Both of our interest rate swaps qualify for cash flow hedge accounting treatment. These interest rate swaps are marked to market at each reporting date andany unrealized gains or losses are included in ~~AOCI~~accumulated other comprehensive income and reclassified to interest expense in the same period or periods during which the hedged transactions affect earnings. Information about the effect of our interest rate swap agreements on the accompanying Condensed Consolidated Statements of Income and Condensed Consolidated Statements of Comprehensive Income, is as follows (in millions):



For the Three Months Ended March 31,	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
2020	$	(4.5	)	Other interest expense, net	$	(0.3	)
2019	$	(1.8	)	Floor plan interest expense and Other interest expense, net	$	—

For the Three Months Ended March 31,
Results Recognized in Accumulated Other Comprehensive Income/(Loss)

Location of Results Reclassified from Accumulated Other Comprehensive Income/(Loss)
to Earnings

Amount Reclassified from Accumulated Other Comprehensive Income/(Loss)
to Earnings
2019 $ (1.8 ) Floor plan interest expense and Other interest expense, net $ —
2018 $ 2.6
Swap interest expense $ (0.2 )

On the basis of yield curve conditions as of March 31, ~~2019~~2020 and including assumptions about future changes in fair value, we expect the amount to be reclassified out of Accumulated Other Comprehensive ~~Income/(Loss)~~Loss into earnings within the next 12 months will be ~~income~~losses of ~~less than $0.1~~$2.2 million.

11. SUPPLEMENTAL CASH FLOW INFORMATION

During the three months ended March 31, ~~2019~~2020 and ~~2018~~2019, we made interest payments, including amounts capitalized, totaling $22.3 million and $14.1 million ~~and~~ ~~$10.1 million~~, respectively. Included in these interest payments are $7.4 million and $9.8 million ~~and~~ ~~$6.3 million~~, of floor plan interest payments during the three months ended March 31, ~~2019~~2020 and ~~2018~~2019, respectively.

During the three months ended March 31, 2020 and 2019, no material income tax payments were ~~made. During the three months ended March 31, 2018, we~~ made, ~~income tax payments, net of~~nor refunds ~~received, totaling $0.2 million.~~received.

During the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, we transferred ~~$37.0~~$39.4 million and ~~$44.7~~$37.0 million, respectively, of loaner vehicles from Other ~~Current Assets~~current assets to Inventories on our Condensed Consolidated Balance Sheets.

12. COMMITMENTS AND CONTINGENCIES

Our dealerships are party to dealer and framework agreements with applicable vehicle manufacturers. In accordance with these agreements, each dealership has certain rights and is subject to restrictions typical in the industry. The ability of these manufacturers to influence the operations of the dealerships or the loss of any of these agreements could have a materially negative impact on our operating results.

In some instances, manufacturers may have the right, and may direct us, to implement costly capital improvements to dealerships as a condition to entering into, renewing, or extending franchise agreements with them. Manufacturers also typically require that their franchises meet specific standards of appearance. These factors, either alone or in combination, could cause us to use our financial resources on capital projects that we might not have planned for or otherwise determined to undertake.

From time to time, we and our dealerships are or may become involved in various claims relating to, and arising out of, our business and our operations. These claims may involve, but not be limited to, financial and other audits by vehicle manufacturers or lenders and certain federal, state, and local government authorities, which have historically related primarily to (i) incentive and warranty payments received from vehicle manufacturers, or allegations of violations of manufacturer agreements or policies, (ii) compliance with lender rules and covenants, and (iii) payments made to government authorities relating to federal, state, and local taxes, as well as compliance with other government regulations. Claims may also arise

through litigation, government proceedings, and other dispute resolution processes. Such claims, including class actions, could relate to, but may not be limited to, the practice of charging administrative fees and other fees and commissions, employment-related matters, truth-in-lending and other dealer assisted financing obligations, contractual disputes, actions brought by governmental authorities, and other matters. We evaluate pending and threatened claims and establish loss contingency reserves based upon outcomes we currently believe to be probable and reasonably estimable.

We believe we have adequately accrued for the potential impact of loss contingencies that are probable and reasonably estimable. Based on our review of the various types of claims currently known to us, there is no indication of material reasonably possible losses in excess of amounts accrued in the aggregate. We currently do not anticipate that any known claim will materially adversely affect our financial condition, liquidity, or results of operations. However, the outcome of any matter cannot be predicted with certainty, and an unfavorable resolution of one or more matters presently known or arising in the future could have a material adverse effect on our financial condition, liquidity, or results of operations.

A significant portion of our business involves the sale of vehicles, parts, or vehicles composed of parts that are manufactured outside the United States. As a result, our operations are subject to customary risks of importing merchandise, including fluctuations in the relative values of currencies, import duties, exchange controls, trade restrictions, work stoppages, and general political and socio-economic conditions in foreign countries. The United States or the countries from

which our products are imported may, from time to time, impose new quotas, duties, tariffs, or other restrictions, or adjust presently prevailing quotas, duties, or tariffs, which may affect our operations, and our ability to purchase imported vehicles and/or parts at reasonable prices.

Substantially all of our facilities are subject to federal, state and local provisions regarding the discharge of materials into the environment. Compliance with these provisions has not had, nor do we expect such compliance to have, any material effect upon our capital expenditures, net earnings, financial condition, liquidity or competitive position. We believe that our current practices and procedures for the control and disposition of such materials comply with applicable federal, state, and local requirements. No assurances can be provided, however, that future laws or regulations, or changes in existing laws or regulations, would not require us to expend significant resources in order to comply therewith.

We had ~~$13.0~~$12.7 million of letters of credit outstanding as of March 31, ~~2019,~~2020, which are required by certain of our insurance providers. In addition, as of March 31, ~~2019,~~2020, we maintained a ~~$5.0~~$5.3 million surety bond line in the ordinary course of our business. Our letters of credit and surety bond line are considered to be off balance sheet arrangements.

Our other material commitments include (i) floor plan notes payable, (ii) operating leases, (iii) long-term debt and (iv) interest on long-term debt, as described elsewhere herein.

13. SUBSEQUENT EVENTS

On April ~~29, 2019,~~27, 2020, we entered into an amendment to our floor plan facility with Ford Credit to extend the ~~Company closed on the sale of the dealership referred~~maturity date from May 31, 2020 to ~~in Note 6.~~July 31, 2020.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Information

Certain of the discussions and information included or incorporated by reference in this report may constitute "forward-looking statements" within the meaning of the federal securities laws. Forward-looking statements are statements that are not historical in nature and may include statements relating to our goals, plans and projections regarding industry and general economic trends, our expected financial position, results of operations or market position and our business strategy. Such statements can generally be identified by words such as "may," "target," "could," "would," "will," "should," "believe," "expect," "anticipate," "plan," "intend," "foresee," and other similar words or phrases. Forward-looking statements may also relate to our expectations and assumptions with respect to, among other things:

The declines in sales and service revenue and ongoing disruptions in our ~~ability~~operations, the operations of our vehicle and parts manufacturers and other suppliers, vendors and business partners, and the global economy in general due to ~~execute our business strategy;~~the COVID-19 pandemic;

the seasonally adjusted annual rate ~~("SAAR")~~ of new vehicle sales in the ~~U.S.;~~

~~our ability to further improve our operating cash flows, and the availability of capital and liquidity;~~

~~our estimated future capital expenditures;~~United States;

general economic conditions and its expected impact on our ~~revenues~~revenue and expenses;

our expected parts and service revenue due to, among other things, improvements in vehicle technology;

~~the variable nature of significant components of our cost structure;~~

our ability to limit our exposure to regional economic downturns due to our geographic diversity and brand mix;

manufacturers' ~~willingness to continue to~~continued use of incentive programs to drive demand for their product offerings;

~~our ability to leverage our common systems, infrastructure and processes in a cost-efficient manner;~~

our capital allocation strategy, including as it relates to acquisitions and divestitures, stock repurchases, dividends and capital expenditures;

~~the continued availability of financing, including floor plan financing for inventory;~~

~~the ability of consumers to secure vehicle financing at favorable rates;~~ and

the growth of the brands that comprise our portfolio over the ~~long-term;~~

~~our ability to mitigate any future negative trends in new vehicle sales; and~~

~~our ability to increase our cash flow and net income as a result of the foregoing~~long-term and other factors.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual future results, performance or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. Such factors include, but are not limited to:

The degree to which declines in sales and service revenue and ongoing disruptions in our operations, the operations of our vehicle and parts manufacturers and other suppliers, vendors and business partners, and the global economy in general due to the COVID-19 pandemic may adversely impact our business, results of operations, financial condition and cash flows;

changes in general economic and business conditions, including changes in employment levels, consumer ~~demand, preferences and~~ confidence levels, consumer demand and preferences, the availability and cost of credit, ~~in a rising interest rate environment,~~ fuel prices, levels of discretionary personal income and interest rates;

our ability to generate sufficient cash flows, maintain our liquidity and obtain any necessary additional funds for working capital, capital expenditures, acquisitions, stock repurchases, debt maturity payments and other corporate purposes, if necessary or desirable;

significant disruptions in the production and delivery of vehicles and parts for any reason, including the COVID-19 pandemic, natural disasters, product recalls, work stoppages or other occurrences that are outside of our control;

our ability to execute our ~~balanced~~ automotive retailing and service business ~~strategy;~~strategy while operating under restrictions and best practices imposed or encouraged by governmental and other regulatory authorities;

our ability to attract and retain skilled employees;

adverse conditions affecting the vehicle manufacturers whose brands we sell, and their ability to design, manufacture, deliver and market their vehicles successfully;

changes in the mix and total number of vehicles we are able to sell;

our outstanding indebtedness and our continued ability to comply with applicable covenants in our various financing and lease agreements, or to obtain waivers of these covenants as necessary;

high levels of competition in our industry, which may create pricing and margin pressures on our products and services;

our relationships with manufacturers of the vehicles we sell and our ability to renew, and enter into new framework and dealer agreements with vehicle manufacturers whose brands we sell, on terms acceptable to us;

the availability of manufacturer incentive programs and our ability to earn these incentives;

failure of our management information systems or any security breaches;

changes in laws and regulations governing the operation of automobile franchises, including trade restrictions, consumer protections, accounting standards, taxation requirements and environmental laws;

changes in, or the imposition of, new tariffs or trade restrictions on imported vehicles or parts;

adverse results from litigation or other similar proceedings involving us;

our ability to ~~generate sufficient cash flows, maintain our liquidity~~consummate planned mergers, acquisitions and ~~obtain any necessary additional funds for working capital, capital expenditures, acquisitions, stock repurchases and/or dividends, debt maturity payments, and other corporate purposes;~~dispositions;

any disruptions in the financial markets, which may impact our ability to access capital;

our relationships with, and the financial stability of, our lenders and lessors;

significant disruptions in the production and delivery of vehicles and parts for any reason, including natural disasters, product recalls, work stoppages, significant property loss or other occurrences that are outside of our control;

our ability to execute our initiatives and other strategies; ~~and~~

our ability to leverage gains from our dealership ~~portfolio.~~portfolio; and

our ability to successfully integrate businesses we may acquire, or that any business we acquire may not perform as we expected at the time we acquired it.

Many of these factors are beyond our ability to control or predict, and their ultimate impact could be material. Moreover, the factors set forth under "Item 1A. Risk Factors" in this report and in our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 and other cautionary statements made in this report should be read and considered as forward-looking statements subject to such uncertainties. Forward-looking statements speak only as of the date ~~they are made, and we~~of this report. We expressly disclaim any obligation to update any forward-looking statement contained herein.

OVERVIEW

We are one of the largest automotive retailers in the United States. As of March 31, ~~2019~~2020, we owned and operated ~~106~~102 new vehicle franchises ~~(87~~(83 dealership locations), representing 3031 brands of automobiles and 2524 collision centers in 1716 metropolitan markets within nine 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. For the three months ended March 31, ~~2019,~~2020, our new vehicle revenue brand mix consisted of ~~47%~~43% imports, ~~33%~~34% luxury, and ~~20%~~23% domestic brands.

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, Texas;

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

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

Mike Shaw dealerships operating in the Denver, Colorado area.

Our revenues are derived primarily from: (i) the sale of new vehicles; (ii) the sale of used vehicles to individual retail customers ("used retail") and to other dealers at auction ("wholesale") (the terms "used retail" and "wholesale" collectively

referred to as "used"); (iii) repair and maintenance services, including collision repair, the sale of automotive replacement parts,

and the reconditioning of used vehicles (collectively referred to as "parts and service"); and (iv) the arrangement of third-party vehicle financing and the sale of a number of vehicle protection products (defined below and collectively referred to as "F&I"). We evaluate the results of our new and used vehicle sales based on unit volumes and gross profit per vehicle sold, our parts and service operations based on aggregate gross profit, and our F&I business based on F&I gross profit per vehicle sold.

Our continued organic growth is dependent upon the execution of our balanced automotive retailing and service business strategy, the continued strength of our brand mix, and the production and allocation of desirable vehicles from the automobile manufacturers whose brands we sell. Our vehicle sales have historically fluctuated with product availability as well as local and national economic conditions, including consumer confidence, availability of consumer credit, fuel prices, and employment levels. ~~Additionally,~~In addition, manufacturer imposed stop-sales or open safety recalls, primarily due to, but not limited to, vehicle safety concerns or a vehicle's failure to meet environmental related requirements.

In addition, our ability to sell certain new and used vehicles can be negatively impacted by a number of factors, some of which are outside of our ~~control~~control. As a result of market conditions caused by COVID-19, certain vehicle manufacturers and ~~may include manufacturer imposed stop-sales~~other suppliers have ceased or ~~open safety recalls, primarily due~~slowed production of new vehicles, parts and other supplies. We cannot predict with any certainty how long the automotive retail industry will be subject to ~~but not limited to,~~these production slowdowns implemented by such vehicle ~~safety concerns or a vehicle's failure to meet environmental related requirements.~~manufacturers and other suppliers and when normalized production will resume at these manufacturers. Further, governmental actions, such as ~~changes~~travel restrictions imposed in response to national emergencies or the imposition of, tariffs or trade restrictions on imported goods, may adversely

affect vehicle sales and depress demand. However, we believe that the impact on our business of any future negative trends in

new vehicle sales would be partially mitigated by (i) the expected relative stability of our parts and service operations over the

long-term, (ii) the variable nature of significant components of our cost structure, and (iii) our diversified brand and geographic mix.

~~mix.~~Impact of COVID-19 on Our Business

The COVID-19 pandemic, and the response thereto, including “shelter in place” or “stay at home” orders issued by federal, state and local governments and other regulatory authorities, has adversely impacted, and is expected to continue to adversely impact, our business operations, store traffic, financial condition, liquidity and cash flow, as well as the operations, financial condition and liquidity of our suppliers, vendors and business partners and the global economic condition in general.

Despite auto retailers having been deemed essential services in most of the markets in which we operate, we experienced significant declines in new and used vehicle unit sales towards the latter half of March which carried over into April. The pandemic has deteriorated consumer confidence and led to furloughs and increased unemployment across the country, reducing the number of consumers who will qualify for the extension of credit for a vehicle purchase or qualify for a lease. Additionally, the closures of, and/or reduced availability of services from the department of motor vehicles in various states have and will continue to have an adverse effect on our ability to obtain license plates for our fleet and our customers, to perfect liens on sold vehicles, and on our customers’ ability to obtain valid driver licenses. Our parts and service business is also operating below capacity, as consumer fears about becoming ill with the disease adversely affects traffic to our dealerships.

In response to the downturn in our business, in early April management took various actions in an attempt to mitigate the financial impact of COVID-19. These actions included the furloughing of approximately 2,300 employees, reduced store hours, and suspension of the Company's 401(k) match. In addition, the Company has implemented temporary reductions in pay for all employees and the Company’s directors have also agreed to waive portions of their annual cash retainers. These actions will be evaluated and adjusted as necessary in response to the Company’s operational needs during the ongoing outbreak of COVID-19 and the resulting economic uncertainty.

We are monitoring and managing our cash flows and have enacted cost saving measures to respond to the volatile environment. The Company has significantly reduced its marketing expenses, deferred most capital expenditures, and negotiated significant discounts with certain vendors through the end of the second quarter of 2020. Because the Company cannot predict the duration of the pandemic or the lifting of "shelter in place orders", the Company will continue to evaluate its options and manage its business as appropriate on a location by location basis in order to preserve its financial flexibility during this challenging time.

The COVID-19 global pandemic has resulted in a significant decrease in our market capitalization and profitability that increases the risk of impairment. During the first quarter of 2020, we recorded a $23.0 million non-cash impairment charge related to our intangible manufacturer franchise rights. We may be required to record additional impairment charges if the COVID-19 global pandemic continues, and we cannot accurately predict the amount and timing of any additional impairment charge at this time, however, any such impairment charge could have an adverse effect on our results of operations and stockholders’ equity.

As a precautionary measure, on March 18, 2020, the Company borrowed an additional $237 million under the Revolving Credit Facility and an additional $110 million under the Used Vehicle Floor Plan Facility. As of March 31, 2020, we had $12.5 million of remaining availability under the Used Vehicle Floor Plan Facility and no remaining availability under the Revolving Credit Facility. As of March 31, 2020, we had cash and cash equivalents of $388.6 million and an additional $180.0 million of funds in our floor plan offset accounts. We believe we will have sufficient liquidity to meet our debt service and working capital requirements; commitments and contingencies; debt repayment, maturity and repurchase obligations; acquisitions; capital expenditures; and any operating requirements for at least the next twelve months.

Our top priority continues to be the safety and protection of our customers, team members and their families. We have modified certain business practices to conform to government restrictions and are taking precautionary measures as directed by government and regulatory authorities. Following the CDC’s recommendation, we are providing face masks to employees. We have also increased the frequency of dealership cleanings, implemented the use of plastic seat and steering wheel covers when performing service on guest's vehicles, are thoroughly cleaning and sanitizing loaner vehicles after each use and have secured extra supplies of hand sanitizer, alcohol wipes, gloves and disinfectants for both employee and guest use at our dealerships. Many of our stores are also offering complimentary pick up and delivery services to our customers, and we continue to offer online purchasing of new and used vehicles with delivery to the customer.

Park Place Acquisition

As previously announced, on December 11, 2019, the Company entered into (1) an Asset Purchase Agreement (the “Asset Purchase Agreement”) with certain members of the Park Place Dealership family of entities, Park Place Mid-Cities, Ltd., a Texas limited partnership, and the identified principal (collectively, “Park Place”) and (2) a Real Estate Purchase Agreement (the “Real Estate Purchase Agreement” and, together with the Asset Purchase Agreement, the “Transaction Agreements”) with certain members of the Park Place Dealership family of entities to acquire substantially all of the assets of, and certain real property related to, the Park Place business. On March 24, 2020, the Purchaser delivered notice to the sellers terminating the Transaction Agreements pursuant to the terms thereof in exchange for the payment of $10.0 million of liquidated damages. Please refer to Liquidity and Capital Resources for additional details.

First Quarter Results

The seasonally adjusted annual rate ("SAAR") of new vehicle sales in the U.S. during the three months ended March 31, ~~2019~~2020 was ~~16.9~~15.2 million compared to ~~17.2~~16.9 million during the three months ended March 31, ~~2018. The automotive retail~~2019. SAAR for the months of January and February was 17.1 million and 17.0 million, respectively. Despite a strong start to the month, March ended with a SAAR of 11.4 million as the impact of the COVID-19 pandemic began to severely impact our business ~~continues~~and industry as a whole. In addition to ~~benefit from~~a decline in vehicle sales in March, there was also a precipitous decline in used vehicle sales, as well as the ~~availability~~parts and service business. As the result of ~~credit to consumers, strong~~government ordered closures of non-essential businesses, the country has seen an unprecedented increase in unemployment claims which has eroded consumer confidence and ~~historically low unemployment levels. Demand~~the willingness to make significant purchases such as automobiles. We expect to continue to be adversely impacted by this pandemic for ~~new vehicles is generally highest during~~ the second, third, and fourth quarters of each year and, accordingly, we expect our revenues to generally be higher during these periods. We typically experience higher sales of luxury vehicles in the fourth quarter, which have higher average selling prices and gross profit per vehicle retailed. Revenues and operating results may be impacted significantly from quarter-to-quarter by changing economic conditions, vehicle manufacturer incentive programs, adverse weather events, or other developments outside our control.foreseeable future.

Our gross profit margin varies with our revenue mix. Sales of new vehicles generally result in a lower gross profit margin than used vehicle sales, sales of parts and service, and sales of F&I products. As a result, when used vehicle, parts and service, and F&I revenue increase as a percentage of total revenue, we expect our overall gross profit margin to increase.

Selling, general, and administrative ("SG&A") expenses consist primarily of fixed and incentive-based compensation, advertising, rent, insurance, utilities, and other customary operating expenses. A significant portion of our cost structure is variable (such as sales commissions) or controllable (such as advertising), which we believe allows us to adapt to changes in the retail environment over the long-term. We evaluate commissions paid to salespeople as a percentage of retail vehicle gross profit, advertising expense on a per vehicle retailed ("PVR") basis, and all other SG&A expenses in the aggregate as a percentage of total gross profit.

We had total available liquidity of ~~$315.4~~$581.1 million as of March 31, ~~2019,~~2020, which consisted of cash and cash equivalents of ~~$10.9~~$388.6 million, ~~$45.0~~$180.0 million of funds in our floor plan offset accounts $105.3 million of availability under our new vehicle floorplan facility that is able to be re-designated to our revolving credit facility, $47.0 million of availability under our revolving credit facility, and ~~$107.2~~$12.5 million of availability under our used vehicle revolving floor plan facility. For further discussion of our liquidity, please refer to "Liquidity and Capital Resources" below.

RESULTS OF OPERATIONS

Three Months Ended March 31, 2020 Compared to the Three Months Ended March 31, 2019 ~~Compared to the~~ ~~Three Months Ended March 31, 2018~~


	For the Three Months Ended March 31,					Increase (Decrease)			% Change		For the Three Months Ended March 31,					Increase (Decrease)			% Change
	2019		2018			Increase (Decrease)			% Change		2020			2019		Increase (Decrease)			% Change
	(Dollars in millions, except per share data)										(Dollars in millions, except per share data)
REVENUE:
New vehicle	$	871.8	$	857.1		$	14.7		2	%	$	822.1		$	871.8	$	(49.7	)	(6	)%
Used vehicle	509.9		484.6			25.3			5	%	493.2			509.9		(16.7		)	(3	)%
Parts and service	217.6		199.3			18.3			9	%	221.6			217.6		4.0			2	%
Finance and insurance, net	71.5		68.2			3.3			5	%	70.4			71.5		(1.1		)	(2	)%
TOTAL REVENUE	1,670.8		1,609.2			61.6			4	%	1,607.3			1,670.8		(63.5		)	(4	)%
GROSS PROFIT:
New vehicle	37.9		38.6			(0.7		)	(2	)%	36.4			37.9		(1.5		)	(4	)%
Used vehicle	34.5		33.5			1.0			3	%	30.7			34.5		(3.8		)	(11	)%
Parts and service	135.3		125.1			10.2			8	%	134.9			135.3		(0.4		)	—	%
Finance and insurance, net	71.5		68.2			3.3			5	%	70.4			71.5		(1.1		)	(2	)%
TOTAL GROSS PROFIT	279.2		265.4			13.8			5	%	272.4			279.2		(6.8		)	(2	)%
OPERATING EXPENSES:
Selling, general, and administrative	191.0		184.2			6.8			4	%	194.7			191.0		3.7			2	%
Depreciation and amortization	8.6		8.2			0.4			5	%	9.5			8.6		0.9			10	%
Other operating expense (income), net	1.8		(0.2		)	2.0			NM
Franchise rights impairment											23.0			—		23.0			—	%
Other operating expense, net											10.2			1.8		8.4			NM
INCOME FROM OPERATIONS	77.8		73.2			4.6			6	%	35.0			77.8		(42.8		)	(55	)%
OTHER EXPENSES:
OTHER EXPENSES (INCOME):
Floor plan interest expense	10.2		6.6			3.6			55	%	7.0			10.2		(3.2		)	(31	)%
Other interest expense, net	13.9		13.0			0.9			7	%	17.0			13.9		3.1			22	%
Swap interest expense	—		0.2			(0.2		)	(100	)%
Loss on extinguishment of long-term debt, net											20.6			—		20.6			—	%
Gain on dealership divestitures, net											(33.7		)	—		(33.7		)	—	%
Total other expenses, net	24.1		19.8			4.3			22	%	10.9			24.1		(13.2		)	(55	)%
INCOME BEFORE INCOME TAXES	53.7		53.4			0.3			1	%	24.1			53.7		(29.6		)	(55	)%
Income tax expense	12.8		13.3			(0.5		)	(4	)%	4.6			12.8		(8.2		)	(64	)%
NET INCOME	$	40.9	$	40.1		$	0.8		2	%	$	19.5		$	40.9	$	(21.4	)	(52	)%
Net income per share—Diluted	$	2.11	$	1.93		$	0.2		9	%	$	1.01		$	2.11	$	(1.10	)	(52	)%

•

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. This floor plan facility was amended in December 2019 to extend the maturity date from December 5, 2019 to May 31, 2020. 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 March 31, 2020, we had $118.4 million, net of $15.3 million in our floor plan offset account, outstanding under our floor plan facility. Additionally, we had $83.6 million outstanding under facilities with certain manufacturers for the financing of loaner vehicles, which were presented within Accounts payable and 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.

•

The New Senior Notes—On February 19, 2020, the Company completed its offering of senior unsecured notes, consisting of $525.0 million aggregate principal amount of 4.50% Senior Notes due 2028 (the “2028 Notes”) and $600.0 million aggregate principal amount of 4.75% Senior Notes due 2030 (the “2030 Notes” and, together with the 2028 Notes, the “Notes”). The 2028 Notes and 2030 Notes mature on March 1, 2028 and March 1, 2030, respectively. Interest is payable semiannually, on March 1 and September 1 of each year. The New Senior Notes were offered,

together with additional borrowings and ~~other financing facilities~~ — ~~we have a floor plan facility with~~cash on hand, to (i) fund, if consummated, the Ford Motor Credit Company ("Ford Credit") to purchase new Ford and Lincoln vehicle inventory, which matures on December 5, 2019. We also have established a floor plan offset account with Ford Credit, which operates in a similar manner toacquisition of substantially all of the assets of Park Place, (ii) redeem all of our ~~floor plan offset account with Bank~~outstanding $600.0 million aggregate principal amount of America. As of March 31, 2019, we had $132.3 million, net of $14.1 million in our floor plan offset account, outstanding under our floor plan facility. Additionally, we had $90.3 million outstanding under facilities with certain manufacturers for the financing of loaner vehicles, which were presented within Accounts Payable and 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% Senior Subordinated Notes due 2024 — as(the “6.0% Notes”) and (iii) pay fees and expenses in connection with the foregoing.

On March 24, 2020, the Company delivered notice to the sellers terminating the previously announced Transaction. As a result, the Company redeemed $245.0 million aggregate principal million of ~~March 31, 2019 we had $600.0~~the 2028 Notes and $280.0 million in aggregate principal amount ~~outstanding related~~of the 2030 Notes (the “Mandatory Redemption Amount”) on a pro rata basis in proportion to the aggregate principal amount of each series of Notes at a redemption price equal to 100% of the Mandatory Redemption Amount, plus accrued and unpaid interest on March 30, 2020. The New Senior Notes of each series are guaranteed, jointly and severally, on a senior unsecured basis, by each of our ~~6.0% Notes. We~~existing and future restricted subsidiaries, with certain exceptions. In addition, the New Senior Notes are subject to customary covenants, events of default and optional redemption revisions. The New Senior Notes are required to ~~pay interest on the 6.0% Notes on June 15 and December 15 of each year until maturity on December 15, 2024.~~

~~Mortgage notes~~ — ~~as of March 31, 2019, we had $130.6 million of mortgage note obligations. These obligations are collateralized by the associated real estate at our dealership locations.~~

~~Restated Master Loan Agreement~~ — ~~provides for term loans to certain of our subsidiaries (the "Restated Master Loan Agreement"). Borrowings~~be registered under the ~~Restated Master Loan Agreement are guaranteed by us and are collateralized by the real property financed under the Restated Master Loan Agreement. As~~Securities Act of ~~March 31, 2019, the outstanding balance under the Restated Master Loan Agreement was $82.0 million. There is no further borrowing availability under this agreement.~~

~~Prior Real Estate Credit Agreement~~ — ~~a real estate term loan credit agreement with borrowings collateralized by first priority liens, subject to certain permitted exceptions, on all~~1933 within 270 days of the ~~real property financed thereunder (the "Prior Real Estate Credit Agreement"). As of March 31, 2019, we had $40.1 million of mortgage note obligations outstanding under~~closing date for the ~~Prior Real Estate Credit Agreement (including $2.7 million classified as Liabilities Associated with Assets Held for Sale). There is no further borrowing availability under this agreement.~~

~~2018 Bank of America Facility -~~ On November 13, 2018, the Company and certain of its subsidiaries entered into a real estate term loan credit agreement (the “Bank of America Credit Agreement") with Bank of America N.A., which provides for term loans in an aggregate amount not to exceed $128.1 million (the "Bank of America Facility"). On November 13, 2018, we borrowed an aggregate amount of $25.4 million under the Bank of America Credit Agreement, a portion of which was used to refinance certainoffering of the Company’s other outstanding mortgage indebtedness. All of the real property financed by an operating dealership subsidiary of the Company under the Bank of America Facility is collateralized by first priority liens, subject to certain permitted exceptions. As of March 31, 2019, we had $25.4 million of outstanding borrowings under the Bank of America Facility.New Senior Notes.

~~2018 Wells Fargo Master Loan Facility -~~ On November 16, 2018, certain subsidiaries of the Company entered into a master loan agreement (the “Wells Fargo Master Loan Agreement”) with Wells Fargo Bank, National Association, as lender which provides for term loans to certain of the Company’s subsidiaries that are borrowers under the Wells Fargo Master Loan Agreement in an aggregate amount not to exceed $100.0 million (the "Wells Fargo Master Loan Facility"). On November 16, 2018, we borrowed an aggregate amount of $25.0 million under the Wells Fargo Master Loan Facility, the proceeds of which were used for general corporate purposes. Borrowings under the Wells Fargo Master Loan Facility are guaranteed by the Company pursuant to a unconditional guaranty, and all of the real property financed by any operating dealership subsidiary of the Company under the Wells Fargo Master Loan Facility is collateralized by first priority liens, subject to certain permitted exceptions. As of March 31, 2019, we had $25.0 million outstanding borrowings under the Wells Fargo Master Loan Facility.


•	6.0% Senior Subordinated Notes due 2024 — In connection with the issuance of the 2028 Notes and 2030 Notes, on March 4, 2020, we redeemed all of our 6.0% Notes at 103% of par, plus accrued and unpaid interest up to, but excluding, the date of redemption.


•	Mortgage notes — as of March 31, 2020, we had $99.2 million of mortgage note obligations. These obligations are collateralized by the associated real estate at our dealership locations.


•	2013 BofA Real Estate Facility— As of March 31, 2020, we had $16.5 million of outstanding borrowings under the 2013 BofA Real Estate Facility. There is no further borrowing availability under this agreement.


•	2015 Wells Fargo Master Loan Facility—Borrowings under the 2015 Wells Fargo Master Loan Facility (as defined herein) are guaranteed by us and are collateralized by the real property financed under the 2015 Wells Fargo Master Loan Facility. As of March 31, 2020, the outstanding balance under this agreement was $75.5 million. There is no further borrowing availability under this agreement.

•

2018 Bank of America Facility —On November 13, 2018, the Company and certain of its subsidiaries entered into the 2018 BofA Real Estate Facility (as defined herein) with Bank of America, which provides for term loans in an aggregate amount not to exceed $128.1 million. 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 March 31, 2020, we had $105.3 million of outstanding borrowings under the 2018 Bank of America Facility.

•

2018 Wells Fargo Master Loan Facility—On November 16, 2018, certain subsidiaries of the Company entered into a 2018 Wells Fargo Master Loan Agreement (as defined herein) which provides for term loans to certain of the Company's subsidiaries that are borrowers under the 2018 Wells Fargo Master Loan Facility in an aggregate amount not to exceed $100.0 million. Our right to make draws under the 2018 Wells Fargo Master Loan Facility will terminate on June 30, 2020. On November 16, 2018, we borrowed an aggregate amount of $25.0 million under the 2018 Wells Fargo Master Loan Facility, the proceeds of which were used for general corporate purposes. As of March 31, 2020, we had $25.0 million outstanding borrowings under the 2018 Wells Fargo Master Loan Facility.

Covenants

We are subject to a number of customary operating and other restrictive covenants in our various debt and lease agreements. We were in compliance with all of our covenants as of March 31, ~~2019.~~

2020.

Share Repurchases and Dividend Restrictions

Our ability to repurchase shares or pay dividends on our common stock is subject to our compliance with the covenants and restrictions in our various debt and lease agreements. Our ~~2016~~2019 Senior Credit Facility and our indenture governing our 6.0% Notes permit us to make an unlimited amount of restricted payments, such as share repurchases or dividends, so long as our Consolidated Total Leverage Ratio, as defined in those agreements, does not exceed 3.0 to 1.0 on a pro forma basis after giving effect to any proposed payments. As of March 31, ~~2019,~~2020, our Consolidated Total Leverage Ratio did not exceed 3.0 to 1.0.

On January 30, 2014, our Board of Directors authorized our current share repurchase program (the "Repurchase Program"). On October 19, 2018, our Board of Directors reset the authorization under our Repurchase Program to $100.0 million in the

aggregate, for the repurchase of our common stock in open market transactions or privately negotiated transactions from time to time.

During the three months ended March 31, ~~2019,~~2020, we ~~repurchased 108,978~~did not repurchase any shares, ~~respectively,~~ of our common stock under the Repurchase ~~Program for a total of $7.4 million.~~Program. As of March 31, ~~2019,~~2020, we had remaining authorization to repurchase ~~$74.1~~$66.3 million in shares of our common stock under the Repurchase Program.

During the three months ended March 31, ~~2019,~~2020, we ~~also~~ repurchased ~~66,912~~53,915 shares, ~~respectively,~~ of our common stock for ~~$4.7~~$5.0 million, from employees in connection with a net share settlement feature of employee equity-based awards.

Cash Flows

Classification of Cash Flows Associated with Floor Plan Notes Payable

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 used vehicles (together referred to as "Floor Plan Notes Payable—Non-Trade"), are classified as financing activities on 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 on the accompanying Condensed Consolidated Statements of Cash Flows. Borrowings of floor plan notes payable associated with inventory acquired in connection with all acquisitions and repayments made in connection with all divestitures are classified as a financing activity in the accompanying Condensed Consolidated Statements of Cash Flows. Cash flows related to floor plan notes payable included in operating activities differ from cash flows related to floor plan notes payable included in financing activities only to the extent that the former are payable to a lender affiliated with the manufacturer from which we purchased the related inventory, while the latter are payable to a lender not affiliated with the manufacturer from which we purchased the related inventory. The majority of our floor plan notes are payable to parties unaffiliated with the entities from which we purchase our new vehicle inventory, with the exception of floor plan notes payable relating to the financing of new Ford and Lincoln vehicles.

Floor plan borrowings are required by all vehicle manufacturers for the purchase of new vehicles, and all floor plan lenders require amounts borrowed for the purchase of a vehicle to be repaid within a short time period after the related vehicle is sold. As a result, we believe that it is important to understand the relationship between the cash flows of all of our floor plan notes payable and new vehicle inventory in order to understand our working capital and operating cash flow and to be able to compare our operating cash flow to that of our competitors (i.e., if our competitors have a different mix of trade and non-trade floor plan financing as compared to us). In addition, we include all floor plan borrowings and repayments in our internal operating cash flow forecasts. As a result, we use the non-GAAP measure "cash provided by operating activities, as adjusted" (defined below) to compare our results to forecasts. We believe that splitting the cash flows of floor plan notes payable between operating activities and financing activities, while all new vehicle inventory activity is included in operating activities, results in significantly different operating cash flow than if all the cash flows of floor plan notes payable were classified together in operating activities.

Cash provided by operating activities, as adjusted, includes borrowings and repayments of floor plan notes payable to lenders not affiliated with the manufacturer from which we purchase the related new vehicles. Cash provided by operating activities, as adjusted, has material limitations, and therefore, may not be comparable to similarly titled measures of other companies and should not be considered in isolation, or as a substitute for analysis of our operating results in accordance with GAAP. In order to compensate for these potential limitations we also review the related GAAP measures.

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


	For the Three Months Ended March 31,				For the Three Months Ended March 31,
	2019		2018		2020		2019
	(In millions)				(In millions)
Reconciliation of Cash provided by operating activities to Cash provided by operating activities, as adjusted
Cash provided by operating activities, as reported	$	65.2	$	35.8	$	127.7	$	65.2
New vehicle floor plan borrowings —non-trade, net	32.7		47.2		37.2		32.7
Cash provided by operating activities, as adjusted	$	97.9	$	83.0	$	164.9	$	97.9

Operating Activities—

Net cash provided by operating activities totaled ~~$65.2~~$127.7 million and ~~$35.8~~$65.2 million, for the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, respectively. Net cash provided by operating activities, as adjusted, totaled ~~$97.9~~$164.9 million and ~~$83.0~~$97.9 million for the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, respectively.

The ~~$14.9~~$67.0 million increase in our net cash provided by operating activities, as adjusted, for the three months ended March 31, ~~2019 as~~2020 compared to the three months ended March 31, ~~2018~~2019 was primarily the result of a ~~$26.3~~$122.2 million increase related to the lower balances of accounts receivable and contracts-in-transit around the period end and a $12.0 million increase related to the change in ~~accounts payable and other current liabilities and a $8.6 million increase related to non-cash adjustments to~~inventory, net ~~income.~~of floor plan borrowings. The increase in our net cash provided by operating activities, as adjusted, was ~~partially~~ offset by a ~~$8.8 million~~ decrease in non-cash adjustments to net income of $13.3 million and a decrease in accounts payable and other current ~~assets, $3.2 million net decrease in other non-current assets and~~ liabilities ~~a $5.8 million decrease related to the timing~~ of ~~collection of accounts receivable and contracts-in-transit and a $2.2 million decrease in inventory, net of floor plan borrowings.~~$58.9 million.

Investing Activities—

Net cash used in investing activities totaled ~~$127.0~~$45.2 million and ~~$64.4~~$127.0 million, for the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, respectively. Capital expenditures, excluding the purchase of real estate, were ~~$3.6~~$9.1 million and ~~$3.3~~$3.6 million for the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, respectively. We expect that capital expenditures for ~~2019~~2020 will total approximately ~~$45.0~~$29.5 million to upgrade or replace our existing facilities, construct new facilities, expand our service capacity, and invest in technology and equipment.

During the three months ended March 31, 2020, we acquired the assets of three franchises (one dealership location) in the Denver, Colorado market for a purchase price of $63.6 million. We funded these acquisitions with an aggregate of $34.5 million of cash and $27.1 million of floor plan borrowings for the purchase of the related new vehicle inventory. In the aggregate, these acquisitions included purchase price holdbacks of $2.0 million for potential indemnity claims made by us with respect to the acquired franchises. In addition to the acquisition amounts above, we released $1.5 million of purchase price holdbacks related to a prior year acquisition.

During the three months ended March 31, 2019, we acquired the assets of eight franchises (four dealership ~~location) in the~~locations) Indianapolis, Indiana market for a purchase price of $121.0 million. Consideration paid (or payable) to fund this acquisition included $70.8 million of cash, $47.7 million of floor plan borrowings for the purchase of the related new vehicle inventory, and purchase price holdbacks of $2.5 million for potential indemnity claims made by us with respect to the acquired franchises.

During the three months ended March 31, ~~2018,~~2020, we ~~acquired the assets of~~sold one franchise (one dealership location) in the ~~Indianapolis, Indiana~~Atlanta, Georgia market and we sold six franchises (five dealership locations) and one collision center in the Jackson, Mississippi market for aan aggregate purchase price of ~~$46.5~~$115.5 million. ~~Consideration paid (or payable) to fund these acquisitions included $36.0~~In addition, during the three months ended March 31, 2020 , we received cash proceeds of $4.2 million, from the sale of ~~cash, $9.5 million of floor plan borrowings for the purchase of the~~vacant properties. The assets and liabilities related ~~new vehicle inventory, and purchase price holdbacks of $1.0 million for potential indemnity claims made by us with respect~~ to the ~~acquired franchise.~~aforementioned divestitures were included in Assets held for sale and Liabilities associated with assets held for sale as of December 31, 2019.

During the three months ended March 31, ~~2018, we received cash proceeds of $2.0 million from the sale of property previously included in Assets Held for Sale.~~

~~During the three months ended March 31,~~2020 and 2019, ~~and 2018,~~ purchases of real estate, including previously leased real estate, totaled ~~$4.9~~$2.3 million and ~~$17.6~~$4.9 million, respectively.

As part of our capital allocation strategy, we continually evaluate opportunities to purchase properties currently under lease and acquire properties in connection with future dealership relocations. No assurances can be provided that we will have or be able to access capital at times or on terms in amounts deemed necessary to execute this strategy.

Financing Activities—

Net cash ~~provided by~~used in financing activities totaled ~~$64.4 million and $28.7~~$212.2 million for the three months ended March 31, ~~2019 and 2018, respectively.~~2020. Net cash provided by financing activities totaled $64.4 million for the three months ended March 31, 2019.

During the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, we had non-trade floor plan borrowings, excluding floor plan borrowings associated with acquisitions, of ~~$1.07~~$1.12 billion and ~~$1.01~~$1.07 billion, respectively, and non-trade floor plan repayments, excluding floor plan repayments associated with a divestiture, of $1.09 billion and $1.03 billion, ~~and $0.97 billion,~~ respectively.

~~In addition, during~~During the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, we had floor plan borrowings of ~~$47.7~~$27.1 million and ~~$9.5~~$47.7 million, respectively, related to acquisitions.

During the three months ended March 31, 2020, we had non-trade floor plan repayments associated with a divestiture of $50.5 million.

Repayments of borrowings totaled ~~$3.9~~$1,156.1 million and ~~$3.6~~$3.9 million, for the three months ended March 31, 2020 and 2019, ~~and 2018,~~ respectively. In addition, payments of debt issuance costs totaled $3.1 million for the three months ended March 31, 2020.

During the three months ended March 31, ~~2019,~~2020, we ~~repurchased~~had proceeds of $7.3 million related to a ~~total~~sale and leaseback of ~~108,978~~real estate in Plano, Texas.

During the three months ended March 31, 2020, we did not repurchase any shares of our common stock under our Repurchase Program ~~for a total of $7.4 million and 66,912~~but repurchased 53,915 shares of our common stock for ~~$4.7~~$5.0 million from employees in connection with a net share settlement feature of employee equity-based awards.

Off Balance Sheet Arrangements

We had no off balance sheet arrangements during any of the periods presented other than those disclosed in Note 12 "Commitments and Contingencies" ofwithin the ~~Notes hereto.~~accompanying Condensed Consolidated Financial Statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

We are exposed to risk from changes in interest rates on a significant portion of our outstanding indebtedness. Based on ~~$1.1 billion~~$1,177.4 million of total variable interest rate debt, which includes our floor plan notes payable and certain mortgage liabilities, outstanding as of March 31, ~~2019~~,2020, a 100 basis point change in interest rates could result in a change of as much as ~~$10.8~~$11.8 million to our total annual interest expense in our Consolidated Statements of Income.

We periodically receive floor plan assistance from certain automobile manufacturers, which is accounted for as a reduction in our new vehicle inventory cost. Floor plan assistance reduced our cost of sales for the three months ended March 31, 2020 and 2019 ~~and 2018~~ by ~~$9.7~~$9.4 million and ~~$8.7~~$9.7 million, respectively. We cannot provide assurance as to the future amount of floor plan assistance and these amounts may be negatively impacted due to future changes in interest rates.

As part of our strategy to mitigate our exposure to fluctuations in interest rates, we have various interest rate swap agreements. All of our interest rate swaps qualify for cash flow hedge accounting treatment and do not contain any ineffectiveness.

In June 2015, we entered into an interest rate swap agreement with a notional principal amount of $100.0 million. This swap was designed to provide a hedge against changes in variable rate cash flows regarding fluctuations in the one month LIBOR, ~~rate,~~ through maturity in February 2025. The notional value of this swap was ~~$83.8~~$78.5 million as of March 31, ~~2019~~2020 and is reducing over its remaining term to $53.1 million at maturity.

In November 2013, we entered into an interest rate swap agreement with a notional principal amount of $75.0 million. This swap was designed to provide a hedge against changes in variable rate cash flows regarding fluctuations in the one month LIBOR, ~~rate,~~ through maturity in September 2023. The notional values of this swap as of March 31, ~~2019~~2020 was ~~$55.5~~$51.8 million and will reduce over its remaining term to $38.7 million at maturity.

For additional information about the effect of our derivative instruments, ~~on the accompanying Condensed Consolidated Financial Statements, see~~please refer to Note 10 "Financial Instruments and Fair Value". within the accompanying Condensed Consolidated Financial Statements.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act"). Based on this evaluation, our principal executive officer and principal financial officer concluded that as of the end of such period such disclosure controls and procedures were effective to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act is (i) recorded, processed, summarized, and reported within the time period specified in the rules and forms of the U.S. Securities and Exchange Commission, and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding disclosure. Management necessarily applies its judgment in assessing the costs and benefits of such controls and procedures, which, by their nature, can provide only reasonable assurance regarding management's control objectives. Management, including the principal executive officer and the principal financial officer, does not expect that our disclosure controls and procedures can prevent all possible errors or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that objectives of the control system are met. There are inherent limitations in all control systems, including the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple errors or mistakes. Additionally, controls can be circumvented by the intentional acts of one or more persons. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and while our disclosure controls and procedures are designed to be effective under circumstances where they should reasonably be expected to operate effectively, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of the inherent limitations in any control system, misstatements due to possible errors or fraud may occur and not be detected.

Changes in Internal Control Over Financial Reporting

The adoption of ASC 842 required the implementation of new accounting processes and a new information technology application to calculate right of use assets and lease liabilities which changed our internal controls over lease accounting and financial reporting. Otherwise, thereThere were no changes in our internal control over financial reporting during the quarter ended

March 31, ~~2019,~~2020 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we and our dealerships may become involved in various claims relating to, and arising out of our business and our operations. These claims may involve, but are not limited to, financial and other audits by vehicle manufacturers or lenders, and certain federal, state, and local government authorities, which relate primarily to (i) incentive and warranty payments received from vehicle manufacturers, or allegations of violations of manufacturer agreements or policies, (ii) compliance with lender rules and covenants and (iii) payments made to government authorities relating to federal, state, and local taxes, as well as compliance with other government regulations. Claims may also arise through litigation, government proceedings, and other dispute resolution processes. Such claims, including class actions, can relate to, but are not limited to, the practice of charging administrative fees, employment-related matters, truth-in-lending practices, contractual disputes, actions brought by governmental authorities, and other matters. We evaluate pending and threatened claims and establish loss contingency reserves based upon outcomes we currently believe to be probable and reasonably estimable.

We currently do not anticipate that any known claim will materially adversely affect our financial condition, liquidity or results of operations. However, the outcome of any matter cannot be predicted with certainty, and an unfavorable resolution of one or more matters presently known or arising in the future could have a material adverse effect on our financial condition, liquidity or results of operations.

Item 1A. Risk Factors

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors that affect our business and financial results that are discussed in Part I, Item 1A, of our Annual Report on Form 10- K for the fiscal year ended December 31, 2019. These factors could materially adversely affect our business, financial condition, liquidity, results of operations and capital position, and could cause our actual results to differ materially from our historical results or the results contemplated by the forward-looking statements contained in this report. Other than as set forth below, there have been no material changes to such risk factors.

The novel coronavirus disease (COVID-19) global pandemic has had and is expected to continue to have a material adverse impact on our business, financial condition and results of operations.

The COVID-19 global pandemic has negatively impacted the global economy, disrupted consumer spending and global supply chains, and created significant volatility and disruption of financial markets. We expect the COVID-19 global pandemic to have a material adverse impact on our business including our results of operations, financial condition and liquidity. The extent of the impact of the COVID-19 global pandemic on our business, including our ability to execute our near-term and long-term business strategies and initiatives in the expected time frame, will depend on future developments, including the duration and scope of the pandemic, which are uncertain and cannot be predicted.

As a result of the COVID-19 global pandemic, and in response to government mandates or recommendations, such as “shelter in place” and self-quarantines, as well as decisions we have made to protect the health and safety of our employees, consumers and communities, we have modified our business practices, including the implementation of reduced hours at certain of our dealerships, developing social distancing plans, restricting employee travel and limiting physical participation in meetings, and cancelling events and industry and other conferences. As a result of the government mandates or recommendations, our dealerships, including our parts and services businesses, are not operating at capacity, which has resulted in a loss of sales and profits. Additionally, the closures of, and/or reduced availability of services from, the department of motor vehicles in various states have and will continue to have an adverse effect on our ability to obtain license plates for our fleet and our customers, to perfect liens on sold vehicles, and on our customers’ ability to obtain valid driver licenses. All of these factors present challenges to our operations, which could adversely affect our business, results of operations and financial condition. We are presently considered an essential business, but we may face future operational restrictions or challenges that may limit operations or require us to further restrict access or close dealerships due to, among other factors, evolving and increasingly stringent governmental restrictions including public health directives, quarantine policies, social distancing measures or positive diagnoses for COVID-19 among our employees at certain dealership locations.

Any significant reduction in consumer visits to, or spending at, our dealerships caused by COVID-19, would result in a loss of sales and profits and other material adverse effects. Self-quarantine or "shelter in place" mandates may reduce customer visits to our dealerships. We also expect consumer fears about becoming ill with the disease to continue, which will further adversely affect traffic to our dealerships. Consumer spending generally may also be negatively impacted by general macroeconomic conditions and consumer confidence, including the impacts of any recession, resulting from the COVID-19 global pandemic. For example, COVID-19 has resulted in employee furloughs and increased unemployment

across the United States, thereby reducing consumer demand for our products and services and also reducing the number of consumers who will quality for the extension of credit for a vehicle purchase or a lease either on favorable terms or at all. All of these factors are expected to negatively impact sales and profitability.

Our profitability is dependent to a great extent on various aspects of vehicle manufacturers’ operations. As a result of market conditions caused by COVID-19, certain vehicle manufacturers and other suppliers have ceased or slowed production of new vehicles, parts and other supplies. We cannot predict with any certainty how long the automotive retail industry will be subject to these production slowdowns implemented by such vehicle manufacturers and other suppliers and when normalized production will resume at these manufacturers. This disruption in our supply network has negatively impacted, and will continue to impact, our ability to maintain a desirable mix of popular new vehicles and parts that consumers demand at the time and in the volumes desired, all of which would adversely impact our revenues.

The effects of the COVID-19 global pandemic on the operating results of our business has resulted in a franchise rights impairment charge in the first quarter of 2020 and it may result in additional impairment charges in the future, which could adversely affect our future operating results. Our principal intangible assets are goodwill and our rights under our franchise agreements with vehicle manufacturers. Goodwill and franchise rights are subject to impairment assessments at least annually or more frequently when events or changes in circumstances indicate that an impairment may have occurred. The COVID-19 global pandemic has resulted in a significant decrease in our market capitalization and profitability that increases the risk of impairment. During the first quarter of 2020, we recorded a $23.0 million non-cash impairment charge related to our intangible manufacturer franchise rights assets. We may be required to record additional impairment charges if the COVID-19 global pandemic continues, and we cannot accurately predict the amount and timing of any additional impairment charge at this time, however, any such impairment charge could have an adverse effect on our results of operations and stockholders’ equity.

In addition, the impact of the COVID-19 global pandemic on macroeconomic conditions may impact the proper functioning of financial and capital markets, foreign currency exchange rates, commodity prices and interest rates. Even after the COVID-19 global pandemic has subsided, we may continue to experience adverse impacts to our business as a result of an economic recession or depression that has occurred or may occur in the future. The continued disruption of global financial markets as a result of the COVID-19 global pandemic could have a negative impact on our ability to access capital in the future.

The extent of the impact of the COVID-19 global pandemic on our business is highly uncertain and difficult to predict, as information is rapidly evolving with respect to the duration and severity of the pandemic. At this point, we cannot reasonably estimate the duration and severity of the COVID-19 global pandemic, or its overall impact on our business. Even after the COVID-19 global pandemic has subsided, we may continue to experience adverse impacts to our business as a result of increased unemployment and any economic recession or depression that has occurred or may occur in the future. Any of these events could amplify the other risks and uncertainties described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and could materially adversely affect our business, financial condition, results of operations and/or stock price.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

~~The following table sets forth information regarding common stock repurchases by the Company on a monthly basis during the three month period ended March 31, 2019:~~

Period Total Number of Shares Purchased(1) 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 Program (in millions)(1)
01/01/2019 - 01/31/2019 —
$ —
—
$ 81.5
02/01/2019 - 02/28/2019 85,826
$ 70.33
29,819
$ 79.4
03/01/2019 - 03/31/2019 90,064
$ 67.55
79,159
$ 74.1
Total 175,890
108,978

~~(1)~~ On January 30, 2014, our Board of Directors authorized our Repurchase Program. On October 19, 2018, our Board of Directors reset the authorization under our Repurchase Program to $100.0 million in the aggregate, for the repurchase of shares of our common stock in open market transactions or privately negotiated transactions. Any repurchases will be subject to applicable limitations in our debt or other financing agreements that may be in existence from time to time. During the three months ended March 31, ~~2019,~~2020, we ~~repurchased 108,978~~did not repurchase any shares of our common stock under the Repurchase Program ~~for a total of $7.4 million and 66,912~~but repurchased 53,915 shares of our common stock for ~~$4.7~~$5.0 million from employees in connection with a net share settlement feature of employee equity-based awards. As of March 31, ~~2019,~~2020, we had remaining authorization to repurchase ~~$74.1~~$66.3 million in shares of our common stock under the Repurchase Program.

Item 4. Mine Safety Disclosures

Not applicable.

Item 6. Exhibits



Exhibit Number		Description of Documents
4.1		~~Seventh Supplemental~~ Indenture relating to the 2028 Notes, dated as of ~~March 25, 2019,~~February 19, 2020, by and among ~~Asbury IN CBG, LLC, Asbury IN CDJ, LLC, Asbury Indy Chev, LLC, Asbury IN Ford, LLC,~~ Asbury Automotive Group, Inc., the Subsidiary Guarantors listed on Schedule I thereto and U.S. Bank National Association, as Trustee, including the form of note attached as Exhibit A thereto (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on February 20, 2020)*
4.2		Form of 4.50% Senior Note due 2028 (included as Exhibit A in Exhibit 4.1 to the Company's Current Report on Form 8-K filed with the SEC on February 20, 2020)*
4.3		Indenture relating to the 2030 Notes, dated as of February 19, 2020, by and among Asbury Automotive Group, Inc., the Subsidiary Guarantors listed on Schedule I thereto and U.S. Bank National Association, as Trustee, including the form of note attached as Exhibit A thereto (filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K filed with the SEC on February 20, 2020)*
4.4		Form of 4.75% Senior Note due 2030 (included as Exhibit A in Exhibit 4.2 to the Company's Current Report on Form 8-K filed with the SEC on February 20, 2020)*
4.5		Registration Rights Agreement relating to the 2028 Notes, dated February 19, 2020, among Asbury Automotive Group, Inc., the guarantors party thereto and BofA Securities, Inc., J.P. Morgan Securities, LLC, Wells Fargo Securities, LLC, Santander Investment Securities Inc., SunTrust Robinson Humphrey, Inc. and U.S. Bancorp Investments, Inc. (filed as Exhibit 4.5 to the Company’s Current Report on Form 8-K filed with the SEC on February 20, 2020)*
4.6		Registration Rights Agreement relating to the 2030 Notes, dated February 19, 2020, among Asbury Automotive Group, Inc., the guarantors party thereto and BofA Securities, Inc., J.P. Morgan Securities, LLC, Wells Fargo Securities, LLC, Santander Investment Securities Inc., SunTrust Robinson Humphrey, Inc. and U.S. Bancorp Investments, Inc. (filed as Exhibit 4.6 to the Company’s Current Report on Form 8-K filed with the SEC on February 20, 2020)*
10.1		Credit Agreement, dated February 7, 2020, by and among Asbury Automotive Group, Inc., certain subsidiaries party thereto and Bank of America, N.A (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on February 13, 2020)*
10.2		First Amendment to the Third Amended and Restated Credit Agreement, dated January 31, 2020, among Asbury Automotive Group, Inc., as a borrower, certain of its subsidiaries, as vehicle borrowers, Bank of America, N.A., as administrative agent, revolving swing line lender, new vehicle floorplan swing line lender, used vehicle floorplan swingline lender and an l/c issuer, and the other lenders party thereto, JPMorgan Chase Bank, N.A. and Wells Fargo Bank, N.A., as co-syndication agents, Mercedes-Benz Financial Services USA LLC and Toyota Motor Credit Corporation, as co-documentation agents, and BofA Securities, Inc. as sole lead arranger and sole bookrunner (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on February 3, 2020)*
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
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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

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



		Asbury Automotive Group, Inc.

Date:	May ~~7, 2019~~11, 2020	By:	/s/ David W. Hult
		Name:	David W. Hult
		Title:	Chief Executive Officer and President



		Asbury Automotive Group, Inc.

Date:	May ~~7, 2019~~11, 2020	By:	/s/ ~~Sean D. Goodman~~William F. Stax
		Name:	~~Sean D. Goodman~~William F. Stax
		Title:	~~Senior~~Interim Principal Financial Officer, Vice President, Controller and Chief ~~Financial~~Accounting Officer

INDEX TO EXHIBITS



Exhibit Number		Description of Documents
4.1		~~Seventh Supplemental~~ Indenture relating to the 2028 Notes, dated as of ~~March 25, 2019,~~February 19, 2020, by and among ~~Asbury IN CBG, LLC, Asbury IN CDJ, LLC, Asbury Indy Chev, LLC, Asbury IN Ford, LLC,~~ Asbury Automotive Group, Inc., the Subsidiary Guarantors listed on Schedule I thereto and U.S. Bank National Association, as Trustee, including the form of note attached as Exhibit A thereto (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on February 20, 2020)*
4.2		Form of 4.50% Senior Note due 2028 (included as Exhibit A in Exhibit 4.1 to the Company's Current Report on Form 8-K filed with the SEC on February 20, 2020)*
4.3		Indenture relating to the 2030 Notes, dated as of February 19, 2020, by and among Asbury Automotive Group, Inc., the Subsidiary Guarantors listed on Schedule I thereto and U.S. Bank National Association, as Trustee, including the form of note attached as Exhibit A thereto (filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K filed with the SEC on February 20, 2020)*
4.4		Form of 4.75% Senior Note due 2030 (included as Exhibit A in Exhibit 4.2 to the Company's Current Report on Form 8-K filed with the SEC on February 20, 2020)*
4.5		Registration Rights Agreement relating to the 2028 Notes, dated February 19, 2020, among Asbury Automotive Group, Inc., the guarantors party thereto and BofA Securities, Inc., J.P. Morgan Securities, LLC, Wells Fargo Securities, LLC, Santander Investment Securities Inc., SunTrust Robinson Humphrey, Inc. and U.S. Bancorp Investments, Inc. (filed as Exhibit 4.5 to the Company’s Current Report on Form 8-K filed with the SEC on February 20, 2020)*
4.6		Registration Rights Agreement relating to the 2030 Notes, dated February 19, 2020, among Asbury Automotive Group, Inc., the guarantors party thereto and BofA Securities, Inc., J.P. Morgan Securities, LLC, Wells Fargo Securities, LLC, Santander Investment Securities Inc., SunTrust Robinson Humphrey, Inc. and U.S. Bancorp Investments, Inc. (filed as Exhibit 4.6 to the Company’s Current Report on Form 8-K filed with the SEC on February 20, 2020)*
10.1		Credit Agreement, dated February 7, 2020, by and among Asbury Automotive Group, Inc., certain subsidiaries party thereto and Bank of America, N.A (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on February 13, 2020)*
10.2		First Amendment to the Third Amended and Restated Credit Agreement, dated January 31, 2020, among Asbury Automotive Group, Inc., as a borrower, certain of its subsidiaries, as vehicle borrowers, Bank of America, N.A., as administrative agent, revolving swing line lender, new vehicle floorplan swing line lender, used vehicle floorplan swingline lender and an l/c issuer, and the other lenders party thereto, JPMorgan Chase Bank, N.A. and Wells Fargo Bank, N.A., as co-syndication agents, Mercedes-Benz Financial Services USA LLC and Toyota Motor Credit Corporation, as co-documentation agents, and BofA Securities, Inc. as sole lead arranger and sole bookrunner (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on February 3, 2020)*
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
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104		Cover Page Interactive Data File (formatted in iXBRL Exhibit 101)
*		Incorporated by reference

4446



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
(Address of principal executive offices)		(Zip Code)



	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



Large Accelerated Filer	x☒		Accelerated Filer	o☐

Non-Accelerated Filer	o☐	~~(Do not check if a smaller reporting company)~~	Smaller Reporting Company	o☐

			Emerging Growth Company	o☐


	March 31, 2019			December 31, 2018			March 31, 2020			December 31, 2019
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	10.9		$	8.3		$	388.6		$	3.5
Contracts-in-transit	158.9			198.3			64.7			194.7
Accounts receivable, net	115.1			130.3			89.4			136.2
Inventories	1,167.8			1,067.6			1,059.7			985.0
Assets held for sale	55.3			26.3			28.7			154.2
Other current assets	120.6			122.2			122.1			129.0
Total current assets	1,628.6			1,553.0			1,753.2			1,602.6
PROPERTY AND EQUIPMENT, net	915.4			886.1			924.4			909.7
OPERATING LEASE RIGHT-OF-USE ASSETS	73.4			—			62.1			65.6
GOODWILL	213.2			181.2			206.5			201.7
INTANGIBLE FRANCHISE RIGHTS	65.8			65.8			113.2			121.7
OTHER LONG-TERM ASSETS	8.5			9.3			9.8			10.0
Total assets	$	2,904.9		$	2,695.4		$	3,069.2		$	2,911.3
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Floor plan notes payable—trade, net	$	132.3		$	114.0		$	118.4		$	130.3
Floor plan notes payable—non-trade, net	903.0			852.1			730.1			657.7
Current maturities of long-term debt	38.7			38.8			47.4			32.4
Current maturities of operating leases	18.3			—			17.3			17.0
Accounts payable and accrued liabilities	306.8			298.4			268.7			308.7
Liabilities associated with assets held for sale	17.7			—			—			100.9
Total current liabilities	1,416.8			1,303.3			1,181.9			1,247.0
LONG-TERM DEBT	874.7			866.5			1,117.5			907.0
OPERATING LEASE LIABILITIES	59.4			—			48.7			52.6
DEFERRED INCOME TAXES	21.3			21.7			24.9			26.0
OTHER LONG-TERM LIABILITIES	28.1			30.7			35.3			32.4
COMMITMENTS AND CONTINGENCIES (Note 12)
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; 41,194,169 and 41,065,069 shares issued, including shares held in treasury, respectively	0.4			0.4
Common stock, $.01 par value; 90,000,000 shares authorized; 41,140,657 and 41,072,080 shares issued, including shares held in treasury, respectively							0.4			0.4
Additional paid-in capital	575.5			572.9			586.4			582.9
Retained earnings	957.7			922.7			1,114.0			1,094.5
Treasury stock, at cost; 21,786,251 and 21,719,339 shares, respectively	(1,028.1		)	(1,023.4		)
Accumulated other comprehensive (loss) income	(0.9		)	0.6
Treasury stock, at cost; 21,845,622 and 21,791,707 shares, respectively							(1,033.6		)	(1,028.6		)
Accumulated other comprehensive loss							(6.3		)	(2.9		)
Total shareholders' equity	504.6			473.2			660.9			646.3
Total liabilities and shareholders' equity	$	2,904.9		$	2,695.4		$	3,069.2		$	2,911.3



	For the Three Months Ended March 31,
	2020		2019
	(In millions)
Revenue:
New vehicle	$	822.1	$	871.8
Used vehicle retail	446.0		458.2
Used vehicle wholesale	47.2		51.7
New and used vehicle	1,315.3		1,381.7
Sale of vehicle parts and accessories	36.8		36.9
Vehicle repair and maintenance services	184.8		180.7
Parts and services	221.6		217.6
Finance and insurance, net	70.4		71.5
Total revenue	$	1,607.3	$	1,670.8



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



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



		Page
PART I—Financial Information
Item 1.	Condensed Consolidated Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets as of March 31, ~~2019~~2020 and December 31, ~~2018~~2019	4
	Condensed Consolidated Statements of Income for the Three Months Ended March 31, ~~2019~~2020 and ~~2018~~2019	5
	Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, ~~2019~~2020 and ~~2018~~2019	6
	Condensed Consolidated Statements of Shareholders' Equity for the Three Months Ended March 31, ~~2019~~2020 and ~~2018~~2019	7
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, ~~2019~~2020 and ~~2018~~2019	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2321
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39
Item 4.	Controls and Procedures	39

	PART II—Other Information

Item 1.	Legal Proceedings	4140
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 4.	Mine Safety Disclosures	41
Item 6.	Exhibits	42
	Signatures	43
	~~Index to Exhibits~~	44
	Index to Exhibits	45



	Common Stock			Additional Paid-in Capital			Retained Earnings		Treasury Stock				Accumulated Other Comprehensive Income (Loss)			Total
	Shares	Amount		Additional Paid-in Capital			Retained Earnings		Shares	Amount			Accumulated Other Comprehensive Income (Loss)			Total
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		)
Other comprehensive income	—	—		—			—		—	—			(3.4		)	(3.4		)
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



	As of
	March 31, 2019		March 31, 2018
	(In millions)
Revenue:
New vehicle	$	871.8	$	857.1
Used vehicle retail	458.2		435.8
Used vehicle wholesale	51.7		48.8
New and used vehicle	1,381.7		1,341.7
Sale of vehicle parts and accessories	36.9		33.8
Vehicle repair and maintenance services	180.7		165.5
Parts and services	217.6		199.3
Finance and insurance, net	71.5		68.2
Total revenue	$	1,670.8	$	1,609.2


~~(a)~~	~~Amounts reflected for floor plan notes payable—new non-trade as of March 31, 2019, excluded $15.0 million classified as Liabilities Associated with Assets Held for Sale.~~


~~(a)~~	~~Amounts reflected for prior real estate credit agreement as of March 31, 2019, excluded a $2.7 million mortgage note payable classified as Liabilities Associated with Assets Held for Sale.~~



		As of
Leases	Classification	March 31, 2019
		(In millions)
Assets:
Operating	Operating lease right-of-use assets	$	73.4
Finance	Property and equipment, net	14.6
Total right-of-use assets		$	88.0
Liabilities:
Current
Operating	Current maturities of operating leases	$	18.3
Finance	Current maturities of long-term debt	0.6
Non-Current
Operating	Operating lease liabilities	59.4
Finance	Long-term debt	17.0
Total lease liabilities		$	95.3



	~~As of~~
	~~March 31, 2019~~
~~Weighted Average Lease Term - Operating Leases~~	~~6.1 years~~
~~Weighted Average Lease Term - Finance Lease~~	~~1.9 years~~
~~Weighted Average Discount Rate - Operating Leases~~	~~4.9~~	%
~~Weighted Average Discount Rate - Finance Lease~~	~~4.1~~	%




	March 31, 2019
	(In millions)
Finance lease cost
Amortization of right-of-use assets	$	—
Interest	0.1
Operating lease cost	5.5
Short-term lease cost	1.0
Variable lease cost	0.2
Total lease cost	$	6.8




	March 31, 2019
	(In millions)
Supplemental Cash Flow:
Cash paid for amounts included in the measurements of lease liabilities
Operating cash flows from finance lease	$	0.1
Operating cash flows from operating leases	5.6
Financing cash flows from finance lease	0.1
Right-of-use assets obtained in exchange for new finance lease liabilities	17.7
Right-of-use assets obtained in exchange for new operating lease liabilities	0.2
Changes to finance lease right-of-use asset resulting from lease reassessment event	(3.1		)



	Capital			Operating
	(In millions)
2019	$	0.4		$	22.5
2020	0.4			22.2
2021	0.4			19.2
2022	0.4			14.0
2023	0.4			6.0
Thereafter	2.8			25.5
Total minimum lease payments	4.8			109.4
Less: Amounts representing interest	(1.7		)	N/A
	$	3.1		$	109.4


~~(a)~~	~~Amounts reflected for mortgage notes payable as of March 31, 2019 excluded a mortgage with an aggregate carrying value of $2.7 million classified as Liabilities Associated with Assets Held for Sale.~~



For the Three Months Ended March 31,	Results Recognized in Accumulated Other Comprehensive Income/(Loss)			Location of Results Reclassified from Accumulated Other Comprehensive Income/(Loss) to Earnings	Amount Reclassified from Accumulated Other Comprehensive Income/(Loss) to Earnings
2019	$	(1.8	)	Floor plan interest expense and Other interest expense, net	$	—
2018	$	2.6		Swap interest expense	$	(0.2	)


	For the Three Months Ended March 31,						Increase (Decrease)			% Change		For the Three Months Ended March 31,						Increase (Decrease)			% Change
	2019			2018			Increase (Decrease)			% Change		2020			2019			Increase (Decrease)			% Change
As Reported:
Revenue per new vehicle sold	$	36,161		$	36,227		$	(66	)	—	%	$	37,407		$	36,161		$	1,246		3	%
Gross profit per new vehicle sold	$	1,572		$	1,632		$	(60	)	(4	)%	$	1,656		$	1,572		$	84		5	%
New vehicle gross margin	4.3		%	4.5		%	(0.2		)%			4.4		%	4.3		%	0.1		%

Luxury:
Gross profit per new vehicle sold	$	3,700		$	3,713		$	(13	)	—	%	$	3,385		$	3,700		$	(315	)	(9	)%
New vehicle gross margin	6.6		%	6.8		%	(0.2		)%			6.1		%	6.6		%	(0.5		)%
Import:
Gross profit per new vehicle sold	$	810		$	799		$	11		1	%	$	851		$	810		$	41		5	%
New vehicle gross margin	2.9		%	2.8		%	0.1		%			3.0		%	2.9		%	0.1		%
Domestic:
Gross profit per new vehicle sold	$	1,576		$	1,801		$	(225	)	(12	)%	$	1,966		$	1,576		$	390		25	%
New vehicle gross margin	4.0		%	4.6		%	(0.6		)%			4.7		%	4.0		%	0.7		%

Same Store:
Revenue per new vehicle sold	$	36,305		$	36,251		$	54		—	%	$	37,433		$	36,614		$	819		2	%
Gross profit per new vehicle sold	$	1,572		$	1,633		$	(61	)	(4	)%	$	1,667		$	1,637		$	30		2	%
New vehicle gross margin	4.3		%	4.5		%	(0.2		)%			4.5		%	4.5		%	—		%

Luxury:
Gross profit per new vehicle sold	$	3,709		$	3,713		$	(4	)	—	%	$	3,416		$	3,722		$	(306	)	(8	)%
New vehicle gross margin	6.6		%	6.8		%	(0.2		)%			6.2		%	6.6		%	(0.4		)%
Import:
Gross profit per new vehicle sold	$	799		$	796		$	3		—	%	$	820		$	810		$	10		1	%
New vehicle gross margin	2.8		%	2.8		%	—		%			2.9		%	2.9		%	—		%
Domestic:
Gross profit per new vehicle sold	$	1,527		$	1,801		$	(274	)	(15	)%	$	1,919		$	1,619		$	300		19	%
New vehicle gross margin	3.8		%	4.6		%	(0.8		)%			4.7		%	4.1		%	0.6		%



	For the Three Months Ended March 31,								Increase (Decrease)			% of Gross Profit Increase (Decrease)
	2019		% of Gross Profit		2018		% of Gross Profit		Increase (Decrease)			% of Gross Profit Increase (Decrease)
	(Dollars in millions)
As Reported:
Personnel costs	$	92.4	33.1	%	$	89.1	33.6	%	$	3.3		(0.5	)%
Sales compensation	28.3		10.1	%	27.4		10.3	%	0.9			(0.2	)%
Share-based compensation	3.9		1.4	%	3.2		1.2	%	0.7			0.2	%
Outside services	19.5		7.0	%	20.1		7.6	%	(0.6		)	(0.6	)%
Advertising	8.0		2.9	%	7.7		2.9	%	0.3			—	%
Rent	6.8		2.4	%	6.3		2.4	%	0.5			—	%
Utilities	4.2		1.5	%	3.9		1.5	%	0.3			—	%
Insurance	3.2		1.1	%	3.0		1.1	%	0.2			—	%
Other	24.7		8.9	%	23.5		8.8	%	1.2			0.1	%
Selling, general, and administrative expense	$	191.0	68.4	%	$	184.2	69.4	%	$	6.8		(1.0	)%
Gross profit	$	279.2			$	265.4

Same Store:
Personnel costs	$	89.6	33.1	%	$	88.9	33.6	%	$	0.7		(0.5	)%
Sales compensation	27.2		10.1	%	27.3		10.3	%	(0.1		)	(0.2	)%
Share-based compensation	3.9		1.4	%	3.2		1.2	%	0.7			0.2	%
Outside services	18.8		7.0	%	20.0		7.6	%	(1.2		)	(0.6	)%
Advertising	7.4		2.7	%	7.7		2.9	%	(0.3		)	(0.2	)%
Rent	6.7		2.5	%	6.3		2.4	%	0.4			0.1	%
Utilities	4.0		1.5	%	3.9		1.5	%	0.1			—	%
Insurance	3.1		1.1	%	3.0		1.1	%	0.1			—	%
Other	$	24.4	9.0	%	$	23.4	8.7	%	1.0			0.3	%
Selling, general, and administrative expense	$	185.1	68.4	%	$	183.7	69.3	%	$	1.4		(0.9	)%
Gross profit	$	270.5			$	264.9


•	2019 Senior Credit Facility —On September 25, 2019, the Company and certain of its subsidiaries entered into the third amended and restated credit agreement with Bank of America, as administrative agent, and the other lenders party thereto (the "2019 Senior Credit Facility"). The 2019 Senior Credit Agreement provides for the following:



Period	Total Number of Shares Purchased(1)	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 Program (in millions)(1)
01/01/2019 - 01/31/2019	—	$	—	—	$	81.5
02/01/2019 - 02/28/2019	85,826	$	70.33	29,819	$	79.4
03/01/2019 - 03/31/2019	90,064	$	67.55	79,159	$	74.1
Total	175,890			108,978