Asbury Automotive Group — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total revenue for the quarter was $4.4 billion, a decrease of 8% from $4.8 billion in the third quarter of 2025.
• Gross profit was $732 million, down 9% from $803 million in the prior year period, with a gross margin of 16.6%.
• Net income was $105 million ($5.84 per diluted share), a 29% decrease from $147 million ($7.52 per diluted share) in the third quarter of 2025.
• Adjusted net income was $111 million ($6.16 per diluted share), a 21% decrease from $140 million ($7.17 per diluted share) in the third quarter of 2025.
• Operating margin was 4.7%, and adjusted operating margin was 4.9%.
• Selling, General and Administrative (SG&A) expenses were $501.2 million, representing 68.5% of gross profit; adjusted SG&A was $493.0 million (67.4% of gross profit).
• New vehicle revenue was $2.3 billion (down 9%), while used vehicle retail revenue was $1.2 billion (down 6%).
• Parts and service revenue was $644 million (down 2%), with gross profit of $371 million.
• Finance and insurance (F&I) per vehicle retailed (PVR) was $2,176.
• Year-to-date net income was $408 million, a 6% decrease from $432 million in the same period of 2025.
• Year-to-date revenue was $12.9 billion, a 3% decrease from $13.3 billion in the prior year.
• As of September 30, 2026, the company held $210 million in cash, short-term investments, and floorplan offset accounts (excluding $39 million at Total Care Auto), with $821 million available under floorplan and revolver lines, totaling $1.0 billion in liquidity.
• Transaction adjusted net leverage ratio was 3.5x at quarter end.
• Floor plan notes payable decreased to $1.76 billion from $2.03 billion at year-end 2025.

Guidance and Future Outlook:

• Management highlighted the completion of the Tekion conversion across all active stores in mid-October, establishing a modern platform to drive efficiency.
• Longest-tenured Tekion markets reported customer pay gross profit up 7% and total parts and service gross profit up 5%.
• The company's "Five Pillars" strategy for 2026 includes increasing new vehicle market share, driving profitable used vehicle growth, re-establishing consistent customer pay gross profit growth, managing SG&A, and leveraging technology.
• Capital allocation strategy considers stock price, market conditions, and potential returns from strategic dealership acquisitions and capital investments.

Business Segments and Product Lines:

• Dealerships Segment: Generated $4.33 billion in external revenue and $181.6 million in segment operating income for the quarter.
• Total Care Auto (TCA) Segment: Generated $82.6 million in revenue and $20.7 million in segment operating income for the quarter.
• New Vehicle Sales: Unit sales decreased 9% to 43,736 units; average selling price was $52,427.
• Used Vehicle Sales: Retail unit sales decreased 8% to 34,586 units, with a used-to-new ratio of 79.1%. Average selling price for used retail vehicles was $33,362.
• Parts and Service: Revenue was $644 million with a gross margin of 57.6%.
• Brand Mix: Luxury brands accounted for 32% of new vehicle revenue, Imports 42%, and Domestic 26%.
• Total Care Auto Rollout: Completed across all Asbury stores in October.

Market and Competitive Landscape:

• New vehicle unit sales declined across Luxury (9%), Import (7%), and Domestic (13%) categories.
• Used vehicle retail unit sales declined 8% overall.
• The company operates 155 new vehicle dealerships with 197 franchises representing 34 domestic and foreign brands, plus 37 collision repair centers.
• Inventory days supply for new vehicles was 53 days and 41 days for used vehicles as of September 30, 2026.

Risks and Challenges:

• Forward-looking statements cite risks including adverse litigation outcomes, inability to realize benefits from transactions, and integration challenges.
• Supply chain disruptions, trade changes, and manufacturer relationships remain potential risks.
• Risks associated with technology integration and implementation of the Tekion platform are noted.
• Competition from new manufacturers distributing significant volumes and changes in automotive state franchise laws are identified.
• Risks related to indebtedness, covenant compliance, and the ability to repurchase debt or equity securities are disclosed.

Management Commentary and Tone:

• Dan Clara, President and CEO, described the Tekion conversion as one of the most ambitious technology initiatives in the company's history, noting the conversion of 47 stores in the third quarter alone.
• Management expressed confidence that the modern platform will enable faster decision-making and more efficient operations.
• The tone acknowledges a challenging sales environment with year-over-year revenue and income declines but emphasizes operational improvements and efficiency gains from the new technology platform.

Other Key Points:

• The company repurchased approximately 1.35 million shares for $278 million year-to-date through September 30, 2026.
• Approximately $322 million remained on the share repurchase authorization as of September 30, 2026.
• Adjusted net income for the quarter excluded $6 million in Tekion implementation expenses, $1 million in duplicative DMS-related expenses, and $1 million in net gain on divestitures.
• Adjusted net income for the prior year quarter excluded a $27 million net gain on divestitures, a $9 million non-cash asset impairment, $7 million in professional fees for the Herb Chambers acquisition, and other acquisition-related costs.
• The company is recognized as one of America's Fastest Growing Companies 2024 by the Financial Times and one of the World's Most Trustworthy Companies for 2024 and 2025 by Newsweek.