided by operating activities may not be comparable to similarly titled measures of other companies and should not be considered in isolation, or as a substitute for

analysis of our operating results in accordance with GAAP.

Adjusted cash flow provided by operating activities may not be comparable to similarly titled measures of other companies and should not be considered in isolation, or as a substitute for analysis of our operating results in accordance with GAAP.

In order to compensate for these potential limitations, we also review the related GAAP measures.

Adjustments related to cash flows associated with our used vehicle borrowing base, floorplan offset accounts and the impact of acquisitions and divestitures eliminates cash flow volatility and provides an adjusted operating cash flow metric that best reflects our results of operations and our management of inventory and related financing activities.

We have provided below a reconciliation of cash flow provided by operating activities, as if all changes in floor plan notes payable, except for (i) borrowings associated with acquisitions and repayments associated with divestitures and (ii) borrowings and repayments associated with the purchase of used vehicle inventory and (iii) changes in the floorplan offset accounts were classified as an operating activity for both floorplan notes payable - non-trade and floor plan notes payable - trade.

We believe that the adjustments related to cash flows associated with our used vehicle borrowing base, floor plan offset accounts and the impact of acquisitions and divestitures eliminates cash flow volatility and provides an adjusted operating cash flow metric that best reflects our results of operations and our management of inventory and related financing activities.

We have provided below a reconciliation of cash flow provided by operating activities, as if all changes in floor plan notes payable, except for (i) borrowings associated with acquisitions and repayments associated with divestitures and (ii) borrowings and repayments associated with the purchase of used vehicle inventory and (iii) changes in the floor plan offset accounts were classified as an operating activity for both floor plan notes payable - non-trade and floor plan notes payable - trade.

For the Year Ended December 31,

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The $37.0 million decrease in adjusted cash flow provided by operating activities for the year ended December 31, 2025 compared to the year ended December 31, 2024, was primarily the result of the following:

• decrease in $86.6 million in net income and non-cash adjustments to net income;

• decrease of $56.7 million related to the change in accounts payable and accrued liabilities;

• decrease of $51.7 million in other current assets, net;

• decrease of $24.4 million in net income and non-cash adjustments to net income.

The decrease in our adjusted cash flow provided by operating activities was partially offset by:

• $59.4 million increase related to sale volume and the timing of collection of accounts receivable and contracts-in-transit during 2025 compared to 2024;

• $31.3 million increase related to other long-term assets and liabilities, net;

• increase of $8.2 million in inventory, net of floor plan notes payable, including both trade and non-trade, excluding offset and including used vehicle borrowing base changes adjusted for acquisitions and divestitures.

The $16.9 million decrease in our adjusted cash flow provided by operating activities for the year ended December 31, 2024 compared to the year ended December 31, 2023, was primarily the result of the following:

• decrease of $86.6 million in net income and non-cash adjustments to net income;

• $100.9 million decrease related to the change in accounts payable and accrued liabilities;

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• $8.2 million decrease in other long-term assets and liabilities, net.

The $281.7 million decrease in our adjusted cash flow provided by operating activities for the year ended December 31, 2023 compared to the year ended December 31, 2022, was primarily the result of the following:

• decrease of $192.4 million in net income and non-cash adjustments to net income;

• $144.1 million related to sale volume and the timing of collection of accounts receivable and contracts-in-transit during 2023 compared to 2022;

• $210.9 million related to the decrease in other current assets, net;

• $2.6 million increase in other long term assets and liabilities, net and

• $1.3 million related to the change in operating lease liabilities.

The decrease in our adjusted cash flow provided by operating activities, was partially offset by:

• $155.2 million related to an increase in inventory, net of floor plan notes payable, including both trade and non-trade, excluding offset and including used vehicle borrowing base changes adjusted for acquisitions and divestitures;

• $114.4 million related to the change in accounts payable and accrued liabilities.

Investing Activities—

Net cash used in investing activities totaled $137.2 million and $1.68 billion for the years ended December 31, 2024 and 2023, respectively, compared to net cash provided by investing activities of $464.7 million for the year ended December 31, 2022.

Net cash used in investing activities totaled $1.46 billion, $137.2 million, and $1.68 billion for the years ended December 31, 2025, 2024, and 2023 respectively.

Cash flows from investing activities relate primarily to capital expenditures, acquisitions, divestitures, and the sale of property and equipment.

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No assurances can be provided that we will have or be able to access capital at times or on terms in amounts deemed necessary to execute this strategy.

On December 11, 2023, we completed the acquisition of the Jim Koons Dealerships for a total purchase price of approximately $1.50 billion, which includes $256.1 million of new vehicle floor plan financing and $100.9 million of assets held for sale related to Koons Lexus of Wilmington.

On July 21, 2025, we completed the acquisition of the Herb Chambers dealerships for a total purchase price of approximately $1.76 billion, which includes $292.0 million of new vehicle floor plan financing, $623.3 million of borrowings under a revolving credit facility, and $546.5 million of borrowings under a real estate facility.

held for sale related to Koons Lexus of Wilmington.

The sources of the purchase price included borrowings under Asbury’s existing credit facility and cash on hand.

During the year ended December 31, 2023, we sold one franchise (one dealership location) in Austin, Texas for proceeds of $30.7 million.

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

Louis, Missouri, three franchises (three dealership locations) and one collision center in Denver, Colorado, two franchises (two dealership locations) in Spokane, Washington, one franchise (one dealership location) in Albuquerque, New Mexico and 11 franchises (nine dealership locations) and two collision centers in North Carolina for proceeds of $701.2 million.

Proceeds from the sale of assets, unrelated to a dealership divestiture, were $6.5 million and $16.3 million for the years ended December 31, 2024 and 2023, respectively.

We did not have any proceeds from the sale of assets, unrelated to a dealership divestitures in 2022.

During the years ended December 31, 2024, 2023, and 2022, we purchased $165.0 million, $195.2 million and $202.2 million of debt securities and $41.4 million of equity securities in December 31, 2022.

During the year ended December 31, 2025, we sold 24 franchises (15 dealership locations) for an aggregate purchase price of approximately $566.5 million.

The Company recorded a pre-tax gain totaling $80.2 million, which is presented in our accompanying consolidated statements of income as a gain on dealership divestitures, net.

During the year ended December 31, 2024, we sold five franchises (5 dealership locations) for an aggregate purchase price of approximately $196.3 million.

The Company recorded a pre-tax gain totaling $8.6 million, which is presented in our accompanying consolidated statements of income as a gain on dealership divestitures, net.

During the year ended December 31, 2023, we sold one franchise (one dealership location) for proceeds of $30.7 million.

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

Proceeds from the sale of assets, unrelated to a dealership divestiture, was $6.5 million and $16.3 million for the years ended December 31, 2024 and 2023, respectively.

We did not have proceeds from the sale of assets, unrelated to a dealership divestiture, for the year ended December 31, 2025.

During the years ended December 31, 2025, 2024, and 2023, we purchased $189.4 million, $165.0 million and $195.2 million of debt securities.

We did not purchase any equity securities in 2025, 2024 or 2023.

During the years ended December 31, 2024, 2023, and 2022, we also received proceeds of $149.8 million, $60.3 million, and $69.7 million from the sale of debt securities respectively and $51.8 million and $50.3 million, from the sale of equity securities in 2023, and 2022, respectively.

We did not have any proceeds from the sale of equity securities in 2024.

During the years ended December 31, 2025, 2024, and 2023, we also received proceeds of $132.8 million, $149.8 million, and $60.3 million from the sale of debt securities respectively and $51.8 million from the sale of equity securities in 2023.

We did not have any proceeds from the sale of equity securities in 2025 or 2024.

Financing Activities—

Net cash used in financing activities totaled $510.3 million and $1.10 billion for the years ended December 31, 2024 and 2022, respectively.

Net cash provided by financing activities totaled $1.18 billion for the year ended December 31, 2023.

Net cash provided by financing activities totaled $653.1 million and $1.18 billion for the years ended December 31, 2025 and 2023, respectively.

Net cash used in financing activities totaled $510.3 million for the year ended December 31, 2024.

During the years ended December 31, 2025, 2024, and 2023, we had non-trade floor plan borrowings of $10.38 billion, $9.45 billion, and $8.39 billion, respectively.

Included in our non-trade floor plan borrowings, were borrowings of $100.7 million and $307.1 million for the years ended December 31, 2024 and 2023, respectively, related to our used vehicle floor plan facility.

We did not have any floor plan borrowing related to our used vehicle floor plan facility as of December 31, 2022.

During the year ended December 31, 2024, 2023 and 2022, we borrowed $1,213.5 million, $329.0 million, and $330.0 million, and repaid $1,213.5 million, $329.0 million and $499.0 million, respectively, on our revolving line of credit.

In addition, during the years ended December 31, 2023, we had non-trade floor plan borrowings of $256.1 million, related to acquisitions.

Included in our non-trade floor plan borrowings, were borrowings of $325.0 million, $100.7 million, and $307.1 million for the years ended December 31, 2025, 2024, and 2023, respectively, related to our used vehicle floor plan facility.

During the years ended December 31, 2025, 2024 and 2023, we borrowed $2.15 billion, $1.21 billion, and $329.0 million, and repaid $2.03 billion, $1.21 billion and $329.0 million, respectively, on our revolving line of credit.

In addition, during the years ended December 31, 2025 and 2023 we had non-trade floor plan borrowings of $262.7 million and $256.1 million, respectively, related to acquisitions.

The majority of our floor plan notes are payable to parties unaffiliated with the entities from which we purchase our new vehicle inventory, with the exception of floor plan notes payable relating to the financing of new Ford and Lincoln vehicles.

We did not have any dealership acquisitions in 2024 and 2022.

We did not have any dealership acquisitions in 2024.

During the years ended December 31, 2025, 2024, and 2023, we made non-trade floor plan repayments of $10.21 billion, $9.66 billion, and $7.06 billion, respectively.

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During 2023, we did not have any floor plan repayments associated with dealership divestitures.

Proceeds from borrowings totaled $546.5 million for the year ended December 31, 2025.

We did not have proceeds from borrowings for the years ended December 31, 2024 and 2023, respectively.

Repayments of borrowings totaled $234.1 million, $71.4 million and $126.0 million, for the years ended December 31, 2025, 2024, and 2023, respectively.

During the year ended December 31, 2022, we received net proceeds from the issuance of common stock totaling $1.4 million.

We did not have any net proceeds from the issuance of common stock in 2024 or 2023.

During the year ended December 31, 2024, 2023, 2022 we repurchased 830,297, 1,316,167 and 1,635,030 shares of our common stock under our Repurchase Program for a total of 183.0 million and $258.1 million and $297.0 million and 46,941, 48,262 and 56,024 shares of our common stock for $10.2 million, $11.4 million and $9.2 million from employees in connection with a net share settlement feature of employee equity-based awards, respectively.

During the years ended December 31, 2025, 2024, and 2023 we repurchased 432,752, 830,297, and 1,316,167 shares of our common stock under our Repurchase Program for a total of $99.9 million, $183.0 million and $258.1 million and 44,212, 46,941 and 48,262 shares of our common stock for $12.8 million, $10.2 million and $11.4 million from employees in connection with a net share settlement feature of employee equity-based awards, respectively.

Off-Balance Sheet Arrangements

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Goodwill represents the excess cost of an acquired business over the fair market value of its identifiable assets and liabilities.

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

We have determined, based on how we integrate acquisitions into our business, how the components of our business

share resources and interact with one another, and how we review the results of our operations, that we have several geographic region-based operating segments.

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

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If we elect to bypass the qualitative assessment or if we determine, on the basis of qualitative factors, that the fair value of the reporting unit is more likely than not less than the carrying amount, a quantitative test would be required.

Based on the underperformance of certain stores, we performed quantitative impairment tests in the second quarter of 2024 and as of our annual impairment testing date, October 1, 2024.

The results of the quantitative impairment testing identified that the carrying values of certain of our franchise rights intangible assets exceeded their fair value by $134.1 million and $14.1 million for the three months ended June 30, 2024 and December 31, 2024, respectively.

In total, we recognized a $148.2 million pre-tax non-cash impairment charge related to our franchise rights intangible assets during the year ended December 31, 2024.

In connection with a change in reporting units in our Dealerships segment, we performed qualitative and quantitative impairment tests of goodwill for the affected reporting units as of October 1, 2024, both before and after the change in reporting units.

For all reporting units, for which a qualitative or quantitative impairment test was performed as of October 1, 2024, the fair values exceeded their carrying amounts.

As a result of our annual franchise rights impairment tests as of October 1, 2025, we identified several dealerships with franchise rights carrying values that exceeded their fair values due to the underperformance of certain stores.

As a result, we recognized a $115.0 million pre-tax non-cash impairment charge related to our franchise rights intangible assets during the year ended December 31, 2025.

In connection with our annual goodwill impairment tests, we performed qualitative impairment tests of goodwill as of October 1, 2025.

For all reporting units, for which a qualitative impairment test was performed as of October 1, 2025, the fair values exceeded their carrying amounts.

We believe that the fair value of our reporting units is substantially in excess of its carrying amount.

We also recorded a goodwill impairment charge of $1.3 million during the year ended December 31, 2024 related to one dealership that met the assets held for sale criteria in June 2024.

The quantitative impairment test of the disposal group included a comparison of the estimated fair value to the carrying value of the disposal group less cost to sell.

We also recorded a franchise rights impairment charge of $26.0 million during the year ended December 31, 2025 related to dealerships that met the assets held for sale criteria during 2025.

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

This asset impairment charge is reflected in asset impairments in our consolidated statements of income.

In total, we recognized asset impairments of $149.5 million and $117.2 million during the years ended December 31, 2024, and 2023, respectively.

No franchise rights or goodwill impairments were identified in 2022.

In total, we recognized asset impairments of $141.0 million, $149.5 million and $117.2 million during the years ended December 31, 2025, 2024, and 2023, respectively.

We continue to monitor developments related to macroeconomic conditions and the performance of our stores and reporting units.

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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 7. Management’s Discussion and Analysis