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7: EX-31.1 Certification -- §302 - SOA'02 HTML 25K
8: EX-31.2 Certification -- §302 - SOA'02 HTML 26K
9: EX-32.1 Certification -- §906 - SOA'02 HTML 22K
10: EX-32.2 Certification -- §906 - SOA'02 HTML 22K
11: R1 Cover Page HTML 75K
12: R2 Condensed Consolidated Balance Sheets HTML 138K
13: R3 Condensed Consolidated Balance Sheets HTML 42K
(Parenthetical)
14: R4 Condensed Consolidated Statements of Income HTML 127K
15: R5 Condensed Consolidated Statements of Comprehensive HTML 49K
Income
16: R6 Consolidated Statements of Shareholders? Equity HTML 95K
17: R7 Consolidated Statements of Shareholders? Equity HTML 26K
(Parenthetical)
18: R8 Condensed Consolidated Statements of Cash Flows HTML 119K
19: R9 Description of Business and Summary of Significant HTML 36K
Accounting Policies
20: R10 Revenue Recognition HTML 67K
21: R11 Acquisitions and Divestitures HTML 45K
22: R12 Accounts Receivable HTML 32K
23: R13 Inventories HTML 31K
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31: R21 Commitments and Contingencies HTML 31K
32: R22 Pay vs Performance Disclosure HTML 33K
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34: R24 Description of Business and Summary of Significant HTML 41K
Accounting Policies (Policies)
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36: R26 Discontinued Operations and Disposal Groups HTML 40K
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48: R38 Revenue Recognition (Narrative) (Details) HTML 26K
49: R39 ACQUISITIONS AND DIVESTITURES - Narrative HTML 72K
(Details)
50: R40 ACQUISITIONS AND DIVESTITURES - Sources of HTML 31K
Preliminary Purchase Consideration (Details)
51: R41 ACQUISITIONS AND DIVESTITURES - Amounts Recorded HTML 56K
Based on Preliminary Estimates of Fair Value
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Notes Payable (Details)
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(Exact name of Registrant as specified in its charter)
iDelaware
i01-0609375
(State
or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
i2905 Premiere Parkway NW,
iSuite
300
iDuluth, iGeorgia
i30097
(Address
of principal executive offices)
(Zip Code)
(i770) i418-8200
(Registrant's telephone number, including area code)
Securities
registered pursuant to Section 12(b) of the Act:
Trading
Title of each class
Symbol(s)
Name of each exchange on which registered
iCommon
stock, $0.01 par value per share
iABG
iNew York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. iYesx No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). iYesx No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer,""accelerated filer,""smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act:
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes i☐ No x
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: The number of shares of common stock outstanding as of April 24, 2024 was i20,172,237.
Preferred stock, $ii.01/
par value; ii10,000,000/ shares authorized; iiiinone///
issued
or outstanding
i—
i—
Common
stock, $ii.01/ par value; ii90,000,000/
shares authorized; i42,236,056 and i42,352,001 shares issued, including shares held in treasury, respectively
i0.4
i0.4
Additional
paid-in capital
i1,296.1
i1,288.4
Retained
earnings
i3,061.5
i2,961.5
Treasury
stock, at cost; i22,063,936 and i22,018,537 shares, respectively
(i1,077.5)
(i1,067.3)
Accumulated
other comprehensive income
i66.4
i61.1
Total
shareholders' equity
i3,346.9
i3,244.1
Total liabilities and shareholders'
equity
$
i10,131.5
$
i10,159.4
See
accompanying Notes to Condensed Consolidated Financial Statements
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1.
iDESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Asbury Automotive Group, Inc., a Delaware corporation organized in 2002, is one of the largest automotive retailers in the United States. Our store operations are conducted by our subsidiaries.
As of March 31,
2024, we owned and operated i206 new vehicle franchises (i157 dealership locations), representing i31
brands of automobiles, and i37 collision centers in i15 states. For the three months ended March 31, 2024, our new vehicle revenue brand mix consisted of i29%
luxury, i41% imports and i30% domestic brands. 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 (collectively referred to as "parts and services" or "P&S"); and finance and insurance ("F&I") products, including arranging
vehicle financing through third parties and aftermarket products, such as extended service contracts, guaranteed asset protection ("GAP") debt cancellation and prepaid maintenance. The finance and insurance products are provided by independent third parties and Total Care Auto, Powered by Landcar ("TCA"). The Company reflects its operations in itwo reportable segments: Dealerships and TCA.
On
December 11, 2023, the Company completed the acquisition of substantially all of the assets, including all real property and businesses of the Jim Koons Dealerships ("Koons") pursuant to a Purchase and Sale Agreement with various entities that comprise the Jim Koons automotive dealerships group (the "Koons acquisition") for an aggregate purchase price of approximately $i1.50 billion, which includes $i256.1 million
of new vehicle floor plan financing and $i100.9 million of assets held for sale related to Koons Lexus of Wilmington. The acquisition was funded with borrowings under Asbury’s existing credit facility and cash on hand. The Koons acquisition comprised i20
new vehicle dealerships and isix collision centers.
i
Basis of Presentation
The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally
accepted in the United States of America ("GAAP"), and reflect the consolidated accounts of Asbury Automotive Group, Inc. (the "Company") and our wholly owned subsidiaries. All intercompany transactions have been eliminated in consolidation. If necessary, reclassifications of amounts previously reported have been made to the accompanying condensed consolidated financial statements in order to conform to current presentation.
In the opinion of management, all adjustments, consisting only of normal, recurring adjustments, considered necessary for a fair statement of the condensed consolidated financial statements as of March 31, 2024, and for the three months ended March 31, 2024 and 2023,
have been included, unless otherwise indicated. Amounts presented in the condensed consolidated financial statements have been calculated using non-rounded amounts for all periods presented and therefore certain amounts may not compute.
The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for any other interim period, or any full year period. Our condensed consolidated financial statements should be read together with our audited consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2023.
i
Use
of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the periods presented. Actual results could differ materially from these estimates. Estimates and assumptions are reviewed quarterly and the effects of any revisions are reflected in the consolidated financial statements in the period they are determined to be necessary. Estimates made in the accompanying condensed consolidated financial statements include, but are not limited to, those relating to inventory valuation reserves, reserves for chargebacks against revenue recognized from the sale of F&I products, reserves for self-insurance programs, and certain assumptions related to goodwill
and dealership franchise rights intangible assets.
i
Share Repurchases
Share repurchases may be made from time-to-time in open market transactions or through privately negotiated transactions under the authorization approved by the Board of Directors. Periodically, the Company may retire repurchased shares of common stock previously held by the Company as treasury stock. In accordance with
our accounting policy, we allocate any
excess share repurchase price over par value between additional paid-in capital, which is limited to amounts initially recorded for the same issue, and retained earnings.
During the three months ended March 31, 2024 and 2023, the
Company repurchased i239,790 and i110,323 shares and retired i239,790
and i164,527, shares, of our common stock under our share repurchase program, respectively. The cash paid for these share repurchases was $i50.0 million and $i20.7 million
for the three months ended March 31, 2024 and 2023, respectively.
On May 26, 2023, we announced that our Board of Directors approved a new authorization to repurchase up to $i250 million of the Company's common stock (the "New Share Repurchase Authorization"), which replaces our previous share repurchase
authorization. As of March 31, 2024, the Company had $i152.6 million remaining on its share repurchase authorization.
i
Earnings
per Share
Basic earnings per share is computed by dividing net income by the weighted-average common shares outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted-average common shares and common share equivalents outstanding during the period. The Company excluded i2,877 and i4,005
restricted share units and i14 and i476 performance share units issued under the Asbury Automotive Group, Inc. 2019 Equity and
Incentive Compensation Plan from its computation of diluted earnings per share for the three months ended March 31, 2024 and 2023, respectively, because they were anti-dilutive. For all periods presented, there were no adjustments to the numerator necessary to compute diluted earnings per share.
/i
Recent Accounting Pronouncements
The
Financial Accounting Standards Board ("FASB") issued final guidance in ASU 2023-09, Improvements to Income Tax Disclosures, in December 2023 which primarily expands the disclosures related to the effective tax rate reconciliation and income taxes paid. The guidance is effective for annual periods beginning after December 15, 2024 and should be applied prospectively with the option of retrospective application. We are evaluating the impact of this new guidance on our consolidated financial statements.
In November 2023, the FASB issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting: Improvements to Reportable Segment Disclosures ("ASU 2023-07"), which enhances the disclosures primarily around segment expenses. In addition, the amendments expand
the scope of quarterly financial reporting by requiring disclosure of both existing annual segment reporting disclosures and the expanded disclosures outlined in ASU 2023-07. The guidance should be applied retrospectively and is effective for fiscal years beginning after December 15, 2023, and for interim periods beginning after December 15, 2024. We are evaluating the impact of this new guidance on our consolidated financial statements.
2. iREVENUE
RECOGNITION
Disaggregation of Revenue
i
Revenue from contracts with customers for the three months ended March 31, 2024 and 2023 consists of the following:
iChanges in contract assets during the period are reflected in the table below. Contract
assets related to vehicle repair and maintenance services are transferred to receivables when a repair order is completed and invoiced to the customer. Certain incremental sales commissions payable to obtain an F&I revenue contract with a customer have been capitalized and are amortized using the same pattern of recognition applicable to the associated F&I revenue contract.
The condensed consolidated balance sheets reflect $i747.2 million and $i736.7 million of deferred revenue as of March 31, 2024 and December 31,
2023, respectively. Approximately $i66.7 million of deferred revenue at December 31, 2023 was recorded in finance and insurance, net revenue in the condensed consolidated statements of income during the three months ended March 31, 2024.
3. iACQUISITIONS
AND DIVESTITURES
Koons Acquisition
On December 11, 2023, we completed the acquisition of the Jim Koons Dealerships. The results of the Jim Koons Dealerships have been included in our consolidated financial statements since that date. The Koons acquisition diversifies Asbury's geographic mix, with expansion in the greater Washington-Baltimore region of the United States.
As a result of the Koons acquisition, we acquired i20 new vehicle
dealerships, isix collision centers and the real property related thereto, for a total purchase price of approximately $i1.50 billion, which includes $i256.1
million of new vehicle floor plan financing and $i100.9 million of assets held for sale related to Koons Lexus of Wilmington. The preliminary purchase price was paid in cash.
i
The sources of the preliminary
purchase consideration are as follows:
Under the acquisition method of accounting, the tangible and intangible assets acquired and liabilities assumed are recorded at their estimated fair value based on information currently available. iThe following table summarizes the amounts recorded based on preliminary estimates of fair value:
Summary
of Assets Acquired and Liabilities Assumed
(In millions)
Assets
Inventories, net
$
i309.0
Other current
assets
i10.3
Assets held for sale
i100.9
Total
current assets
i420.2
Property and equipment, net
i418.3
Goodwill
i238.5
Intangible
franchise rights
i430.3
Operating lease right-of-use assets
i11.2
Total
assets acquired
$
i1,518.5
Liabilities
Operating lease liabilities
$
i11.2
Other
liabilities
i7.2
Total liabilities assumed
i18.4
Net
assets acquired
$
i1,500.0
The preliminary acquisition accounting is based upon the Company’s estimates of fair value. The estimated fair values of the assets acquired and liabilities assumed and the related preliminary acquisition
accounting are based on management’s estimates and assumptions, as well as other information compiled by management, including the books and records of Koons. Our estimates and assumptions are subject to change during the measurement period, not to exceed one year from the acquisition date. The areas of acquisition accounting that are not yet finalized primarily relate to the following significant items: (i) finalizing the review and valuation of inventory, land, land improvements, buildings and non-real property and equipment (including the models, key assumptions, estimates and inputs used) and assignment of remaining useful lives associated with the depreciable assets, and (ii) finalizing the review and valuation of manufacturer franchise rights (including key assumptions, inputs and estimates). As the initial acquisition accounting is based on our preliminary assessments, actual values may differ (possibly materially) when final information becomes available that
differs from our current estimates. Additionally, the total consideration transferred is subject to certain post-close adjustments. We believe that the information gathered to date provides a reasonable basis for estimating the preliminary fair values of assets acquired and liabilities assumed. We will continue to evaluate these items until they are satisfactorily resolved and adjust our acquisition accounting accordingly, within the allowable measurement period. Measurement period adjustments recorded during the three months ended March 31, 2024 and their related effects on our consolidated statement of income were not material.
Approximately $i430.3 million
of the purchase price was assigned to the indefinite lived franchise rights intangible assets related to the dealer agreements applicable to each new vehicle dealership. In addition, goodwill of $i238.5 million was recognized and is primarily attributable to the anticipated synergies that Asbury expects to derive from the Koons acquisition as well as the acquired assembled workforce of the Koons dealerships.
The Company's consolidated statement of income for the three months ended March
31, 2024 included revenue and net income attributable to the Jim Koons Dealerships of $i681.4 million and $i26.5 million, respectively.
Other
Acquisitions and Divestitures
There were iino/ acquisitions during the three
months ended March 31, 2024 and 2023.
During the three months ended March 31, 2024, we sold ione franchise (ione
dealership location) in Wilmington, Delaware. The carrying value of assets, net of liabilities sold, approximated the sales price. There were ino divestitures during the three months ended March 31, 2023.
(a)
Inventories, net as of March 31, 2024 and December 31, 2023, excluded $i83.3 million and $i84.5 million classified as assets held for sale, respectively.
/
The
lower of cost and net realizable value reserves reduced total inventories by $i8.7 million and $i8.8 million as of March 31, 2024 and December 31, 2023, respectively.
As of March 31, 2024 and December 31, 2023, certain automobile manufacturer incentives reduced new vehicle inventory cost by $i9.0 million and $i8.3
million, respectively, and reduced new vehicle cost of sales for the three months ended March 31, 2024 and 2023 by $i26.3 million and $i22.3
million, respectively.
Assets and liabilities classified as held for sale include (i) assets and liabilities associated with pending dealership disposals, (ii) real estate not currently used in our operations that we are actively marketing to sell and (iii) the related mortgage notes payable, if applicable.
i
A
summary of assets held for sale and liabilities associated with assets held for sale is as follows:
Total
liabilities associated with assets held for sale
i2.1
i2.1
Net
assets held for sale
$
i240.7
$
i340.1
/
As
of March 31, 2024, assets held for sale consisted of i10 franchise (i10 dealership locations) in addition to ione
real estate property not currently used in our operations.
As of December 31, 2023, assets held for sale consisted of i11 franchise (i11 dealership locations) in addition to ione
real estate property not currently used in our operations.
7. iINVESTMENTS
Our investment portfolio is primarily funded by product premiums from the sale of our TCA F&I products. iThe
amortized cost, gross unrealized gains and losses and estimated fair values of debt securities available-for-sale are as follows:
As
of March 31, 2024 and December 31, 2023, the Company had $i2.4 million and $i2.5 million of accrued interest
receivable, respectively, which is included in other current assets on the condensed consolidated balance sheets. The Company does not consider accrued interest receivable in the carrying amount of financial assets held at amortized cost basis or in the allowance for credit losses.
i
A summary of amortized costs and fair value of investments by time to maturity, is as follows:
There
were ino gross losses and $i0.2 million gross gains realized related to the sale of available-for-sale debt securities carried at fair value for the three months ended March 31,
2024.
There were ino gross losses and $i0.1 million gross gains realized related to the sale of available-for-sale debt securities carried
at fair value for the three months ended March 31, 2023.
i
The following tables summarize the amount of unrealized losses, defined as the amount by which the amortized cost exceeds fair value, and the related fair value of investments with unrealized losses. The investments were segregated into two categories: those that have been in a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position for 12 or more months. The reference point for determining
how long an investment was in an unrealized loss position was March 31, 2024.
The
Company reviews the investment securities portfolio at the security level on a quarterly basis for potential credit losses, which takes into consideration numerous factors including changes in credit ratings. The decline in fair value identified in the tables above are a result of widening market spreads and not a result of credit quality. Additionally, the Company has determined it has both the intent and ability to hold these investments until the market price recovers or until maturity and does not believe it will be required to sell the securities before maturity. Accordingly, ino
credit losses were recognized on these securities during the three months ended March 31, 2024.
8. iFLOOR PLAN NOTES PAYABLE
i
Floor plan notes
payable consisted of the following:
We
have floor plan offset accounts that allow us to offset our floor plan notes payable balances outstanding with transfers of cash to reduce the amount of outstanding floor plan notes payable that would otherwise accrue interest, while retaining the ability to transfer amounts from the offset account into our operating cash accounts within the same day.
We have the ability to convert a portion of our availability under the Revolving Credit Facility to the New Vehicle Floor
Plan Facility or the Used Vehicle Floor Plan Facility. The maximum amount we are allowed to convert is determined based on our aggregate revolving commitment under the Revolving Credit Facility, less $i50.0 million. In addition, we are able to convert any amounts moved to the New Vehicle Floor Plan Facility or Used Vehicle Floor Plan Facility back to the Revolving Credit Facility.
In addition to our new and used vehicle floor plan facilities, we
have loaner vehicle floor plan facilities with Bank of America and certain original equipment manufacturers (“OEMs”). Loaner vehicles notes payable related to Bank of America as of March 31, 2024 and December 31, 2023 were $i128.1 million and $i127.2 million,
respectively. Loaner vehicles notes payable related to OEMs as of March 31, 2024 and December 31, 2023 were $i99.9 million and $i111.9 million, respectively.
Mortgage notes payable bearing interest at
fixed rates
i31.4
i31.9
2021 Real Estate Facility
i605.8
i614.4
2021
BofA Real Estate Facility
i164.1
i165.9
2018 Bank of America Facility
i49.2
i50.3
2018
Wells Fargo Master Loan Facility
i70.7
i72.0
2015
Wells Fargo Master Loan Facility
i35.9
i37.2
2023 Syndicated Revolving Credit Facility
i—
i—
Finance
lease liability
i8.4
i8.4
Total debt outstanding
i3,215.4
i3,230.1
Add—unamortized
premium on i4.50% Senior Notes due 2028
i0.6
i0.6
Add—unamortized
premium on i4.75% Senior Notes due 2030
i1.3
i1.3
Less—debt
issuance costs
(i24.7)
(i25.9)
Long-term debt, including current portion
i3,192.6
i3,206.2
Less—current
portion, net of current portion of debt issuance costs
(i84.4)
(i84.9)
Long-term
debt
$
i3,108.1
$
i3,121.2
/
10.
iFINANCIAL INSTRUMENTS AND FAIR VALUE
In determining fair value, we use various valuation approaches, including market and income approaches. Accounting standards establish a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are inputs that reflect our assumptions about
the presumptions market participants would use in pricing the asset or liability, developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the reliability of inputs as follows:
Level 1-Valuations based on quoted prices in active markets for identical assets or liabilities that we have the ability to access.
Level 2-Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. Assets and liabilities utilizing Level 2 inputs include interest rate swap instruments, exchange-traded debt securities that are not actively traded or do not have a high trading volume, mortgage notes payable and certain real estate properties on a non-recurring basis.
Level 3-Valuations based on inputs that are unobservable and significant to the overall fair value measurement. Asset and liability measurements utilizing Level 3 inputs include those used in estimating the fair value of certain non-financial assets and non-financial liabilities in purchase acquisitions and those used in the assessment of impairment for goodwill and manufacturer franchise rights.
The availability of observable inputs can vary and is affected by a wide variety of factors. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree
of judgment required to determine fair value is greatest for instruments categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed is determined based on the lowest level input that is significant to the fair value measurement.
Fair value is a market-based exit price measure considered from the perspective of a market participant who holds the asset or owes the liability rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, our assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date. We use inputs that are current as of the measurement date, including during periods of significant market fluctuations.
Financial
instruments consist primarily of cash and cash equivalents, investments, contracts-in-transit, accounts receivable, cash surrender value of corporate-owned life insurance policies, accounts payable, floor plan notes payable, subordinated long-term debt, mortgage notes payable and interest rate swap instruments. The carrying values of our financial instruments, with the exception of subordinated long-term debt, approximate fair value due to (i) their short-term nature, (ii) recently completed market transactions or (iii) existence of variable interest rates, which approximate market rates. The fair value of our subordinated long-term debt is based on reported market prices in an inactive market that reflect Level 2 inputs.
i
A
summary of the carrying values and fair values of our subordinated long-term debt is as follows:
We currently have isix interest rate swap agreements. These swaps are designed to provide a hedge against changes in variable rate cash flows regarding fluctuations in the SOFR rate. iThe
following table provides information on the attributes of each swap as of March 31, 2024:
The fair value of cash flow swaps is calculated as the present value of expected future cash flows, determined on the basis of forward interest rates and present value factors. Fair value estimates reflect a credit adjustment to the discount rate applied to all expected cash flows under the swaps. Other than this input, all other inputs used in the valuation of these swaps are designated to be Level 2 inputs. The fair value of our swaps was an $i89.8 million and $i79.8
million asset as of March 31, 2024 and December 31, 2023, respectively.
i
The following table provides information regarding the fair value of our interest rate swap agreements and the impact on the condensed consolidated balance sheets:
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 accumulated other comprehensive income and reclassified to interest expense in the same period or periods during which the hedged transactions affect earnings. iInformation about the effect of our interest rate swap agreements in 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
2024
$
i19.1
Other
interest expense, net
$
(i9.2)
2023
$
(i27.0)
Other
interest expense, net
$
(i7.7)
On the basis of yield curve conditions as of March 31, 2024 and including assumptions about future changes in fair value, we expect the amount to be reclassified out of accumulated other comprehensive income into earnings within the next 12 months will be gains
of $i28.8 million.
The table below presents the Company’s investment securities that are measured at fair value on a recurring basis aggregated by the level in the fair value hierarchy within which those measurements fall:
We
review the fair value hierarchy classifications each reporting period. Changes in the observability of the valuation attributes may result in a reclassification of certain investments. Such reclassifications are reported as transfers in and out of Level 3, or between other levels, at the beginning fair value for the reporting period in which the changes occur.
Available-for-sale debt securities are recorded at fair value andany unrealized gains or losses are included in accumulated other comprehensive income and reclassified to finance and insurance, net revenue in the period or periods during which the debt securities are sold and the gains or losses are realized. iInformation
about the effect of our available-for-sale debt securities in 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
2024
$
(i2.7)
Revenue-Finance
and insurance, net
$
i0.1
2023
$
i2.6
Revenue-Finance
and insurance, net
$
i0.1
11. iSUPPLEMENTAL
CASH FLOW INFORMATION
During the three months ended March 31, 2024 and 2023, we made interest payments, including amounts capitalized, totaling $i57.7 million and $i28.4
million, respectively.
During the three months ended March 31, 2024, we did inot make any income tax payments and received refunds payments of $i1.0 million. During the three
months ended March 31, 2023, we did iinot/ make or receive any income tax refunds payments or refunds.
During
the three months ended March 31, 2024 and 2023, we transferred $i124.0 million and $i90.4
million, respectively, of loaner vehicles from other current assets to inventories on our condensed consolidated balance sheets.
As of March 31, 2024, the Company had itwo reportable segments: (1) Dealerships and (2) TCA. Our dealership operations are organized by management into geographic market-based groups within the Dealerships segment. The operations of our F&I product provider are reflected within our TCA segment. Our Chief Operating Decision Maker is our Chief Executive Officer who manages the business, regularly reviews financial
information and allocates resources at the geographic market level for our dealerships and at the TCA segment level for our F&I product provider's operations. The geographic dealership group operating segments have been aggregated into one reportable segment as their operations (i) have similar economic characteristics (our markets all have similar long-term average gross margins), (ii) offer similar products and services (all of our markets offer new and used vehicles, parts and service, and finance and insurance products), (iii) have similar customers, (iv) have similar distribution and marketing practices (all of our markets distribute products and services through dealership facilities that market to customers in similar ways), and (v) operate under similar regulatory environments.
TCA's vehicle protection products are sold through affiliated dealerships and the revenue from the related commissions is included in finance
and insurance, net revenue in the Dealerships segment before consolidation. The corresponding claims expense incurred and the amortization of deferred acquisition costs is recorded as a cost of sales in the TCA segment. The Dealerships segment also provides vehicle repair and maintenance services to TCA customers in connection with claims related to TCA's vehicle protection products. Upon consolidation, the associated service revenue and costs recorded by the Dealerships segment are eliminated against claims expense recorded by the TCA segment.
i
Reportable segment financial information for
the three months ended March 31, 2024 and 2023, are as follows:
On August 3, 2022, we received a Civil Investigative Demand (“CID”) from the FTC requesting information and documents concerning the Company’s corporate structure and operation of six of its dealerships. We responded to the CID by producing information and documents for the period August 1, 2019 to April 24, 2023.
On February 8, 2024, the FTC staff counsel sent to us a proposed consent order and draft complaint, alleging that the Company and ithree of our dealerships had violated Section 5 of the Federal Trade Commission Act (“FTC Act”) and certain provisions of the Equal Credit Opportunity Act (“ECOA”) in connection with the sale of add-on products (e.g., vehicle service contracts,
maintenance plans, etc.), and advising that it would recommend the filing of an enforcement action if the Company did not settle the FTC’s claims. The
Company disputes the FTC’s allegations that it violated the FTC Act and the ECOA, and is currently involved in discussions with the FTC staff regarding the matter. There can be no assurance that negotiations between us and the FTC for a
favorable settlement will be successful, or that we will succeed in any litigation as a result of the investigation. At this time, we are unable to reasonably predict the possible outcome of this matter, or provide a reasonably possible range of loss, if any, as a result of the investigation. If the FTC files a suit against us based on these allegations, whether meritorious or not, it may adversely affect our ability to attract customers, result in the loss of existing customers, harm our reputation and cause us to incur defense costs and other expenses.
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 for which we might not have planned 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. 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 $i14.0 million of letters of credit outstanding as of March 31, 2024, which are required by certain of our insurance providers. In addition, as of March 31, 2024, we maintained a $i21.5
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.
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 seasonally adjusted annual rate of new vehicle sales in the United States;
•general economic conditions and its expected impact on our revenue and expenses;
•our expected parts and service revenue due to, among other things, improvements in vehicle technology;
•our ability to limit our exposure to regional economic downturns due to our geographic diversity and brand mix;
•manufacturers' continued use of incentive programs to drive demand for their product offerings;
•our capital allocation
strategy, including as it relates to acquisitions and divestitures, stock repurchases, dividends and capital expenditures;
•our revenue growth strategy;
•the growth of the brands that comprise our portfolio over the long-term;
•disruptions in the production and supply of vehicles and parts from our vehicle and parts manufacturers and other suppliers, which can disrupt our operations; and
•our estimated future capital expenditures, which can be impacted by increasing prices and labor shortages and acquisitions and divestitures.
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 ability to acquire and successfully integrate acquired businesses into our existing operations and realize expected benefits and synergies from such acquisitions;
•the effects of increased expenses or unanticipated liabilities incurred as a result of, or due to activities related to our acquisitions or divestitures;
•changes in general economic and business conditions, including the current inflationary environment, the current interest rate environment, changes in employment levels, consumer confidence levels, consumer demand and preferences, the availability
and cost of credit, fuel prices and levels of discretionary personal income;
•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 supply shortages, natural disasters, severe weather, civil unrest, product recalls, work stoppages or other occurrences that are outside of our control;
•our ability to successfully attract and retain skilled employees;
•our ability to successfully operate,
including our ability to maintain, and obtain future necessary regulatory approvals, for Total Care Auto, Powered by Landcar ("TCA"), our finance and insurance ("F&I ") product provider;
•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, or those of our third-party service providers, management
information systems;
•any data security breaches occurring, including with regard to personally identifiable information ("PII");
•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, regulatory investigations or other similar proceedings involving us, including costs, expenses, settlements and judgments related thereto;
•our ability to consummate
planned or pending mergers, acquisitions and 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;
•our ability to execute our initiatives and other strategies; and
•our ability to leverage scale and cost structure to improve operating efficiencies across our dealership portfolio.
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" 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 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, 2024, through our Dealerships segment, we owned and operated 206 new vehicle franchises (157 dealership locations), representing 31 brands of automobiles, and 37 collision centers within 15 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. The finance and insurance products are provided by both independent third parties and TCA. The F&I products offered by TCA are sold through affiliated dealerships. For the three months ended March 31, 2024, our new vehicle revenue brand mix consisted of 29% luxury, 41% imports and 30% domestic brands. The Company manages its operations in two reportable segments: Dealerships and TCA. Amounts presented have been calculated using non-rounded amounts for all periods presented and therefore certain amounts may not compute.
Our Dealerships segment 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. 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 TCA segment revenues, reflected in F&I revenue, net, are derived from the sale of various vehicle protection products including vehicle service contracts, GAP, prepaid
maintenance contracts, and appearance protection contracts. These products are sold through company-owned dealerships. TCA's F&I revenues also include investment gains or losses and income earned associated with the performance of TCA's investment portfolio.
Our TCA segment gross profit margin can vary due to incurred claims expense and the performance of our investment portfolio. Certain F&I products may result in higher gross profit margins to TCA. Therefore, the product mix of F&I products sold by TCA can affect the gross profits earned. In addition, interest rate volatility, based on economic and market conditions outside the control of the Company,
may increase or reduce TCA segment gross profit margins as well as the fair market values of certain securities within our investment portfolio. Fair market values typically fluctuate inversely to the fluctuations in interest rates.
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 basis, and all other SG&A expenses in the aggregate as a percentage of total gross profit.
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.
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. Certain manufacturers continue to be hampered by the lack of availability of parts and key components from suppliers which has impacted new vehicle inventory levels and availability of certain parts. We cannot predict with any certainty how long the automotive retail industry will continue to be subject to these production slowdowns or when normalized production will resume at these manufacturers.
Jim Koons Acquisition
On December 11, 2023, the Company completed the acquisition of substantially all of the assets, including all real property and businesses of the Jim Koons Dealerships ("Koons")
pursuant to a Purchase and Sale Agreement with various entities that comprise the Jim Koons automotive dealerships group (the "Koons acquisition") for an aggregate purchase price of approximately $1.50 billion, which includes $256.1 million of new vehicle floor plan financing and $100.9 million of assets held for sale related to Koons Lexus of Wilmington. The acquisition was funded with borrowings under Asbury’s existing credit facility and cash on hand. The Koons acquisition comprised 20 new vehicle dealerships and six collision centers.
Financial Highlights
Highlights related to our financial condition and results of operations include the following:
•Consolidated revenue for the three months ended March 31, 2024 was $4.20 billion, compared to $3.58 billion
for the prior year.
•Consolidated gross profit for the three months ended March 31, 2024 was $750.0 million, compared to $696.2 million for the prior year.
•The increase in consolidated revenue and gross profit is primarily due to the effects of the Koons acquisition. Refer to Note 3, "Acquisitions and Divestitures" for further details.
•Our capital allocation priorities were supported by the repurchase of 239,790 shares for $50.0 million during the three months ended March 31, 2024.
The Company's operating results for the three months ended March 31, 2024 include the results of the Koons dealerships acquired in the fourth quarter of 2023. Accordingly, the increases in revenue, gross profit and income from operations for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 are largely a result of this acquisition.
We
assess the organic growth of our revenue and gross profit on a same store basis. We believe that our assessment on a same store basis represents an important indicator of comparative financial performance and provides relevant information to assess our performance. As such, for the following discussion, same store amounts consist of information from dealerships for identical months in each comparative period, commencing with the first full month we owned the dealership. Additionally, amounts related to divested dealerships are excluded from each comparative period.
Total revenue for the three months ended March 31, 2024 increased by $618.9 million (17%) compared to the three months ended March 31, 2023, due to a $296.6 million (17%) increase in new vehicle revenue, a $230.4 million (20%)
increase in used vehicle revenue, a $74.8 million (15%) increase in parts and service revenue and a $17.2 million (10%) increase in F&I, net revenue. The $53.8 million (8%) increase in gross profit during the three months ended March 31, 2024 was driven by a $52.0 million (18%) increase in parts and service gross profit and a $22.9 million (14%) increase in F&I, net gross profit, partially offset by a $16.0 million (9%) decrease in new vehicle gross profit and a $5.1 million (7%) decrease in used vehicle gross profit.
Income from operations during the three months ended March 31, 2024 decreased by $13.7 million (5%), compared to the three months ended March 31, 2023, primarily due to a $65.6 million (16%) increase in SG&A expense and a $1.9 million (12%) increase
in depreciation and amortization expense, partially offset by a $53.8 million (8%) increase in gross profit.
Total other expenses, net increased by $28.9 million (76%), primarily as a result of a $22.2 million increase in floor plan interest expense and an increase of $6.7 million (18%) in other interest expense, net recorded during the three months ended March 31, 2024 when compared to the same period of the prior year. Income before income taxes decreased $42.7 million (18%) to $195.8 million for the three months ended March 31, 2024. Overall, net income decreased by $34.3 million (19%) during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.
For the three months ended March 31, 2024, new vehicle revenue increased by $296.6 million (17%) as a result of an 18% increase in new vehicle units sold, partially offset by a 1% decrease in revenue per new vehicle sold. Same store new vehicle revenue decreased by $11.0 million (1%) as the result of an 1% decrease in revenue per new vehicle sold. New vehicle unit sales on a same store basis remained flat during the three months ended March 31, 2024, as compared to
the same period of the prior year.
For the three months ended March 31, 2024, new vehicle gross profit and same store new vehicle gross profit decreased by $16.0 million (9%) and $40.9 million (23%), respectively. Same store new vehicle gross margin for the three months ended March 31, 2024 decreased 227 basis points to 7.8% driven by the slight easing of new vehicle inventory constraints which softened the historically high new vehicle margins seen in recent years.
The seasonally adjusted annual rate ("SAAR") for new vehicle sales in the U.S. during the three months ended March 31, 2024 was approximately 15.4 million which increased as compared to approximately 15.2 million during the three months ended March 31,
2023. The increase in SAAR period over period reflects higher inventory supply coupled with continued consumer demand for new vehicles. However, we continue to be impacted by the significant variation in new vehicle days supply among brands and models.
(Dollars in millions, except for per vehicle data)
As Reported:
Revenue:
Used
vehicle retail revenue
$
1,191.4
$
1,021.6
$
169.7
17
%
Used vehicle wholesale revenue
165.5
104.9
60.6
58
%
Used
vehicle revenue
$
1,356.9
$
1,126.5
$
230.4
20
%
Gross profit:
Used vehicle retail gross profit
$
65.0
$
70.6
$
(5.7)
(8)
%
Used
vehicle wholesale gross profit
6.9
6.4
0.6
9
%
Used vehicle gross profit
$
71.9
$
77.0
$
(5.1)
(7)
%
Used
vehicle retail units:
Used vehicle retail units
39,489
32,989
6,500
20
%
Same
Store:
Revenue:
Used vehicle retail revenue
$
965.3
$
1,009.7
$
(44.4)
(4)
%
Used
vehicle wholesale revenue
129.2
104.3
24.9
24
%
Used vehicle revenue
$
1,094.5
$
1,114.0
$
(19.5)
(2)
%
Gross
profit:
Used vehicle retail gross profit
$
52.5
$
70.0
$
(17.5)
(25)
%
Used vehicle wholesale gross profit
4.3
6.5
(2.1)
(33)
%
Used
vehicle gross profit
$
56.8
$
76.4
$
(19.6)
(26)
%
Used vehicle retail units:
Used vehicle retail units
31,875
32,466
(591)
(2)
%
Used Vehicle
Metrics—
For the Three Months Ended March 31,
Increase (Decrease)
% Change
2024
2023
As
Reported:
Revenue per used vehicle retailed
$
30,169
$
30,969
$
(799)
(3)
%
Gross profit per used vehicle retailed
$
1,646
$
2,141
$
(496)
(23)
%
Used
vehicle retail gross margin
5.5
%
6.9
%
(1.5)
%
Same Store:
Revenue
per used vehicle retailed
$
30,285
$
31,101
$
(817)
(3)
%
Gross profit per used vehicle retailed
$
1,647
$
2,155
$
(508)
(24)
%
Used
vehicle retail gross margin
5.4
%
6.9
%
(1.5)
%
Used vehicle revenue increased by $230.4 million (20%) due to a $169.7 million (17%) increase in used vehicle retail revenue and a $60.6 million (58%) increase in used vehicle wholesale revenue. Same store used vehicle revenue decreased by $19.5 million (2%) due to a $44.4 million (4%) decrease in used vehicle retail revenue, partially offset by a $24.9 million (24%) increase in used vehicle wholesale revenue. Total used vehicle retail unit sales increased by 20% due
to the Koons acquisition while same store used vehicle retail unit sales decreased by 2% during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. Used vehicle revenue and unit volume have continued to contract as seen in the first quarter of 2024, along with margins on both an all store and same store basis. Used vehicle revenue and unit volumes have been negatively impacted by the lack of inventory availability, especially in vehicles with lower mileage. For the three months ended
March 31, 2024, total Company and same store used vehicle retail gross profit margins decreased by 146 basis points and 149 basis points, respectively, as compared to the three months ended March 31, 2023. Decreases in used vehicle gross margins, on both a total Company and same store basis, was largely driven by a tighter market for used vehicles during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.
For the three months ended March 31, 2024, used vehicle retail gross profit margins decreased from 6.9% to 5.5% and 6.9% to 5.4%, respectively, for all stores and on a same
store basis when compared to the same period of the prior year. Used vehicle retail gross profit decreased $5.7 million (8%) for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 and decreased $17.5 million (25%) on a same store basis for the same period. On a total company basis, our gross profit per used vehicle retailed decreased $496 (23%), and on a same store basis, our gross profit per used vehicle retailed decreased $508 (24%) when compared to the prior year period which was primarily driven by decreases in used vehicle market prices.
Parts and Service—
For
the Three Months Ended March 31,
Increase (Decrease)
% Change
2024
2023
(Dollars in millions)
As Reported:
Parts and service
revenue
$
590.4
$
515.6
$
74.8
15
%
Parts and service gross profit:
Customer pay
$
206.5
$
175.2
$
31.3
18
%
Warranty
43.8
36.0
7.8
22
%
Wholesale
parts
20.3
20.1
0.2
1
%
Parts and service gross profit, excluding reconditioning and preparation
$
270.7
$
231.3
$
39.4
17
%
Parts
and service gross margin, excluding reconditioning and preparation
45.8
%
44.9
%
1.0
%
Reconditioning and preparation *
$
63.5
$
50.8
$
12.7
25
%
Total
parts and service gross profit
$
334.1
$
282.1
$
52.0
18
%
Total parts and service gross margin
56.6
%
54.7
%
1.9
%
Same
Store:
Parts and service revenue
$
522.0
$
513.3
$
8.7
2
%
Parts and service gross profit:
Customer
pay
$
180.3
$
174.3
$
6.0
3
%
Warranty
39.5
36.0
3.5
10
%
Wholesale
parts
19.8
20.0
(0.2)
(1)
%
Parts and service gross profit, excluding reconditioning and preparation
$
239.6
$
230.3
$
9.4
4
%
Parts
and service gross margin, excluding reconditioning and preparation
45.9
%
44.9
%
1.0
%
Reconditioning and preparation *
$
57.1
$
50.6
$
6.5
13
%
Total
parts and service gross profit
$
296.8
$
280.9
$
15.9
6
%
Total parts and service gross margin
56.9
%
54.7
%
2.1
%
*
Reconditioning and preparation represents the gross profit earned by our parts and service departments for internal work performed is included as a reduction of Parts and Service Cost of Sales in the accompanying Condensed Consolidated Statements of Income upon the sale of the vehicle.
The $74.8 million (15%) increase in parts and service revenue was primarily due to a $53.2 million (16%) increase in customer pay revenue, a $14.6 million (22%) increase in warranty revenue and a $6.9 million (6%) increase in wholesale parts revenue. Same store parts and service revenue increased by $8.7 million (2%) from $513.3 million for the three months ended March 31, 2023 to $522.0 million for the three months ended March 31, 2024. The increase in same store parts and service revenue was due to a $5.7 million (2%)
increase in customer pay revenue, a $6.0 million (9%) increase in warranty revenue, partially offset by a $3.0 million (3%) decrease in wholesale parts revenue. The trend of increased aging of vehicles, which are at historically high levels, is leading to increased customer pay and warranty revenues. Consumers are owning a vehicle for longer
periods of time due to various factors, including the higher cost of vehicles, higher interest rates, as well as the vehicle inventory
constraints experienced in the automotive industry in recent years.
For the three months ended March 31, 2024, total parts and service gross profit increased by $52.0 million (18%) to $334.1 million, and same store total parts and service gross profit increased by $15.9 million (6%) to $296.8 million when compared to the same period of prior year. The all store increase is primarily due to the Koons acquisition and reconditioning and preparation, while the same store increase is primarily a result of reconditioning and preparation, and increased customer pay and warranty volume, which is in line with the increasing trend of aged vehicles.
Finance and Insurance, net—
For
the Three Months Ended March 31,
Increase (Decrease)
% Change
2024
2023
(Dollars in millions, except for per vehicle data)
As Reported:
Finance
and insurance, net revenue
$
189.7
$
172.5
$
17.2
10
%
Finance and insurance, net gross profit
$
181.1
$
158.2
$
22.9
14
%
Finance
and insurance, net per vehicle sold
$
2,259
$
2,344
$
(85)
(4)
%
Same Store:
Finance
and insurance, net revenue
$
155.5
$
172.1
$
(16.5)
(10)
%
Finance and insurance, net gross profit
$
146.9
$
157.8
$
(10.8)
(7)
%
Finance
and insurance, net per vehicle sold
$
2,218
$
2,360
$
(142)
(6)
%
F&I revenue, net increased $17.2 million (10%) during the three months ended March 31, 2024 when compared to the three months ended March 31, 2023, as a result of a 19% increase in new and used retail unit sales, partially offset by a 4% decrease in F&I per
vehicle retailed.
On a same store basis, F&I revenue, net decreased by $16.5 million (10%) during the three months ended March 31, 2024 when compared to the three months ended March 31, 2023, as a result of a 1% decrease in new and used retail unit sales and a 6% decrease in F&I per vehicle retailed. We are seeing slightly lower penetration rates in our F&I products as customers look for ways to manage lower monthly payments in a rising interest rate environment.
The financial results of the TCA segment, after dealership eliminations, are as follows:
For
the Three Months Ended March 31,
Increase (Decrease)
% Change
2024
2023
(Dollars in millions)
Finance and insurance, revenue
$
30.7
$
35.0
$
(4.3)
(12)
%
Finance
and insurance, cost of sales
$
8.6
$
14.3
$
(5.7)
(40)
%
Finance and insurance, gross profit
$
22.1
$
20.7
$
1.4
7
%
TCA
offers a variety of F&I products, such as extended vehicle service contracts, prepaid maintenance contracts, GAP, appearance protection contracts and lease wear-and-tear contracts. TCA's products are sold through our automobile dealerships.
Revenue generated by TCA is earned over the period of the related product contract. The method for recognizing revenue is assigned based on contract
type and expected claim patterns. Premium revenues are supplemented with investment gains or losses and income earned associated with the performance of TCA's investment portfolio. During the three months ended March 31, 2024, TCA generated $30.7 million of revenue, consisting primarily of earned premium and $4.2 million from the investment portfolio.
Direct expenses incurred for the acquisition of F&I contracts on which revenue has not yet been recognized have been deferred and are amortized over the related contract period. During the three months ended March 31, 2024, TCA recorded $8.6 million of cost of sales consisting primarily of claims
expense, after the elimination of claims paid to affiliated dealerships. Commissions expense paid by TCA to our affiliated dealerships and reflected as F&I revenue in our Dealerships segment is eliminated in the TCA segment upon consolidation.
As we continue to integrate TCA, we expect a rollout of TCA products to our remaining stores by the end of 2024. With the ownership of TCA, while the combined profitability of the transaction is higher, the timing of revenue and
cost recognition is deferred and amortized over the life of the contract. We expect that this rollout will result in lower F&I revenue and gross profit over the next two to three years due to the change in how these contracts are earned.
Selling, General, and Administrative Expense—
For
the Three Months Ended March 31,
Increase (Decrease)
% of Gross Profit Increase (Decrease)
2024
% of Gross Profit
2023
% of Gross Profit
(Dollars in millions)
As Reported:
Personnel
costs
$
311.3
41.5
%
$
278.8
40.0
%
$
32.6
1.5
%
Rent and related expenses
29.8
4.0
%
28.4
4.1
%
1.4
(0.1)
%
Advertising
16.4
2.2
%
9.7
1.4
%
6.7
0.8
%
Other
111.0
14.8
%
86.2
12.4
%
24.9
2.4
%
Selling,
general, and administrative expense
$
468.6
62.5
%
$
403.0
57.9
%
$
65.6
4.6
%
Gross profit
$
750.0
$
696.2
Same
Store:
Personnel costs
$
260.3
40.8
%
$
276.9
39.9
%
$
(16.5)
0.9
%
Rent
and related expenses
27.8
4.4
%
28.2
4.1
%
(0.4)
0.3
%
Advertising
11.9
1.9
%
9.5
1.4
%
2.4
0.5
%
Other
96.9
15.2
%
85.1
12.3
%
11.8
2.9
%
Selling,
general, and administrative expense
$
397.0
62.3
%
$
399.7
57.7
%
$
(2.7)
4.6
%
Gross profit
$
637.7
$
693.1
SG&A
expense as a percentage of gross profit increased 459 basis points from 57.9% for the three months ended March 31, 2023 to 62.5% for the three months ended March 31, 2024, while same store SG&A expense as a percentage of gross profit increased 459 basis points to 62.3% over the same period. The increase in SG&A as a percentage of gross profit on a total company basis during the three months ended March 31, 2024 is primarily the result of higher cost in personnel and other categories in SG&A expense partially offset by higher gross profits for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. The increase in SG&A as a percentage of gross profit on the same store basis
during the three months ended March 31, 2024 is primarily the result of lower gross profits for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. On a total company basis, SG&A expense increased by $65.6 million for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 primarily due to the Koons acquisition in December 2023.
Floor Plan Interest Expense—
Floor plan interest expense increased by $22.2 million to $22.8 million during the three months ended March 31, 2024 compared to
$0.6 million during the three months ended March 31, 2023 due to higher levels of new inventory and the lower floor plan offset account balances held during the three months ended March 31, 2024 as compared to three months ended March 31, 2023.
Income Tax Expense—
The $8.4 million (15%) decrease in income tax expense was primarily the result of a $42.7 million (18%) decrease in income before income taxes. For the three months ended March 31, 2024 and 2023, our effective income tax rate was 24.9% and 23.9%, respectively,
which differed from the U.S. statutory rate primarily due to the favorable effects of the windfall component of equity compensation, a discrete item, and unfavorable effects of various permanent tax adjustments such as executive compensation.We currently estimate our effective tax rate for the year ended December 31, 2024 at approximately 25.0%.
As of March 31, 2024, we had total available liquidity of $712.3 million, which consisted of cash and cash equivalents of $19.8 million (excluding $9.2 million held by TCA), available funds in our floor plan offset accounts of $205.2 million and $486.0 million of availability under our revolving credit facility and $1.4 million of availability under our used vehicle floor plan facility. The borrowing capacities under our revolving credit facility and our used vehicle floor plan facility are limited by borrowing base calculations and, from time-to-time, may be further limited by our required compliance with certain financial covenants. As of March 31, 2024, these financial covenants did not further limit our availability under our
other credit facilities.
We continually evaluate our liquidity and capital resources based upon (i) our cash and cash equivalents on hand, (ii) the funds that we expect to generate through future operations, (iii) current and expected borrowing availability under our 2023 Senior Credit Facility, (iv) amounts in our new vehicle floor plan notes payable offset accounts, and (v) the potential impact of our capital allocation strategy and any contemplated or pending future transactions, including, but not limited to, financings, acquisitions, dispositions, equity and/or debt repurchases, dividends, or other capital expenditures. We believe we will have sufficient liquidity to meet our debt service and working capital requirements; commitments and contingencies; debt repayment, maturity and repurchase obligations; acquisitions; capital expenditures; and any operating requirements for at least the next twelve months and the foreseeable
future.
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, 2024.
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.
During the three months ended March 31, 2024, we repurchased 239,790 shares of our common stock under our repurchase program for a total of $50.0 million. On May 26, 2023,
we announced that our Board of Directors authorized a new $250.0 million share repurchase authorization (the "New Share Repurchase Authorization"), which replaced our previous share repurchase authorization. As of March 31, 2024, we had $152.6 million remaining under our New Share Repurchase Authorization.
During the three months ended March 31, 2024, we repurchased 45,399 shares of our common stock for $9.8 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 through our 2023 Senior Credit Facility ("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 statement of cash flows. Cash flows related to floor plan notes payable included in operating activities differ from cash flows
related to floor plan notes payable included in financing activities only to the extent that the former are payable to a lender affiliated with the manufacturer from which we purchased the related inventory, while the latter are payable to our 2023 Senior Credit Facility that includes lenders affiliated with the manufacturers and lenders not affiliated with the manufacturers from which we purchased the related inventory. The majority of our floor plan notes are payable to our 2023 Senior Credit Facility, with the exception of floor plan notes payable relating to the financing of new Ford and Lincoln vehicles and certain loaner vehicle programs.
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 "Adjusted cash flow provided by operating activities" (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 flows than if all the cash flows of floor plan notes payable were classified together in operating activities.
Adjusted cash flow provided by operating activities includes borrowings and repayments of floor plan notes payable non-trade and used floor plan notes payable borrowing base changes. Adjusted cash flow provided by operating activities may not be comparable to similarly titled measures of other companies and should not be considered in isolation, or as a substitute for analysis of our operating
results in accordance with GAAP. In order to compensate for these potential limitations, we also review the related GAAP measures. We believe that the adjustments related to cash flows associated with our used vehicle borrowing base, floor plan offset accounts and the impact of acquisitions and divestitures eliminates cash flow volatility and provides an adjusted operating cash flow metric that best reflects our results of operations and our management of inventory and related financing activities.
We have provided below a reconciliation of cash flow provided by operating activities as if all changes in floor plan notes payable, except for (i) borrowings associated with acquisitions and repayments associated with divestitures and (ii) borrowings and repayments associated with the purchase of used vehicle inventory and (iii) changes in the floor plan offset accounts were classified as an operating activity for both floor plan
notes payable - non-trade and floor plan notes payable - trade.
Reconciliation
of cash provided by operating activities to cash provided by operating activities, as adjusted
Cash provided by operating activities, as reported
$
177.1
$
171.7
Change in Floor Plan Notes Payable—Non-Trade, net
(67.4)
1.4
Change in
Floor Plan Notes Payable—Non-Trade associated with floor plan offset, used vehicle borrowing base changes adjusted for acquisition and divestitures
124.0
70.7
Change in Floor Plan Notes Payable—Trade associated with floor plan offset, adjusted for acquisition and divestitures
(25.0)
0.1
Adjusted cash flow provided by operating activities
$
208.7
$
243.9
Operating
Activities—
Net cash provided by operating activities totaled $177.1 million and $171.7 million, for the three months ended March 31, 2024 and 2023, respectively. Adjusted cash flow provided by operating activities totaled $208.7 million and $243.9 million, for the three months ended March 31, 2024 and 2023, respectively. Adjusted cash flow provided by operating activities includes net income, adjustments to reconcile net income to net cash provided by operating activities, changes in working capital, changes in used vehicle borrowing base, changes in floor plan notes payable—non-trade and trade, excluding the impact of offsets, and excluding operating cash flows associated with acquisitions and divestitures related to loaner
vehicles and new vehicle inventories financed through floor plan notes payable—trade.
The $35.2 million decrease in adjusted cash flow provided by operating activities for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, was primarily the result of the following:
•decrease in $19.8 million net income and non-cash adjustments to net income;
•$89.9 million related to a decrease in accounts payable and accrued liabilities; and
•$13.1 million related to sales volume and the timing of collection of accounts receivable and contracts-in-transit
during 2024 as compared to 2023.
The decrease in our adjusted cash flow provided by operating activities was partially offset by:
•$49.1 million related to an increase in inventory, net of floor plan notes payable, including both trade and non-trade, excluding offset and including used vehicle borrowing base changes adjusted for acquisitions and divestitures;
•$34.1 million related to the increase in other current assets, net; and
•$5.3 million increase in other long term assets and liabilities, net.
Net cash used in investing activities totaled $13.6 million and $55.2 million for the three months ended March 31, 2024 and 2023, respectively. Capital expenditures, excluding the purchase of real estate, were $25.7 million and $15.2 million for the three months ended March 31, 2024 and 2023, respectively.
During the three months ended March 31, 2024, we acquired
real estate properties for $67.4 million and also purchased previously leased real estate properties for $11.9 million.
During the three months ended March 31, 2024, we sold one franchise (one dealership location) in Wilmington, Delaware for an aggregate purchase price of $102.0 million.
We purchased $20.1 million and $44.1 million of debt securities during the three months ended March 31, 2024 and 2023, respectively.
We received proceeds of $9.5 million and $3.5 million from the sale of debt securities during the three months ended March 31, 2024 and 2023, respectively. We also received
proceeds of $0.6 million from the sale of equity securities during the three months ended March 31, 2023.
We expect that capital expenditures during 2024 will total approximately $200.0 - $225.0 million to upgrade or replace our existing facilities, construct new facilities, expand our service capacity, and invest in technology and equipment. In addition, 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 used in financing activities totaled $180.2 million and
$55.0 million for the three months ended March 31, 2024 and 2023, respectively.
During the three months ended March 31, 2024 and 2023, we had non-trade floor plan borrowings, excluding floor plan borrowings associated with acquisitions, of $2.53 billion and $1.80 billion, respectively, and non-trade floor plan repayments, excluding floor plan repayments associated with divestitures, of $2.63 billion and $1.80 billion, respectively.
During the three months ended March 31, 2024, we had $6.9 million non-trade floor plan repayments associated with divestitures.
Repayments of borrowings totaled $14.7
million and $15.3 million for the three months ended March 31, 2024 and 2023, respectively.
There were $582.8 million borrowings and repayments under our Revolving Credit Facility during the three months ended March 31, 2024.
During the three months ended March 31, 2024, we repurchased 239,790 shares of our common stock under our Repurchase Program for a total of $50.0 million. In addition, we repurchased 45,399 shares of our common stock for $9.8 million from employees in connection with a net share settlement feature of employee equity-based awards. During the three months ended March 31, 2023, we repurchased 110,323 shares of our
common stock under our Repurchase Program for a total of $20.7 million and repurchased 45,613 shares of our common stock for $10.9 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 13 "Commitments and Contingencies" within the accompanying condensed consolidated financial statements.
Critical Accounting Policies and Estimates
For a description of our critical accounting policies and estimates, see our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. Our critical accounting policies and estimates have not changed materially
during the three months ended March 31, 2024.
As of March 31, 2024, the Company had outstanding $405.0 million of 4.500% Senior Notes due 2028 and $445.0 million of 4.750% Senior Notes due 2030. The Senior Notes have
been fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis, by each existing and future restricted subsidiary of the Company (the “Guarantor Subsidiaries”), with the exception of Landcar Administration Company, Landcar Agency, Inc. and Landcar Casualty Company and their respective subsidiaries (collectively, the “TCA Non-Guarantor Subsidiaries"). The 2028 Notes and the 2030 Notes were required to be registered under the Securities Act of 1933 within 270 days of the closing date for the offering of each respective series. The
Company completed the registration of the 2028 Notes and 2030 Notes in October 2020.
The following tables present summarized financial information for the Company and the Guarantor Subsidiaries on a combined basis after elimination of (i) intercompany transactions and balances among Asbury and the Guarantor Subsidiaries and (ii) assets, liabilities, and equity in earnings from and investments in any non-guarantor subsidiaries.
Summarized
Balance Sheet Data of Asbury and Guarantor Subsidiaries:
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk
We are exposed to risk from changes in interest rates on a portion of our outstanding indebtedness. Based on $1.70 billion of total variable interest rate debt outstanding as of March 31, 2024 which includes our floor plan notes payable, amounts drawn on our used vehicle floor plan, and certain mortgage liabilities, net of interest rate swaps, a 100 basis point change in interest rates could result in a change of as much as $17.0 million to our total annual interest expense in our condensed consolidated
statements of income.
We periodically receive floor plan assistance from certain automobile manufacturers, which is accounted for primarily as a reduction in our new vehicle inventory cost. Floor plan assistance reduced our cost of sales for the three months ended March 31, 2024 and 2023 by $23.0 million and $20.8 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.
We
currently have six interest rate swap agreements. Each of these swaps were designed to provide a hedge against changes in variable rate cash flows regarding fluctuations in the SOFR rate. The following table provides information on the attributes of each swap as of March 31, 2024:
Inception Date
Notional Principal at Inception
Notional
Value
Notional Principal at Maturity
Maturity Date
(In millions)
(In millions)
(In millions)
January 2022
$
300.0
$
270.0
$
228.8
December
2026
January 2022
$
250.0
$
250.0
$
250.0
December 2031
May 2021
$
184.4
$
164.1
$
110.6
May
2031
July 2020
$
93.5
$
74.9
$
50.6
December 2028
July 2020
$
85.5
$
66.7
$
57.3
November
2025
June 2015
$
100.0
$
57.5
$
53.1
February 2025
For additional information about the effect of our derivative instruments, see 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 our disclosure controls and procedures were effective as of March 31, 2024.
Changes in Internal Control Over Financial Reporting
During the quarter ended March
31, 2024, as part of our integration activities following the acquisition of the Jim Koons Dealerships (“Koons”) in December 2023, we are evaluating and have begun to implement changes related to Koons’ business process controls, IT general controls and IT infrastructure to more closely align with the standards of the Company’s controls environment. In accordance with our integration efforts, we plan to incorporate Koons’ operations into our internal control over financial reporting program within the time provided by the applicable rules and regulations of the U.S. Securities and Exchange Commission.
We also implemented a new cloud-based human resource information system during the quarter ended March 31, 2024. We implemented new or modified procedures
and controls where appropriate and will continue to evaluate the design and operating effectiveness of internal control over financial reporting in subsequent periods.
There were no other changes in our internal control over financial reporting during the quarter ended March 31, 2024 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
As of the date of this filing, there have been no additional material legal proceedings or material developments in the legal proceedings disclosed in Part 1, Item 3, of our Annual Report on Form 10-K for the year ended December 31, 2023. For more information, see Note 13 "Commitments and Contingencies" within the accompanying condensed consolidated financial statements..
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 year ended December 31, 2023. 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. There have been no material changes to such risk factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Share
repurchases are implemented through purchases made from time to time in either the open market or private transactions. The share repurchases could include purchases pursuant to a written trading plan in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, which allows companies to repurchase shares of stock at times when they might otherwise be prevented from doing so by securities laws or under self-imposed trading blackout periods. The extent that the Company repurchases its shares, the number of shares and the timing of any repurchases will depend on general market conditions, legal requirements and other corporate considerations. The repurchase program may be modified, suspended or terminated at any time without prior notice.
Information about the shares of our common stock that we repurchased during the
quarter ended March 31, 2024 is set forth below:
Period
Total Number of Shares (or Units) Purchased
Average Price Paid per Share (or Unit)
Total Number
of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs
Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (In millions)
01/01/2024 - 01/31/2024
5
$
209.06
—
$
202.6
02/01/2024 - 02/29/2024
40,995
$
217.47
—
$
202.6
03/01/2024
- 03/31/2024
244,189
$
208.56
239,790
$
152.6
Total
285,189
239,790
On May
26, 2023, our Board of Directors announced that it authorized a new $250.0 million share repurchase authorization (the "New Share Repurchase Authorization"), for the repurchase of our common stock in open market transactions or privately negotiated transactions or in other manners as permitted by federal securities laws and other legal and contractual requirements.
Item 5. Other Information
None of the Company's directors or officers iiadopted/,
modified, or iiterminated/ a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the Company's fiscal quarter ended March 31, 2024.
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
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
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
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.