

o☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-31262

ASBURY AUTOMOTIVE GROUP, INC.

(Exact name of Registrant as specified in its charter)

Delaware

01-0609375

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

~~Delaware~~

~~01-0609375~~

~~(State or other jurisdiction of~~

~~incorporation or organization)~~

~~(I.R.S. Employer~~

~~Identification No.)~~

2905 Premiere Parkway NW,

Suite 300

~~Duluth, Georgia~~

~~30097~~

Duluth, Georgia

30097

(Address of principal executive offices)

(Zip Code)

(770) 418-8200

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Trading

Title of each class

Symbol(s)

Name of each exchange on which registered

Common stock, $0.01 par value per share

ABG

New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate website, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act:

Large Accelerated Filer

☒

Accelerated Filer

☐

~~Large Accelerated Filer~~

~~Accelerated Filer~~

Non-Accelerated Filer

o☐

~~(Do not check if a smaller reporting company)~~

Smaller Reporting Company

o☐

Emerging Growth Company

o☐

Table of Conte n t s

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o☐ No x

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: The number of shares of common stock outstanding as of ~~October 24, 2017~~July 27, 2021 was ~~20,817,702~~.

19,341,374.

Table of Conte n t s

ASBURY AUTOMOTIVE GROUP, INC.

TABLE OF CONTENTS



				Page
PART I—Financial Information
Item 1.			Condensed Consolidated Financial Statements (unaudited)
			Condensed Consolidated Balance Sheets as of ~~September~~June 30, ~~2017~~2021 and December 31, ~~2016~~2020	4
			Condensed Consolidated Statements of Income for the Three and ~~Nine~~ Six Months Ended ~~September~~June 30, ~~2017~~2021 and ~~2016~~2020	5
			Condensed Consolidated Statements of Comprehensive Income for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2021 and ~~2016~~2020	6
			Condensed Consolidated Statements of Shareholders' Equity for the Six Months Ended June 30, 2021 and 2020	7
			Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2021 and ~~2016~~2020	79
			Notes to Condensed Consolidated Financial Statements	810
Item 2.			Management's Discussion and Analysis of Financial Condition and Results of Operations	1724
Item 3.			Quantitative and Qualitative Disclosures About Market Risk	3951
Item 4.			Controls and Procedures	4051

			PART II—Other Information

Item 1.			Legal Proceedings	4052
Item 1.A.			Risk factors	52
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds	4152
Item 4.6.			~~Mine Safety Disclosures~~Exhibits	4153
			~~Item 6.~~Signatures	~~Exhibits~~54	42
	~~Signatures~~	43
	~~Index to Exhibits~~	44

Table of Conte n t s

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

ASBURY AUTOMOTIVE GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except par value and share data)

(Unaudited)


	June 30, 2021		December 31, 2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	102.3	$	1.4
Contracts-in-transit	145.8		161.5
Accounts receivable, net	112.9		155.5
Inventories	560.2		875.2

Assets held for sale	31.6		28.3
Other current assets	179.7		183.8
Total current assets	1,132.5		1,405.7
PROPERTY AND EQUIPMENT, net	1,177.6		956.2
OPERATING LEASE RIGHT-OF-USE ASSETS	213.0		317.4
GOODWILL	563.2		562.2
INTANGIBLE FRANCHISE RIGHTS	425.2		425.2

OTHER LONG-TERM ASSETS	13.4		9.6
Total assets	$	3,524.9	$	3,676.3
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Floor plan notes payable—trade, net	$	13.9	$	64.9
Floor plan notes payable—non-trade, net	227.6		637.3
Current maturities of long-term debt	43.2		36.6
Current maturities of operating leases	17.6		24.8
Accounts payable and accrued liabilities	451.9		450.9
Liabilities associated with assets held for sale	5.1		8.9
Total current liabilities	759.3		1,223.4
LONG-TERM DEBT	1,335.0		1,165.2
OPERATING LEASE LIABILITIES	199.8		296.7
DEFERRED INCOME TAXES	34.6		34.6
OTHER LONG-TERM LIABILITIES	47.9		50.9
COMMITMENTS AND CONTINGENCIES (Note 12)	0		0
SHAREHOLDERS' EQUITY:
Preferred stock, $.01 par value; 10,000,000 shares authorized; NaN issued or outstanding	0		0
Common stock, $.01 par value; 90,000,000 shares authorized; 41,254,715 and 41,133,668 shares issued, including shares held in treasury, respectively	0.4		0.4
Additional paid-in capital	603.9		595.5
Retained earnings	1,593.8		1,348.9
Treasury stock, at cost; 21,913,341 and 21,848,314 shares, respectively	(1,043.9)		(1,033.7)
Accumulated other comprehensive loss	(5.9)		(5.6)
Total shareholders' equity	1,148.3		905.5
Total liabilities and shareholders' equity	$	3,524.9	$	3,676.3

September 30, 2017 December 31, 2016
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 2.8
$ 3.4
Contracts-in-transit 131.8
182.6
Accounts receivable, net 108.7
138.4
Inventories 843.5
894.9
Assets held for sale 16.2
16.1
Other current assets 117.7
97.0
Total current assets 1,220.7
1,332.4
PROPERTY AND EQUIPMENT, net 823.0
815.4
GOODWILL 160.8
128.1
INTANGIBLE FRANCHISE RIGHTS 54.7
48.5
OTHER LONG-TERM ASSETS 10.6
11.7
Total assets $ 2,269.8
$ 2,336.1
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Floor plan notes payable—trade, net $ 109.7
$ 108.3
Floor plan notes payable—non-trade, net 578.6
673.5
Current maturities of long-term debt 14.3
14.0
Accounts payable and accrued liabilities 277.8
309.1
Total current liabilities 980.4
1,104.9
LONG-TERM DEBT 901.4
912.7
DEFERRED INCOME TAXES 9.1
8.9
OTHER LONG-TERM LIABILITIES 31.6
29.9
COMMITMENTS AND CONTINGENCIES (Note 11)

SHAREHOLDERS' EQUITY:
Preferred stock, $.01 par value; 10,000,000 shares authorized; none issued or outstanding —
—
Common stock, $.01 par value; 90,000,000 shares authorized; 40,973,460 and 40,750,765 shares issued, including shares held in treasury, respectively 0.4
0.4
Additional paid-in capital 559.8
549.4
Retained earnings 707.8
611.5
Treasury stock, at cost; 20,153,622 and 19,497,596 shares, respectively (918.9 ) (879.5 )
Accumulated other comprehensive loss (1.8 ) (2.1 )
Total shareholders' equity 347.3
279.7
Total liabilities and shareholders' equity $ 2,269.8
$ 2,336.1

See accompanying Notes to Condensed Consolidated Financial Statements

Table of Conte n t s

ASBURY AUTOMOTIVE GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share data)

(Unaudited)


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2021		2020		2021		2020
REVENUE:
New vehicle	$	1,368.4	$	761.8	$	2,520.1	$	1,583.9
Used vehicle	816.2		447.5		1,507.1		940.7
Parts and service	292.4		169.2		554.4		390.8
Finance and insurance, net	107.0		66.6		195.3		137.0
TOTAL REVENUE	2,584.0		1,445.1		4,776.9		3,052.4
COST OF SALES:
New vehicle	1,244.3		723.2		2,320.5		1,508.9
Used vehicle	732.7		410.4		1,367.8		872.9
Parts and service	109.8		68.7		208.7		155.4
TOTAL COST OF SALES	2,086.8		1,202.3		3,897.0		2,537.2
GROSS PROFIT	497.2		242.8		879.9		515.2
OPERATING EXPENSES:
Selling, general, and administrative	269.7		152.2		509.5		346.9
Depreciation and amortization	10.1		9.7		19.9		19.2
Franchise rights impairment	0		0		0		23.0
Other operating (income) expense, net	(1.0)		(1.3)		(4.2)		8.9
INCOME FROM OPERATIONS	218.4		82.2		354.7		117.2
OTHER EXPENSES (INCOME):
Floor plan interest expense	2.1		4.1		5.0		11.1
Other interest expense, net	14.4		11.8		28.4		28.8


Loss on extinguishment of long-term debt	0		0		0		20.6
Gain on dealership divestitures, net	0		0		0		(33.7)
Total other expense, net	16.5		15.9		33.4		26.8
INCOME BEFORE INCOME TAXES	201.9		66.3		321.3		90.4
Income tax expense	49.8		16.7		76.4		21.3


NET INCOME	$	152.1	$	49.6	$	244.9	$	69.1
EARNINGS PER SHARE:
Basic—


Net income	$	7.88	$	2.58	$	12.69	$	3.60
Diluted—


Net income	$	7.80	$	2.57	$	12.56	$	3.58
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic	19.3		19.2		19.3		19.2

Restricted stock	0.1		0		0.1		0
Performance share units	0.1		0.1		0.1		0.1
Diluted	19.5		19.3		19.5		19.3

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2017 2016 2017 2016
REVENUE:
New vehicle $ 881.6
$ 940.9
$ 2,597.0
$ 2,676.3
Used vehicle 455.6
476.4
1,396.6
1,407.5
Parts and service 197.2
200.4
589.5
584.9
Finance and insurance, net 67.7
65.4
202.5
192.6
TOTAL REVENUE 1,602.1
1,683.1
4,785.6
4,861.3
COST OF SALES:
New vehicle 840.6
893.4
2,474.6
2,536.6
Used vehicle 426.8
446.6
1,301.2
1,307.7
Parts and service 74.4
77.4
222.3
222.9
TOTAL COST OF SALES 1,341.8
1,417.4
3,998.1
4,067.2
GROSS PROFIT 260.3
265.7
787.5
794.1
OPERATING EXPENSES:
Selling, general, and administrative 182.5
185.7
549.2
549.2
Depreciation and amortization 8.1
7.8
24.0
23.0
Other operating expenses, net —
1.5
0.7
4.2
INCOME FROM OPERATIONS 69.7
70.7
213.6
217.7
OTHER EXPENSES:
Floor plan interest expense 5.8
5.0
17.1
14.4
Other interest expense, net 13.4
13.2
40.2
40.0
Swap interest expense 0.4
0.8
1.6
2.4
Total other expenses, net 19.6
19.0
58.9
56.8
INCOME BEFORE INCOME TAXES 50.1
51.7
154.7
160.9
Income tax expense 19.4
19.3
58.1
60.8
NET INCOME $ 30.7
$ 32.4
$ 96.6
$ 100.1
EARNINGS PER COMMON SHARE:
Basic—
Net income $ 1.49
$ 1.47
$ 4.64
$ 4.39
Diluted—
Net income $ 1.48
$ 1.47
$ 4.60
$ 4.37
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 20.6
22.0
20.8
22.8
Restricted stock 0.1
0.0
0.1
0.0
Performance share units 0.1
0.1
0.1
0.1
Diluted 20.8
22.1
21.0
22.9

See accompanying Notes to Condensed Consolidated Financial Statements

Table of Conte n t s

ASBURY AUTOMOTIVE GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2021		2020		2021		2020
Net income	$	152.1	$	49.6	$	244.9	$	69.1
Other comprehensive (loss) income:
Change in fair value of cash flow swaps	(6.5)		(0.6)		(0.3)		(5.1)

Income tax benefit associated with cash flow swaps	1.6		0.2		0		1.3
Comprehensive income	$	147.2	$	49.2	$	244.6	$	65.3

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2017 2016 2017 2016
Net income $ 30.7
$ 32.4
$ 96.6
$ 100.1
Other comprehensive income (loss):
Change in fair value of cash flow swaps 0.3
1.0
0.5
(4.8 )
Income tax benefit (expense) associated with cash flow swaps (0.1 ) (0.4 ) (0.2 ) 1.9
Comprehensive income $ 30.9
$ 33.0
$ 96.9
$ 97.2

See accompanying Notes to Condensed Consolidated Financial Statements

Table of Conte n t s

ASBURY AUTOMOTIVE GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(Dollars in millions)

(Unaudited)


	Common Stock			Additional Paid-in Capital		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Income (Loss)		Total
	Shares	Amount						Shares	Amount
Balances, December 31, 2020	41,133,668	$	0.4	$	595.5	$	1,348.9	21,848,314	$	(1,033.7)	$	(5.6)	$	905.5
Comprehensive Income:
Net income	—	—		—		92.8		—	—		—		92.8
Change in fair value of cash flow swaps, net of reclassification adjustment and $1.6 tax charge	—	—		—		—		—	—		4.6		4.6
Comprehensive income	—	—		—		92.8		—	—		4.6		97.4
Share-based compensation	—	—		4.7		—		—	—		—		4.7
Issuance of common stock, net of forfeitures, in connection with share-based payment arrangements	115,881	—		—		—		—	—		—		0
Repurchase of common stock associated with net share settlement of employee share-based awards	—	—		—		—		61,893	(9.6)		—		(9.6)

Balances, March 31, 2021	41,249,549	$	0.4	$	600.2	$	1,441.7	21,910,207	$	(1,043.3)	$	(1.0)	$	998.0
Comprehensive Income:
Net income	—	—		—		152.1		—	—		—		152.1
Change in fair value of cash flow swaps, net of reclassification adjustment and $1.6 tax benefit	—	—		—		—		—	—		(4.9)		(4.9)
Comprehensive income	—	—		—		152.1		—	—		(4.9)		147.2

Share-based compensation	—	—		3.7		—		—	—		—		3.7
Issuance of common stock, net of forfeitures in connection with share-based payment arrangements	5,166	—		—		—		—	—		—		0
Repurchase of common stock associated with net share settlement of employee share-based awards	—	—		—		—		3,134	(0.6)		—		(0.6)


Balances, June 30, 2021	41,254,715	$	0.4	$	603.9	$	1,593.8	21,913,341	$	(1,043.9)	$	(5.9)	$	1,148.3

Table of Conte n t s


	Common Stock			Additional Paid-in Capital		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Income (Loss)		Total
	Shares	Amount						Shares	Amount
Balances, December 31, 2019	41,072,080	$	0.4	$	582.9	$	1,094.5	21,791,707	$	(1,028.6)	$	(2.9)	$	646.3
Comprehensive Income:
Net income	—	—		—		19.5		—	—		—		19.5
Change in fair value of cash flow swaps, net of reclassification adjustment and $1.1 tax benefit	—	—		—		—		—	—		(3.4)		(3.4)
Comprehensive income	—	—		—		19.5		—	—		(3.4)		16.1

Share-based compensation	—	—		3.8		—		—	—		—		3.8
Issuance of common stock, net of forfeitures, in connection with share-based payment arrangements	68,577	—		(0.3)		—		—	—		—		(0.3)
Repurchase of common stock associated with net share settlements of employee share-based awards	—	—		—		—		53,915	(5.0)		—		(5.0)


Balances, March 31, 2020	41,140,657	$	0.4	$	586.4	$	1,114.0	21,845,622	$	(1,033.6)	$	(6.3)	$	660.9
Comprehensive Income:
Net income	—			—		49.6		—	—		—		49.6
Change in fair value of cash flow swaps, net of reclassification adjustment and $0.2 tax benefit	—	—		—		—		—	—		(0.4)		(0.4)
Comprehensive income	—	—		—		49.6		—	—		(0.4)		49.2

Share-based compensation	—	—		3.1					—		—		3.1
Forfeitures in connection with share-based payment arrangements	(2,916)	—		—		—		—	—		—		0
Repurchase of common stock associated with net share settlements of employee share-based awards	—	—		—		—		2,552	(0.1)		—		(0.1)


Balances, June 30, 2020	41,137,741	$	0.4	$	589.5	$	1,163.6	21,848,174	$	(1,033.7)	$	(6.7)	$	713.1

See accompanying Notes to Condensed Consolidated Financial Statements

Table of Conte n t s

ASBURY AUTOMOTIVE GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)


	For the Six Months Ended June 30,
	2021		2020
CASH FLOW FROM OPERATING ACTIVITIES:
Net income	$	244.9	$	69.1
Adjustments to reconcile net income to net cash provided by operating activities—
Depreciation and amortization	19.9		19.2
Share-based compensation	8.3		6.6

Franchise rights impairment	0		23.0
Loss on extinguishment of long-term debt	0		20.6
Loaner vehicle amortization	12.5		10.8
Gain on divestitures, net	0		(33.7)
Change in right-of-use assets	11.1		9.3
Other adjustments, net	(0.5)		0.5
Changes in operating assets and liabilities, net of acquisitions and divestitures—
Contracts-in-transit	15.7		79.6
Accounts receivable	42.3		48.6

Inventories	424.6		463.5
Other current assets	(121.7)		(61.9)
Floor plan notes payable—trade, net	(51.0)		(77.0)
Accounts payable and other current liabilities	(3.1)		(21.7)
Operating lease liabilities	(11.2)		(9.5)
Other long-term assets and liabilities, net	(4.5)		7.6
Net cash provided by operating activities	587.3		554.6
CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures—excluding real estate	(26.7)		(18.2)
Capital expenditures—real estate	(5.5)		(2.3)


Purchase of previously leased real estate	(217.1)		0
Acquisitions	(1.0)		(63.1)
Divestitures	0		115.5
Proceeds from the sale of assets	21.5		4.2
Net cash provided by (used in) investing activities	(228.8)		36.1
CASH FLOW FROM FINANCING ACTIVITIES:
Floor plan borrowings—non-trade	2,401.0		1,633.8
Floor plan borrowings—acquisitions	0		27.1
Floor plan repayments—non-trade	(2,808.9)		(1,858.0)
Floor plan repayments—non-trade divestitures	0		(50.5)
Proceeds from borrowings	184.4		1,424.7
Repayments of borrowings	(23.9)		(1,157.2)
Proceeds from sale and leaseback transaction	0		7.3
Payment of debt issuance costs	0		(3.1)

Repurchases of common stock, including shares associated with net share settlement of employee share-based awards	(10.2)		(5.1)

Net cash provided by (used in) financing activities	(257.6)		19.0
Net increase in cash and cash equivalents	100.9		609.7
CASH AND CASH EQUIVALENTS, beginning of period	1.4		3.5
CASH AND CASH EQUIVALENTS, end of period	$	102.3	$	613.2

For the Nine Months Ended September 30,
2017 2016
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $ 96.6
$ 100.1
Adjustments to reconcile net income to net cash provided by operating activities—
Depreciation and amortization 24.0
23.0
Share-based compensation 10.0
9.1
Deferred income taxes 0.1
6.4
Impairment expenses —
3.1
Loaner vehicle amortization 16.8
15.6
Other adjustments, net 2.3
2.5
Changes in operating assets and liabilities, net of acquisitions and divestitures—
Contracts-in-transit 50.8
46.8
Accounts receivable 30.0
7.5
Inventories 189.5
78.1
Other current assets (145.6 ) (111.0 )
Floor plan notes payable—trade, net 1.4
(20.4 )
Accounts payable and accrued liabilities (34.3 ) (11.0 )
Other long-term assets and liabilities, net 1.6
1.5
Net cash provided by operating activities 243.2
151.3
CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures—excluding real estate (21.4 ) (47.3 )
Capital expenditures—real estate (0.3 ) (10.6 )
Purchases of previously leased real estate —
(19.6 )
Acquisitions (80.1 ) —
Proceeds from the sale of assets 3.8
—
Net cash used in investing activities (98.0 ) (77.5 )
CASH FLOW FROM FINANCING ACTIVITIES:
Floor plan borrowings—non-trade 2,818.1
2,920.4
Floor plan borrowings—acquisitions 25.1
—
Floor plan repayments—non-trade (2,938.1 ) (2,813.9 )
Repayments of borrowings (11.5 ) (11.2 )
Payment of debt issuance costs —
(2.7 )
Repurchases of common stock, including shares associated with net share settlement of employee share-based awards (39.4 ) (165.5 )
Net cash used in financing activities (145.8 ) (72.9 )
Net (decrease) increase in cash and cash equivalents (0.6 ) 0.9
CASH AND CASH EQUIVALENTS, beginning of period 3.4
2.8
CASH AND CASH EQUIVALENTS, end of period $ 2.8
$ 3.7

See Note 1011 "Supplemental Cash Flow Information" for further details

See accompanying Notes to Condensed Consolidated Financial Statements

Table of Conte n t s

ASBURY AUTOMOTIVE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

We are one of the largest automotive retailers in the United ~~States, operating 94~~States. As of June 30, 2021, we owned and operated 112 new vehicle franchises ~~(80~~(91 dealership locations) representing 31 automobile brands and 25 collision repair centers, and 1 auto auction in 1716 metropolitan markets within ~~nine states as of September 30, 2017.~~9 states. Our stores offer an extensive range of automotive products and services, including new and used vehicles; parts and service, which includes repair and maintenance services, replacement parts and collision repair services; and finance and insurance products. As of ~~September~~June 30, ~~2017, we offered 29 brands of new vehicles and~~2021, our new vehicle revenue brand mix consisted of ~~46%~~45% luxury, 39% imports, ~~33% luxury,~~ and ~~21%~~16% domestic brands. ~~We also operated 24 collision repair centers that serve customers in our local markets.~~

Our retail network is made up of dealerships operating primarily under the following locally-branded dealership groups:

•Coggin dealerships operating primarily in Jacksonville, Fort Pierce and Orlando, Florida;

•Courtesy dealerships operating in Tampa, Florida;

•Crown dealerships operating in North Carolina, South Carolina and Virginia;

~~Gray-Daniels~~•Greenville Automotive dealerships operating in ~~the Jackson, Mississippi area;~~Greenville, South Carolina;

•Hare and Estes dealerships operating in the Indianapolis, Indiana area;

•McDavid dealerships operating in metropolitan Austin ~~Dallas~~ and ~~Houston,~~Dallas-Fort Worth, Texas;

•Nalley dealerships operating in metropolitan Atlanta, Georgia; ~~and~~

•Park Place dealerships operating in the Dallas-Fort Worth, Texas area;

•Plaza dealerships operating in metropolitan St. Louis, ~~Missouri.~~Missouri; and

~~Our operating results are generally subject to changes~~•Mike Shaw dealerships in the economic environment as well as seasonal variations. Historically, we have generated more revenue and operating income in the second, third, and fourth quarters than in the first quarter of the calendar year. Generally, the seasonal variations in our operations are caused by factors related to weather conditions, changes in manufacturer incentive programs, model changeovers and consumer buying patterns, among other things.

~~2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~Denver, Colorado area.

Basis of Presentation

The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"), and reflect the consolidated accounts of Asbury Automotive Group, Inc. (the "Company") and our wholly owned subsidiaries. All intercompany transactions have been eliminated in consolidation. If necessary, reclassifications of amounts previously reported have been made to the accompanying Condensed Consolidated Financial Statements in order to conform to current presentation.

In the opinion of management, all adjustments, consisting only of normal, recurring adjustments, considered necessary for a fair ~~presentation~~statement of the Condensed Consolidated Financial Statements as of ~~September~~June 30, ~~2017,~~2021, and for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 and ~~2016,~~2020, have been ~~included.~~included, unless otherwise indicated. The results of operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 are not necessarily indicative of the results that may be expected for any other interim period, or any full year period. Our Condensed Consolidated Financial Statements should be read together with our audited ~~consolidated financial statements~~Consolidated Financial Statements contained in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2020.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the periods presented. Actual results could differ materially from these estimates. Estimates and assumptions are reviewed quarterly and the effects of any revisions are reflected in the ~~consolidated financial statements~~Consolidated Financial Statements in the period they are determined to be necessary. Significant estimates made in the accompanying Condensed Consolidated Financial Statements include, but are not limited to, those relating to inventory valuation reserves, variable consideration and constraint considerations related to retro-commission arrangements, reserves for chargebacks against revenue recognized from the sale of finance and insurance products, reserves for insurance programs, certain assumptions related to intangible and long-lived assets, and reserves for certain legal or similar proceedings relating to our business operations.

Contracts-In-Transit

Contracts-in-transit represent receivables from third-party finance companies for the portion of new and used vehicle purchase price financed by customers through sources arranged by us.

Table of Conte n t s

Accounts Receivable

The allowance for credit losses is estimated using an annual loss rate approach, by type of receivable, utilizing historical loss rates which have been adjusted for expectations of future economic conditions.

Revenue Recognition

~~Revenue from the sale of~~Please refer to Note 2 "Revenue Recognition."

Internal Profit

Revenues and expenses associated with internal work performed by our parts and service departments on new and used ~~vehicles (which excludes sales tax)~~vehicle inventory are eliminated in consolidation. The gross profit earned by our parts and service departments for internal work performed is recognized upon the latest of delivery, signing of the sales contract or approval of financing. Revenue from the sale of parts, service and collision repair work (which excludes sales tax) is recognized upon delivery of parts to the customer or at the time vehicle service or repair work is completed, as applicable. Manufacturer incentives and rebates, including manufacturer holdbacks, floor plan interest assistance and certain advertising assistance, are recognizedincluded as a reduction of ~~new vehicle cost~~Parts and Service Cost of ~~sales at the time the related vehicles are sold,~~Sales in the accompanying Condensed Consolidated Statements of ~~Income.~~

~~We receive commissions from third-party lending and insurance institutions for arranging customer financing and from~~Income upon the sale of the vehicle. The costs incurred by our new and used vehicle departments for work performed by our parts and service ~~contracts, guaranteed auto protection (known as "GAP") insurance, and other insurance, to customers (collectively "F&I"). We may be charged back for F&I commissions in the event a contract~~departments is prepaid, defaulted upon, or terminated ("chargebacks"). F&I commissions are recorded at the time a vehicle is sold, and a reserve for future chargebacks is established based on historical chargeback experience and the termination provisions of the applicable contract. F&I commissions, net of estimated future chargebacks, are included in ~~Finance and Insurance, net~~either New Vehicle Cost of Sales or Used Vehicle Cost of Sales in the accompanying Condensed Consolidated Statements of ~~Income. Additionally, we participate in future profits associated with~~Income, depending on the ~~performance~~classification of the ~~third-party~~vehicle serviced. We eliminate the internal profit on vehicles that remain in inventory.

Income Taxes

We use the liability method to account for income taxes. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of differences between the carrying amounts of assets and liabilities and their respective tax basis using currently enacted tax rates.

Share Repurchases

Share repurchases may be made from time-to-time in open market transactions or through privately negotiated transactions under the authorization approved by the Board of Directors. Periodically, the Company may retire repurchased shares of common stock previously held ~~underlying portfolio~~by the Company as treasury stock. In accordance with our accounting policy, we allocate any excess share repurchase price over par value between additional paid-in capital, which is limited to amounts initially recorded for ~~certain products, pursuant to retrospective commission arrangements. Our retrospective portfolio income is recorded as revenue at~~ the ~~time it is received from our third-party providers.~~same issue, and retained earnings.

Earnings per ~~Common~~ Share

Basic earnings per ~~common~~ share is computed by dividing net income by the weighted-average common shares outstanding during the period. Diluted earnings per ~~common~~ share is computed by dividing net income by the weighted-average common shares and common share equivalents outstanding during the period. The Company excluded 113 restricted share units and 12 performance share units and 904 restricted share units and 324 performance share units issued under the Asbury Automotive Group, Inc. 2019 Equity and Incentive Compensation Plan, from its computation of diluted earnings per share for the three and six months ended June 30, 2021, respectively, because they were anti-dilutive. There were no anti-dilutive share increments for the three and six months ended June 30, 2020. For all periods presented, there were no adjustments to the numerator necessary to compute diluted earnings per share.

Assets Held for Sale and Liabilities Associated with Assets Held for Sale

Certain amounts have been classified as Assets Held for Sale in the accompanying Condensed Consolidated Balance Sheets. Assets and liabilities classified as held for sale may include assets and liabilities associated with pending dealership disposals, real estate ~~not currently used in our operations that~~ we are actively marketing to sell, and any related mortgage notes payable or other liabilities, if applicable. Classification as held for sale begins on the date that we have met all of the criteria for classification as held for sale.

At the time of classifying assets as held for sale, we compare the carrying value of these assets to estimates of fair value to assess for impairment. We compare the carrying value to estimates of fair value utilizing the assistance of third-party broker opinions of value and third-party desktop appraisals to assist in our fair value estimates related to real estate properties.

Statements of Cash Flows

Borrowings and repayments of floor plan notes payable to a lender unaffiliated with the manufacturer from which we purchase a particular new vehicle ("Non-Trade") and all floor plan notes payable relating to pre-owned vehicles (together referred to as "Floor Plan Notes Payable—Non-Trade"), are classified as financing activities onin the accompanying Condensed Consolidated Statements of Cash Flows, with borrowings reflected separately from repayments. 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 onin the accompanying Condensed

Table of Conte n t s

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 financing activities in the accompanying Condensed Consolidated ~~Statement~~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 a lender not affiliated with the manufacturer from which we purchased the related inventory.

Loaner vehicles account for a significant portion of Other ~~Current Assets.~~current assets. We acquire loaner vehicles either with available cash or through borrowing from either our manufacturer affiliated lenders or through our senior secured credit agreement with Bank of America, as administrative agent, and the other agents and lenders party thereto ~~(the "2016~~(as amended, the "2019 Senior Credit Facility"). Loaner vehicles are initially used by our service department for a short period of time (typically six to twelve months) before

we seek to sell them. Therefore, we classify the acquisition of loaner vehicles in Other ~~Current Assets~~current assets and the borrowings and repayments of loaner vehicle notes payable in Accounts ~~Payable~~payable and ~~Accrued Liabilities~~accrued liabilities in the accompanying Condensed Consolidated Statements of Cash Flows. Loaner vehicles are depreciated over the service period to their estimated value. At the end of the loaner service period, loaner vehicles are transferred from Other ~~Current Assets~~current assets to used vehicle inventory. These transfers are reflected as non-cash transfers between Other ~~Current Assets~~current assets and Inventories in the accompanying Condensed Consolidated Statements of Cash Flows.

Recent Accounting Pronouncements

In March ~~2016,~~2020, the Financial Accounting Standards Board ("FASB") issued Accounting ~~Standard~~Standards Update ~~("ASU") 2016-09, Compensation—Stock Compensation~~2020-04, Reference Rate Reform (Topic ~~718), to simplify certain aspects~~848): Facilitation of the ~~accounting for share-based payment transactions to employees. The new standard requires excess tax benefits and tax deficiencies to be recorded in the statements~~Effects of ~~income as a component of the provision for income taxes when stock awards vest or are settled.~~Reference Rate Reform on Financial Reporting ("ASU 2020-04"). In addition, it eliminates the requirement to reclassify cash flows related to excess tax benefits from operating activities to financing activities on the consolidated statements of cash flows. The standard also provides an accounting policy election to account for forfeitures as they occur, allows us to withhold more of an employee’s vesting shares for tax withholding purposes without triggering liability accounting, and clarifies that all cash payments made to tax authorities on an employee’s behalf for withheld shares should be presented as a financing activity on our statements of cash flows.

~~We adopted the new standard~~ January 1, 2017, upon which excess tax benefits or deficiencies from share-based award activity were reflected in the Condensed Consolidated Statements of Income as a component of the provision for income taxes, whereas they previously were recognized in equity. We also elected to account for forfeitures as they occur, rather than estimate expected forfeitures. The adoption of ASU 2016-09 resulted in a cumulative-effect adjustment of $0.5 million (pre-tax) to reduce retained earnings and increase additional paid-in capital as of January 1, 2017, related to our election to account for forfeitures as they occur.

We adopted the aspects of the standard affecting the cash flow presentation retrospectively, and accordingly, to conform to the current year presentation, we reclassified $0.2 million of excess tax benefits under financing activities to operating activities for the nine months ended September 30, 2017 in our Condensed Consolidated Statements of Cash Flows. The presentation requirements for cash flows related to employee taxes paid for withheld shares had no impact on any of the periods presented on our consolidated statements of cash flows since such cash flows have historically been presented as a financing activity.

~~In July 2015,~~2021, the FASB issued ~~ASU 2015-11, Inventory~~Accounting Standards Update No. 2021-01, Reference Rate Reform (Topic ~~330)~~848): ~~Simplifying~~Scope, which clarified the ~~Measurement~~scope and application of ~~Inventory, changing~~ the ~~subsequent measurement~~original guidance. The guidance from the lower of cost or market to the lower of cost and net realizable value. We adopted this standard, beginning January 1, 2017, and its adoption did not have an impact on our consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), a new standard on revenue recognition. Further, the FASB has issued a number of additional ASUs regarding the new revenue recognition standard. The new standard, as amended, will supersede existing revenue recognition guidance andin these standards apply to ~~all entities~~contract accounting, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met, and provides optional expedients and exceptions for a limited time to ease the potential burden in accounting for reference rate reform. The amendments apply only to contracts and hedging relationships that ~~enter into contracts~~reference LIBOR or another reference rate expected to ~~provide goods or services~~be discontinued due to ~~customers. The guidance also addresses the measurement~~reference rate reform. ASU 2020-04 is effective upon issuance and recognition of gains and losses on the sale of certain non-financial assets, such as real estate, property, and equipment. The new standard will become effective for annual reporting periods beginning on or after December 15, 2017 and interim periods within that year. The new standardgenerally can be ~~adopted either retrospectively~~applied to ~~each reporting period presented or as a cumulative effect adjustment as of the date of adoption.~~applicable contract modifications through December 31, 2022. LIBOR benchmarking is utilized in our debt (including mortgages), revolving credit facilities, floorplan facilities, and interest rate swaps. We anticipate using the modified retrospective approach with the cumulative effect of initially adopting the standard recognized on the date of adoption. We established an implementation team to assess the impact of the new standard to our material revenue streams and potential differences from our current policies as well as the changes in controls and processes, if any, to implement the standard. We are ~~currently~~ in the process of ~~reviewing contracts~~completing our evaluation of the impact that the adoption of the provisions from this standard will have on our Consolidated Financial Statements.

2. REVENUE RECOGNITION

The Company satisfies performance obligations either over time or at a point in time. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised good or performing a service to a customer. Sales and other taxes we collect concurrent with revenue-producing activities are excluded from revenue.

Table of Conte n t s

Disaggregation of Revenue

The following table summarizes revenue from contracts with customers for the three and six months ended June 30, 2021 and 2020:


	For the Three Months Ended June 30,
	2021		2020
	(In millions)
Revenue:
New vehicle	$	1,368.4	$	761.8
Used vehicle retail	759.4		412.6
Used vehicle wholesale	56.8		34.9
New and used vehicle	2,184.6		1,209.3
Sale of vehicle parts and accessories	49.0		25.9
Vehicle repair and maintenance services	243.4		143.3
Parts and services	292.4		169.2
Finance and insurance, net	107.0		66.6
Total revenue	$	2,584.0	$	1,445.1



	For the Six Months Ended June 30,
	2021		2020
	(In millions)
Revenue:
New vehicle	$	2,520.1	$	1,583.9
Used vehicle retail	1,366.9		858.6
Used vehicle wholesale	140.2		82.1
New and used vehicle	4,027.2		2,524.6
Sale of vehicle parts and accessories	91.8		62.7
Vehicle repair and maintenance services	462.6		328.1
Parts and services	554.4		390.8
Finance and insurance, net	195.3		137.0
Total revenue	$	4,776.9	$	3,052.4

Table of Conte n t s

Contract Assets

Changes in contract assets during the period are reflected in the table below. Contract assets related ~~documents for each material revenue stream and based on our preliminary assessment we do not anticipate changes~~ to ~~the timing of our recognition of revenue of new and used vehicle sales and the sale of vehicle parts.~~

~~Our current policy is to record revenue for customer pay~~ vehicle repair and maintenance services ~~once~~are transferred to receivables when a repair order is completed and invoiced to the repair is completed. Based on our preliminary assessment of the new standard we anticipate that this revenue will likely be recognized as we perform these services. We are currently reviewing whether our preliminary assessment is appropriate based on our review of customer contracts.customer.


	Vehicle Repair and Maintenance Services		Finance and Insurance, net		Total
	(In millions)
Contract Assets (Current), January 1, 2021	$	7.1	$	13.3	$	20.4
Transferred to receivables from contract assets recognized at the beginning of the period	(7.1)		(3.3)		(10.4)
Increases related to revenue recognized, inclusive of adjustments to constraint, during the period	8.2		3.0		11.2
Contract Assets (Current), March 31, 2021	$	8.2	$	13.0	$	21.2
Transferred to receivables from contract assets recognized at the beginning of the period	(8.2)		(3.5)		(11.7)
Increases related to revenue recognized, inclusive of adjustments to constraint, during the period	10.0		3.3		13.3
Contract Assets (Current), June 30, 2021	10.0		12.8		22.8

We are currently evaluating the constraint factors for a portion of the transaction price for certain insurance contracts. The new standard requires that an estimate of variable consideration, subject to a constraint, be included in the transaction price and recognized when or as an entity satisfies its performance obligation. In the event variable consideration is considered fully constrained, recognition will occur once the uncertainties associated with the constraint determination are resolved. In the event

~~our evaluation of these factors results in the variable consideration not being fully constrained, revenue would be subjected to accelerated recognition under the new standard.~~

We have not yet quantified the impact from adopting this standard to our consolidated financial statements and will continue to assess the impacts, including the enhanced disclosure requirements, and any changes to our processes and controls prior to adoption.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), a new standard on lease accounting. The new standard will supersede the existing lease accounting guidance and apply to all entities. The guidance defines new principles for the recognition, measurement, presentation, and disclosure of leases for both lessees and lessors. The new standard will become effective for annual reporting periods beginning on or after December 15, 2018 and for interim periods within that year. A modified retrospective approach is required and early adoption of this standard is permitted. While we are still evaluating the impact of this standard, we expect that the right-of-use assets and the associated lease liabilities will be material to our financial statements. We plan to adopt this standard effective January 1, 2019.

3. ACQUISITIONS AND DIVESTITURES

Results of acquired dealerships are included in our accompanying Condensed Consolidated Statements of Income commencing on the date of acquisition. Our acquisitions are accounted for such that the assets acquired and liabilities assumed are recognized at their acquisition date fair values, with any excess of the consideration transferred over the estimated fair values of the identifiable net assets acquired recorded as goodwill. Goodwill is an asset representing operational synergies and future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. The fair value of our manufacturer franchise rights are determined atas of the acquisition date by discounting the projected cash flows specific to each franchise. Included in this analysis are market participant assumptions ~~at a dealership level, regarding~~related to the cash flows directly attributable to the franchise rights, ~~revenue~~including year-over-year and terminal growth rates, working capital requirements, weighted average cost of capital, future gross margins, and future selling, general, and administrative expenses. ~~Using an estimated weighted average cost~~

Park Place Acquisition

On December 11, 2019, we announced the proposed acquisition of ~~capital, estimated residual values at the end~~substantially all of the ~~forecast period and estimated future capital expenditure requirements,~~assets of the businesses of the Park Place Dealership family of entities (collectively, "Park Place") pursuant to that certain Asset Purchase Agreement, dated as of December 11, 2019, among the Company, ~~calculates~~Park Place and the ~~fair value~~other parties thereto (the "2019 Asset Purchase Agreement"), and related agreements and transactions (collectively, the "2019 Acquisition"). On March 24, 2020, as a result of the ~~franchise rights.~~uncertainties related to the COVID-19 pandemic, we delivered notice to the sellers terminating the 2019 Acquisition pursuant to the terms of the related agreements and transactions in exchange for the payment of $10.0 million of liquidated damages which is reflected in our accompanying Condensed Consolidated Statements of Income as Other operating expense (income), net.

On July 6, 2020, the Company, through 2 of its subsidiaries, entered into an Asset Purchase Agreement with certain members of the Park Place Dealership group, to acquire substantially all of the assets of, and lease the real property related to, 12 new vehicle dealership franchises (8 dealership locations), 2 collision centers and an auto auction (collectively, the "Park Place acquisition"). The Park Place acquisition was completed on August 24, 2020 and financed through a combination of cash, floor plan facilities and seller financing. The seller financing comprised $150.0 million in aggregate principal amount of a 4.00% promissory note due August 2021 and $50.0 million in aggregate principal amount of 4.00% promissory note due February 2022 (collectively, the "Seller Notes"). In September 2020, the Company redeemed the Seller Notes with proceeds from the offering of 4.50% Notes due 2028 and 4.75% Notes due 2030.

Table of Conte n t s

The sources of the purchase consideration are as follows:


	(In millions)
Cash	$	527.4
Seller Notes	200.0
New Vehicle Floor Plan Facility	127.5
Used Vehicle Floor Plan Facility	35.0
Purchase price	$	889.9

Under the acquisition method of accounting, the purchase price is allocated to the tangible and intangible assets acquired and liabilities assumed based on information currently available. During the six months ended June 30, 2021, we recorded a $1.5 million measurement period adjustment to Property and equipment and Goodwill, respectively. The following table summarizes the allocation of the purchase price:


Summary of Assets Acquired and Liabilities Assumed
	(In millions)
Inventories	$	120.8
Loaner vehicles	57.0
Property and equipment	36.5
Goodwill and intangible assets	360.4
Manufacturer franchise rights	324.0
Operating lease right-of-use assets	202.7
Total assets acquired	1,101.4
Operating lease liabilities	(202.2)
Other liabilities	(9.3)
Total liabilities assumed	(211.5)
Net assets acquired	$	889.9

On May 20, 2021, we exercised the purchase option for certain Park Place real estate leases whose original operating lease right-of-use assets and liabilities totaled $99.5 million. The purchase option price for these properties was $216.9 million which was partly financed through the 2021 BofA Real Estate Facility. See Note 9 "Debt" for further details.

The Company's Condensed Consolidated Statements of Income included revenue attributable to Park Place for the six months ended June 30, 2021 of $887.6 million.

Other Acquisitions and Divestitures

There were no business combinations or divestitures during the six months ended June 30, 2021; however, we did release $1.0 million of purchase price holdback related to a prior year acquisition during the six months ended June 30, 2021.

During the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2020, we acquired the assets of ~~two~~3 franchises ~~(two~~(1 dealership ~~locations) and one collision center~~location) in the ~~Indianapolis, Indiana~~Denver, Colorado market for a purchase price of ~~$80.1~~$63.6 million. We ~~financed these acquisitions~~funded this acquisition with ~~$55.0~~an aggregate of $34.5 million of cash and ~~$25.1~~$27.1 million of floor plan borrowings for the purchase of the related new vehicle inventory.

~~Below is~~ This acquisition included purchase price holdbacks of $2.0 million for potential indemnity claims made by us with respect to the ~~preliminary allocation~~acquired franchises. In addition to the acquisition amount above, we released $1.5 million of purchase price ~~for the acquisitions completed~~holdbacks related to a prior year acquisition during the ~~nine~~six months ended ~~September~~June 30, ~~2017. We have not finished our final assessments of third party real estate appraisals and our internal valuation~~2020.

~~of manufacturer franchise rights and the assignment of goodwill to reporting units.~~ The ~~$38.9 million of~~ goodwill and manufacturer franchise rights associated with our acquisitions will be deductible for federal and state income tax purposes ratably over a 15 year period.

Table of Conte n t s

As of
September 30, 2017
(In millions)
Inventory $ 25.9
Real estate 12.2
Property and equipment 1.4
Goodwill 32.7
Manufacturer franchise rights 6.2
Loaner and rental vehicles 3.2
Liabilities assumed (1.5 )
Total purchase price $ 80.1
Below is the allocation of purchase price for the acquisition completed during the six months ended June 30, 2020.


	For the Six Months Ended June 30,
	2020
	(In millions)
Inventory	$	29.8
Real estate	14.5
Property and equipment	0.4
Goodwill and manufacturer franchise rights	19.2



Other	(0.3)
Total purchase price	$	63.6

During the six months ended June 30, 2020, we sold 1 franchise (1 dealership location) in the Atlanta, Georgia market and we sold 6 franchises (5 dealership locations) and 1 collision center in the Jackson, Mississippi market. The Company recorded a pre-tax gain totaling $33.7 million, which is presented in our accompanying Condensed Consolidated Statements of Income as Gain on dealership divestitures, net. The divested businesses would not be considered significant subsidiaries as defined in Rule 1-02(w) of Regulation S-X.

4. ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following:


	As of
	June 30, 2021		December 31, 2020
	(In millions)
Vehicle receivables	$	35.5	$	61.2
Manufacturer receivables	36.3		57.1
Other receivables	42.6		38.4
Total accounts receivable	114.4		156.7
Less—Allowance for credit losses	(1.5)		(1.2)
Accounts receivable, net	$	112.9	$	155.5

As of
September 30, 2017 December 31, 2016
(In millions)
Vehicle receivables $ 37.4
$ 53.2
Manufacturer receivables 40.9
45.5
Other receivables 32.0
41.6
Total accounts receivable 110.3
140.3
Less—Allowance for doubtful accounts (1.6 ) (1.9 )
Accounts receivable, net $ 108.7
$ 138.4

5. INVENTORIES

Inventories consisted of the following:


	As of
	June 30, 2021		December 31, 2020
	(In millions)
New vehicles	$	224.2	$	640.0
Used vehicles	284.4		188.5
Parts and accessories	51.6		46.7
Total inventories (a)	$	560.2	$	875.2

As of
September 30, 2017 December 31, 2016
(In millions)
New vehicles $ 673.7
$ 720.6
Used vehicles 128.2
132.7
Parts and accessories 41.6
41.6
Total inventories $ 843.5
$ 894.9
____________________________

(a) Amounts reflected for inventory as of June 30, 2021, excluded $3.0 million of inventories classified as Assets held for sale.

The lower of cost and net realizable value reserves reduced total inventories by ~~$5.7~~$4.9 million and ~~$6.5~~$6.7 million as of ~~September~~June 30, ~~2017~~2021 and December 31, ~~2016~~,2020, respectively. As of ~~September~~June 30, ~~2017~~2021 and December 31, ~~2016,~~2020, certain automobile manufacturer incentives reduced new vehicle inventory cost by ~~$7.8~~$2.9 million and ~~$8.2~~$8.3 million,, respectively, and reduced new vehicle cost of sales for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 and ~~2016~~2020 by ~~$29.4~~$31.3 million and ~~$29.8~~$19.8 million, respectively. New vehicle inventories as of June 30, 2021 have decreased from December 31, 2020 as a result of manufacturer production challenges caused by the semiconductor chip shortage.

Table of Conte n t s

6. ASSETS AND LIABILITIES HELD FOR SALE

Assets and liabilities classified as held for sale include (i) assets and liabilities associated with pending dealership disposals, (ii) real estate not currently used in our operations that we are actively marketing to sell and (iii) the related mortgage notes payable, if applicable.

A summary of assets held for sale and liabilities associated with assets held for sale is as follows:


	As of
	June 30, 2021		December 31, 2020
	(In millions)
Assets:
Inventory	$	3.0	$	0
Loaner vehicles	0.6		0
Property and equipment, net	27.1		28.3
Operating lease right-of-use assets	0.4		0
Goodwill	0.5		0

Total Assets held for sale	31.6		28.3
Liabilities:

Floor plan notes payable—non-trade	1.8		0
Loaners vehicle payable	0.6		0
Current maturities of long-term debt	0.2		0.5
Current maturities of operating leases	0.2		0
Long-term debt	2.1		8.4
Operating lease liabilities	0.2		0
Total Liabilities associated with assets held for sale	5.1		8.9
Net assets held for sale	$	26.5	$	19.4

As of June 30, 2021 assets held for sale consisted of 1 franchise (1 dealership location) and 1 real estate property not currently used in our operations. The assets and liabilities associated with these properties totaled $31.6 million and $5.1 million, respectively.

As of December 31, 2020, assets held for sale consisted of 3 real estate properties that were not being used in our operations. The assets and liabilities totaled $28.3 million and $8.9 million, respectively.

During the ~~nine~~six months ended ~~September~~June 30, ~~2017, we reclassified two~~2021, the Company sold 2 vacant properties with a net book ~~values~~value of ~~$3.8 million to Assets Held for Sale. Additionally, during~~$12.5 million.

During the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2020, the Company sold 7 franchises (6 dealership locations) and 1 collision center for a pre-tax gain totaling $33.7 million. Additionally, we sold ~~one~~1 vacant property with a net book value of ~~$3.9~~$3.7 million.

~~Assets held for sale, comprising real estate~~

7. GOODWILL AND INTANGIBLE FRANCHISE RIGHTS

Our acquisitions have resulted in the recording of goodwill and intangible franchise rights. Goodwill is an asset representing operational synergies and future economic benefits arising from other assets acquired in a business combination that are not ~~currently used in~~individually identified and separately recognized. Franchise rights are indefinite-lived intangible assets representing our ~~operations, totaled $16.2 million~~rights under franchise agreements with vehicle manufacturers. Goodwill and ~~$16.1 million~~intangible franchise rights are tested annually as of ~~September 30, 2017~~October 1st, or more frequently in the event that facts and ~~December 31, 2016, respectively, and there were no liabilities associated with these real estate assets held~~circumstances indicate a triggering event has occurred.

The results of the quantitative impairment testing for ~~sale~~certain franchise rights as of ~~September 30, 2017 or December~~March 31, ~~2016.~~

~~During~~2020, identified that the ~~nine months ended September 30, 2016, we recorded $1.5 million~~carrying values of ~~impairment expense based on~~certain of our franchise rights assets exceeded their fair value. As a third-party broker opinion of value associated with a property transferred to Assets Held for Sale. Additionally, during the nine months ended September 30, 2016, we recorded $0.7 million of impairment expense based on offers from prospective buyers on one of the real estate properties classified in Assets Held for Sale.

~~In addition to the above impairments, during the nine months ended September 30, 2016,~~result, we recognized a ~~$0.9~~$23.0 million pre-tax non-cash impairment charge ~~associated with a lease buyout~~during the three months ended March 31, 2020. We did 0t perform impairment testing related to goodwill and ~~lease termination on real estate not classified~~franchise rights for the six months ended June 30, 2021 as ~~held for sale. This was recorded in Other Operating Expenses, net in our accompanying Condensed Consolidated Statements~~no triggering events had occurred.

Table of ~~Income.~~Conte n t s

7.8. FLOOR PLAN NOTES PAYABLE

Floor plan notes payable consisted of the following:


	As of							As of
	September 30, 2017			December 31, 2016				June 30, 2021		December 31, 2020
	(In millions)							(In millions)
Floor plan notes payable—trade	$	121.5		$	120.0		Floor plan notes payable—trade	$	13.9	$	71.7
Floor plan notes payable offset account	(11.8		)	(11.7		)	Floor plan notes payable offset account	0		(6.8)
Total floor plan notes payable—trade, net	$	109.7		$	108.3
Floor plan notes payable—trade, net							Floor plan notes payable—trade, net	$	13.9	$	64.9

Floor plan notes payable—non-trade	$	641.8		$	732.7
Floor plan notes payable—new non-trade (a)							Floor plan notes payable—new non-trade (a)	$	302.6	$	715.9

Floor plan notes payable offset account	(63.2		)	(59.2		)	Floor plan notes payable offset account	(75.0)		(78.6)
Total floor plan notes payable—non-trade, net	$	578.6		$	673.5
Floor plan notes payable—non-trade, net							Floor plan notes payable—non-trade, net	$	227.6	$	637.3

Table 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.Conte n t s

New Vehicle—


	For the Six Months Ended June 30,				Increase (Decrease)		% Change
	2021		2020
	(Dollars in millions, except for per vehicle data)
As Reported:
Revenue:
Luxury	$	1,126.2	$	520.0	$	606.2	117	%
Import	995.6		700.1		295.5		42	%
Domestic	398.3		363.8		34.5		9	%
Total new vehicle revenue	$	2,520.1	$	1,583.9	$	936.2	59	%
Gross profit:
Luxury	$	106.6	$	33.7	$	72.9	216	%
Import	62.1		23.2		38.9		168	%
Domestic	30.9		18.1		12.8		71	%
Total new vehicle gross profit	$	199.6	$	75.0	$	124.6	166	%
New vehicle units:
Luxury	18,596		9,351		9,245		99	%
Import	31,634		24,068		7,566		31	%
Domestic	8,754		8,618		136		2	%
Total new vehicle units	58,984		42,037		16,947		40	%

Same Store:
Revenue:
Luxury	$	703.2	$	503.5	$	199.7	40	%
Import	991.5		684.2		307.3		45	%
Domestic	393.6		340.2		53.4		16	%
Total new vehicle revenue	$	2,088.3	$	1,527.9	$	560.4	37	%
Gross profit:
Luxury	$	60.7	$	32.5	$	28.2	87	%
Import	62.0		22.8		39.2		172	%
Domestic	30.6		16.9		13.7		81	%
Total new vehicle gross profit	$	153.3	$	72.2	$	81.1	112	%
New vehicle units:
Luxury	12,031		9,038		2,993		33	%
Import	31,556		23,565		7,991		34	%
Domestic	8,653		8,094		559		7	%
Total new vehicle units	52,240		40,697		11,543		28	%

For the Nine Months Ended September 30,
Increase
(Decrease)

%
Change
2017 2016
(Dollars in millions, except for per vehicle data)
As Reported:
Revenue:
Luxury $ 852.3
$ 909.7
$ (57.4 ) (6 )%
Import 1,205.7
1,206.0
(0.3 ) — %
Domestic 539.0
560.6
(21.6 ) (4 )%
Total new vehicle revenue $ 2,597.0
$ 2,676.3
$ (79.3 ) (3 )%
Gross profit:
Luxury $ 54.7
$ 61.4
$ (6.7 ) (11 )%
Import 42.8
52.9
(10.1 ) (19 )%
Domestic 24.9
25.4
(0.5 ) (2 )%
Total new vehicle gross profit $ 122.4
$ 139.7
$ (17.3 ) (12 )%
New vehicle units:
Luxury 16,117
17,469
(1,352 ) (8 )%
Import 43,504
43,814
(310 ) (1 )%
Domestic 14,163
15,326
(1,163 ) (8 )%
Total new vehicle units 73,784
76,609
(2,825 ) (4 )%

Same Store:
Revenue:
Luxury $ 852.3
$ 889.9
$ (37.6 ) (4 )%
Import 1,186.8
1,154.7
32.1
3 %
Domestic 487.2
524.1
(36.9 ) (7 )%
Total new vehicle revenue $ 2,526.3
$ 2,568.7
$ (42.4 ) (2 )%
Gross profit:
Luxury $ 54.8
$ 59.9
$ (5.1 ) (9 )%
Import 42.5
51.3
(8.8 ) (17 )%
Domestic 21.6
23.8
(2.2 ) (9 )%
Total new vehicle gross profit $ 118.9
$ 135.0
$ (16.1 ) (12 )%
New vehicle units:
Luxury 16,117
17,102
(985 ) (6 )%
Import 42,891
42,049
842
2 %
Domestic 12,677
14,256
(1,579 ) (11 )%
Total new vehicle units 71,685
73,407
(1,722 ) (2 )%

Table of Conte n t s

New Vehicle Metrics—


	For the Six Months Ended June 30,						Increase (Decrease)			% Change
	2021			2020
As Reported:
Revenue per new vehicle sold	$	42,725		$	37,679		$	5,046		13	%
Gross profit per new vehicle sold	$	3,384		$	1,784		$	1,600		90	%
New vehicle gross margin	7.9		%	4.7		%	3.2		%

Luxury:
Gross profit per new vehicle sold	$	5,732		$	3,604		$	2,128		59	%
New vehicle gross margin	9.5		%	6.5		%	3.0		%
Import:
Gross profit per new vehicle sold	$	1,963		$	964		$	999		104	%
New vehicle gross margin	6.2		%	3.3		%	2.9		%
Domestic:
Gross profit per new vehicle sold	$	3,530		$	2,100		$	1,430		68	%
New vehicle gross margin	7.8		%	5.0		%	2.8		%

Same Store:
Revenue per new vehicle sold	$	39,975		$	37,543		$	2,432		6	%
Gross profit per new vehicle sold	$	2,935		$	1,774		$	1,161		65	%
New vehicle gross margin	7.3		%	4.7		%	2.6		%

Luxury:
Gross profit per new vehicle sold	$	5,045		$	3,596		$	1,449		40	%
New vehicle gross margin	8.6		%	6.5		%	2.1		%
Import:
Gross profit per new vehicle sold	$	1,965		$	968		$	997		103	%
New vehicle gross margin	6.3		%	3.3		%	3.0		%
Domestic:
Gross profit per new vehicle sold	$	3,536		$	2,088		$	1,448		69	%
New vehicle gross margin	7.8		%	5.0		%	2.8		%

For the Nine Months Ended September 30, Increase (Decrease)
%
Change
2017 2016
As Reported:
Revenue per new vehicle sold $ 35,197
$ 34,935
$ 262
1 %
Gross profit per new vehicle sold $ 1,659
$ 1,824
$ (165 ) (9 )%
New vehicle gross margin 4.7 % 5.2 % (0.5 )%

Luxury:
Gross profit per new vehicle sold $ 3,394
$ 3,515
$ (121 ) (3 )%
New vehicle gross margin 6.4 % 6.7 % (0.3 )%
Import:
Gross profit per new vehicle sold $ 984
$ 1,207
$ (223 ) (18 )%
New vehicle gross margin 3.5 % 4.4 % (0.9 )%
Domestic:
Gross profit per new vehicle sold $ 1,758
$ 1,657
$ 101
6 %
New vehicle gross margin 4.6 % 4.5 % 0.1 %

Same Store:
Revenue per new vehicle sold $ 35,242
$ 34,993
$ 249
1 %
Gross profit per new vehicle sold $ 1,659
$ 1,839
$ (180 ) (10 )%
New vehicle gross margin 4.7 % 5.3 % (0.6 )%

Luxury:
Gross profit per new vehicle sold $ 3,400
$ 3,503
$ (103 ) (3 )%
New vehicle gross margin 6.4 % 6.7 % (0.3 )%
Import:
Gross profit per new vehicle sold $ 991
$ 1,220
$ (229 ) (19 )%
New vehicle gross margin 3.6 % 4.4 % (0.8 )%
Domestic:
Gross profit per new vehicle sold $ 1,704
$ 1,669
$ 35
2 %
New vehicle gross margin 4.4 % 4.5 % (0.1 )%

~~New~~For the six months ended June 30, 2021, new vehicle revenue ~~decreased~~increased by ~~$79.3~~$936.2 million ~~(3%~~(59%) as a result of a ~~4% decrease~~40% increase in new vehicle units sold, ~~partially offset by a 1%~~as well as an increase in revenue per new vehicle sold. ~~Same~~For the six months ended June 30, 2021, same store new vehicle revenue ~~decreased~~increased by ~~$42.4~~$560.4 million ~~(2%~~(37%) as athe result of a ~~2% decrease~~28% increase in new vehicle units sold, ~~partially offset by a slight~~and as well as an increase in revenue per unit sold.

For the six months ended June 30, 2021, new vehicle ~~sold.~~

~~Same~~gross profit and same store new vehicle gross profit ~~for the nine months ended September 30, 2017 decreased~~increased by ~~$16.1~~$124.6 million ~~(12%~~(166%) and $81.1 million (112%), ~~due to a 10% decrease in gross profit per new vehicle sold.~~respectively. Same store new vehicle gross margin for the ~~nine~~six months ended ~~September~~June 30, ~~2017 decreased by 60~~2021 improved 260 basis points to ~~4.7%~~7.3%.

The ~~decrease~~seasonally adjusted annual rate ("SAAR") of new vehicle sales in ~~our~~the U.S. during the six months ended June 30, 2021 was 17.0 million compared to 13.3 million during the six months ended June 30, 2020, a 28% increase. The Company experienced continued strength in new vehicle sales for the six months ended June 30, 2021, building on the new vehicle sales recovery in the latter part of 2020. The increase in new vehicle sales revenue for the six months ended June 30, 2021 over the same ~~store gross profit margin was primarily~~period in the prior year is also attributable to ~~a change~~the acquisition of the Park Place Dealership group in ~~our revenue mix towards our generally lower margin import brands~~August 2020 and ~~margin pressures~~the significant decline in new vehicle sales during April 2020 as a result of ~~generally higher~~the COVID-19 pandemic. On a same store basis, we experienced an increase in gross profit across all three categories of new vehicle sales driven by the increase in volume and gross profit per new vehicle sold. The increased profitability is partly attributable to the lack of supply of new vehicle inventory ~~levels across~~driven by the ~~industry and~~manufacturer production challenges arising from semiconductor chip shortages. Due to the ~~failure to achieve~~reduced supply of new vehicles by manufacturers, new vehicle days supply of inventory was approximately 17 days for the ~~aggressive~~six months ended June 30,

Table of Conte n t s

2021, which is well below our targeted days supply. Luxury new vehicle sales and ~~marketing incentive targets set~~gross profit increased on an as reported basis by ~~certain manufacturers.~~$606.2 million (117%) and $72.9 million (216%), respectively, for the six months ended June 30, 2021 as compared to the six months ended June 30, 2020 in part due to the Park Place acquisition which occurred in the third quarter of 2020. On a same store basis, we saw an improvement in gross profit margin across all categories of revenue in the second quarter of 2021 as compared to the second quarter of 2020, due to the low supply of new vehicle inventory which coupled with the demand for new vehicles, resulted in improved gross profit margins across all new vehicle categories.

Used Vehicle—


	For the Six Months Ended June 30,				Increase (Decrease)		% Change
	2021		2020
	(Dollars in millions, except for per vehicle data)
As Reported:
Revenue:
Used vehicle retail revenue	$	1,366.9	$	858.6	$	508.3	59	%
Used vehicle wholesale revenue	140.2		82.1		58.1		71	%
Used vehicle revenue	$	1,507.1	$	940.7	$	566.4	60	%
Gross profit:
Used vehicle retail gross profit	$	121.0	$	62.8	$	58.2	93	%
Used vehicle wholesale gross profit	18.3		5.0		13.3		266	%
Used vehicle gross profit	$	139.3	$	67.8	$	71.5	105	%
Used vehicle retail units:
Used vehicle retail units	50,375		38,687		11,688		30	%

Same Store:
Revenue:
Used vehicle retail revenue	$	1,115.2	$	820.4	$	294.8	36	%
Used vehicle wholesale revenue	89.6		79.2		10.4		13	%
Used vehicle revenue	$	1,204.8	$	899.6	$	305.2	34	%
Gross profit:
Used vehicle retail gross profit	$	101.3	$	60.8	$	40.5	67	%
Used vehicle wholesale gross profit	12.8		5.1		7.7		151	%
Used vehicle gross profit	$	114.1	$	65.9	$	48.2	73	%
Used vehicle retail units:
Used vehicle retail units	44,007		37,012		6,995		19	%

For the Nine Months Ended September 30, Increase (Decrease)
%
Change
2017 2016
(Dollars in millions, except for per vehicle data)
As Reported:
Revenue:
Used vehicle retail revenue $ 1,245.7
$ 1,254.7
$ (9.0 ) (1 )%
Used vehicle wholesale revenue 150.9
152.8
(1.9 ) (1 )%
Used vehicle revenue $ 1,396.6
$ 1,407.5
$ (10.9 ) (1 )%
Gross profit:
Used vehicle retail gross profit $ 94.4
$ 101.4
$ (7.0 ) (7 )%
Used vehicle wholesale gross profit 1.0
(1.6 ) 2.6
163 %
Used vehicle gross profit $ 95.4
$ 99.8
$ (4.4 ) (4 )%
Used vehicle retail units:
Used vehicle retail units 59,107
59,378
(271 ) — %

Same Store:
Revenue:
Used vehicle retail revenue $ 1,200.9
$ 1,170.5
$ 30.4
3 %
Used vehicle wholesale revenue 144.8
145.2
(0.4 ) — %
Used vehicle revenue $ 1,345.7
$ 1,315.7
$ 30.0
2 %
Gross profit:
Used vehicle retail gross profit $ 90.0
$ 94.7
$ (4.7 ) (5 )%
Used vehicle wholesale gross profit 1.2
(1.4 ) 2.6
NM
Used vehicle gross profit $ 91.2
$ 93.3
$ (2.1 ) (2 )%
Used vehicle retail units:
Used vehicle retail units 56,623
54,674
1,949
4 %

Used Vehicle Metrics—


	For the Six Months Ended June 30,						Increase (Decrease)			% Change
	2021			2020
As Reported:
Revenue per used vehicle retailed	$	27,134		$	22,194		$	4,940		22	%
Gross profit per used vehicle retailed	$	2,402		$	1,623		$	779		48	%
Used vehicle retail gross margin	8.9		%	7.3		%	1.6		%

Same Store:
Revenue per used vehicle retailed	$	25,341		$	22,166		$	3,175		14	%
Gross profit per used vehicle retailed	$	2,302		$	1,643		$	659		40	%
Used vehicle retail gross margin	9.1		%	7.4		%	1.7		%

For the Nine Months Ended September 30, Increase (Decrease)
%
Change
2017 2016
As Reported:
Revenue per used vehicle retailed $ 21,075
$ 21,131
$ (56 ) — %
Gross profit per used vehicle retailed $ 1,597
$ 1,708
$ (111 ) (6 )%
Used vehicle retail gross margin 7.6 % 8.1 % (0.5 )%

Same Store:
Revenue per used vehicle retailed $ 21,209
$ 21,409
$ (200 ) (1 )%
Gross profit per used vehicle retailed $ 1,589
$ 1,732
$ (143 ) (8 )%
Used vehicle retail gross margin 7.5 % 8.1 % (0.6 )%

Table of Conte n t s

NM—~~Not Meaningful~~

Used vehicle revenue ~~decreased~~increased by ~~$10.9~~$566.4 million ~~(1%~~(60%) due to a ~~decrease of $9.0~~$508.3 million ~~(1%~~(59%) increase in used vehicle retail revenue, and a ~~$1.9~~$58.1 million ~~(1%~~(71%) ~~decrease~~increase in used vehicle wholesale revenue. Same store used vehicle revenue increased by ~~$30.0~~$305.2 million ~~(2%~~(34%) due to ana $294.8 million (36%) increase ~~of $30.4 million (3%)~~ in ~~same store~~ used vehicle retail revenue, ~~partially offset by~~and a ~~$0.4~~$10.4 million ~~decrease~~(13%) increase in ~~same store~~ used vehicle wholesale revenues. ~~For the nine months ended September 30, 2017 same store used vehicle retail unit sales grew by 1,949 units (4%).~~

For the ~~nine~~six months ended ~~September~~June 30, ~~2017 same store used vehicle retail~~2021, gross profit margins ~~decreased 60~~increased by 160 basis points to ~~7.5% as~~8.9%. Due to the new vehicle inventory shortages that have arisen due to manufacturer challenges, we continue to see an increased demand for used vehicles. As a result, ~~of the 8% decrease~~on both a same store and as reported basis, we experienced a significant improvement in used vehicle gross profit ~~per~~margins during the six months ended June 30, 2021 as compared to the same period in the prior year. Used vehicle ~~retailed~~gross profit margins increased for the six months ended June 30, 2021 by $71.5 million (105%) on an all store basis and $48.2 million (73%) on a ~~1% decrease in revenue per~~same store basis as compared to the six months ended June 30, 2020. We finished the first quarter with a 37 days supply of used vehicle ~~retailed.~~inventory, slightly above our historic targeted supply of 30 to 35 days. The increase in the days supply of used inventory was driven by the new vehicle inventory shortages which has helped drive demand for used vehicle sales.

Parts and Service—


	For the Six Months Ended June 30,						Increase (Decrease)			% Change
	2021			2020
	(Dollars in millions)
As Reported:
Parts and service revenue	$	554.4		$	390.8		$	163.6		42	%
Parts and service gross profit:
Customer pay	203.9			131.8			72.1			55	%
Warranty	51.1			40.1			11.0			27	%
Wholesale parts	15.0			9.9			5.1			52	%
Parts and service gross profit, excluding reconditioning and preparation	$	270.0		$	181.8		$	88.2		49	%
Parts and service gross margin, excluding reconditioning and preparation	48.7		%	46.5		%	2.2		%
Reconditioning and preparation *	$	75.7		$	53.6		$	22.1		41	%
Total parts and service gross profit	$	345.7		$	235.4		$	110.3		47	%


Same Store:
Parts and service revenue	$	446.7		$	377.6		$	69.1		18	%
Parts and service gross profit:
Customer pay	161.1			127.6			33.5			26	%
Warranty	38.5			38.7			(0.2)			(1)	%
Wholesale parts	12.5			9.5			3.0			32	%
Parts and service gross profit, excluding reconditioning and preparation	$	212.1		$	175.8		$	36.3		21	%
Parts and service gross margin, excluding reconditioning and preparation	47.5		%	46.6		%	0.9		%
Reconditioning and preparation *	$	65.1		$	51.6		$	13.5		26	%
Total parts and service gross profit	$	277.2		$	227.4		$	49.8		22	%

For the Nine Months Ended September 30,
Increase
(Decrease)

%
Change
2017 2016
(Dollars in millions)
As Reported:
Parts and service revenue $ 589.5
$ 584.9
$ 4.6
1 %
Parts and service gross profit:
Customer pay 203.8
201.4
2.4
1 %
Warranty 61.7
54.4
7.3
13 %
Wholesale parts 15.7
15.6
0.1
1 %
Parts and service gross profit, excluding reconditioning and preparation $ 281.2
$ 271.4
$ 9.8
4 %
Parts and service gross margin, excluding reconditioning and preparation 47.7 % 46.4 % 1.3 %

Reconditioning and preparation $ 86.0
$ 90.6
$ (4.6 ) (5 )%
Total parts and service gross profit $ 367.2
$ 362.0
$ 5.2
1 %
Total parts and service gross margin 62.3 % 61.9 % 0.4 %

Same Store:
Parts and service revenue $ 579.6
$ 556.1
$ 23.5
4 %
Parts and service gross profit:
Customer pay 199.9
192.4
7.5
4 %
Warranty 60.8
52.5
8.3
16 %
Wholesale parts 15.6
14.5
1.1
8 %
Parts and service gross profit, excluding reconditioning and preparation $ 276.3
$ 259.4
$ 16.9
7 %
Parts and service gross margin, excluding reconditioning and preparation 47.7 % 46.6 % 1.1 %

Reconditioning and preparation $ 84.1
$ 85.6
$ (1.5 ) (2 )%
Total parts and service gross profit $ 360.4
$ 345.0
$ 15.4
4 %
Total parts and service gross margin 62.2 % 62.0 % 0.2 %

* Reconditioning and preparation represents the gross profit earned by our parts and service departments for internal work performed is included as a reduction of Parts and Service Cost of Sales in the accompanying Condensed Consolidated Statements of Income upon the sale of the vehicle.

The ~~$4.6~~$163.6 million ~~(1%~~(42%) increase in parts and service revenue was primarily ~~the result of an~~due to a $120.4 million (46%) increase ~~of $12.4 million (12%) in warranty revenue, partially offset by a $6.7 million (2%) decrease~~ in customer pay revenue, ~~and~~ a ~~$1.1~~$25.9 million ~~(1%~~(47%) ~~decrease~~increase in wholesale parts revenue and a $17.3 million (23%) increase in warranty revenue. Same store parts and service revenue increased by ~~$23.5~~$69.1 million ~~(4%~~(18%) from ~~$556.1~~$377.6 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2020 to ~~$579.6~~$446.7 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~2021. The increase in same store parts and service revenue was ~~primarily~~ due to a ~~$14.4~~$52.4 million ~~(14%~~(21%) increase in ~~warranty~~customer pay revenue, a ~~$4.7~~$17.8 million ~~(6%~~(34%) increase in wholesale parts revenue ~~and~~partially offset by a ~~$4.4~~$1.1 million ~~(1%~~(2%) ~~increase~~decrease in ~~customer pay~~warranty revenue.

Parts and service gross profit, excluding reconditioning and preparation, increased by ~~$9.8~~$88.2 million ~~(4%~~(49%) to ~~$281.2~~$270.0 million, and same store gross profit, excluding reconditioning and preparation, increased by ~~$16.9~~$36.3 million ~~(7%~~(21%) to ~~$276.3~~$212.1 million. The ~~increase in same store~~ parts and service ~~gross profit is primarily due~~business was negatively impacted by "shelter in place" orders issued in response to ~~a shift~~ the COVID-19 pandemic

Table of Conte n t s

in ~~mix towards our higher margin warranty revenue.~~2020 but has shown improvement as COVID-19 restrictions have eased and in conjunction with the COVID-19 vaccination rollout.

Finance and Insurance, net—


	For the Nine Months Ended September 30,				Increase (Decrease)		% Change			For the Six Months Ended June 30,				Increase (Decrease)		% Change
	2017		2016							2021		2020
	(Dollars in millions, except for per vehicle data)									(Dollars in millions, except for per vehicle data)
As Reported:									As Reported:
Finance and insurance, net	$	202.5	$	192.6	$	9.9	5	%	Finance and insurance, net	$	195.3	$	137.0	$	58.3	43	%
Finance and insurance, net per vehicle sold	$	1,524	$	1,416	$	108	8	%	Finance and insurance, net per vehicle sold	$	1,786	$	1,697	$	89	5	%

Same Store:									Same Store:
Finance and insurance, net	$	196.2	$	182.5	$	13.7	8	%	Finance and insurance, net	$	178.2	$	132.9	$	45.3	34	%
Finance and insurance, net per vehicle sold	$	1,529	$	1,425	$	104	7	%	Finance and insurance, net per vehicle sold	$	1,851	$	1,710	$	141	8	%

F&I revenue, net ~~revenue~~ increased ~~by $9.9~~$58.3 million ~~(5%~~(43%) during the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 when compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016, with~~2020, and same store F&I revenue, net ~~revenue increasing~~increased by ~~$13.7~~$45.3 million ~~(8%~~(34%) over the same ~~time~~ period. ~~During the nine months ended September 30, 2017, we benefited from the acceleration of commissions~~F&I revenue, net increased as a result of ~~our amended agreement with our primary insurance products underwriter which became effective during~~ the ~~fourth quarter~~increase in new and used retail unit sales for the six months ended June 30, 2021 as compared to the six months ended June 30, 2020. For the six months ended June 30, 2021, the Company was able to improve the F&I PVR by $89 per unit (5%) over the comparable prior year period.

Table of ~~2016.~~Conte n t s

Selling, General, and Administrative Expense—

For the Nine Months Ended September 30,
Increase
(Decrease)

% of Gross
Profit Increase (Decrease)
2017
% of Gross
Profit
2016
% of Gross
Profit

(Dollars in millions)
As Reported:
Personnel costs $ 261.1
33.2 % $ 257.1
32.4 % $ 4.0
0.8 %
Sales compensation 83.5
10.6 % 83.8
10.6 % (0.3 ) — %
Share-based compensation 10.0
1.3 % 9.1
1.1 % 0.9
0.2 %
Outside services 60.7
7.7 % 57.7
7.3 % 3.0
0.4 %
Advertising 22.7
2.9 % 25.4
3.2 % (2.7 ) (0.3 )%
Rent 20.2
2.6 % 23.0
2.9 % (2.8 ) (0.3 )%
Utilities 11.8
1.5 % 11.7
1.5 % 0.1
— %
Insurance 11.4
1.4 % 13.6
1.7 % (2.2 ) (0.3 )%
Other 67.8
8.5 % 67.8
8.5 % —
— %
Selling, general, and administrative expense $ 549.2
69.7 % $ 549.2
69.2 % $ —
0.5 %
Gross profit $ 787.5
$ 794.1

Same Store:
Personnel costs $ 252.8
33.0 % $ 244.2
32.3 % $ 8.6
0.7 %
Sales compensation 80.5
10.5 % 79.4
10.5 % 1.1
— %
Share-based compensation 10.0
1.3 % 9.1
1.2 % 0.9
0.1 %
Outside services 59.0
7.7 % 54.0
7.1 % 5.0
0.6 %
Advertising 21.6
2.8 % 22.4
3.0 % (0.8 ) (0.2 )%
Rent 20.2
2.6 % 22.9
3.0 % (2.7 ) (0.4 )%
Utilities 11.4
1.5 % 10.9
1.4 % 0.5
0.1 %
Insurance 11.0
1.4 % 12.8
1.7 % (1.8 ) (0.3 )%
Other $ 66.7
8.7 % $ 65.3
8.7 % 1.4
— %
Selling, general, and administrative expense $ 533.2
69.5 % $ 521.0
68.9 % $ 12.2
0.6 %
Gross profit $ 766.7
$ 755.8


	For the Six Months Ended June 30,								Increase (Decrease)		% of Gross Profit Increase (Decrease)
	2021		% of Gross Profit		2020		% of Gross Profit
	(Dollars in millions)
As Reported:
Personnel costs	$	249.7	28.4	%	$	166.7	32.4	%	$	83.0	(4.0)	%
Sales compensation	89.0		10.1	%	52.2		10.1	%	36.8		—	%
Share-based compensation	8.3		0.9	%	6.7		1.3	%	1.6		(0.4)	%
Outside services	50.2		5.7	%	38.4		7.5	%	11.8		(1.8)	%
Advertising	16.5		1.9	%	11.6		2.3	%	4.9		(0.4)	%
Rent	20.3		2.3	%	12.7		2.5	%	7.6		(0.2)	%
Utilities	8.8		1.0	%	7.4		1.4	%	1.4		(0.4)	%
Insurance	13.4		1.5	%	8.8		1.7	%	4.6		(0.2)	%
Other	53.3		6.1	%	42.4		8.1	%	10.9		(2.0)	%
Selling, general, and administrative expense	$	509.5	57.9	%	$	346.9	67.3	%	$	162.6	(9.4)	%
Gross profit	$	879.9			$	515.2

Same Store:
Personnel costs	$	206.6	28.6	%	$	161.1	32.3	%	$	45.5	(3.7)	%
Sales compensation	76.5		10.6	%	50.2		10.1	%	26.3		0.5	%
Share-based compensation	8.3		1.1	%	6.7		1.3	%	1.6		(0.2)	%
Outside services	41.1		5.7	%	36.9		7.4	%	4.2		(1.7)	%
Advertising	14.1		2.0	%	10.7		2.1	%	3.4		(0.1)	%
Rent	20.0		2.8	%	12.6		2.5	%	7.4		0.3	%
Utilities	7.2		1.0	%	7.1		1.4	%	0.1		(0.4)	%
Insurance	10.8		1.5	%	8.1		1.6	%	2.7		(0.1)	%
Other	$	42.5	5.8	%	$	41.5	8.5	%	1.0		(2.7)	%
Selling, general, and administrative expense	$	427.1	59.1	%	$	334.9	67.2	%	$	92.2	(8.1)	%
Gross profit	$	722.8			$	498.4

SG&A expense as a percentage of gross profit ~~was 69.7%~~decreased 940 basis points from 67.3% for the ~~nine~~six months ended ~~September~~June 30, ~~2017 compared~~2020 to ~~69.2%~~57.9% for the ~~nine~~six months ended ~~September~~June 30, ~~2016. Same~~2021 while same store SG&A expense as a percentage of gross profit ~~increased by 60~~decreased 810 basis points ~~from 68.9% for the nine months ended September 30, 2016~~ to 69.5% for the nine months ended September 30, 2017. The increase in SG&A expense is primarily attributable to higher personnel costs and higher outside services predominately related to our investments in technologies to improve our customer experience and productivity, partially offset by decreases in Insurance, Advertising, and Rent Expense.59.1% over that same period. The decrease in ~~insurance expense for~~SG&A as a percentage of gross profit during the ~~nine~~six months ended ~~September~~June 30, ~~2017 compared to the nine months ended September 30, 2016~~2021, is primarily the result of ~~a reduction~~higher sales volume and gross profits on new and used vehicle sales. On an as-reported basis, Personnel costs and Sales compensation increased by $83.0 million and $36.8 million, respectively, for the six months ended June 30, 2021 as compared to the six months ended June 30, 2020, primarily due to the Park Place acquisition and an increase in ~~insurance retention~~sales commissions related to ~~hail storm damage at~~the increase in gross profits earned during the periods. In addition, the Company made the decision to continue to pay its employees when certain ~~dealerships~~of our stores were closed in ~~2016, coupled with lower premiums for property and casualty insurance. Included in SG&A expense~~February 2021 as a result of weather-related disruptions. Rent increased from $12.7 million to $20.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017 is approximately $1.5~~2021 as compared to the same period in the prior year due to real estate operating leases entered into related to Park Place dealership locations. Lastly, insurance expenses increased by $4.6 million for the six months ended June 30, 2021 as compared to the six months ended June 30, 2020 due to increased insurance premiums stemming from the Park Place acquisition and claims associated with certain weather-related events.

Franchise Rights Impairment—

During the six months ended June 30, 2020, we recorded a franchise rights impairment charge of ~~expense in connection with our previously disclosed CEO transition.~~$23.0 million. As a result of the COVID-19 pandemic, we performed a quantitative impairment analysis of certain franchise rights assets and determined that their carrying values exceeded their fair value by $23.0 million as of March 31, 2020. We did not perform impairment testing related to franchise rights for the six months ended June 30, 2021 as no triggering events had occurred.

Table of Conte n t s

Other Operating ~~Expenses, net —~~Expense, net—

Other operating ~~expenses,~~expense, net ~~which~~ includes gains and losses from the sale of property and equipment, ~~income derived from lease arrangements,~~ and other ~~non-core~~ operating items ~~was $0.7 million for~~not considered core to our business. During the ~~nine~~six months ended ~~September~~June 30, ~~2017 compared with~~2021, the Company recorded other operating ~~expenses,~~income, net of $4.2 million, ~~in the comparable 2016 period.~~

~~During the nine months ended September 30, 2017, we recognized expenses associated with~~primarily related to a ~~lease termination~~$3.5 million gain arising from legal settlements and a $1.9 million gain on divestitures of ~~$2.9 million,~~certain real estate, partially offset by ~~$0.8~~$1.3 million of real estate related charges. Included in the $8.9 million of other ~~income~~operating expense, net for the six months ended June 30, 2020, was an $11.6 million charge related to certain financing transactions related to, as well as the termination of, the Park Place acquisition, partially offset by a $2.1 million gain related to legal settlements and a ~~$0.9~~$0.3 million gain ~~recognized for legal settlements.~~

During the nine months ended September 30, 2016, we recognized $3.1 million in non-cash real estate related impairment charges consisting of $0.9 million related to a lease buyout and a lease termination, $0.7 million related to the ~~write down~~sale of ~~a property classified as Assets Held for Sale, and $1.5 million related to a property transferred to Assets Held for Sale.~~vacant real estate.

Floor Plan Interest ~~Expense —~~Expense—

Floor plan interest expense ~~increased~~decreased by ~~$2.7~~$6.1 million ~~(19%~~(55%) to ~~$17.1~~$5.0 million during the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 compared to ~~$14.4~~$11.1 million ~~for~~during the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2020 primarily as a result of ~~higher~~lower new vehicle inventory levels and a decrease in 30-day LIBOR from which our floor plan interest ~~rates.~~rate is calculated.

Loss on Extinguishment of Debt—

On March 4, 2020, the Company redeemed its $600 million 6% Notes scheduled to mature in 2024 at 103% of par, plus accrued and unpaid interest. We recorded a loss on extinguishment of the 6% Notes of $19.1 million which comprised a redemption premium of $18.0 million and the write-off of the unamortized premium and debt issuance costs totaling $1.1 million, net.

As a result of the termination of the Asset Purchase Agreement (the "2019 Asset Purchase Agreement"), dated as of December 11, 2019, among the Company, Park Place and the other parties thereto, the Company delivered a notice of special mandatory redemption to holders of its $525.0 million aggregate principal amount of Senior Notes due 2028 (the "Existing 2028 Notes") and $600.0 million aggregate principal amount of Senior Notes due 2030 (the "Existing 2030 Notes") pursuant to which it would redeem on a pro rata basis (1) $245.0 million of the Existing 2028 Notes and (2) $280.0 million of the Existing 2030 Notes, in each case, at 100% of the respective principal amount plus accrued and unpaid interest to, but excluding the special mandatory redemption date. On March 30, 2020, the Company completed the redemption and recorded a write-off of unamortized debt issuance costs of $1.5 million.

Gain on Dealership Divestitures, net—

During the six months ended June 30, 2020, we sold one franchise (one dealership location) in the Atlanta, Georgia market and we sold six franchises (five dealership locations) and one collision center in the Jackson, Mississippi market. The Company recorded a net pre-tax gain totaling $33.7 million.

Income Tax Expense—

The $55.1 million increase in income tax expense was primarily the result of a $230.9 million increase in income before income taxes. Our effective tax rate for the six months ended June 30, 2021 was 23.8% and 23.6% in the prior comparative period as a result of excess tax benefits associated with share-based compensation vesting.

LIQUIDITY AND CAPITAL RESOURCES

As of ~~September~~June 30, ~~2017~~,2021, we had total available liquidity of ~~$406.4~~$576.5 million,, which consisted of $102.3 million of cash and cash equivalents, of ~~$2.8~~$75.0 million, ~~$75.0 million~~ of available funds in our floor plan offset accounts, $190.0 million of availability under our new vehicle floor plan facility that is able to be ~~re-designated~~converted to our revolving credit facility, ~~$46.7~~$49.2 million of availability under our revolving credit facility, and ~~$91.9~~$160.0 million of availability under our used vehicle revolving floor plan 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~~customary operating and other restrictive covenants. As of ~~September~~June 30, ~~2017~~,2021, these ~~financial~~ covenants did not further limit our availability under our credit facilities. For more information on our ~~financial~~ covenants, see "Covenants" and "Share Repurchases and Dividend Restrictions" below.

We continually evaluate our liquidity and capital resources based upon (i) our cash and cash equivalents on hand, (ii) the funds that we expect to generate through future operations, (iii) current and expected borrowing availability under our ~~2016~~2019 Senior Credit Facility, our other floor plan facilities, our Real Estate Credit Agreement, our Restated Master Loan Agreement, and our mortgage financings (each, as defined below), (iv) amounts in our new vehicle floor plan notes payable offset accounts, and (v) the potential impact of our capital allocation strategy and any contemplated or pending future transactions, including, but not limited to, financings, acquisitions, dispositions, equity and/or debt repurchases, dividends, or other capital expenditures. We believe we will have sufficient liquidity to meet our debt service and working capital requirements;

Table of Conte n t s

commitments and contingencies; debt repayment, maturity and repurchase obligations; acquisitions; capital expenditures; and any operating requirements for at least the next twelve months.

Material Indebtedness

We currently are party to the following material credit facilities and agreements, and have the following material indebtedness outstanding. For a more detailed description of the material terms of these agreements and facilities, and this indebtedness, please refer to ~~the "Long-Term Debt" footnote included~~Note 13 "Debt" in ~~this Quarterly Report on Form 10-Q and~~ our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016.~~2020.

~~2016~~•2019 Senior Credit Facility—On ~~July~~September 25, ~~2016,~~2019, the Company and certain of its subsidiaries entered into anthe third amended and restated ~~senior secured~~ credit agreement with Bank of America, as administrative agent, and the other lenders party ~~thereto.~~

~~The 2016~~thereto (the "2019 Senior Credit ~~Facility~~Facility"). The 2019 Senior Credit Agreement provides for the following:

Revolving Credit Facility—A $250.0 million ~~revolving credit facility (the "Revolving~~Revolving Credit ~~Facility")~~Facility for, among other things, acquisitions, working capital and capital expenditures, including a $50.0 million sub-limit for letters of credit. As described below, as of ~~September~~June 30, ~~2017,~~2021, we ~~re-designated~~converted $190.0 million of ~~availability~~aggregate commitments from the Revolving Credit Facility to ~~the~~our New Vehicle Floor Plan Facility, ~~(as defined below),~~ resulting in $60.0 million of borrowing capacity. In addition, we had ~~$13.3~~$10.8 million in outstanding letters of credit as of June 30, 2021, resulting in ~~$46.7~~$49.2 million of borrowing availability as of ~~September~~June 30, ~~2017.~~2021.

New Vehicle Floor Plan Facility—A ~~$900.0 million new vehicle revolving floor plan facility (the "New Vehicle Floor Plan Facility"). In connection with the~~$1.04 billion New Vehicle Floor Plan Facility ~~we established an account with Bank of America that~~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. As a result of the use of our floor plan offset account and the reduction in LIBOR rates, we ~~experience~~experienced a reduction in Floor Plan Interest Expense on our Condensed Consolidated Statements of Income. As of ~~September~~June 30, ~~2017,~~2021, we had ~~$578.6~~$229.4 million ~~which is net of $63.2 million in our floor plan offset account,~~ outstanding under the New Vehicle Floor Plan ~~Facility.~~Facility, which included $1.8 million classified as Liabilities associated with assets held for sale on our Condensed Consolidated Balance Sheet and is net of $75.0 million in our floor plan offset account.

Used Vehicle Floor Plan Facility—A ~~$150.0~~$160.0 million ~~used vehicle revolving floor plan facility (the "Used~~Used Vehicle Floor Plan ~~Facility")~~Facility to finance the acquisition of used vehicle inventory and for, among other things, working capital and capital expenditures, as well as to refinance used vehicles. We began the year with nothing drawn on our used vehicle floor plan facility and there was no activity during the six months ended June 30, 2021. Our borrowing capacity under the Used Vehicle Floor Plan Facility was ~~limited to $91.9~~$160.0 million based on our borrowing base calculation as of ~~September~~June 30, ~~2017. We have with nothing drawn on our used vehicle floor plan facility as of September 30, 2017.~~

2021.

Subject to compliance with certain conditions, the ~~agreement governing the 2016~~2019 Senior Credit ~~Facility~~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 ~~$325.0~~$350.0 million in the aggregate without lender consent.

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. The maximum amount we are allowed to re-designate is determined based on ~~our current borrowing availability~~aggregate commitments under the Revolving Credit Facility, less $50.0 million. 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. ~~As of September 30, 2017, we re-designated~~On April 6, 2021, $190.0 million of our availability under the Revolving Credit Facility was re-designated to the New Vehicle Floor Plan ~~Facility. We re-designated this amount~~Facility to take advantage of ~~the~~ lower commitment fee ~~rates on the New Vehicle Floor Plan Facility when compared to the Revolving Credit Facility.~~

rates.

Borrowings under the ~~2016~~2019 Senior Credit Facility bear interest, at our option, based on ~~the London Interbank Offered Rate ("LIBOR")~~LIBOR or the Base Rate, in each case, plus an Applicable ~~Margin.~~Rate. The Base Rate is the highest of (i) the ~~(i)~~Federal Funds Rate plus 0.50%, (ii) the Bank of America prime rate, ~~(ii) Federal Funds rate plus 0.50%,~~ and (iii) one month LIBOR plus 1.00%. ~~The~~ Applicable ~~Margin, for borrowings under~~Rate means with respect to the Revolving Credit Facility, ~~ranges~~a range from ~~1.25%~~1.00% to ~~2.50%~~2.00% for LIBOR loans and ~~0.25%~~0.15% to ~~1.50%~~1.00% for Base Rate loans, in each case based on the Company's consolidated total lease adjusted leverage ratio. Borrowings under the New Vehicle ~~Floor Plan~~Floorplan Facility bear interest, at ~~the~~our option, ~~of the Company,~~ based on LIBOR plus ~~1.25%~~1.10% or the Base Rate plus ~~0.25%~~0.10%. Borrowings under the Used Vehicle ~~Floor Plan~~Floorplan Facility bear interest, at ~~the~~our option, ~~of the Company,~~ based on LIBOR plus ~~1.50%~~1.40% or the Base Rate plus ~~0.50%~~0.40%.

In addition to the payment of interest on borrowings outstanding under the ~~2016~~2019 Senior Credit Facility, we are required to pay a quarterly commitment fee on ~~the~~ total unused commitments thereunder. The fee for unused commitments under the Revolving Credit Facility is between ~~0.20%~~0.15% and ~~0.45%~~0.40% per year, based on the Company's total lease adjusted

Table of Conte n t s

leverage ratio, and the fee for unused commitments under the New Vehicle Facility Floor Plan and the Used Vehicle Facility Floor Plan Facility is 0.15% per year.

•Manufacturer affiliated new vehicle floor plan and other financing facilities—We have a floor plan facility with the Ford Motor Credit Company ("Ford Credit") to purchase new Ford and Lincoln vehicle ~~inventory, which matures on December 5, 2019. During August 2016, we~~inventory. Our floor plan facility with Ford Credit was amended in July 2020 and can be terminated by either the Company or Ford Credit with a 30-day notice period. We have also established a floor plan offset account with Ford Credit, which operates in a similar manner to our floor plan offset account with Bank of America. As of ~~September~~June 30, ~~2017,~~2021, we had ~~$109.7~~$13.9 million ~~net of $11.8~~outstanding with Ford Credit. Additionally, we had $131.2 million ~~in our floor plan offset account,~~ outstanding under our ~~floor plan facility. Additionally, we had $80.8 million outstanding under~~2019 Senior Credit Facility and facilities with certain manufacturers for the financing of loaner vehicles, which ~~were~~are presented within Accounts ~~Payable~~payable and ~~Accrued Liabilities~~accrued liabilities in our Condensed Consolidated

Balance Sheets. Neither our floor plan facility with Ford Credit nor our facilities for loaner vehicles have stated borrowing limitations.

~~6.0%~~•The New Senior ~~Subordinated~~ Notes ~~due 2024~~ —asOn February 19, 2020, the Company completed its offering of ~~September 30, 2017 we had $600.0~~senior unsecured notes, consisting of $525.0 million in aggregate principal amount ~~outstanding related~~of the Existing 2028 Notes and $600.0 million aggregate principal amount of the Existing 2030 Notes. The Existing 2028 Notes and Existing 2030 Notes mature on March 1, 2028 and March 1, 2030, respectively.

On March 24, 2020, the Company delivered notice to ~~our 6.0% Notes. We are required~~the sellers terminating the 2019 Asset Purchase Agreement and the Real Estate Purchase Agreement. As a result, the Company redeemed $245.0 million aggregate principal million of the Existing 2028 Notes and $280.0 million aggregate principal amount of the Existing 2030 Notes pursuant to ~~pay~~the Special Mandatory Redemption.

In September 2020, the Company completed an add-on issuance of $250.0 million aggregate principal amount of additional senior notes consisting of $125.0 million aggregate principal amount of additional Existing 2028 Notes at a price of 101.00% of par, plus accrued interest onfrom September 1, 2020, and $125.0 million aggregate principal amount of additional Existing 2030 Notes (together with the ~~6.0%~~additional 2028 Notes, onthe "Additional Notes") at a price of 101.75% of par, plus accrued interest from September 1, 2020.

•Mortgage notes—As of June ~~15 and December 15 of each year until maturity on December 15, 2024.~~

~~Mortgage notes~~ — ~~as of September~~ 30, ~~2017,~~2021, we had ~~$177.6~~$76.6 million of mortgage note ~~obligations.~~obligations which included $2.3 million classified as Liabilities associated with assets held for sale. These obligations are collateralized by the associated real estate at our dealership locations.

•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. ("Bank of America"), as lender, providing for term loans in an aggregate amount not to exceed $75.0 million, subject to customary terms and conditions (the "2013 BofA Real Estate Facility"). As of June 30, 2021, we had $32.3 million of outstanding borrowings under the 2013 BofA Real Estate Facility. There is no further borrowing availability under this agreement.

~~Restated~~

•2015 Wells Fargo Master Loan ~~Agreement~~ 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 ~~(the "Restated~~that are borrowers under the 2015 Wells Fargo Master Loan ~~Agreement"~~Agreement in an aggregate amount not to exceed $100.0 million (the "2015 Wells Fargo Master Loan Facility"). Borrowings under the ~~Restated~~2015 Wells Fargo Master Loan ~~Agreement~~Facility are guaranteed by us and are collateralized by the real property financed under the ~~Restated~~2015 Wells Fargo Master Loan ~~Agreement.~~Facility. As of ~~September~~June 30, ~~2017,~~2021, the outstanding balance under ~~the Restated Master Loan Agreement~~this agreement was ~~$90.6~~$55.8 million. There is no further borrowing availability under this ~~facility.~~

agreement.

~~Real Estate Credit Agreement~~ •2018 Bank of America 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 June 30, 2021, we had $81.5 million of outstanding borrowings under the 2018 Bank of America Facility.

•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"). As of June 30, 2021,

Table of Conte n t s

we had $84.4 million, outstanding borrowings under the 2018 Wells Fargo Master Loan Facility. There is no further borrowing availability under this agreement.

•2021 BofA Real Estate Facility—On May 20, 2021, the Company and certain of its subsidiaries borrowed $184.4 million under a real estate term loan credit agreement, dated as of May 10, 2021 (the “2021 BofA Real Estate Credit Agreement”), by 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 provides for term loans in an aggregate amount equal to $184.4 million, subject to customary terms and conditions (the “2021 BofA Real Estate Facility”). The Company used the proceeds from these borrowings to finance the exercise of its option to purchase certain of the leased real property related to the Park Place dealerships. The Company completed the purchase of the leased real property on May 20, 2021.

Term loans under our 2021 BofA Real Estate Facility bear interest, at our option, based on (1) LIBOR plus 1.65% per annum or (2) the Base Rate (as described below) plus 0.65% per annum. The Base Rate is the highest of (i) the Federal Funds rate plus 0.50%, (ii) the Bank of America prime rate, and (iii) one month LIBOR plus 1.0%. We will be required to make 39 consecutive quarterly principal payments of 1.00% of the initial amount of each loan, with a balloon repayment of the outstanding principal amount of loans due on the maturity date. The 2021 BofA Real Estate Facility matures ten years from the initial funding date. Borrowings under the 2021 BofA Real Estate Facility are guaranteed by us and each of our operating dealership subsidiaries that leased the real estate now financed under the 2021 BofA Real Estate Facility, and are collateralized by first priority liens, subject to certain permitted exceptions, on all of the real property financed ~~thereunder (the "Real~~thereunder.

The representations and covenants in the 2021 BofA Real Estate Credit ~~Agreement"). As~~Agreement are customary for financing transactions of ~~September 30, 2017, we had $48.3 million of mortgage note obligations outstanding under~~this nature, including, among others, a requirement to comply with a minimum consolidated current ratio, minimum consolidated fixed charge coverage ratio and maximum consolidated total lease adjusted leverage ratio, in each case as set out in the 2021 BofA Real Estate Credit Agreement. ~~There is no further borrowing availability under~~In addition, certain other covenants could restrict our ability to incur additional debt, pay dividends or acquire or dispose of assets. The 2021 BofA Real Estate Credit Agreement also provides for events of default that are customary for financing transactions of this ~~agreement.~~

nature, including cross-defaults to other material indebtedness. Upon the occurrence of an event of default, we could be required by the 2021 BofA Real Estate Credit Agreement to immediately repay all amounts outstanding thereunder.


								As of
	As of							June 30, 2021			December 31, 2020
	September 30, 2017			December 31, 2016				(In millions)
							4.50% Senior Notes due 2028	$	405.0		$	405.0
4.75% Senior Notes due 2030							4.75% Senior Notes due 2030	445.0			445.0
Mortgage notes payable bearing interest at fixed rates(a)							74.3			79.2
2021 BofA Real Estate Facility							2021 BofA Real Estate Facility	184.4			0
2018 Bank of America Facility							2018 Bank of America Facility	81.5			84.2
2018 Wells Fargo Master Loan Facility (b)							2018 Wells Fargo Master Loan Facility (b)	84.4			86.9
2013 BofA Real Estate Facility							2013 BofA Real Estate Facility	32.3			33.6
2015 Wells Fargo Master Loan Facility (c)							2015 Wells Fargo Master Loan Facility (c)	55.8			61.7
	(In millions)
	$	600.0		$	600.0
	177.6			182.8
Real estate credit agreement	48.3			51.5
Restated master loan agreement	90.6			93.6
Capital lease obligations	3.3			3.4
Finance lease liability							Finance lease liability	24.9			16.6
Total debt outstanding	919.8			931.3			Total debt outstanding	1,387.6			1,212.2
Add—unamortized premium on 6.0% Senior Subordinated Notes due 2024	7.1			7.6
Add—unamortized premium on 4.50% Senior Notes due 2028							Add—unamortized premium on 4.50% Senior Notes due 2028	1.1			1.2
Add—unamortized premium on 4.75% Senior Notes due 2030							Add—unamortized premium on 4.75% Senior Notes due 2030	2.0			2.1
Less—debt issuance costs	(11.2		)	(12.2		)	Less—debt issuance costs	(12.5)			(13.7)
Long-term debt, including current portion	915.7			926.7			Long-term debt, including current portion	1,378.2			1,201.8
Less—current portion, net of current portion of debt issuance costs	(14.3		)	(14.0		)	Less—current portion, net of current portion of debt issuance costs	(43.2)			(36.6)
Long-term debt	$	901.4		$	912.7		Long-term debt	$	1,335.0		$	1,165.2


	As of
	June 30, 2021		December 31, 2020
	(In millions)
Carrying Value:
4.50% Senior Notes due 2028	401.3		400.9
4.75% Senior Notes due 2030	440.9		440.6
Mortgage notes payable (a)	511.1		343.7
Total carrying value	$	1,353.3	$	1,185.2

Fair Value:
4.50% Senior Notes due 2028	417.2		423.2
4.75% Senior Notes due 2030	463.9		476.2
Mortgage notes payable (a)	523.3		354.5
Total fair value	$	1,404.4	$	1,253.9



	As of
	September 30, 2017		December 31, 2016
	(In millions)
Carrying Value:
6.0% Senior Subordinated Notes due 2024	$	607.1	$	607.6
Mortgage notes payable	316.5		327.9
Total carrying value	$	923.6	$	935.5

Fair Value:
6.0% Senior Subordinated Notes due 2024	$	627.0	$	613.5
Mortgage notes payable	320.0		339.5
Total fair value	$	947.0	$	953.0


Inception Date	Notional Principal at Inception		Notional Value as of June 30, 2021		Notional Principal at Maturity		Maturity Date
	(In millions)
May 2021	$	184.4	$	184.4	$	110.6	May 2031
July 2020	$	93.5	$	89.2	$	50.6	December 2028
July 2020	$	85.5	$	81.5	$	57.3	November 2025
June 2015	$	100.0	$	71.9	$	53.1	February 2025
November 2013	$	75.0	$	47.1	$	38.7	September 2023


	As of
	June 30, 2021		December 31, 2020
	(In millions)
Other current liabilities	$	(5.2)	$	(2.8)
Other long-term assets	$	4.2	0
Other long-term liabilities	(6.5)		(4.4)
Total fair value	$	(7.5)	$	(7.2)



x☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the Three Months Ended September 30,	Results Recognized in Accumulated Other Comprehensive Loss (Effective Portion)			Location of Results Reclassified from Accumulated Other Comprehensive Loss to Earnings	Results Reclassified from Accumulated Other Comprehensive Loss to Earnings
2017	$	(0.1	)	Swap interest expense	$	(0.4	)
2016	$	0.2		Swap interest expense	$	(0.8	)


For the Three Months Ended June 30,	Results Recognized in Accumulated Other Comprehensive Income/(Loss)		Location of Amount Reclassified from Accumulated Other Comprehensive Income/(Loss) to Earnings	Amount Reclassified from Accumulated Other Comprehensive Income/(Loss) to Earnings
2021	$	(7.3)	Other interest expense, net	$	0.9
2020	$	(0.6)	Other interest expense, net	$	0.6


Inception Date	Notional Principal at Inception		Notional Value		Notional Principal at Maturity		Maturity Date
	(In millions)		(In millions)		(In millions)
May 2021	$	184.4	$	184.4	$	110.6	May 2031
July 2020	$	93.5	$	89.2	$	50.6	December 2028
July 2020	$	85.5	$	81.5	$	57.3	November 2025
June 2015	$	100.0	$	71.9	$	53.1	February 2025
November 2013	$	75.0	$	47.1	$	38.7	September 2023



Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (in millions)
07/01/2017 - 07/31/2017	90,700	$	56.15	90,700	$	53.3
08/01/2017 - 08/31/2017	—	$	—	—	$	—
09/01/2017 - 09/30/2017	—	$	—	—	$	—



Exhibit Number						Description of Documents
~~10.1~~ 10.1*						~~First Amendment to Employment~~Credit Agreement, ~~between~~dated May 10, 2021, by and among Asbury Automotive Group, Inc., certain subsidiaries party thereto, the various financial institutions party thereto as lenders, and ~~David W. Hult, dated~~Bank of America, N.A., as ~~of August 21, 2017~~administrative agent (incorporated by reference to Exhibit 10.1 toof the Company's Current Report on Form 8-K filed ~~with the SEC~~ on August 22, 2017)* May 20, 2021)
~~10.2~~ 10.2*						~~Transition and Separation~~Letter Agreement between Asbury Automotive Group, Inc. and ~~Craig T. Monaghan,~~Michael Welch, dated as of ~~August 21, 2017~~June 14, 2021 (incorporated by reference to Exhibit ~~10.2 to~~10.1 of the ~~Company’s~~Company's Current Report on Form 8-K filed ~~with the SEC~~ on August 22, 2017)* July 6, 2021)
~~31.1~~ 10.3						Separation Agreement and General Release between Asbury Automotive Group, Inc. and Patrick J. Guido, dated June 25, 2021
31.1						Certificate of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2						Certificate of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1						Certificate of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2						Certificate of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS						XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document
101.SCH						XBRL Taxonomy Extension Schema Document
101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF						XBRL Taxonomy Extension Definition Linkbase Document
101.LAB						XBRL Taxonomy Extension Label Linkbase Document
101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document
*104						Cover Page Interactive Data File (formatted in iXBRL Exhibit 101)
*						Incorporated by ~~reference.~~ reference

William F. Stax
			Name:
		~~Asbury Automotive Group, Inc.~~

~~Date: October 25, 2017~~	~~By:~~	~~/s/ Sean D. Goodman~~
	~~Name:~~	~~Sean D. Goodman~~
	~~Title:~~	~~Senior Vice President and Chief Financial Officer~~

William F. Stax

~~Exhibit~~ ~~Number~~Title:		~~Description of Documents~~
~~10.1~~	First Amendment to Employment Agreement between Asbury Automotive Group, Inc. and David W. Hult, dated as of August 21, 2017 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on August 22, 2017)*
~~10.2~~	Transition and Separation Agreement between Asbury Automotive Group, Inc. and Craig T. Monaghan, dated as of August 21, 2017 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on August 22, 2017)*
~~31.1~~	~~Certificate of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~
~~31.2~~	~~Certificate of Chief~~Interim Principal Financial Officer, ~~pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~
~~32.1~~	~~Certificate of~~Vice President, Controller and Chief ~~Executive~~ Accounting Officer ~~pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~
~~32.2~~	~~Certificate of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~
~~101.INS~~	~~XBRL Instance Document~~
~~101.SCH~~	~~XBRL Taxonomy Extension Schema Document~~
~~101.CAL~~	~~XBRL Taxonomy Extension Calculation Linkbase Document~~
~~101.DEF~~	~~XBRL Taxonomy Extension Definition Linkbase Document~~
~~101.LAB~~	~~XBRL Taxonomy Extension Label Linkbase Document~~
~~101.PRE~~	~~XBRL Taxonomy Extension Presentation Linkbase Document~~
*	~~Incorporated by reference.~~