Asked for one specific financial benefit of Tekion that justifies the short-term noise.

Dan Clara highlighted the Koons dealerships as an example, where Tekion led to a 21% increase in gross dollars per technician, a 16% increase in average productivity per service advisor, and a 5% decrease in support costs, alongside an improved guest experience. “When you look at the gross dollars per technician being up 21% at cons and the average productivity per service adviser -- and then you add the fact that support cost has also decreased. It's a pretty nice mix and aligned with what we expected.”

Inquired about the breakdown of the 11% same-store new car unit decline and 12% used car unit decline, specifically how much was due to weather, Tekion productivity, and market conditions.

Dan Clara estimated weather impacted Q1 same-store new and used car volumes by approximately 500 units each, and fixed revenue by $13 million. He also noted that Tekion conversions involve closing operations for one day (Monday) and reduced efficiency for 4-6 months post-conversion. “On the -- when you look at the weather impact, I'm talking about from a same-store basis, we believe there's no closure in Q1 affected us somewhere in the $500 range and similarly in U.S. core volume... somewhere around $13 million impact.”

Clarified the mid-60s SG&A target, asking if it excludes DMS transition impacts, and questioned the rationale for ramping up buybacks while EBITDA is declining, linking it to Tekion benefits.

Michael Welch confirmed mid-60s SG&A is achievable without weather headwinds, and expects further improvement in 4Q as Tekion efficiencies materialize. He explained buybacks were driven by proceeds from divestitures and the belief that the stock is undervalued, anticipating dramatically higher EBITDA in H2 2026 and into 2027 post-Tekion rollout. “We do think the back half of this year and into 2017, the EBITDA comes up dramatically with the Tekion rollout behind us. And so we're kind of trying to balance the leverage ratio and the share buybacks. And if the share price is low, we're going to lean in a little bit of share buybacks.”

ABG

Asbury Automotive Group (ABG) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Consumer Discretionary· Apr 28, 2026

Source: earnings call transcript

Executive summary

Asbury Automotive Group Q1 FY26 — Tekion Transition and Strategic Portfolio Optimization

Asbury Automotive Group navigated a complex Q1 FY26 marked by significant Tekion DMS conversions and strategic portfolio optimization through divestitures. While severe weather and the DMS transition temporarily impacted volumes and efficiency, management remains confident in the long-term benefits of the technology platform and the strategic capital allocation decisions. The company is balancing debt reduction and share repurchases, anticipating improved financial performance in the latter half of the year as Tekion efficiencies materialize.

Highlights

Strategic divestiture of 10 dealerships and a collision center, representing approximately $600 million in annualized revenue, used to repurchase 678,000 shares and reduce debt.
Used vehicle PVR increased 16% YoY to $1,847 on an all-store basis, marking the second consecutive quarter of progress.
March saw adjusted same-store SG&A in the low 60s, indicating a rebound from weather impacts.
Customer pay and warranty gross profit in Parts & Service grew 4% in March, with April trending similarly.
Over 50% of stores are now running on Tekion, on track for full conversion by Fall, with early efficiency gains observed (e.g., Koons dealerships saw gross dollars per technician up 21% YoY).

Concerns

Q1 results reflect an expected decrease in volumes, with new vehicle units down approximately 4,300 on a same-store basis due to moderated consumer demand, severe weather, and Tekion transition disruption.
Parts and Service had a challenging quarter, with same-store gross profit slightly down YoY, attributed to winter storms and temporary disruption from DMS transition.
Adjusted SG&A as a percentage of gross profit on a same-store basis was 66.9%, higher than expected due to $2 million in legal expenses and severe weather headwinds.
New vehicle PVR on an all-store basis was down $177 YoY, indicating a moderation towards normalized profitability levels.
The non-cash deferral impact from TCA negatively affected adjusted EPS by $0.26 per share.

Guidance & targets

Category	Target	Timeline	Confidence
Effective tax rate	approximately 25% medium materiality	FY26	High
Capital expenditures	approximately $250 million medium materiality	FY26	High
Capital expenditures	approximately $250 million medium materiality	FY27	High
Fixed operations gross profit growth	mid-single-digit rates medium materiality	Long-term	Medium
Tekion DMS conversion	fully converted high materiality	Fall 2026 · FY26	High
TCA implementation	complete rollout across all platforms medium materiality	Year-end 2026 · FY26	High
Adjusted SG&A as a percentage of gross profit	mid-60s range medium materiality	Going forward	Medium

ABG operating KPIs by quarter

ABG operating KPIs stated on its earnings calls, by fiscal quarter
KPI	This call Mar 2026 Q1 FY26	Jun 2026 Q2 FY26	Change vs prior quarter
F&I PVR	$2,307 Shifting to F&I We earned an F&I PVR of $2,307. Source: earnings call transcript	$2,214 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. Source: earnings call transcript	-4%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Deals & partnerships

Undisclosed Divestiture of 10 dealerships and 1 collision center, and termination of 7 franchises (Alfa Romeo and Maserati brands). Generated $600 million in annualized revenue (estimated)

Divested 10 dealerships and a collision center at attractive multiples, representing approximately $600 million in annualized revenue. Terminated 7 franchises, including Alfa Romeo and Maserati brands. Combined, these stores generated an estimated annualized revenue of $625 million.

Risks & headwinds

Temporary disruption in store operations and elevated integration costs due to Tekion DMS transition. Peak in Q2 and Q3 2026, with efficiencies taking 4-6 months to materialize per store.

Costs related to integration and temporary disruption will remain elevated as team members become fully acclimated. Stores are slightly less efficient in the first 2 months of operating in the new DMS.

Mitigation:Management believes short-term headwinds are outweighed by long-term benefits in efficiency, productivity, and cost reduction. Dedicated training and support for team members.

Expected decrease in volumes due to moderated consumer demand. Q1 FY26 and continuing into Q2 FY26.

New vehicle volumes were down. New car sales slowdown into April. Same-store new vehicle revenue down 9% YoY.

Mitigation:Focus on maximizing per unit profitability (e.g., used vehicle strategy). Monitoring consumer behavior.

Impact from severe winter weather across multiple weekends and nearly all markets. Q1 FY26 (January and February particularly rough).

Estimated $19 million impact on gross profit and $0.56 impact on EPS. Approximately 500 units lost sales in new and used vehicles (same-store). $13 million impact on same-store fixed revenue.

Mitigation:Weather is behind us; March and April showed recovery.

Monitoring consumer behavior in light of ongoing geopolitical events and high oil/gasoline prices. Ongoing.

Not yet quantified for impact on buying habits, but potential for shift if war lingers.

Mitigation:Monitoring trends; historically takes 5-6 months for consumer buying habits to change due to gas prices.

Headwind from Stellantis brand performance, impacting domestic GPU. Ongoing.

Domestic GPU impacted.

Mitigation:Focusing on performing better with Stellantis, getting inventory turn, and maximizing gross profit.

Potential challenge in sourcing used vehicles if new car sales do not rebound, as fewer trade-ins will be available. Next few quarters.

Roughly 2,300 to 2,500 trade-ins on 4,000 new units, with 80% retailed. A chunk of pre-owned normally available internally will be missing.

Mitigation:Anticipate increased pool of used vehicles from lease return activity through the year.

What to watch in Q2 FY26

Tekion efficiency gains

Very late Q2 into Q3

Current Koons dealerships seeing 21% tech productivity, 16% service advisor productivity, 5% support cost reduction. Overall, stores are slightly less efficient in first 2 months post-conversion.

Target Overall company-wide efficiency gains and cost reductions, with more stores moving past the 4-6 month adjustment window.

Why it matters

Tekion is a major investment and strategic initiative; realizing its promised efficiencies is critical for future profitability and operational leverage.

I would say that the peak is going to be very late 2Q into 3Q is kind of where the peak will be.

Find out whether ABG delivers this. Inve re-checks your case every morning.

Q&A highlights

Asked for a "state of the union" on current demand trends for new and used vehicles, and parts & service, considering Q1's weather and Tekion impacts, and the end of tax refund season.

David Hult noted January/February were rough due to weather, but March and April showed signs of recovery, with SG&A in the low 60s. He acknowledged a slowdown in new car sales continuing into April, and potential challenges in sourcing used vehicles if new sales don't rebound. He expressed confidence in Parts & Service bouncing back as Tekion efficiencies take hold.

“January and February were really rough for us from a weather perspective... March was a good sign for us... We see the same going into April. Very difficult to predict much beyond that with what's going on with the war in gasoline prices and other things and how long that lingers.”

asked by Jeffrey Lick · answered by David Hult

2 min read 6 chapters

Detailed narrative

Tekion DMS Transition and Impact

The company is actively migrating to Tekion, with over 50% of stores converted and full conversion expected by Fall 2026. This transition, while necessary for elevating guest experience and enhancing operational capabilities, is causing temporary disruptions and elevated integration costs, particularly peaking in Q2 and Q3.

Early results from converted Koons dealerships show significant efficiency gains, including a 21% increase in gross dollars per technician and a 16% rise in average productivity per service advisor, alongside a 5% decrease in support costs.

Strategic Portfolio Optimization

Asbury divested 10 dealerships and a collision center, representing approximately $600 million in annualized revenue, and terminated 7 franchises, including Alfa Romeo and Maserati brands. These strategic transactions allowed the company to optimize its portfolio, reduce its CapEx burden, and deploy proceeds towards higher-return options, including debt reduction and share repurchases.

Capital Allocation and Shareholder Returns

The company repurchased 678,000 shares for $147 million, leveraging the proceeds from divestitures and robust cash flow. Management views the current stock price as undervalued and is taking advantage of this dislocation to accelerate repurchase activity, balancing debt levels and shareholder returns. The diluted share count is approximately 18.6 million.

Q1 Operational Headwinds

The first quarter was impacted by several factors, including moderated consumer demand, severe winter weather across nearly all markets, and temporary disruptions from the Tekion DMS transition. Weather alone is estimated to have impacted gross profit by $19 million and EPS by $0.56, and caused approximately 500 units of lost sales in both new and used vehicles on a same-store basis.

Used Vehicle Strategy and Performance

Asbury's strategy in used vehicles focuses on maximizing per-unit profitability rather than chasing volume. This approach has led to sequential increases in used vehicle GPUs in 6 out of the last 7 quarters. The company anticipates an increasing pool of used vehicles through the year, aided by lease return activity, which is expected to provide opportunities for volume growth while maintaining profitability.

Parts & Service Growth Potential

Despite a challenging Q1 due to weather and DMS transition, the company expects fixed operations gross profit to grow at mid-single-digit rates over time. Management highlights the aging car park, increased vehicle complexity, and the efficiencies gained from Tekion (such as improved cycle time) as key drivers for long-term growth in this segment.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.