Asbury Automotive Q3 Revenue Falls 8% as Vehicle and F&I Revenue Declines

Asbury Automotive Group (NYSE: ABG) reported an 8% year-over-year decline in third-quarter 2026 revenue, as lower new- and used-vehicle revenue and weaker finance and insurance results outweighed steadier performance in parts and service. Same-store revenue fell 6%, while a non-cash accounting deferral at Total Care Auto reduced the contribution from the company’s F&I operations.

For the quarter ended September 30, Asbury recorded net income of $105.1 million and diluted earnings per share of $5.84. Adjusted net income was $110.8 million, or $6.16 per diluted share, while adjusted EBITDA totaled $218.0 million.

New-vehicle revenue declined 9% on a total-company basis and 8% at same stores. Used-vehicle retail revenue fell 6% overall and 3% on a same-store basis. F&I revenue, including Total Care Auto, decreased 9%, with same-store revenue down 8%.

TCA deferral weighs on F&I results

Same-store F&I profit per vehicle retailed was $2,177 in the third quarter, compared with $2,196 a year earlier. Excluding the TCA deferral, the measure was $2,334, down from $2,453 in the prior-year period. The year-over-year deferral impact was negative $138 per vehicle.

TCA generated estimated standalone pretax income of $20.9 million in the quarter. After a $16.4 million non-cash deferral, its consolidated pretax contribution was $4.5 million. The corresponding estimated earnings contribution was $0.19 per share, compared with $0.88 per share before the deferral.

For full-year 2026, Asbury estimates TCA standalone pretax income of $85.6 million and a consolidated contribution of $30.0 million after $55.6 million of non-cash deferrals. The company estimates the consolidated earnings contribution at $1.23 per share. TCA had 1.4 million active contracts and $453 million of investments and cash.

Parts and service remains comparatively stable

Parts and service was the most resilient major business line. Total-company revenue declined 2%, but same-store revenue increased 1%. Same-store gross profit was flat for customer-pay work, down 1% for warranty work, down 3% for wholesale parts and down 4% for collision services. Combined customer-pay and warranty gross profit was flat, while fixed absorption remained above 100%.

Internal-combustion and hybrid vehicles represented 97% of repair-order volume, with plug-in hybrids at 2% and battery-electric vehicles at 1%. Average revenue per repair order was $577 for internal-combustion and hybrid vehicles, $720 for plug-in hybrids and $864 for battery-electric vehicles.

Nine-month margin and cash flow decline

For the first nine months of 2026, revenue was $12.91 billion, compared with $13.32 billion in the corresponding 2025 period. Adjusted operating income declined to $653.9 million from $762.2 million, and adjusted operating margin narrowed to 5.1% from 5.7%.

Adjusted operating cash flow totaled $525.2 million for the nine-month period, down from $542.6 million a year earlier. Adjusted free cash flow fell to $335.6 million from $438.2 million as capital expenditures excluding real estate and lease buyouts increased to $189.7 million from $104.4 million. Adjusted operating cash flow per share rose to $28.48 from $27.62, reflecting a lower diluted share count.

Asbury ended the quarter with $1.03 billion of liquidity. Its transaction-adjusted net leverage ratio increased to 3.5 times from 3.4 times at the end of the second quarter, above the company’s normal target range of 2.5 to 3.0 times. Adjusted long-term net debt was $3.13 billion, while transaction-adjusted EBITDA for the trailing 12 months was $900.4 million.

Capital allocation and operating priorities

Management’s strategy centers on increasing new-car market share, expanding used-vehicle volumes profitably, growing customer-pay service work, managing selling, general and administrative expenses, and using technology to improve operations and the customer experience.

The company expects 2026 spending on strategic and planned facility upgrades to total $250 million to $275 million. Asbury repurchased $278 million of shares during the first nine months of 2026 and said its capital-allocation priorities include strengthening the balance sheet, preparing for upcoming debt maturities, investing in its existing portfolio, evaluating selective transactions and continuing share repurchases. The company is targeting leverage below 3.0 times as part of its 2026-2027 plan.

Asbury identified several factors that could affect its outlook, including integration and technology-implementation risks, supply-chain and parts disruptions, tariffs and other trade changes, manufacturer and supplier stability, competition from new vehicle brands, acquisition and divestiture execution, debt-covenant compliance, litigation, geopolitical conflicts and natural disasters. The company also cautioned that its TCA estimates depend on factors including industry sales levels and acquisition activity and may change.