Oct 27, 2026 earnings call — Tekion rollout completed; focus on efficiency
All Asbury stores now on Tekion after converting 47 stores in the quarter and finishing the final 10 dealerships in October.
Revenue $4.4B (est $4.5B) · EPS $6.16 (est $6.42)
Key quotes
"Every active Asbury store is now operating on Tekion, our single modern technology platform."
"Used retail gross profit grew 3% over last year, and we grew used retail PVR by 10% to $1.78 thousand."
"Our same-store adjusted SG&A as a percentage of gross profit was 67% in the quarter."
Analyst Q&A 11
Tekion rollout effects on stores
Q (Jeffrey Lick · Stephens): Analyst asked how Tekion stores differ from non-Tekion stores and when benefits from recent rollouts will appear.
A: Management said Tekion stores that reached the 6-month mark show clear gains in fixed operations and productivity. They gave metrics: customer pay gross profit grew in some markets and ROs per advisor, dollars per technician, and units per salesperson all rose. They said 47 stores rolled in the quarter and it takes 6 months for muscle memory to kick in.
"As I stated, the customer pay gross profit grew 7% in the Koons and the Georgia stores." — Daniel Clara (CEO)
Parts & service trends and TCA options
Q (Rajat Gupta · JPMorgan): Analyst asked if the Koons/Georgia metrics are same-store year-over-year and whether TCA should stay in-house or be separated.
A: Management confirmed the metrics are same-store versus prior year and said parts and service are higher with room to improve as more stores season. They said they like the TCA business for its cash flow and guest experience, but they are evaluating keeping it, growing it, or spinning it out.
"We love what it does for us long term and the cash flow that it provides." — Michael D. Welch (CFO)
Why fixed operations margin compressed
Q (Glenn Chin · Seaport Research Partners): Analyst asked what caused margin compression in parts and service despite same-store growth and what consumer behavior looked like.
A: Management said margin compression is a temporary effect from Tekion rollouts as staff learn a new system and initially discount to serve guests. They said dollars per ticket stayed flat or rose and customer-paid traffic was down 1.9%. Management also noted internal gross and used-car recon volume will help margins going forward.
"The path of least resistance, which I do not blame team members to take, is they start discounting just to make sure that we take care of the guests." — Daniel Clara (CEO)
Share loss, work deferrals, FTC impact
Q (Alexander Perry · BofA): Analyst asked if cheaper independents are taking service share or if work is being deferred, and what FTC enforcement actions do to pricing and doc fees.
A: Management said they have not seen an increase in declined work and cited average miles of service customers as a retention factor. They said FTC actions level the playing field, Asbury has been compliant, and transparency is positive for the industry.
"As far as what does it do, I think that it is great for the industry." — Daniel Clara (CEO)
BEV sales decline and timing of Tekion benefits
Q (Michael Ward · Citi): Analyst asked for the BEV unit numbers year-over-year and whether anything else compressed new vehicle gross.
A: Management said BEVs were 2.1% of total units in Q3 of 26 and EV sales were down 76% year-over-year. They said the PVR drop was driven by import OEM pressure such as Hyundai and domestic challenges with Stellantis, but they have reduced inventory and improved ordering for Stellantis. They expect Tekion benefits to appear more in late Q1 or early Q2.
"In Q3 of 26, my electric vehicles were 2.1% of the total units sold." — Daniel Clara (CEO)
SG&A path into 2027
Q (Rob Salzman · UBS): Analyst asked how SG&A as a percent of gross will trend into 2027 after the Tekion transition.
A: Management said they expect to be in the low 60s by the end of 2027 and will get better in Q4 with further progress through 2027. They said improvements come from both gross profit growth and removing costs, and many stores will reach the 6-month window by Q2.
"Just to clarify, we expect to be in the low 60s by the end of 2027." — Michael D. Welch (CFO)
Consumer shifts and used sourcing
Q (Daniela · Morgan Stanley): Analyst asked whether consumers are trading down, substituting new for used, or deferring service, and whether used supply is from off-lease or competition.
A: Management said they see some shifts from high-gas models toward more efficient SUVs, but they have not seen increased declines of service work. For used vehicle volume, they are improving appraisals and look-to-book and working with freight operators to convert more appraised cars into retail units.
"it is more about tweaking the way that we appraise cars, improving our look to book." — Daniel Clara (CEO)
Wholesale impact, M&A, and SG&A opportunities
Q (John Babcock · Barclays): Analyst asked how a soft wholesale market affected GPUs, what M&A market looks like, and what else can cut SG&A.
A: Management said wholesale softness had little PVR impact because 75%–80% of inventory is internal and auction buys typically yield about 50% less PVR than trade-ins but add internal gross and recon opportunity. They said priorities are operational excellence and debt paydown below 3x before major M&A, and that AI plus Tekion will drive SG&A efficiencies while redeploying resources to growth areas.
"I would say that the private market transactions in our industry, they continue to show the value that buyers place on high quality dealership portfolios." — Daniel Clara (CEO)
Negative equity and funding for tuck-ins
Q (David Whiston · Morningstar): Analyst asked how interest rates and negative equity affect purchases and service spend, and whether tuck-in M&A would tap credit or use internal cash.
A: Management said negative equity is the biggest impact they're seeing as pandemic sales come back into trade, and interest rates so far have not caused a major shift though leasing might help affordability. They said first priority is getting leverage down; share buybacks could be used at current prices, and tuck-in acquisitions would come after leverage is reduced so they have optionality.
"I will tell you that the biggest impact that I have seen or the 1 that comes up the most is negative equity." — Daniel Clara (CEO)
Doc fees and new vehicle PVR normalization
Q (Ryan Sigdahl · Craig Hallum Capital Group): Analyst asked if doc fees will fall and whether new-vehicle PVR normalization (around $3,000) will be affected.
A: Management said they do not expect doc fees to go down and that Asbury has historically priced doc fees mid-market and will stay transparent. They reiterated new vehicle PVR guidance in the $2.75 thousand to $3 thousand range and said PVRs look stabilized within that range.
"We have never wanted to be the highest in the markets that we operate." — Daniel Clara (CEO)
Path for parts & service and F&I trends
Q (Rajat Gupta · JPMorgan): Analyst asked if fixed-ops can return to mid single-digit growth in 2027, whether signs appear in Q4, and whether that is market or Tekion driven; also asked about F&I product attach and core F&I trends excluding TCA.
A: Management warned Q4 is still Tekion-impacted because 47 stores went live and many stores remain in the heavy transition phase. They said markets that passed the 6-month mark are showing progress (Florida and Georgia up in September) but full benefits will be realized by end of Q1 and into Q2 of 2027. On F&I, they said product mix has shifted slightly but store-level F&I PBR grew, excluding the TCA deferral.
"So you will see progress in Q4, meaning in the stores that continue to roll into the 6 month threshold." — Daniel Clara (CEO)