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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2023
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from              to
Commission file number: 001-31262  
ASBURY AUTOMOTIVE GROUP, INC.
(Exact name of Registrant as specified in its charter)
Delaware01-0609375
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
2905 Premiere Parkway NW,Suite 300 
Duluth, Georgia
30097
(Address of principal executive offices) (Zip Code)
(770) 418-8200
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Trading
Title of each classSymbol(s)Name of each exchange on which registered
Common stock, $0.01 par value per shareABGNew York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  o
Indicate by check mark whether the registrant has submitted electronically 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).    Yes  x    No  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act:
Large Accelerated Filer  Accelerated Filer
Non-Accelerated FilerSmaller Reporting Company
Emerging Growth Company


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      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 July 27, 2023 was 20,575,182.


ASBURY AUTOMOTIVE GROUP, INC.

TABLE OF CONTENTS

  Page
PART I—Financial Information
PART II—Other Information








PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements

ASBURY AUTOMOTIVE GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except par value and share data)
(Unaudited)
 June 30, 2023December 31, 2022
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$77.5 $235.3 
Short-term investments10.3 5.4 
Contracts-in-transit, net167.2 220.8 
Accounts receivable, net175.7 171.9 
Inventories, net1,199.2 959.2 
Assets held for sale27.5 29.1 
Other current assets346.6 288.1 
Total current assets2,003.9 1,909.8 
INVESTMENTS287.3 235.0 
PROPERTY AND EQUIPMENT, net1,940.2 1,941.0 
OPERATING LEASE RIGHT-OF-USE ASSETS233.6 235.4 
GOODWILL1,783.4 1,783.4 
INTANGIBLE FRANCHISE RIGHTS1,800.1 1,800.1 
OTHER LONG-TERM ASSETS117.4 116.7 
Total assets$8,165.9 $8,021.4 
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Floor plan notes payable—trade, net$49.3 $51.0 
Floor plan notes payable—non-trade, net  
Current maturities of long-term debt59.2 84.5 
Current maturities of operating leases21.2 23.6 
Accounts payable and accrued liabilities687.5 645.0 
Deferred revenue—current223.6 218.9 
Liabilities associated with assets held for sale8.8 10.5 
Total current liabilities1,049.6 1,033.4 
LONG-TERM DEBT3,181.3 3,216.8 
LONG-TERM LEASE LIABILITY218.7 218.4 
DEFERRED REVENUE490.5 495.0 
DEFERRED INCOME TAXES101.7 100.7 
OTHER LONG-TERM LIABILITIES55.6 53.5 
COMMITMENTS AND CONTINGENCIES (Note 13)
SHAREHOLDERS' EQUITY:
Preferred stock, $.01 par value; 10,000,000 shares authorized; none issued
or outstanding
  
Common stock, $.01 par value; 90,000,000 shares authorized; 42,591,097 and 43,593,809 shares issued, including shares held in treasury, respectively
0.4 0.4 
Additional paid-in capital1,282.0 1,281.4 
Retained earnings2,781.1 2,610.1 
Treasury stock, at cost; 22,016,267 and 22,024,479 shares, respectively
(1,066.4)(1,063.0)
Accumulated other comprehensive income71.4 74.4 
Total shareholders' equity3,068.6 2,903.5 
Total liabilities and shareholders' equity$8,165.9 $8,021.4 


See accompanying Notes to Condensed Consolidated Financial Statements
4

ASBURY AUTOMOTIVE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data)
(Unaudited)
 For the Three Months Ended June 30,For the Six Months Ended June 30,
 2023202220232022
REVENUE:
New vehicle$1,942.7 $1,864.6 $3,710.4 $3,720.1 
Used vehicle1,107.3 1,362.4 2,233.9 2,713.4 
Parts and service526.1 520.2 1,041.7 1,022.1 
Finance and insurance, net166.3 203.0 338.9 406.4 
TOTAL REVENUE3,742.5 3,950.1 7,324.8 7,862.0 
COST OF SALES:
New vehicle1,757.7 1,644.1 3,346.5 3,275.7 
Used vehicle1,036.4 1,258.3 2,086.0 2,510.0 
Parts and service234.1 229.7 467.6 455.2 
Finance and insurance1.2 15.3 15.5 26.5 
TOTAL COST OF SALES3,029.4 3,147.4 5,915.5 6,267.3 
GROSS PROFIT713.1 802.7 1,409.3 1,594.7 
OPERATING EXPENSES:
Selling, general, and administrative408.6 448.2 811.6 903.7 
Depreciation and amortization16.8 18.1 33.5 36.5 
Other operating expense (income), net 0.8  (1.9)
INCOME FROM OPERATIONS287.7 335.5 564.2 656.3 
OTHER EXPENSES:
Floor plan interest expense0.8 1.5 1.5 4.1 
Other interest expense, net39.3 37.6 76.6 75.2 
(Gain) loss on dealership divestitures, net(13.5)28.7 (13.5)(4.4)
Total other expenses, net26.6 67.8 64.6 74.9 
INCOME BEFORE INCOME TAXES261.1 267.7 499.6 581.4 
Income tax expense64.8 66.4 121.9 142.3 
NET INCOME$196.4 $201.4 $377.7 $439.1 
EARNINGS PER SHARE:
Basic—
Net income$9.37 $9.11 $17.78 $19.60 
Diluted—
Net income$9.34 $9.07 $17.70 $19.52 
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic20.922.121.222.4
Performance share units0.10.10.10.1
Diluted21.022.221.322.5






 See accompanying Notes to Condensed Consolidated Financial Statements
5

ASBURY AUTOMOTIVE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
(Unaudited)
 For the Three Months Ended June 30,For the Six Months Ended June 30,
 202320222023 2022
Net income$196.4 $201.4 $377.7 $439.1 
Other comprehensive income:
Change in fair value of cash flow swaps17.0 28.6 (2.4)70.9 
Income tax (expense) benefit associated with cash flow swaps(4.1)(6.9)0.6 (17.4)
Losses on available-for-sale debt securities(4.2) (1.7)(2.1)
Income tax benefit associated with available-for-sale debt securities1.0 0.2 0.5 0.4 
Comprehensive income$206.0  $223.3 $374.7  $490.9 







































See accompanying Notes to Condensed Consolidated Financial Statements
6

ASBURY AUTOMOTIVE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Dollars in millions)
(Unaudited)

 Common StockAdditional
Paid-in
Capital
Retained
Earnings
Treasury StockAccumulated
Other
Comprehensive
Income (Loss)
Total
 SharesAmountSharesAmount
Balances, December 31, 202243,593,809 $0.4 $1,281.4 $2,610.1 22,024,479 $(1,063.0)$74.4 $2,903.5 
Comprehensive Income:
Net income— — — 181.4 — — — 181.4 
Change in fair value of cash flow swaps, net of reclassification adjustment and $4.7 million tax benefit
— — — — — — (14.6)(14.6)
Unrealized gain on changes in fair value of debt securities, net of reclassification adjustment and $0.5 million tax expense
— — — — — — 2.0 2.0 
Comprehensive income— — — 181.4 — — (12.6)168.7 
Share-based compensation— — 8.6 — — — — 8.6 
Issuance of common stock, net of forfeitures, in connection with share-based payment arrangements120,575 — — — — — — 
Share repurchases— — — — 110,323 (20.7)— (20.7)
Repurchase of common stock associated with net share settlement of employee share-based awards— — — — 45,613 (10.9)— (10.9)
Retirement of common stock(164,527)— (2.0)(28.2)(164,527)30.2 —  
Balances, March 31, 202343,549,857 $0.4 $1,288.0 $2,763.3 22,015,888 $(1,064.3)$61.8 $3,049.2 
Comprehensive Income:
Net income— — — 196.4 — — — 196.4 
Change in fair value of cash flow swaps, net of reclassification adjustment and $4.1 million tax expense
— — — — — — 12.8 12.8 
Unrealized loss on changes in fair value of debt securities, net of reclassification adjustment and $1.0 million tax benefit
— — — — — — (3.2)(3.2)
Comprehensive income— — — 196.4 — — 9.6 206.0 
Share-based compensation— — 5.5 — — — — 5.5 
Issuance of common stock, net of forfeitures in connection with share-based payment arrangements1,043 — — — — — —  
Share repurchases— — — — 959,803 (192.1)— (192.1)
Repurchase of common stock associated with net share settlement of employee share-based awards— — — — 379 (0.1)— (0.1)
Retirement of common stock(959,803)— (11.6)(178.5)(959,803)190.1 —  
Balances, June 30, 202342,591,097 $0.4 $1,282.0 $2,781.1 22,016,267 (1,066.4)$71.4 $3,068.6 

7

 Common StockAdditional
Paid-in
Capital
Retained
Earnings
Treasury StockAccumulated
Other
Comprehensive
Income (Loss)
Total
 SharesAmountSharesAmount
Balances, December 31, 202145,052,293 $0.4 $1,278.6 $1,881.3 21,914,251 $(1,044.1)$(0.7)$2,115.5 
Comprehensive Income:
Net income— — — 237.7 — — — 237.7 
Change in fair value of cash flow swaps, net of reclassification adjustment and $10.4 million tax expense
— — — — — — 31.8 31.8 
Unrealized loss on changes in fair value of debt securities, net of reclassification adjustment and $0.2 million tax benefit
— — — — — — (2.0)(2.0)
Comprehensive income— — — 237.7 — — 29.8 267.5 
Share-based compensation— — 7.0 — — — — 7.0 
Issuance of common stock, net of forfeitures, in connection with share-based payment arrangements115,435 —  — — — —  
Share repurchases— — 1.4 — 1,069,203 (200.0)— (198.6)
Repurchase of common stock associated with net share settlements of employee share-based awards— — — — 53,810 (8.9)— (8.9)
Retirement of common stock(1,069,203)— (12.9)(187.1)(1,069,203)200.0 —  
Balances, March 31, 202244,098,525 $0.4 $1,274.1 $1,931.9 21,968,061 $(1,053.0)$29.1 $2,182.5 
Comprehensive Income:
Net income— — 201.4 — — — 201.4 
Change in fair value of cash flow swaps, net of reclassification adjustment and $6.9 million tax expense
— — — — — — 21.7 21.7 
Unrealized gain on changes in fair value of debt securities, net of reclassification adjustment $0.2 million tax benefit
— — — — — — 0.2 0.2 
Comprehensive income— — — 201.4 — — 21.9 223.3 
Share-based compensation— — 4.7 — — — — 4.7 
Issuance of common stock, net of forfeitures, in connection with share-based payment arrangements1,485 — — — — — — — 
Repurchase of common stock associated with net share settlements of employee share-based awards— — — — 436 (0.1)— (0.1)
Balances, June 30, 202244,100,010 $0.4 $1,278.8 $2,133.3 21,968,497 $(1,053.1)$51.0 $2,410.4 
















See accompanying Notes to Condensed Consolidated Financial Statements
8

ASBURY AUTOMOTIVE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
 For the Six Months Ended June 30,
 20232022
CASH FLOW FROM OPERATING ACTIVITIES:
Net income$377.7 $439.1 
Adjustments to reconcile net income to net cash provided by operating activities—
Depreciation and amortization33.5 36.5 
Share-based compensation14.1 11.7 
Deferred income taxes2.2 (2.7)
Unrealized (gains) losses on investments(3.3)12.0 
Loaner vehicle amortization13.4 5.8 
Gain on divestitures, net(13.5)(4.4)
Change in right-of-use assets12.4 13.8 
Other adjustments, net1.5 1.1 
Changes in operating assets and liabilities, net of acquisitions and divestitures—
Contracts-in-transit53.6 (8.9)
Accounts receivable(3.3)45.2 
Inventories(44.7)54.2 
Other current assets(267.0)(189.7)
Floor plan notes payable—trade, net(1.7)(9.6)
Deferred revenue0.2 29.4 
Accounts payable and accrued liabilities64.1 82.5 
Operating lease liabilities(12.9)(14.5)
Other long-term assets and liabilities, net(4.6)(4.9)
Net cash provided by operating activities221.7 496.6 
CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures—excluding real estate(40.8)(39.5)
Divestitures30.7 379.7 
Purchases of debt securities—available-for-sale(124.2)(25.9)
Purchases of equity securities (8.4)
Proceeds from the sale of debt securities—available-for-sale17.7 29.4 
Proceeds from the sale of equity securities51.8 8.9 
Proceeds from the sale of assets2.3  
Net cash (used in) provided by investing activities(62.5)344.2 
CASH FLOW FROM FINANCING ACTIVITIES:
Floor plan borrowings—non-trade3,719.2 3,618.4 
Floor plan repayments—non-trade(3,722.0)(4,115.4)
Floor plan repayments—divestitures (21.6)
Repayments of borrowings(82.8)(24.1)
Proceeds from revolving credit facility 330.0 
Repayments of revolving credit facility (499.0)
Proceeds from issuance of common stock 1.4 
Payment of debt issuance costs (0.4)
Purchases of treasury stock(220.3)(200.0)
Repurchases of common stock, including amounts associated with net share settlements of
employee share-based awards
(11.0)(8.9)
Net cash used in financing activities(316.9)(919.6)
Net decrease in cash and cash equivalents(157.8)(78.8)
CASH AND CASH EQUIVALENTS, beginning of period235.3 178.9 
CASH AND CASH EQUIVALENTS, end of period$77.5 $100.1 

See Note 11 "Supplemental Cash Flow Information" for further details
See accompanying Notes to Condensed Consolidated Financial Statements
9

ASBURY AUTOMOTIVE GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. DESCRIPTION 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 June 30, 2023, we owned and operated 181 new vehicle franchises (138 dealership locations), representing 31 brands of automobiles, and 32 collision centers in 14 states. For the six months ended June 30, 2023, our new vehicle revenue brand mix consisted of 33% luxury, 39% imports and 28% 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 two reportable segments: Dealerships and TCA.
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 June 30, 2023, and for the three and six months ended June 30, 2023 and 2022, 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 or tie to prior year financial statements due to rounding.
The results of operations for the three and six months ended June 30, 2023 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, 2022.
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 finance and insurance products, reserves for self-insurance programs, and certain assumptions related to goodwill and dealership franchise rights intangible assets.
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 June 30, 2023, the Company repurchased and retired 959,803 shares of our common stock under our share repurchase program. There were no shares repurchased and retired during the three months ended June 30, 2022. During the six months ended June 30, 2023 and 2022, the Company repurchased 1,070,126 and 1,069,203 shares and retired 1,124,330 and 1,069,203 shares, of our common stock under our share repurchase program, respectively. The cash paid
10

for these share repurchases was $210.7 million and $200.0 million for the six months ended June 30, 2023 and 2022, respectively.
On May 25, 2023, we announced that our Board of Directors approved a new authorization to repurchase up to $250 million of the Company's common stock (the "New Share Repurchase Authorization"), which replaces our previous share repurchase authorization. As of July 24, 2023, the Company had $250 million remaining on its share repurchase authorization.
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 714 and 473 restricted share units and 0 and 18,339 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 June 30, 2023 and 2022, respectively. During the six months ended June 30, 2023 and 2022, the Company excluded 3,947 and 1,669 restricted share units and 0 and 89 performance share units issued under the Asbury Automotive Group, Inc. 2019 Equity and Incentive Compensation Plan from its computation of diluted earnings per share, respectively, because they were anti-dilutive. For all periods presented, there were no adjustments to the numerator necessary to compute diluted earnings per share.
Recent Accounting Pronouncements
In September 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2022-04, Liabilities-Supplier Finance Programs. This standard serves to improve transparency about supplier finance programs. The ASU requires certain disclosures around key terms of outstanding supply chain finance programs and changes in obligations during a reporting period related to vendors participating in these programs. The new disclosure requirements do not affect the recognition, measurement or financial statement presentation of any amounts due. The guidance is effective for fiscal years beginning after December 15, 2022, except for rollforward information, which is effective in the first quarter of 2024. Early adoption is permitted. The adoption of this new guidance on January 1, 2023 did not have a material impact on our condensed consolidated financial statements. See Note 8, "Floor Plan Notes Payable."
2. REVENUE RECOGNITION
Disaggregation of Revenue
Revenue from contracts with customers for the three and six months ended June 30, 2023 and 2022 consists of the following:
For the Three Months Ended June 30,
20232022
(In millions)
Revenue:
   New vehicle$1,942.7 $1,864.6 
   Used vehicle retail1,013.3 1,272.7 
   Used vehicle wholesale94.0 89.7 
New and used vehicle3,050.0 3,227.0 
  Sale of vehicle parts and accessories123.9 125.4 
  Vehicle repair and maintenance services402.2 394.8 
Parts and services526.1 520.2 
Finance and insurance, net166.3 203.0 
Total revenue$3,742.5 $3,950.1 
11

For the Six Months Ended June 30,
20232022
(In millions)
Revenue:
   New vehicle$3,710.4 $3,720.1 
   Used vehicle retail2,034.9 2,489.7 
   Used vehicle wholesale198.9 223.7 
New and used vehicle5,944.2 6,433.5 
  Sale of vehicle parts and accessories250.0 255.6 
  Vehicle repair and maintenance services791.7 766.5 
Parts and service1,041.7 1,022.1 
Finance and insurance, net338.9 406.4 
Total revenue$7,324.8 $7,862.0 
Contract Assets
Changes 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.
Vehicle Repair and Maintenance ServicesFinance and Insurance, netDeferred Sales CommissionsTotal
(In millions)
Balance as of January 1, 2023$14.7 $14.7 $37.2 $66.6 
Transferred to receivables from contract assets recognized at the beginning of the period(14.7)(3.0) (17.7)
Amortization of costs to obtain a contract with a customer  (2.0)(2.0)
Costs incurred to obtain a contract with a customer  8.6 8.6 
Increases related to revenue recognized, inclusive of adjustments to constraint, during the period16.3 2.8  19.1 
Balance as of March 31, 2023$16.3 $14.5 $43.8 $74.6 
Contract Assets (current), March 31, 202316.3 14.5 12.9 43.7 
Contract Assets (long-term), March 31, 2023  30.9 30.9 
Transferred to receivables from contract assets recognized at the beginning of the period(16.3)(2.7) (19.0)
Amortization of costs to obtain a contract with a customer  (3.2)(3.2)
Costs incurred to obtain a contract with a customer  13.5 13.5 
Increases related to revenue recognized, inclusive of adjustments to constraint, during the period17.5 2.5  20.0 
Balance as of June 30, 2023$17.5 $14.3 $54.1 $86.2 
Contract Assets (current), June 30, 202317.5 14.3 15.4 47.4 
Contract Assets (long-term), June 30, 2023  38.7 38.7 
12

Deferred Revenue
The condensed consolidated balance sheets reflect $714.0 million and $713.9 million of deferred revenue as of June 30, 2023 and December 31, 2022, respectively. Approximately $124.7 million of deferred revenue at December 31, 2022 was recorded in finance and insurance, net revenue in the condensed consolidated statements of income during the six months ended June 30, 2023.
3. DIVESTITURES
During the six months ended June 30, 2023, we sold one franchise (one dealership location) in Austin, Texas. The Company recorded a pre-tax gain totaling $13.5 million, which is presented in our accompanying condensed consolidated statements of income as gain on dealership divestitures, net.
During the six months ended June 30, 2022, we sold one franchise (one dealership location) in St. Louis, Missouri, three franchises (three dealership locations) and one collision center in Denver, Colorado, two franchises (two dealership locations) in Spokane, Washington and one franchise (one dealership location) in Albuquerque, New Mexico. The Company recorded a pre-tax gain totaling $4.4 million, which is presented in our accompanying condensed consolidated statements of income as gain on dealership divestitures, net.

4. ACCOUNTS RECEIVABLE
Accounts receivable consisted of the following: 
 As of
 June 30, 2023December 31, 2022
 (In millions)
Vehicle receivables$51.8 $50.4 
Manufacturer receivables43.1 43.3 
Other receivables82.4 80.5 
     Total accounts receivable177.4 174.1 
Less—Allowance for credit losses(1.7)(2.2)
     Accounts receivable, net$175.7 $171.9 
5. INVENTORIES
Inventories consisted of the following:
As of
 June 30, 2023December 31, 2022
 (In millions)
New vehicles$706.5 $527.7 
Used vehicles357.7 304.4 
Parts and accessories135.0 127.2 
Total inventories, net (a)$1,199.2 $959.2 
____________________________
(a) Inventories, net as of December 31, 2022, excluded $3.4 million classified as assets held for sale.
The lower of cost and net realizable value reserves reduced total inventories by $8.6 million and $10.7 million as of June 30, 2023 and December 31, 2022, respectively. As of June 30, 2023 and December 31, 2022, certain automobile manufacturer incentives reduced new vehicle inventory cost by $5.4 million and $2.7 million, respectively, and reduced new vehicle cost of sales for the six months ended June 30, 2023 and 2022 by $46.4 million and $48.8 million, respectively.
13

6. ASSETS AND LIABILITIES HELD FOR SALE
Assets and liabilities classified as held for sale include (i) assets and liabilities associated with pending dealership disposals, (ii) real estate not currently used in our operations that we are actively marketing to sell and (iii) the related mortgage notes payable, if applicable.
A summary of assets held for sale and liabilities associated with assets held for sale is as follows:
As of
June 30, 2023December 31, 2022
(In millions)
Assets:
Inventory$ $3.4 
Loaners, net 0.9 
Property and equipment, net25.5 24.0 
Operating lease right-of-use assets2.0  
Goodwill 0.9 
Total assets held for sale27.5 29.1 
Liabilities:
Floor plan notes payable—non-trade 2.8 
Loaners notes payable 0.8 
Current maturities of long-term debt0.4 0.6 
Long-term debt6.4 6.2 
Operating lease liabilities2.0  
Total liabilities associated with assets held for sale8.8 10.5 
Net assets held for sale$18.7 $18.7 
As of June 30, 2023, assets held for sale consisted of real estate associated with four used vehicle stores, one collision center, and one real estate property not currently used in our operations.
As of December 31, 2022, assets held for sale consisted of one franchise (one dealership location) in addition to one real estate property not currently used in our operations.
14

7. INVESTMENTS
Our investment portfolio is primarily funded by product premiums from the sale of our TCA F&I products. The amortized cost, gross unrealized gains and losses and estimated fair values of debt securities available-for-sale, equity securities, and other investments measured at net asset value are as follows:
As of June 30, 2023
Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
(In millions)
Short-term investments$10.3 $ $ $10.3 
U.S. Treasury13.4  (0.3)13.1 
Municipal30.8 0.1 (0.5)30.4 
Corporate117.2 0.2 (2.7)114.7 
Mortgage and other asset-backed securities131.3 0.3 (2.5)129.1 
Total debt securities303.2 0.6 (6.1)297.6 
Total investments$303.2 $0.6 $(6.1)$297.6 

As of December 31, 2022
Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
(In millions)
Short-term investments$5.4 $ $ $5.4 
U.S. Treasury11.8  (0.2)11.6 
Municipal22.8  (0.4)22.4 
Corporate81.8 0.2 (2.3)79.7 
Mortgage and other asset-backed securities73.8 0.3 (1.4)72.7 
Total debt securities195.5 0.5 (4.4)191.7 
Common stock48.7   48.7 
Total investments$244.2 $0.5 $(4.4)$240.4 
There were no equity securities held as of June 30, 2023. The Company had an unrealized loss of $0.4 million related to equity securities held as of December 31, 2022.
As of June 30, 2023 and December 31, 2022, the Company had $2.2 million and $1.3 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.
15

A summary of amortized costs and fair value of investments by time to maturity, is as follows:
 As of June 30, 2023
 Amortized CostFair Value
 (In millions)
Due in 1 year or less$10.3 $10.3 
Due in 1-5 years101.0 98.8 
Due in 6-10 years57.3 56.2 
Due after 10 years3.2 3.2 
Total by maturity171.8 168.5 
Mortgage and other asset-backed securities131.3 129.1 
Total investment securities$303.2 $297.6 
There were $0.1 million and $0.2 million gross gains realized, respectively, related to the sale of available-for-sale debt securities carried at fair value for the three and six months ended June 30, 2023. There were no gross losses realized related to the sale of available-for-sale debt securities carried at fair value for the three and six months ended June 30, 2023. There were $3.7 million gross gains and $0.9 million gross losses realized, respectively, related to the sale of equity securities carried at fair value for the three and six months ended June 30, 2023.
There were no gross gains realized related to the sale of available-for-sale debt securities carried at fair value for the three and six months ended June 30, 2022. There were $0.5 million and $0.8 million gross losses realized, respectively, related to the sale of available-for-sale debt securities carried at fair value for three and six months ended June 30, 2022. There were $1.4 million and $1.8 million gross gains realized, respectively, related to the sale of equity securities carried at fair value for the three and six months ended June 30, 2022. There were $1.0 million and $1.4 million gross losses realized, respectively, related to the sale of equity securities carried at fair value for the three and six months ended June 30, 2022.
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 June 30, 2023.
As of June 30, 2023
Less than 12 MonthsGreater than 12 MonthsTotal
Fair ValueUnrealized LossesFair ValueUnrealized LossesFair ValueUnrealized Losses
(In millions)
Short-term investments$9.0 $ $1.3 $ $10.3 $ 
U.S. Treasury9.6 0.3 1.1 0.1 10.7 0.3 
Municipal23.0 0.5 0.9  23.8 0.5 
Corporate90.1 2.1 8.7 0.6 98.8 2.7 
Mortgage and other asset-backed securities99.5 2.2 3.7 0.3 103.3 2.5 
Total debt securities$231.1 $5.1 $15.7 $1.0 $246.9 $6.1 
16

As of December 31, 2022
Less than 12 MonthsGreater than 12 MonthsTotal
Fair ValueUnrealized LossesFair ValueUnrealized LossesFair ValueUnrealized Losses
(In millions)
U.S. Treasury$9.2 $(0.2)$ $ $9.2 $(0.2)
Municipal19.0 (0.4)  19.0 (0.4)
Corporate66.2 (0.1)5.2 (0.3)71.4 (0.4)
Mortgage and other asset-backed securities51.4 (1.3)1.5 (0.2)52.9 (1.5)
Total debt securities$145.7 $(2.0)$6.8 $(0.5)$152.6 $(2.5)
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, no credit losses were recognized on these securities during the three and six months ended June 30, 2023.
8. FLOOR PLAN NOTES PAYABLE
Floor plan notes payable consisted of the following:
As of
 June 30, 2023December 31, 2022
 (In millions)
Floor plan notes payable—trade$91.0 $65.1 
Floor plan notes payable offset account(41.7)(14.2)
Floor plan notes payable—trade, net$49.3 $51.0 
Floor plan notes payable—new non-trade (a)$743.8 $613.6 
Floor plan notes payable offset account (b)(743.8)(613.6)
Floor plan notes payable—non-trade, net$ $ 
____________________________

(a) Floor plan notes payable—new non-trade as of December 31, 2022, excluded $2.8 million classified as liabilities associated with assets held for sale, respectively.
(b) In addition to the $743.8 million and $613.6 million shown above as of June 30, 2023 and December 31, 2022, respectively, we held $32.9 million and $164.0 million, in the floor plan notes payable offset account as of June 30, 2023 and December 31, 2022, respectively. As of June 30, 2023, $32.9 million was shown as an offset to loaner vehicles notes payable. As of December 31, 2022, $100.8 million of the $164.0 million was reflected within cash and cash equivalents and the remaining $63.2 million was shown as an offset to loaner vehicles notes payable. Loaner vehicle notes payable is included in accounts payable and accrued liabilities within the condensed consolidated balance sheets.
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 $50.0 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.
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On May 27, 2022, $389.0 million of our availability under the Revolving Credit Facility was re-designated to the New Vehicle Floor Plan Facility to take advantage of lower commitment fee rates. On March 31, 2023, we designated this $389.0 million 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 Ford Motor Credit Company (“Ford Credit”), Bank of America and certain original equipment manufacturers (“OEMs”). Loaner vehicles notes payable related to Ford Credit as of June 30, 2023 and December 31, 2022 were $7.7 million and $13.4 million, respectively. Loaner vehicles notes payable related to Bank of America as of June 30, 2023 and December 31, 2022 were $60.9 million and $10.8 million, net of offsets of $32.9 million and $63.2 million, respectively. Loaner vehicles notes payable related to OEMs as of June 30, 2023 and December 31, 2022 were $81.1 million and $70.4 million, respectively.
9. DEBT
Long-term debt consisted of the following:
 As of
June 30, 2023December 31, 2022
(In millions)
4.50% Senior Notes due 2028
$405.0 $405.0 
4.625% Senior Notes due 2029
800.0 800.0 
4.75% Senior Notes due 2030
445.0 445.0 
5.00% Senior Notes due 2032
600.0 600.0 
Mortgage notes payable bearing interest at fixed rates (a)37.0 38.3 
2021 Real Estate Facility (b)634.8 660.6 
2021 BofA Real Estate Facility169.6 173.3 
2018 Bank of America Facility (c)52.4 54.5 
2018 Wells Fargo Master Loan Facility74.4 76.9 
2013 BofA Real Estate Facility 24.9 
2015 Wells Fargo Master Loan Facility39.8 42.3 
Finance lease liability8.4 8.4 
Total debt outstanding3,266.5 3,329.2 
Add—unamortized premium on 4.50% Senior Notes due 2028
0.7 0.8 
Add—unamortized premium on 4.75% Senior Notes due 2030
1.4 1.6 
Less—debt issuance costs(28.1)(30.4)
Long-term debt, including current portion3,240.5 3,301.2 
Less—current portion, net of current portion of debt issuance costs(59.2)(84.5)
Long-term debt$3,181.3 $3,216.8 
____________________________
(a) Mortgage notes payable excluded $2.7 million that were classified as liabilities associated with assets held for sale as of December 31, 2022.
(b) Amounts reflected for the 2021 Real Estate Facility as of June 30, 2023 excluded $6.8 million classified as liabilities associated with assets held for sale.
(c) Amounts reflected for the 2018 Bank of America Facility as of December 31, 2022, excluded $4.1 million classified as liabilities associated with assets held for sale.
In June 2023, the Company prepaid the aggregate principal amounts remaining under the 2013 BofA Real Estate Facility for an aggregate amount of approximately $23.9 million with cash on hand.
10. FINANCIAL 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
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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, 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 and certain mortgage notes payable, 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. We estimate the fair value of our mortgage notes payable using a present value technique based on current market interest rates for similar types of financial instruments that reflect Level 2 inputs.
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A summary of the carrying values and fair values of our subordinated long-term debt and our mortgage notes payable is as follows: 
 As of
 June 30, 2023December 31, 2022
 (In millions)
Carrying Value:
4.50% Senior Notes due 2028
$402.5 $409.5 
4.625% Senior Notes due 2029
789.8 789.1 
4.75% Senior Notes due 2030
442.0 441.7 
5.00% Senior Notes due 2032
591.9 591.5 
Mortgage notes payable (a)1,006.0 1,061.1 
Total carrying value$3,232.1 $3,292.9 
Fair Value:
4.50% Senior Notes due 2028
$369.6 $354.4 
4.625% Senior Notes due 2029
710.0 672.0 
4.75% Senior Notes due 2030
394.9