Asbury Automotive Group Inc

Greetings. Welcome to Asbury Automotive Group third quarter 2026 earnings call. At this time, all participants are in a listen-only mode. A 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. Please note this conference is being recorded. I will now turn the conference over to Paran Patel, Vice President of Finance and Treasurer. Thank you. 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 Ashbury Automotive Group's third quarter 2026 earnings call. The press release detailing Ashbury's third quarter results was issued earlier this morning and is posted on our website at investors.ashburyauto.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 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 Those which are historical in nature, which may include financial projections 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 31, 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, non-GAAP financial measures as defined may be discussed on this call. As required by applicable SEC rules, we provide conciliations of any such non-GAAP financial measures for 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.ashburyauto.com, highlighting our third quarter results. And now, it is my pleasure to hand over the call to our president and CEO, Dan Clara. Dan?

Thank you, Farheen, and good morning, everyone. Welcome to our third quarter earnings call. I am pleased to share that we have reached a defining milestone. Every active Asbury store is now operating on Techia, our single modern technology platform. After several years of planning and execution, we now run the entire company on one system, giving us a common foundation to operate more efficiently, make decisions faster, and serve our customers. This milestone is one part of a broader strategy. Anchored in our five pillars, which aligns the organization on operational excellence within the following five priorities. Growing new vehicle market share, driving profitable volume growth in used vehicles, reestablishing consistent growth in customer pay growth profit, disciplined management of SG&A, and leveraging technology. On the technology pillar, we converted 47 stores to Techion in the third quarter. Our largest single quarter ever and completed the final 10 dealerships in October. Our longest tenured Techion stores in Georgia and at Kuhn's are giving us an early read on the platform's impact. In the third quarter, customer pay gross profit grew 7% versus the total company's same store being flat. Total fixed-off gross grew 5%. versus total company same store down 2%. Units per salesperson increased 4% and gross profit per technician improved by 9%, both outpacing the rest of the company. As we have shared before, it takes time for team members to build the muscle memory that comes with a new platform before taking it to another level. These stores have had the time and we believe the same opportunity exists and the rest of our stores to improve efficiency, enhance the guest experience and drive value for our shareholders. This was a major lift for our organization. Our store teams learned a new system while continuing to sell, service and care for our guests every day. And our support teams worked alongside them at every step. I am grateful to them and to our partners at Techion for getting us across the finish line. With the conversion behind us, the time and resources we dedicated to implementation can now go back into running and growing the business. Our teams have done the hard work. Now it is time to put the technology to work. It has been a busy few months for our teams. In addition to converting 47 stores to Tech Yacht in the third quarter, we also implemented Total Care Auto to our 30 plus herb chamber stores. which completed our TCA rollout to all of Asbury. And now I will speak to our operational results on a same store basis unless otherwise noted. I will note that our herb chamber stores are included in same store results for August and September only. Starting with new vehicles, our new vehicle business continue to perform in line with our expectations this quarter. On an all-store basis, new PVRs were $2,949, down 6% sequentially. These PVRs are well within the range where we expect them to remain going forward. Same-store new units were down 8% against a tough prior year comparison as we were lapping the expiration of federal and state BEV tax credit eligibility in 2025. The sharp decrease in EV volume accounted for 5% of this 8% change year-over-year, mostly driven by Colorado, which had a robust state EV incentives last year. We closed the quarter with a well-managed inventory position of 53 day supply, in line with the second quarter and setting us up well for the fourth quarter. Next, turning to used vehicles. Our used vehicle business continued to build momentum this quarter, and we are encouraged by the progress. Used retail gross profit grew 3% over last year, and we grew used retail PVR by 10% to $1,777, reflecting our focus on growing volume profitably. Our strategy and retailing process improvements are taking hold and driving a stronger pre-owned business. On an all-store basis, our used retail volume increased 4.5% over the second quarter. With our discipline processes in place, we anticipate use volume to increase on a year-over-year basis as we move into the fourth quarter. And we ended the quarter with a 41-day supply, keeping us well positioned heading into the fourth quarter. Moving to F&I. Our F&I business performed well at the dealership level this quarter, where F&I PVR was up year-over-year. On a reported basis, F&I PVR was $2,177, down $19 from the prior year. But that decline was driven entirely by the non-cash TCA deferral, which represented $138 of impact. Excluding the TCA deferral, our F&I PVR was $2,453, up $119 year-over-year. Our front end yield per vehicle was $4,583 in the third quarter. Next, parts and service. Our customer pay revenue was up 2% with gross profit flat year over year. Warranty gross profit was down 1%. Overall, parts and service was not where we wanted it to be. But now, with a heavy lift of rolling out a new DMS behind us, we are optimistic in our ability to get back to consistent growth while delivering an exceptional guest experience. And quickly, on operational efficiencies. Our same store adjusted SG&A as our percentage of gross profit was 67% in the quarter. With the TechYon conversion now complete, we believe our SG&A can reach the low 60% range by the end of 2027, driven by efficiency gains as our teams become more productive on the platform. As we enter the fourth quarter, I am encouraged by what I see. Our used business has improved for several quarters in a row. And with our TechYon rollout now behind us, our teams can turn their full attention to serving our guests and executing our five pillar strategy. We will remain disciplined in allocating capital. Our priority is to bring net leverage below three times. We believe we are well positioned to finish the year strong and look forward to one platform to achieve our goals in 2027. Most of all, I want to thank our team members. They took on one of the largest changes in our company's history. and delivered it while keeping our guests at the center of everything we do. We are now positioned to see the benefits of their hard work. And before I pass to Michael, one additional item worth noting. In early October, the FTC administrative proceeding against the company was dismissed. The outcome is consistent with our long-held view that our F&I sales practice have been and continue to be sound, lawful, and in compliance with applicable regulations. We remain focused on serving our guests with the integrity and transparency that we have always defined how we do business. And with that, I'll now hand the call over to Michael to discuss our financial results for the quarter.