Asbury Automotive Group (NYSE:ABG) reported second-quarter 2026 adjusted earnings per share of $6.82, as the dealership operator continued its transition to the Tekion dealership-management system and emphasized operational improvements, used-vehicle volume growth and share repurchases.
The company generated $4.4 billion in revenue, $753 million in gross profit and a 17.2% gross-profit margin during the quarter. Adjusted operating margin was 5.3%, while adjusted EBITDA totaled $235 million and adjusted net income was $125 million, Chief Financial Officer Michael Welch said.
Tekion rollout passes 70% milestone
President and Chief Executive Officer Dan Clara, speaking on his first earnings call as CEO, described 2026 as a transition year as Asbury completes the Tekion rollout across its stores. The company expects to finish the conversion by October, with about 30% of its store base remaining as of the call.
Clara said the conversion requires investment because Asbury is operating legacy systems while installing the new platform, but management expects the common system to produce efficiencies once stores have had time to adapt. Stores generally require five to six months after conversion before the company sees more significant operational benefits, he said.
In markets that have been on Tekion for at least five months, including Koons, Georgia and Florida, average units per salesperson increased 12% in June and dollars per technician rose 10%, Clara said. He later added that the Koons operations posted a 14.2% sequential increase in units per sales manager and a 15.2% increase in units per finance-and-insurance manager.
Management said Tekion helps reduce the need for technicians and service advisers to switch among multiple systems. The platform consolidates communications among advisers, technicians and parts departments, while also enabling faster delivery of photos and videos to customers regarding recommended work.
Welch said the company transitioned 13 stores in July and expects the third quarter to be a relatively heavy implementation period. Asbury intentionally slowed conversions in May after rolling out Herb Chambers operations in March and April, he said, because the acquired group was also adapting to the company’s standard processes and shared-service center.
Vehicle operations and fixed operations
On a same-store basis, new-vehicle unit sales declined 6% in the quarter. New-vehicle profit per retail unit, or PVR, was $2,896 on a same-store basis and $3,124 on an all-store basis. Asbury ended the period with a 53-day new-vehicle supply.
Clara said the company saw a temporary sales disruption at stores converting to Tekion as sales staff adapted to the new system’s workflow for internet leads and follow-up, though recovery has been faster than in fixed operations. He also cited a 28% decline at Stellantis stores, as well as lower volumes at some import dealerships following the prior-year demand for electric vehicles before incentives expired.
Luxury new-vehicle volume declined 10%, imports were flat and domestic volume fell 16%, according to Clara. He said inventory is improving at luxury manufacturers and that Toyota’s supply of roughly 12 to 15 days supports healthy margins.
Used-vehicle retail PVR was $1,927, up 5% sequentially, while used-vehicle volume was effectively flat from the first quarter. Used-vehicle supply ended the quarter at 37 days, compared with 30 days previously, after the company purchased approximately 6,500 vehicles at auction during the quarter.
Management said it began shifting its used-car strategy in May toward higher volume while maintaining what it considers healthy PVRs. Clara expects year-over-year used-vehicle volume growth to begin in the fourth quarter. The company is seeking inventory through consumer purchases, off-lease vehicles, loaner fleets and selective auction purchases, while emphasizing the advantages of franchise dealerships in sourcing and certifying vehicles.
Customer-pay parts and service business was flat year over year, and total fixed-operations gross profit was slightly lower. However, total same-store fixed gross profit increased 4% in June, and Clara said July trends were similar. The company expects low- to mid-single-digit customer-pay growth in the third quarter.
Cost targets, cash flow and capital allocation
Same-store adjusted selling, general and administrative expense was 65.3% of gross profit, while the all-store figure was 66%, a 260-basis-point improvement from the first quarter. Welch said Asbury expects gradual quarterly improvement despite continued rollout costs and sees a path to begin realizing savings late in 2026 and into 2027.
Clara said the company aims to reduce SG&A to the low-60% range of gross profit by the end of 2027 after the Tekion conversion is complete and efficiencies are realized. Asbury is also investing in artificial intelligence applications across operations and support functions, he said.
Year-to-date adjusted operating cash flow was $305 million, and adjusted free cash flow totaled $188 million through June. Excluding real-estate purchases, capital expenditures were $117 million in the first half, with full-year capital spending still expected to be about $250 million.
- Liquidity at quarter-end was $966 million, excluding cash at TotalCare Auto.
- Transaction-adjusted net leverage was 3.4 times.
- Asbury repurchased 668,000 shares for $131 million in the second quarter.
- Year-to-date repurchases totaled 1.35 million shares for $278 million, equal to 7% of the company’s year-end 2025 share count.
Welch said Asbury temporarily accepted higher leverage because management viewed the company’s shares as attractively valued. The company continues to target leverage of 3.0 times and expects to reach that level in early to mid-2027. Management said it continues to review acquisition opportunities but currently views share repurchases as offering a better return than the deals it has recently evaluated.
About Asbury Automotive Group (NYSE:ABG)
Asbury Automotive Group, Inc (NYSE:ABG) is one of the largest automotive retailers in the United States. Headquartered in Duluth, Georgia, the company operates a network of franchised dealerships representing a diverse portfolio of automotive brands. Its core business activities include the sale of new and pre-owned vehicles, as well as the provision of vehicle finance, insurance and protection products to retail customers.
In addition to retail sales, Asbury offers a comprehensive suite of after-sales services, from scheduled maintenance and certified collision repair to parts distribution.
