UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): September 28, 2021
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation)
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(770 ) 418-8200
(Registrant's telephone number, including area code)
None
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ☐
Item 1.01 Entry into a Material Definitive Agreement.
Equity Purchase Agreement, Real Estate Purchase Agreement and Insurance Purchase Agreement
On September 28, 2021, Asbury Automotive Group, LLC (“Purchaser”), a Delaware limited liability company and a wholly-owned subsidiary of Asbury Automotive Group, Inc., a Delaware corporation (the “Company”), entered into (i) a Purchase Agreement (the “Equity Purchase Agreement”) with certain members of the Larry H. Miller Dealership family of entities; (ii) a Real Estate Purchase and Sale Agreement (the “Real Estate Purchase Agreement”) with Miller Family Real Estate, L.L.C. and (iii) a Purchase Agreement (the “Insurance Purchase Agreement” and together with the Equity Purchase Agreement and the Real Estate Purchase Agreement, the “Transaction Agreements”) with certain equity owners of the Total Care Auto Powered by Landcar (“Total Auto Care”) insurance business affiliated with the Larry H. Miller Dealership family of entities. Pursuant to the Transaction Agreements, Purchaser will acquire the equity interests of, and the real property related to (collectively, the “Transactions”), the businesses of the Larry H. Miller Dealerships and Total Care Auto (collectively, the “Businesses”), each described in the Equity Purchase Agreement, the Real Estate Purchase Agreement and the Insurance Purchase Agreement, for an aggregate purchase price of approximately $3.1 billion, reflecting $2.3 billion of goodwill, approximately $744 million of real estate and leasehold improvements, and approximately $100 million in parts and fixed assets.
The Transaction Agreements contain customary representations and warranties made by each of the parties. The parties have also agreed to various covenants in the Transaction Agreements, including covenants by the sellers, the various seller affiliates and the principal to conduct the material operations of the Businesses in the ordinary course of business consistent with past practice and to cooperate with the Company’s efforts to secure permanent financing prior to closing of the Transactions. Purchaser and Sellers have agreed to indemnify one another against certain damages (subject to certain exceptions and limitations).
The closing of the Transactions is subject to various customary closing conditions, including (i) receipt of approval of the Transactions by certain automotive manufacturers, (ii) receipt of certain governmental clearances, including the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and certain required approvals related to the insurance business, (iii) the continued accuracy of the representations and warranties of the parties (subject to specified materiality standards) and (iv) the absence of a material adverse effect with respect to the Businesses. The Transaction Agreements are not subject to any financing condition.
The closing of the Transactions is expected to be consummated during the fourth quarter of 2021, subject to receipt of regulatory and other approvals and customary closing conditions.
The foregoing descriptions of the Transaction Agreements do not purport to be complete and are subject to, and qualified in their entirety by reference to, the full text of the Equity Purchase Agreement, the Real Estate Purchase Agreement and the Insurance Purchase Agreement, copies of which will be filed with the Company’s next Quarterly Report on Form 10-Q.
Debt Financing Commitment Letter
In connection with entering into the Transaction Agreements, the Company entered into a commitment letter, dated September 28, 2021 (the “Commitment Letter”), with Bank of America, N.A., BofA Securities, Inc. and JPMorgan Chase Bank N.A. (collectively, the “Commitment Parties”), pursuant to which, among other things, the Commitment Parties have committed to provide debt financing for the Transactions, consisting of (i) a $2.35 billion bridge loan (the “HY Bridge Facility”); and (ii) a $900.0 million 364-day bridge loan (the “364-Bridge Facility”), on the terms and subject to the conditions set forth in the Commitment Letter. Each of the HY Bridge Facility and 364-Day Bridge Facility is subject to reduction as set forth in the Commitment Letter upon the completion of certain debt and equity financings, as applicable, and upon other specified events. The obligation of the Commitment Parties to provide this debt financing is subject to a number of customary conditions, including, without limitation, execution and delivery of certain definitive documentation.
The foregoing description of the Commitment Letter does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full text of the Commitment Letter, a copy of which will be filed with the Company’s next Quarterly Report on Form 10-Q.
Item 7.01 Regulation FD Disclosure
On September 29, 2021, the Company issued a press release announcing the Transactions, a copy of which is furnished herewith as Exhibit 99.1 and incorporated herein by reference. Also on September 29, 2021, the Company posted on its website at https://www.asburyauto.com an investor presentation regarding the Transactions, a copy of which is furnished herewith as Exhibit 99.2 and incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description | ||||||||||
| Press Release, dated September 29, 2021 | |||||||||||
| Investor Presentation, dated September 29, 2021 | |||||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | ||||||||||
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ASBURY AUTOMOTIVE GROUP, INC. | |||||||||||
| Date: September 29, 2021 | By: | /s/ Michael Welch | |||||||||
| Name: | Michael Welch | ||||||||||
| Title: | Senior Vice President and Chief Financial Officer | ||||||||||
Exhibit 99.1
Investors & Reporters May Contact:
Karen Reid
VP – Corporate FP&A and Treasurer
(770) 418-8211
ir@asburyauto.com
Asbury Automotive Group Adds Approximately $5.7 Billion in
Annualized Revenues with Transformational Acquisition of
Larry H. Miller Dealerships and
Total Care Auto, Powered by Landcar
Acquisition Represents:
•Eighth largest dealership group in the US1
◦Over 60 stores in the attractive Western US representing 18 franchise brands with best-in-class operators
•Provider of service contracts and other vehicle protection products with EBITDA margins of 20%+
•Well-respected group with the leading brands in these desirable, high-growth markets
Strategically Important to Asbury:
•Adds approximately $5.7 billion in annualized revenue
•Expected to generate significant value for shareholders
◦LTM EBITDA of $360 million, including day-one cost savings
•Expands Asbury’s footprint coast to coast and increases potential of Asbury’s Clicklane omni-channel platform
•Diversifies Asbury with addition of vertically integrated profitable F&I product provider, offering opportunity for future expansion into other Asbury dealerships
•Exceeds Asbury’s target for the acquisition pillar of its 5-year strategic growth plan
Asbury has an additional $900 million in annualized revenue from other acquisitions under contract
DULUTH, Ga., Sep. 29, 2021 -- Asbury Automotive Group, Inc. (NYSE: ABG), one of the largest automotive retail and service companies in the U.S., entered into a definitive agreement with Larry H. Miller Group1 of Companies (“LHM Group”) to acquire Larry H. Miller
1 Per Automotive News 2020 Top 150 Dealership Groups by New Vehicle Retail Sales dated April 5th, 2021.
Dealerships, the eighth largest dealer group in the U.S., and Total Care Auto, Powered by Landcar (“TCA” or “Landcar Agency”).
“Larry H. Miller Dealerships is one of the most respected automotive dealer groups in the United States with a strong culture and stewardship mentality,” said David Hult, Asbury's President and Chief Executive Officer. “This acquisition is a unique opportunity to rapidly expand Asbury’s presence into these desirable, high-growth Western markets with strong accretion from day-one, with this impressive group and its rich history. Larry H. Miller Dealerships is a well-run operation with long tenured employees and a senior leadership team equaling over 5,300 passionate team members, all of whom have had a part in building and carrying forward the legacy that Larry H. and Gail Miller founded over 42 years ago. We are thrilled to grow our presence in these states that we believe have appealing economic and demographic growth opportunities while broadening our geographic reach. Our now national footprint, complemented by our digital purchasing capabilities in Clicklane, creates a truly expansive omni-channel platform of dealerships.
“This acquisition will further diversify our total portfolio mix and add approximately $5.7 billion in expected annualized revenues, which positions us well to execute our five-year plan to generate $20 billion in annual revenue by 2025. With these acquisitions, we will exceed our previously published five-year target for M&A within the first year of the plan. We will continue to seek acquisitions that fit our culture and strategy. We believe that this acquisition is truly transformative for Asbury, and we are honored to be the stewards of Larry and Gail’s vision. Additionally, we expect this acquisition to be highly accretive to earnings per share in 2022 and beyond.”
“Since our family’s purchase of a single Utah dealership in 1979, we have been honored to cultivate a strong, values-based culture and customer-first business model within the automotive industry for more than four decades,” said Gail Miller, Owner, Larry H. Miller Group of Companies. “We feel a great sense of stewardship to our incredible associates and their families, to our loyal customers and partners, and to the communities where we operate. As always, we believe that being in business is a means to doing good, and this transaction will elevate our ability to continue to enrich lives through our philanthropic efforts as well as reinvest in new ventures.”
“We are proud that Larry H. Miller Dealerships has grown to be one of the largest automotive retailers in the country,” said Steve Starks, Chief Executive Officer of the Larry H. Miller Group of Companies. “Our incredible employees will have the opportunity to be part of Asbury, another well-respected and trusted brand, that brings a national footprint with a best-in-class technology platform. This transaction provides additional opportunities for the LHM Group to further diversify and grow our portfolio of businesses and investments.”
“Larry H. Miller Dealerships, like Park Place, showcase a customer centered approach that aligns with Asbury’s North Star to be the most guest-centric automotive retailer. We continue to allocate our capital thoughtfully to further this vision,” said Hult.
This transaction will diversify Asbury's geographic mix, with entry into six Western states: Arizona, Utah, New Mexico, Idaho, California, and Washington, and adds to its growing
Colorado footprint. Larry H. Miller Dealerships portfolio mix of largely domestic brands has historically delivered strong and stable margins in these markets.
The operating assets acquired include 54 new vehicle dealerships, seven used vehicle dealerships, and 11 collision centers. Combined, Larry H. Miller Dealerships sells over 115,000 new and used vehicles annually.
In addition to the dealerships, Asbury will acquire TCA, a leading provider of service contracts and other vehicle protection products, providing enhanced profitability and cash flow. “TCA is comprehensively integrated with Larry H. Miller Dealerships and presents a compelling opportunity for Asbury to enter this profitable F&I business. Like the dealerships, this service contract company is extremely well run. TCA has historically delivered 20%+ EBITDA margins on average,” Hult said.
“We look forward to becoming part of one of the nation’s leading and largest automotive and retail companies,” said Dean Fitzpatrick, President, Larry H. Miller Dealerships. “Asbury is like-minded in terms of our values and stewardship. Their vision to be the most guest-centric company in the industry aligns with our guiding principle to be the best place in town to work and the best place in town to do business.”
Financial Impact of Larry H. Miller Dealerships and TCA Acquisition
The aggregate purchase price of $3.2 billion includes approximately $740 million of real estate. The transaction is expected to close in the fourth quarter of 2021 and is subject to automobile factory approvals and other customary closing conditions. The EBITDA for the twelve months ended June 30, 2021 of these acquired entities is approximately $360 million, which includes day-one cost savings.
Asbury has secured committed bridge financing in support of the acquisition, which it expects to replace with a combination of permanent debt and equity financing prior to closing. The equity portion of the permanent financing is currently expected to be approximately $600 million. Although the transaction is initially expected to take Asbury above its targeted net leverage range of 3.0x, Asbury believes that it can de-lever to near 3.0x over the next 18-24 months given the highly accretive nature of the deal combined with strong free cash flow generation.
The acquisition of these entities, assuming a fourth quarter of 2021 closing date and equity financing of $600 million, is expected to be approximately 14% accretive to 2022 earnings per share with 2024 EPS accretion expected to be approximately 20%.
Additional Acquisitions Under Contract
Asbury also has several other strategic acquisitions under contract, which also align with Asbury’s culture and customer centric model, that are expected to add approximately $900 million in additional annualized revenues. These acquisitions are expected be funded using existing cash on hand and existing credit facilities.
These additional acquisitions are expected to drive total, inclusive of Larry H. Miller Dealerships, TCA, and the additional acquisitions under contract, 2022 EPS accretion to approximately 20% and 2024 EPS accretion to approximately 28%.
This press release does not constitute an offer to sell, or a solicitation of an offer to buy, any security. Any offers, solicitations or offers to buy, or any sales of securities will be made in accordance with the requirements of the Securities Act of 1933.
Advisors
BofA Securities served as financial advisor to Asbury Automotive Group, with BofA Securities and JPMorgan Chase Bank, N.A. providing committed financing for the transaction; Jones Day and Hill Ward Henderson acted as legal counsel to Asbury Automotive Group. J.P. Morgan Securities, LLC served as exclusive financial advisor to the Larry H. Miller Group of Companies and Katten Muchin Rosenman LLP and Snell & Wilmer acted as legal counsel to the Larry H. Miller Group of Companies.
Conference Call Details
Additional information regarding the transaction will be provided during a conference call on September 29, 2021, at 9:00 a.m. Eastern Time. The conference call will be simulcast live on the internet and can be accessed at www.asburyauto.com/company/investor-relations. A replay will be available at these sites for 30 days.
In addition, a live audio of the call will be accessible to the public by calling (800) 353-6461 (domestic), or (334) 647-4513 (international); passcode – 4198508. Callers should dial in approximately 5 to 10 minutes before the call begins.
A conference call replay will be available two hours following the call for seven days and can be accessed by calling (888) 203-1112 (domestic), or (719) 457-0820 (international); passcode – 4198508.
About Asbury Automotive Group, Inc.
Asbury Automotive Group, Inc. (NYSE: ABG), a Fortune 500 company headquartered in Duluth, GA, is one of the largest automotive retailers in the U.S. In late 2020, Asbury embarked on a 5-year plan to increase revenue and profitability strategically through organic and acquisitive growth as well as their innovative Clicklane digital car purchasing platform, with its guest-centric approach as Asbury’s constant North Star. Asbury currently operates 91 dealerships, consisting of 112 franchises, representing 31 domestic and foreign brands of vehicles. Asbury also operates 25 collision repair centers. Asbury offers an extensive range of automotive products and services, including new and used vehicles; parts and service, which includes vehicle repair and maintenance services, replacement parts and collision repair services; and finance and insurance products, including arranging vehicle financing through third parties and aftermarket products, such as extended service contracts, guaranteed asset protection debt cancellation, and prepaid maintenance.
For additional information, visit www.asburyauto.com.
Larry H. Miller Group of Companies
Headquartered in Sandy, Utah, the Larry H. Miller Group of Companies is a family owned, diversified portfolio of businesses and investments spanning multiple industries and asset classes. What began with the purchase of a single automotive dealership in 1979, has grown to one of the largest privately held companies in the United States. Today, the LHM Group’s main areas of focus include automotive, entertainment, sports, finance, auto insurance, real estate, health care, and philanthropy.
Larry H. Miller Dealerships operates 54 new vehicle dealerships, seven used vehicle dealerships, 11 collision centers, and a used vehicle wholesale business across Utah, Arizona, New Mexico, Colorado, Idaho, California, and Washington. The dealerships sell new and used vehicles, vehicle maintenance and repair services, vehicle parts, extended service contracts, vehicle protection products and aftermarket products. It is the eighth largest dealer group in the U.S. by New Vehicle Retail Sales according to Automotive News.
Total Care Auto, Powered by Landcar offers extended vehicle service contracts, prepaid maintenance contracts, vehicle theft assistance contracts, key replacement contracts, guaranteed asset protection (“GAP”) contracts, paintless dent repair contracts, appearance protection contracts, tire and wheel, DrivePur, and lease wear and tear contracts. In addition, TCA provides the required contractual liability insurance if needed. The majority of these service contracts are sold through affiliated automobile dealerships.
For additional information, visit www.lhm.com or email communications@lhm.com.
Forward-Looking Statements
To the extent that statements in this press release are not recitations of historical fact, such statements constitute "forward-looking statements" as such term is defined in the Private Securities Litigation Reform Act of 1995. The forward-looking statements in this press release may include statements relating to goals, plans, expectations, projections regarding the expected benefits of the proposed transaction, managements plans, projections and objectives for the proposed transaction, future operations, scale and performance, integration plans and expected synergies therefrom, the timing of completion of the proposed transaction, and our financial position, results of operations, market position, capital allocation strategy, initiatives, business strategy and expectations of our management.
The following are some but not all of the factors that could cause actual results or events to differ materially from those anticipated, including: the occurrence of any event, change or other circumstances that could give rise to the termination of the asset purchase agreement; the risk that the necessary manufacturer approvals may not be obtained; the risk that the necessary regulatory approvals may not be obtained or may be obtained subject to conditions that are not anticipated; the risk that the proposed transaction will not be consummated in a timely manner; risks that any of the closing conditions to the proposed acquisition may not be satisfied or may not be satisfied in a timely manner; risks related to disruption of management time from ongoing business operations due to the proposed acquisition; failure to realize the benefits expected from the proposed acquisition; failure to promptly and effectively integrate the acquisition; and the
effect of the announcement of the proposed acquisition on their operating results and businesses and on the ability of Asbury and Larry H. Miller Dealerships to retain and hire key personnel, maintain relationships with suppliers; our ability to execute our business strategy; the impact of the COVID-19 pandemic, market factors, Asbury's relationships with, and the financial and operational stability of, vehicle manufacturers and other suppliers, acts of God or other incidents and the shortage of semiconductor chips, which may adversely impact supply from vehicle manufacturers and/or present retail sales challenges, risks associated with Asbury's indebtedness (including available borrowing capacity, compliance with its financial covenants and ability to refinance or repay such indebtedness, on favorable terms), Asbury's relationships with, and the financial stability of, its lenders and lessors, risks related to competition in the automotive retail and service industries, general economic conditions both nationally and locally, governmental regulations, legislation, adverse results in litigation and other proceedings, and Asbury's ability to execute its five-year strategic plan, IT initiatives and other operational strategies, Asbury's ability to leverage gains from its dealership portfolio, Asbury's ability to capitalize on opportunities to repurchase its debt and equity securities or purchase properties that it currently leases, and Asbury's ability to stay within its targeted range for capital expenditures. These risks, uncertainties and other factors are disclosed in Asbury's Annual Report on Form 10-K, subsequent quarterly reports on Form 10-Q and other periodic and current reports filed with the Securities and Exchange Commission from time to time.
These forward-looking statements and such risks, uncertainties and other factors speak only as of the date of this press release. We expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein, whether as a result of new information, future events or otherwise.
1 © Asbury Automotive Group 2021. All rights reserved.NYSE | ABG Acquisition of Larry H. Miller Dealerships & Total Care Auto, Powered by Landcar September 29, 2021 © Asbury Automotive Group 2021. All R ghts Reserved (NYSE: ABG)
2 © Asbury Automotive Group 2021. All rights reserved.NYSE | ABG To the extent that statements in this presentation are not recitations of historical fact, such statements constitute "forward-looking statements" as such term is defined in the Private Securities Litigation Reform Act of 1995. The forward-looking statements in this presentation may include statements relating to goals, plans, expectations, projections regarding the expected benefits of the proposed transaction, management’s plans, projections and objectives for future operations, scale and performance, integration plans and expected synergies therefrom, the timing of completion of the proposed transaction, and our financial position, results of operations, market position, capital allocation strategy, initiatives, business strategy and expectations of our management. The following are some but not all of the factors that could cause actual results or events to differ materially from those anticipated, including: the occurrence of any event, change or other circumstances that could give rise to the termination of the asset purchase agreement; the risk that the necessary manufacturer approvals may not be obtained; the risk that the necessary regulatory approvals may not be obtained or may be obtained subject to conditions that are not anticipated; the risk that the proposed transaction will not be consummated in a timely manner; risks that any of the closing conditions to the proposed acquisition may not be satisfied or may not be satisfied in a timely manner; risks related to disruption of management time from ongoing business operations due to the proposed acquisition; failure to realize the benefits expected from the proposed acquisition; failure to promptly and effectively integrate the acquisition; and the effect of the announcement of the proposed acquisition on their operating results and businesses and on the ability of Asbury and Larry H. Miller Dealerships to retain and hire key personnel, maintain relationships with suppliers; our ability to execute our business strategy; the impact of the COVID-19 pandemic, market factors, Asbury's relationships with, and the financial and operational stability of, vehicle manufacturers and other suppliers, acts of God or other incidents and the shortage of semiconductor chips, which may adversely impact supply from vehicle manufacturers and/or present retail sales challenges, risks associated with Asbury's indebtedness (including available borrowing capacity, compliance with its financial covenants and ability to refinance or repay such indebtedness, on favorable terms), Asbury's relationships with, and the financial stability of, its lenders and lessors, risks related to competition in the automotive retail and service industries, general economic conditions both nationally and locally, governmental regulations, legislation, adverse results in litigation and other proceedings, and Asbury's ability to execute its five-year strategic plan, IT initiatives and other operational strategies, Asbury's ability to leverage gains from its dealership portfolio, Asbury's ability to capitalize on opportunities to repurchase its debt and equity securities or purchase properties that it currently leases, and Asbury's ability to stay within its targeted range for capital expenditures. These risks, uncertainties and other factors are disclosed in Asbury's Annual Report on Form 10-K, subsequent quarterly reports on Form 10-Q and other periodic and current reports filed with the Securities and Exchange Commission from time to time. These forward-looking statements and such risks, uncertainties and other factors speak only as of the date of this presentation. We expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein, whether as a result of new information, future events or otherwise. Forward-Looking Statements
3 © Asbury Automotive Group 2021. All rights reserved.NYSE | ABG The information contained in this presentation (including the forward-looking statements) are made as of the date hereof, unless otherwise expressly stated herein. They are subject to change without notice and, except as may be required by applicable law, Asbury expressly disclaims any obligation to update the information contained herein to reflect the occurrence of future events or developments, even if any of the assumptions, judgments and estimates on which the information contained herein is based prove to be incorrect or become outdated. No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information contained herein. This presentation is intended for informational purposes only. Legal Disclaimer
4 © Asbury Automotive Group 2021. All rights reserved.NYSE | ABG Best-in-class SG&A cost structure Best-in-class operating margins Operational excellence with omni- channel initiatives driving sales, efficiencies and guest experience Disciplined acquisition strategy targeting high quality assets with a proven integration playbook FORTUNE AUTOMOTIVE RETAILER 500 26% 3% 5% 33% 15% 3% 6% 3% 6% 91(3) Locations 112(3) Franchises 31(3) Brands ~$8B TOTAL REVENUE (1) New Vehicle Revenue(2) (1) For the twelve months ending Dec 31, 2020, pro forma reflecting the impact of acquisitions and divestures closed in 2020 (2) For the three months ending Jun 30, 2021 (3) As of Jun 30, 2021 NYSE: ABG 25(3) Collision Centers ~175K RETAIL UNITS SOLD (1)
5 © Asbury Automotive Group 2021. All rights reserved.NYSE | ABG Larry H. Miller Dealerships and Total Care Auto, Powered by Landcar(1) Overview 8th LARGEST dealership group in the US(2) FAMILY-OWNED business since 1979 54 new vehicle dealerships; 7 used vehicle dealerships; 11 collision centers 18 automotive brands PROFITABLE F&I product provider $5.7B in LTM revenue $360M in LTM EBITDA 115,000+ new and used retail units sold Draper Ford Lincoln American Toyota Albuquerque Surprise CJDR Sandy CJDR Average Revenue per Rooftop of Over $100M Key Brands Note: Larry H. Miller Dealerships numbers based on June LTM (1) Total Care Auto, Powered by Landcar (“TCA” or “Landcar Agency”) (2) 2020 Automotive News Top 150 Dealership Groups Report
6 © Asbury Automotive Group 2021. All rights reserved.NYSE | ABG TCA Offerings Vehicle service contracts Extensive list of vehicle parts and systems High sales and service retention Prepaid maintenance Customizable plans Oil and filter changes, lubrication Protection plans Vehicle theft assistance Guaranteed Asset Protection Key & remote replacement 24 hour emergency road service Lost key or lockout service Leased vehicle protection Interior and exterior protection Glass protection and broken parts Tire & wheel protection Covered road hazards Flat tire coverage Key Offerings Key Statistics 2.0M Open contracts 20%+ EBITDA Margins ~$240M Revenue High percentage of claims are serviced by Larry H. Miller Dealerships Vehicle Sold (Dealership) TCA F&I Product Sold (Dealership and TCA) Claims Paid (TCA) Repair Work (Dealership) Service Drives F&I Products Sold (Dealership and TCA) TCA Life Cycle
7 © Asbury Automotive Group 2021. All rights reserved.NYSE | ABG Transaction Highlights Meaningfully increases Asbury’s scale and creates the 4th largest US automotive retailer1 Strong portfolio of dealerships with a long history of operational excellence and valuable brands2 Enhancing presence in targeted high-growth markets with attractive demographic dynamics3 Ownership of TCA, a highly-scalable provider of a full-suite of F&I products, will enhance profitability with 20%+ EBITDA margins6 Transaction is expected to add ~$360M in EBITDA (expected to be accretive to 2022 EPS by ~20% when factoring in additional acquisitions under contract and by ~28% in 2024)(1)7 Leverages the Clicklane transactional tool to create a coast-to-coast, truly expansive, omni-channel platform5 Dealership portfolio is highly aligned to customer brand preferences within the markets4 Exceeds previously published 5-year target for M&A within the first year of the plan8 (1) Assumes impact of potential $600M of equity financing
8 © Asbury Automotive Group 2021. All rights reserved.NYSE | ABG $20.4 $20.0 $17.9 $14.2 $13.1 $12.6 $9.9 $8.0 $5.3 $4.4 $15.5 $15.5 $8.0 $10.9 $9.8 $8.9 $5.3 $5.7 $0.9 $0.9 $4.5 $2.2 $2.8 $0.0 $4.0 $8.0 $12.0 $16.0 $20.0 $24.0 AutoNation Lithia Penske Asbury + LHM + Stevinson/LOIs Group 1 Sonic Hendrick Asbury Standalone LHM Standalone Ken Garff Asbury Pro Forma LTM Jun-21 Source: 2020 Automotive News Top 150 Dealership Groups Report (1) Pro forma acquisitions announced in 2020 and YTD 2021 (2) Global auto dealership sales; US sales of $10.3B (3) Pro forma acquisition of Park Place closed 08/24/2020 (4) Pro forma acquisitions announced YTD 2021; US sales of ~$10.3B ($8.5B + $1.8B from acquisition of Prime Automotive) (5) Pro forma acquisitions announced YTD 2021 Significantly Increases Asbury’s Scale Acquisition transforms Asbury to the 4th largest auto retailer in the US (1) (3) Sa le s ($ B ) (2) (4) Pro Forma LTM Jun-21 (5) (3) Public Private Pro Forma
9 © Asbury Automotive Group 2021. All rights reserved.NYSE | ABG Pro Forma Asbury / LHM Geographic Presence(1) Source: IHS Markit, US Census Bureau (1) Includes new and used dealerships; excludes collision centers Metropolitan Area Macro Trends ('20-'25 CAGR) 5.1% 6.2% 3.7% 4.8% 1.3% 3.0% Salt Lake City Denver Phoenix Albuquerque Boise United States 2020 LHM Dealership Revenue by State WA (3) ID (4) CO (ABG: 3, LHM: 12) NM (7) AZ (12) CA (2) UT (21) TX (14) FL (24) MO (7) GA (17) SC (5) VA (4) NC (9) Boise Denver Albuquerque Phoenix Salt Lake City LHM (61) Asbury (91) IN (8) AZ 29% UT 28% CO 17% NM 12% ID 7% CA 4% WA 3% Population Growth by State (2010 to 2020) 17.1% 16.3% 15.8% 15.1% 2.0% 6.5% Utah Idaho Arizona Colorado New Mexico United States New passenger car & light truck registrationsGross metropolitan product (GMP) 6.2% 6.4% 6.8% 5.9% 6.2% 5.8% Salt Lake City Denver Phoenix Albuquerque Boise United States Geographic Expansion into Strategic High-Growth Markets with Attractive Demographics
10 © Asbury Automotive Group 2021. All rights reserved.NYSE | ABG 263 203 163 145 143 108 89 89 77 67 0 50 100 150 200 250 300 Toyota CDJR Ford Honda Chevrolet Subaru Hyundai Nissan Kia Buick GMC Import Domestic Dealership Portfolio is Highly Aligned to Customer Brand Preferences in its Markets Top 10 Volume Brands in Markets With Larry H. Miller Dealerships(1) Source: CAI Atlanta (1) Total unit sales from 2019 – 2021; 2021 units annualized 10 18 5 3 3 1 3 6 1 – # of LHM dealerships Larry H. Miller Dealerships has leading brands in high-growth, attractive markets Vehicle sales (units in 000s)
11 © Asbury Automotive Group 2021. All rights reserved.NYSE | ABG 16% 12% 4% 3% 2% 3% 10% 8% 4% 3% 2% 1% 1% 3% 15% 7% 4% 2% Asbury’s Diverse Pro Forma Brand Portfolio Strategically Aligns to Customer Preferences Across All of its Markets Import - 40% Luxury - 32% Domestic - 28% (Based on New Vehicle Revenue) Note: Based on Asbury new vehicle revenue for twelve months ended August 31, 2021 and Larry H. Miller Dealerships new vehicle revenue for FY 2020 (1) Other import includes Fiat, Isuzu, Mini, Sprinter, Subaru and Volkswagen (2) Other luxury includes Bentley, Genesis, Infiniti, Jaguar, Lincoln and Volvo Other Import (1) Other Luxury (2)
12 © Asbury Automotive Group 2021. All rights reserved.NYSE | ABG Update On Five Year Plan(1) The acquisition of Larry H. Miller Dealerships continues Asbury’s strategic plan to acquire premier assets in high-growth, desirable markets across the US $8B $2B $5B $20B Same Store Acquisitions 2020 2025~20% CAGR(2) Clicklane $5B Expected to acquire $6.6B(3) of annualized revenue Expected to exceed acquisition growth target of $5B through high quality strategic acquisitions (1) These projections and targets are forward-looking statements that are based on assumptions that are inherently subject to significant uncertainties and contingencies, many of which are beyond our control. Actual results could differ materially from those contained in these projections. (2) Pro forma to reflect impact of 2020 acquisitions and divestitures (3) Includes acquisition of Larry H. Miller Dealerships, TCA and additional acquisitions
13 © Asbury Automotive Group 2021. All rights reserved.NYSE | ABG Summary Highlights Financial Impact Transaction valued at ~$3.2B, including $740M in real estate Reflects ~6x multiple for Larry H. Miller Dealerships(1) and ~10x multiple for TCA Adds ~$360M of EBITDA including day-one cost savings Expected to be accretive to 2022 EPS by ~14% and to 2024 EPS by ~20%(2) Financing Expected to be financed through a combination of debt and equity Intends to maintain strong credit profile with a focus on deleveraging to ~3x by 2023 Anticipated Closing Transaction is expected to close by year end, subject to customary closing conditions Transaction Scope Acquisition of Larry H. Miller Dealerships, including 54 new vehicle dealerships, 7 used dealerships, and 11 collision centers 18 brands represented across 7 Western states TCA, a leading provider of F&I products, providing enhanced profitability (1) Excluding real estate (2) Assumes impact of potential $600M of equity financing Additional Acquisitions Additional $900M in annualized revenue from other acquisitions under contract Transactions expected to be funded using existing cash on hand and existing credit facilities Additional acquisitions expected to drive total 2022 EPS accretion to ~20% and 2024 EPS accretion to ~28%(2)
14 © Asbury Automotive Group 2021. All rights reserved.NYSE | ABG Q&A