Asbury Automotive Group Inc

Greetings and welcome to the Asbury Automotive Group first quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Chris Reeves, Vice President of Finance and Treasurer. Thank you, sir. You may begin.

Thanks, Operator, and good morning. As noted, today's call is being recorded and will be available for replay later this afternoon. Welcome to the Asbury Automotive Group's first quarter 2026 earnings call. The press release detailing Asbury's first quarter results was issued earlier this morning and is posted on our website at investors.asburyauto.com. Participating with me today are David Holt, our President and Chief Executive Officer, Dan Clara, our Chief Operating Officer, and Michael Welch, our Senior Vice President and Chief Financial Officer. At the conclusion of our remarks, we will open up the call for questions and will be available later for any follow-up questions. Before we begin, we must remind you that the discussion during the call today is likely to contain forward-looking statements. Forward-looking statements are statements other than those which are historical in nature which may include financial projections, forecasts, and current expectations, each of which are subject to significant uncertainties. For information regarding certain of the risks that may cause actual results to differ materially from these statements, please see our filings with the SEC from time to time, including our Form 10-K for the year ended December 31st, 2025, any subsequently filed quarterly reports on Form 10-Q, and our earnings release issued earlier today. we expressly disclaim any responsibility to update forward-looking statements. In addition, certain non-GAAP financial measures, as defined under SEC rules, may be discussed on this call. As required by applicable SEC rules, we provide reconciliations of any such non-GAAP financial measures to the most directly comparable GAAP measures on our website. Comparisons will be made on a year-over-year basis unless we indicate otherwise. We have also posted an updated investor presentation on our website, investors.asburyauto.com, highlighting our first quarter results. It is my pleasure to now hand the call over to our CEO, David Holt. David.

Thank you, Chris. And good morning, everyone. Welcome to our first quarter earnings call. Our first quarter results highlighted efforts to transform our business by optimizing our portfolio and successfully migrating to Techion. Today, Over 50% of our stores are running on Techion. We remain on track and anticipate to be fully converted by the fall of this year, after which time we expect to begin fully realizing the cost and efficiency benefits enabled by the new technology platform. The first and second quarter of this year represent the peak in terms of number of stores making the transition. As a result, costs related to integration and temporary disruption to store operations will also remain elevated as team members become fully acclimated to the new technology. MICA will provide additional color behind the transition and its impact on our financial performance. The first quarter also showcased a number of capital allocation decisions which Asbury which positioned Asbury for future success, while also returning capital to our shareholders. We divested 10 dealerships and a collision center at attractive multiples, representing approximately $600 million in annualized revenue. $147 million of the proceeds went towards repurchasing 678,000 shares of our stock, with the rest directed towards reducing our debt. In our view, our trading price undervalues the earning potential of the company, and we took advantage of this price-to-value dislocation to accelerate our repurchase activity. Moving on to our first quarter 2026 operational performance. Our results reflect the expected decrease in volumes as consumer demand moderated from last year's tariff-driven spike in sales. More challenging weather was also a factor as was the temporary disruption for the stores going through the Techion conversion. While new vehicle volumes were down, gross profit on a per-unit basis held up well. On an all-store basis, new vehicle PVRs were down just $73 sequentially and $177 on a year-over-year basis, an indication profitability is beginning to approach normalized levels. Similarly, used vehicle PVRs on an all-store basis was $1,847, which is up sequentially 5% and 16% year over year as the team continues to execute our strategy to maximize per unit profitability. Arts and service had a more challenging quarter driven by a variety of factors, including weather, a more cautious consumer, and temporary disruption from our DMS transition. That said, we still expect fixed operations gross profit to grow at mid-single-digit rate over time. And now for our consolidated results for the first quarter. We generated $4.1 billion in revenue, had a gross profit of $727 million, a gross profit margin of 17.7 percent, an expansion of 22 basis points. We delivered an adjusted operating margin of 5%. Our adjusted earnings per share was $5.37, and our adjusted EBITDA was $207 million. Before I hand the call over to our incoming Chief Executive Officer, Dan Clara, I want to take a moment to thank our team members for helping to make Asbury Automotive the company that it is today. Together, we have transformed our organization from a regional player one with national scale in highly desirable markets a balanced portfolio and a leader in technology focused investments it has been an honor and a privilege to serve as the student of this business for the past eight and a half years and i know our best days are ahead with dan running the company dan i will hand things over to you to discuss our operational performance Good morning, everyone.