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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 September 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


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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 October 26, 2023 was 20,577,372.


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ASBURY AUTOMOTIVE GROUP, INC.

TABLE OF CONTENTS

  Page
PART I—Financial Information
PART II—Other Information








Table of Contents
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)
 September 30, 2023December 31, 2022
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$41.6 $235.3 
Short-term investments7.4 5.4 
Contracts-in-transit, net177.2 220.8 
Accounts receivable, net202.5 171.9 
Inventories, net1,242.1 959.2 
Assets held for sale15.8 29.1 
Other current assets368.3 288.1 
Total current assets2,054.9 1,909.8 
INVESTMENTS291.8 235.0 
PROPERTY AND EQUIPMENT, net1,960.5 1,941.0 
OPERATING LEASE RIGHT-OF-USE ASSETS230.6 235.4 
GOODWILL1,783.4 1,783.4 
INTANGIBLE FRANCHISE RIGHTS1,800.1 1,800.1 
OTHER LONG-TERM ASSETS133.7 116.7 
Total assets$8,255.0 $8,021.4 
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Floor plan notes payable—trade, net$58.9 $51.0 
Floor plan notes payable—non-trade, net  
Current maturities of long-term debt85.9 84.5 
Current maturities of operating leases21.3 23.6 
Accounts payable and accrued liabilities601.8 645.0 
Deferred revenue—current226.7 218.9 
Liabilities associated with assets held for sale 10.5 
Total current liabilities994.5 1,033.4 
LONG-TERM DEBT3,136.5 3,216.8 
LONG-TERM LEASE LIABILITY215.8 218.4 
DEFERRED REVENUE500.2 495.0 
DEFERRED INCOME TAXES103.6 100.7 
OTHER LONG-TERM LIABILITIES56.0 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; 42,594,062 and 43,593,809 shares issued, including shares held in treasury, respectively
0.4 0.4 
Additional paid-in capital1,287.2 1,281.4 
Retained earnings2,950.4 2,610.1 
Treasury stock, at cost; 22,017,396 and 22,024,479 shares, respectively
(1,066.6)(1,063.0)
Accumulated other comprehensive income77.2 74.4 
Total shareholders' equity3,248.5 2,903.5 
Total liabilities and shareholders' equity$8,255.0 $8,021.4 


See accompanying Notes to Condensed Consolidated Financial Statements
4

Table of Contents
ASBURY AUTOMOTIVE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data)
(Unaudited)
 For the Three Months Ended September 30,For the Nine Months Ended September 30,
 2023202220232022
REVENUE:
New vehicle$1,861.9 $1,799.2 $5,572.2 $5,519.3 
Used vehicle1,111.7 1,330.7 3,345.6 4,044.1 
Parts and service526.5 536.1 1,568.2 1,558.2 
Finance and insurance, net166.1 200.0 505.0 606.4 
TOTAL REVENUE3,666.2 3,865.9 10,991.0 11,727.9 
COST OF SALES:
New vehicle1,693.6 1,598.0 5,040.1 4,873.7 
Used vehicle1,049.6 1,248.6 3,135.6 3,758.5 
Parts and service235.3 238.5 702.9 693.6 
Finance and insurance14.1 13.0 29.6 39.5 
TOTAL COST OF SALES2,992.7 3,098.1 8,908.2 9,365.4 
GROSS PROFIT673.5 767.8 2,082.8 2,362.5 
OPERATING EXPENSES:
Selling, general, and administrative391.7 438.2 1,203.3 1,341.9 
Depreciation and amortization17.0 17.1 50.5 53.6 
Other operating income, net (1.1) (3.0)
INCOME FROM OPERATIONS264.7 313.6 829.0 970.0 
OTHER EXPENSES:
Floor plan interest expense 1.9 1.5 6.0 
Other interest expense, net38.7 38.6 115.3 113.8 
Gain on dealership divestitures, net  (13.5)(4.4)
Total other expenses, net38.7 40.5 103.3 115.4 
INCOME BEFORE INCOME TAXES226.0 273.1 725.7 854.6 
Income tax expense56.8 68.1 178.7 210.5 
NET INCOME$169.2 $205.0 $547.0 $644.1 
EARNINGS PER SHARE:
Basic—
Net income$8.22 $9.26 $26.02 $28.83 
Diluted—
Net income$8.19 $9.23 $25.91 $28.72 
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic20.622.121.022.3
Restricted stock0.10.10.10.1
Diluted20.722.221.122.4






 
See accompanying Notes to Condensed Consolidated Financial Statements
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ASBURY AUTOMOTIVE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
(Unaudited)
 For the Three Months Ended September 30,For the Nine Months Ended September 30,
 202320222023 2022
Net income$169.2 $205.0 $547.0 $644.1 
Other comprehensive income:
Change in fair value of cash flow swaps11.4 33.5 9.0 104.4 
Income tax expense associated with cash flow swaps(2.8)(8.2)(2.2)(25.6)
Losses on available-for-sale debt securities(3.7)(3.1)(5.4)(5.3)
Income tax benefit associated with available-for-sale debt securities0.9 0.7 1.4 1.1 
Comprehensive income$175.0  $227.9 $549.8  $718.7 








































See accompanying Notes to Condensed Consolidated Financial Statements
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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 
Comprehensive Income:
Net income— — — 169.2 — — — 169.2 
Change in fair value of cash flow swaps, net of reclassification adjustment and $2.8 million tax expense
— — — — — — 8.6 8.6 
Unrealized loss on changes in fair value of debt securities, net of reclassification adjustment and $0.9 million tax benefit
(2.9)(2.9)
Comprehensive income— — — 169.2 —  5.7 175.0 
Share-based compensation— — 5.2 — — — — 5.2 
Issuance of common stock, net of forfeitures in connection with share-based payment arrangements2,965 — — — — — —  
Repurchase of common stock associated with net share settlement of employee share-based awards— — — — 1,129 (0.2)— (0.2)
Balances, September 30, 202342,594,062 $0.4 $1,287.2 $2,950.4 22,017,396 $(1,066.6)$77.2 $3,248.5 
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 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 
Comprehensive Income:
Net income— — — 205.0 — — — 205.0 
Change in fair value of cash flow swaps, net of reclassification adjustment and $8.2 million tax expense
— — — — — — 25.3 25.3 
Loss on changes in fair value of debt securities, net of $0.9 million tax benefit
— — — — — — (2.5)(2.5)
Comprehensive income— — — 205.0 — — 22.9 227.9 
Share-based compensation— — 4.7 — — — — 4.7 
Issuance of common stock, net of forfeitures, in connection with share-based payment arrangements2,575 — — — — — — — 
Repurchase of common stock associated with net share settlements of employee share-based awards— — — — 1,031 (0.2)— (0.2)
Balances, September 30, 202244,102,585 $0.4 $1,283.4 $2,338.2 21,969,528 $(1,053.3)$74.1 $2,642.9 


See accompanying Notes to Condensed Consolidated Financial Statements
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ASBURY AUTOMOTIVE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
 For the Nine Months Ended September 30,
 20232022
CASH FLOW FROM OPERATING ACTIVITIES:
Net income$547.0 $644.1 
Adjustments to reconcile net income to net cash provided by operating activities—
Depreciation and amortization50.6 53.6 
Share-based compensation19.3 16.4 
Deferred income taxes2.2 (4.4)
Unrealized (gains) losses on investments(1.9)16.1 
Loaner vehicle amortization23.8 9.7 
Gain on divestitures, net(13.5)(4.4)
Change in right-of-use assets20.5 18.9 
Other adjustments, net(1.7)2.7 
Changes in operating assets and liabilities, net of acquisitions and divestitures—
Contracts-in-transit43.6 43.3 
Accounts receivable(31.2)44.0 
Inventories29.9 50.8 
Other current assets(415.6)(285.7)
Floor plan notes payable—trade, net7.9 (15.2)
Deferred revenue13.0 35.9 
Accounts payable and accrued liabilities(24.1)62.4 
Operating lease liabilities(20.7)(19.3)
Other long-term assets and liabilities, net(9.3)(4.5)
Net cash provided by operating activities239.8 664.4 
CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures—excluding real estate(76.5)(62.5)
Capital expenditures—real estate (10.2)
Acquisitions (5.0)
Divestitures30.7 379.0 
Purchases of debt securities—available-for-sale(164.9)(132.4)
Purchases of equity securities (41.4)
Proceeds from the sale of debt securities—available-for-sale52.2 56.0 
Proceeds from the sale of equity securities51.8 49.5 
Proceeds from the sale of assets16.3  
Net cash (used in) provided by investing activities(90.4)233.0 
CASH FLOW FROM FINANCING ACTIVITIES:
Floor plan borrowings—non-trade5,643.1 5,502.0 
Floor plan repayments—non-trade(5,645.9)(5,989.8)
Floor plan repayments—divestitures (21.6)
Repayments of borrowings(108.8)(48.5)
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, associated with net share settlements of
employee share-based awards
(11.2)(9.1)
Net cash used in financing activities(343.1)(935.0)
Net decrease in cash and cash equivalents(193.7)(37.6)
CASH AND CASH EQUIVALENTS, beginning of period235.3 178.9 
CASH AND CASH EQUIVALENTS, end of period$41.6 $141.3 
See Note 11 "Supplemental Cash Flow Information" for further details
See accompanying Notes to Condensed Consolidated Financial Statements
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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 September 30, 2023, we owned and operated 181 new vehicle franchises (138 dealership locations), representing 31 brands of automobiles, and 31 collision centers in 14 states. For the nine months ended September 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.
Pending Acquisition
On September 7, 2023, the Company, through one of its subsidiaries, entered into a Purchase and Sale Agreement (the "Transaction Agreement") with various entities that comprise the Jim Koons automotive dealerships group (the "Jim Koons Dealerships"). Pursuant to the Transaction Agreement, the Company is expected to acquire substantially all of the assets, including all real property of the Jim Koons Dealerships for an aggregate purchase price of approximately $1.20 billion, which includes approximately $417.0 million for real estate and leasehold improvements. In addition, we expect to acquire new and used vehicles, service loaner vehicles, fixed assets, parts and supplies for a purchase price to be determined at the closing of the transaction. Jim Koons Dealerships operates 20 new vehicle dealerships and six collision centers. The acquisition of these entities is anticipated to close in the fourth quarter of 2023 and is subject to various customary closing conditions, including approval from the applicable automotive manufacturers.
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 September 30, 2023, and for the three and nine months ended September 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 nine months ended September 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.
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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 September 30, 2023 and 2022, there were no shares repurchased under our share repurchase program. During the nine months ended September 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 for these share repurchases was $210.7 million and $200.0 million for the nine months ended September 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.
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 466 and 403 restricted share units and 3 and 0 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 September 30, 2023 and 2022, respectively. During the nine months ended September 30, 2023 and 2022, the Company excluded 2,235 and 1,937 restricted share units and 0 and 394 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."

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2. REVENUE RECOGNITION
Disaggregation of Revenue
Revenue from contracts with customers for the three and nine months ended September 30, 2023 and 2022 consists of the following:
For the Three Months Ended September 30,
20232022
(In millions)
Revenue:
   New vehicle$1,861.9 $1,799.2 
   Used vehicle retail1,016.8 1,249.8 
   Used vehicle wholesale94.9 80.9 
New and used vehicle2,973.6 3,129.9 
  Sale of vehicle parts and accessories125.1 128.9 
  Vehicle repair and maintenance services401.4 407.2 
Parts and services526.5 536.1 
Finance and insurance, net166.1 200.0 
Total revenue$3,666.2 $3,865.9 
For the Nine Months Ended September 30,
20232022
(In millions)
Revenue:
   New vehicle$5,572.2 $5,519.3 
   Used vehicle retail3,051.8 3,739.5 
   Used vehicle wholesale293.8 304.6 
New and used vehicle8,917.8 9,563.4 
  Sale of vehicle parts and accessories375.0 384.5 
  Vehicle repair and maintenance services1,193.1 1,173.7 
Parts and service1,568.2 1,558.2 
Finance and insurance, net505.0 606.4 
Total revenue$10,991.0 $11,727.9 










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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 
Transferred to receivables from contract assets recognized at the beginning of the period(17.5)(1.7) (19.2)
Amortization of costs incurred to obtain a contract with a customer   (3.2)(3.2)
Costs incurred to obtain a contract with a customer  10.7 10.7 
Increases related to revenue recognized, inclusive of adjustments to constraint, during the period23.9 1.7  25.6 
Balance as of September 30, 2023$23.9 $14.3 $61.6 $99.7 
Contract Assets (current), September 30, 202323.9 14.3 17.6 55.8 
Contract Assets (long-term), September 30, 2023$ $ $43.9 $43.9 
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Deferred Revenue
The condensed consolidated balance sheets reflect $726.9 million and $713.9 million of deferred revenue as of September 30, 2023 and December 31, 2022, respectively. Approximately $176.7 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 nine months ended September 30, 2023.
3. DIVESTITURES
During the nine months ended September 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 nine months ended September 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, during the nine months September 30, 2022, which is presented in our accompanying condensed consolidated statements of income as gain on dealership divestitures, net. We also paid an additional $5.0 million during the quarter ended September 30, 2022 in connection with purchase price adjustments related to a prior year acquisition.

4. ACCOUNTS RECEIVABLE
Accounts receivable consisted of the following: 
 As of
 September 30, 2023December 31, 2022
 (In millions)
Vehicle receivables$65.5 $50.4 
Manufacturer receivables51.1 43.3 
Other receivables88.8 80.5 
     Total accounts receivable205.3 174.1 
Less—Allowance for credit losses(2.8)(2.2)
     Accounts receivable, net$202.5 $171.9 
5. INVENTORIES
Inventories consisted of the following:
As of
 September 30, 2023December 31, 2022
 (In millions)
New vehicles$806.9 $527.7 
Used vehicles304.3 304.4 
Parts and accessories131.0 127.2 
Total inventories, net (a)$1,242.1 $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 $8.7 million and $10.7 million as of September 30, 2023 and December 31, 2022, respectively. As of September 30, 2023 and December 31, 2022, certain automobile manufacturer incentives reduced new vehicle inventory cost by $7.0 million and $2.7 million, respectively, and reduced new vehicle cost of sales for the nine months ended September 30, 2023 and 2022 by $68.9 million and $69.4 million, respectively.
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6. ASSETS AND LIABILITIES HELD FOR SALE
Assets and liabilities classified as held for sale include (i) assets and liabilities associated with pending dealership disposals, (ii) real estate not currently used in our operations that we are actively marketing to sell and (iii) the related mortgage notes payable, if applicable.
A summary of assets held for sale and liabilities associated with assets held for sale is as follows:
As of
September 30, 2023December 31, 2022
(In millions)
Assets:
Inventory$ $3.4 
Loaners, net 0.9 
Property and equipment, net15.8 24.0 
Goodwill 0.9 
Total assets held for sale15.8 29.1 
Liabilities:
Floor plan notes payable—non-trade 2.8 
Loaners notes payable 0.8 
Current maturities of long-term debt 0.6 
Long-term debt 6.2 
Total liabilities associated with assets held for sale 10.5 
Net assets held for sale$15.8 $18.7 
As of September 30, 2023, assets held for sale consisted of real estate associated with 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.
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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 September 30, 2023
Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
(In millions)
Short-term investments$7.4 $ $ $7.4 
U.S. Treasury13.5  (0.4)13.1 
Municipal30.0  (1.0)29.0 
Corporate120.6  (4.2)116.4 
Mortgage and other asset-backed securities136.9 0.1 (3.7)133.3 
Total debt securities308.5 0.1 (9.4)299.2 
Total investments$308.5 $0.1 $(9.4)$299.2 

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 September 30, 2023. The Company had an unrealized loss of $0.4 million related to equity securities held as of December 31, 2022.
As of September 30, 2023 and December 31, 2022, the Company had $2.1 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.
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A summary of amortized costs and fair value of investments by time to maturity, is as follows:
 As of September 30, 2023
 Amortized CostFair Value
 (In millions)
Due in 1 year or less$7.4 $7.4 
Due in 1-5 years108.0 104.8 
Due in 6-10 years53.6 51.4 
Due after 10 years2.5 2.3 
Total by maturity171.6 165.9 
Mortgage and other asset-backed securities136.9 133.3 
Total investment securities$308.5 $299.2 
There were $0.1 million and $0.3 million gross gains realized, respectively, related to the sale of available-for-sale debt securities carried at fair value for the three and nine months ended September 30, 2023. There were $1.5 million gross losses realized related to the sale of available-for-sale debt securities carried at fair value for both the three and nine months ended September 30, 2023. There were no gross gains and gross losses realized related to the sale of equity securities carried at fair value for the three months ended September 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 nine months ended September 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 nine months ended September 30, 2022. There were $1.2 million and $1.9 million gross losses realized, respectively, related to the sale of available-for-sale debt securities carried at fair value for three and nine months ended September 30, 2022. There were $8.4 million and $10.1 million gross gains realized, respectively, related to the sale of equity securities carried at fair value for the three and nine months ended September 30, 2022. There were $2.1 million and $3.6 million gross losses realized, respectively, related to the sale of equity securities carried at fair value for the three and nine months ended September 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 September 30, 2023.
As of September 30, 2023
Less than 12 Months