Asbury Automotive Group Inc

Greetings and welcome to the Asbury Automotive Group second 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 Investor Relations. 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 Asbury Automotive Group's second quarter 2026 earnings call. The press release detailing Asbury's second quarter results was issued earlier this morning and is posted on our website at investors.asburyauto.com. Participating with me today are Dan Clara, our President and Chief Executive Officer, and Michael Welch, our Senior Vice President and Chief Financial Officer. At the conclusion of our remarks, we will open the call up for questions and will be available later today 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 is 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, and 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 second quarter results. It is my pleasure to now hand the call over to our President and CEO, Dan Clara. Dan?

Thank you, Chris, and good morning, everyone. Welcome to our second quarter earnings call. I want to begin my first earnings call as Asbury's CEO by thanking our team members across the country for the work they do every day to serve our guests and support one another. Your commitment, resilience, and focus on continuous improvement are what makes this company strong. As we noted in our prior quarter commentary, 2026 is a year of transition for Asbury as we finalize the rollout of Techion across our store base. Focus on growth through operational improvements and continue our balanced approach to capital allocation. Our results continue to reflect the investment associated with completing the TECION rollout while simultaneously operating our legacy systems. This investment positioned us to capture meaningful operating efficiencies as we anticipate completion of the rollout by October of this year. Rolling out a new DMS at this scale is a significant undertaking and I am proud of our team members commitment to making this transition successful. Crossing the 70% implementation milestone is important because an increasing percentage of our store base is now positioned to benefit from a common operating platform. Importantly, the operational improvements we're seeing are not isolated. Markets that have been on tech beyond the longest continue to demonstrate better productivity, stronger customer pay performance, higher technician efficiency, and improving sales effectiveness. For example, our Coons, Georgia, and Florida markets have at least five months post-conversion under their belts. Just looking at the month of June, those stores grew average units per salesperson by 12% and increased the dollars per technician by 10%. These are just a few of the operating metrics we expected to improve as stores mature on the platform. Our strategic initiatives, which I will refer to as our five pillars, are focused on increasing new vehicle market share, re-establishing consistent growth in customer paid gross profit, driving profitable volume growth in used vehicles, managing SG&A, and leveraging technology. A successful migration to TECION remains a top priority as we approach our final remaining stores. Collectively, these pillars are not a change in direction. They represent a sharpened way of executing the priorities that will drive growth and return for our shareholders. On the capital allocation front, we continue deploying capital into our own shares because we believe our stock represents an attractive long-term investment while maintaining ample liquidity and flexibility. In the first two quarters combined, we have repurchased 7% of our 2025 ending share count. Michael will provide additional details on our approach to capital allocation. And now I will speak to our operational results on a same store basis unless otherwise noted. Starting with new vehicles, new units were down 6%. New PVRs were $2,896 on a same store basis and $3,124 on an all store basis. with flattening sequential declines indicating we are near normalized levels. We ended the quarter with new day supply at 53 days, a healthy level that supports stabilizing PBR. Next, turning to used vehicles. We earned a used retail PBR of $1,927, a sequential increase of 5% on effectively the same store volume as the first quarter. Our used vehicle strategy is already producing sequential improvement while positioning us for higher volume over time. As a reminder, our used vehicle strategy has been focused on maintaining discipline rather than chasing volume for volume's sake, with an emphasis on maximizing gross profit. In May, we began shifting our approach toward driving higher used vehicle volume while still maintaining healthy PVRs. We are beginning to see positive results from this strategy. As we continue deploying this used vehicle strategy across the organization, I expect to see increased used vehicle volume as we move into the fourth quarter of 2026. We're also continuing to invest in our appraisal and pricing tools while maintaining discipline in our resourcing of vehicles from consumers, off-list channels, along with strategic acquisitions through the auctions. Finally, we ended the quarter with a 37-day supply. Moving to F&I. We earned an F&I PVR of $2,214. And finally, in the second quarter, our total front-end yield per vehicle was $4,698. Next, on parts and service. Our customer-paid business was flat year-over-year, and our overall parts and service gross profit was slightly down. As I mentioned earlier, it takes five to six months to see operational improvements from our DMS change. A large number of transition stores are still within this window, and we expect a return to normalized growth levels in the coming quarters. We did see better traction in June, where total same-store fixed gross profit was up 4%. Now, I'd like to quickly talk about continued focus on operational efficiency. Along with growing gross profit, cost discipline remains a top priority, and we measure ourselves on how well we contain expenses in order to drive a strong operating market. Our same store adjusted SG&A as a percentage of gross profit was 65.3% in the quarter. Once all stores are converted to Tech Yon and we begin to gain all its efficiencies, we believe our SG&A can get to the low 60% range by the end of 2027. We also continue to invest in AI across every department in the company. Whether in operations or support, we've seen meaningful opportunities to improve efficiency, assist our team members, and enhance the guest experience. As we enter the second half of the year, we have greater visibility into the completion of our technology roll-up, encouraging operational trends in our mature tech and markets, a healthy balance sheet, meaningful liquidity, and significant flexibility to continue investing in our business while returning capital to our shareholders. We believe the foundation we're building today positions us very well for long-term value creation. And with that, I'll now pass the call to Michael to discuss our financial results for the quarter. Michael?