ASBURY AUTOMOTIVE GROUP INCABG
ASBURY AUTOMOTIVE GROUP INC Goodwill & Intangibles Disclosure
GOODWILL AND INTANGIBLE FRANCHISE RIGHTS
Our acquisitions have resulted in the recording of goodwill and intangible franchise rights. Goodwill is an asset representing operational synergies and future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Intangible franchise rights is an asset representing our rights under franchise agreements with vehicle manufacturers.
In connection with the Herb Chambers acquisition, we recorded goodwill of $341.7 million and franchise rights of $428.5 million. Goodwill related to the Herb Chambers acquisition was allocated to the Dealerships segment.
The changes in goodwill and intangible franchise rights for the years ended December 31, 2025 and 2024 are as follows:
| Goodwill | |||||||||||||||||
| Dealerships | TCA | Total | |||||||||||||||
| (In millions) | |||||||||||||||||
| Balance as of December 31, 2023 (a) | $ | 1,472.4 | $ | 536.6 | $ | 2,009.0 | |||||||||||
| Reclassified from assets held for sale | 29.6 | — | 29.6 | ||||||||||||||
| Acquisitions | 40.9 | — | 40.9 | ||||||||||||||
| Divestitures | (30.1) | — | (30.1) | ||||||||||||||
| Impairments | (1.3) | — | (1.3) | ||||||||||||||
| Reclassified to assets held for sale | (3.5) | — | (3.5) | ||||||||||||||
| Balance as of December 31, 2024 (a) | $ | 1,508.1 | $ | 536.6 | $ | 2,044.7 | |||||||||||
| Acquisitions | 341.7 | — | 341.7 | ||||||||||||||
| Divestitures | (71.8) | — | (71.8) | ||||||||||||||
| Reclassified to assets held for sale | (33.3) | — | (33.3) | ||||||||||||||
| Balance as of December 31, 2025 (a) | $ | 1,744.7 | $ | 536.6 | $ | 2,281.3 | |||||||||||
_____________________________
(a) Net of accumulated impairment losses of $552.6 million recorded prior to the year ended December 31, 2023.
| Intangible Franchise Rights | |||||
| (In millions) | |||||
| Balance as of December 31, 2023 | $ | 2,095.8 | |||
| Reclassified from assets held for sale | 71.9 | ||||
| Acquisitions - measurement-period adjustments | (26.7) | ||||
| Divestitures | (74.6) | ||||
| Impairments | (148.2) | ||||
| Reclassified to assets held for sale | (6.5) | ||||
| Balance as of December 31, 2024 | $ | 1,911.7 | |||
| Reclassified from assets held for sale | 23.1 | ||||
| Acquisitions | 428.5 | ||||
| Divestitures | (120.2) | ||||
| Impairments | (141.0) | ||||
| Reclassified to assets held for sale | (4.5) | ||||
| Balance as of December 31, 2025 | $ | 2,097.6 | |||
Our quantitative impairment tests for franchise rights include a comparison of the estimated fair value to the carrying value of each franchise right asset. The Company estimates fair value by using a discounted cash flow model (income approach) based on market participant assumptions related to the cash flows directly attributable to the franchise. These assumptions include year-over-year and terminal growth rates, weighted average cost of capital and future EBITDA margins.
We performed a quantitative impairment test for certain underperforming stores as of our annual impairment testing date, October 1, 2025. The results of the quantitative impairment testing identified that the carrying values of certain of our franchise rights intangible assets exceeded their fair value by $115.0 million and the related impairment charge was recorded during the three months ended December 31, 2025. Taking into account the $26.0 million of franchise rights impairments discussed in Note 6, Assets Held for Sale, in total, we recognized a $141.0 million pre-tax non-cash impairment charge related to our franchise rights intangible assets during the year ended December 31, 2025.
Based on the underperformance of certain stores, we performed quantitative impairment tests in the second quarter of 2024 and as of our annual impairment testing date, October 1, 2024. The results of the quantitative impairment testing identified that the carrying values of certain of our franchise rights intangible assets exceeded their fair value by $134.1 million and $14.1 million and the related impairment charges were recorded during the three months ended June 30, 2024 and December 31, 2024, respectively. In total, we recognized a $148.2 million pre-tax non-cash impairment charge related to our franchise rights intangible assets during the year ended December 31, 2024.
We also performed qualitative impairment assessments on the remaining franchise rights as of October 1, 2025 and 2024, respectively. The results of our qualitative impairment assessments on the remaining franchise rights indicated that the fair values of the franchise rights related to those dealerships more likely than not exceeded their carrying values.
We performed qualitative impairment tests of goodwill for all reporting units as of October 1, 2025. The results of our qualitative goodwill impairment assessments for all reporting units indicated that the fair values of the reporting units more likely than not exceeded their carrying values.
Additionally, in connection with changes in reporting units in our Dealerships segment, we performed qualitative and quantitative impairment tests of goodwill for the affected reporting units as of October 1, 2024, both before and after the change in reporting units. Lastly, we performed an interim quantitative impairment test of goodwill for two reporting units in the second quarter of 2024.
The quantitative impairment tests of goodwill, related to certain reporting units, as of October 1, 2024, and during the second quarter of 2024 included a comparison of the estimated fair value to the carrying value of the reporting unit. The Company estimates fair value by using a discounted cash flow model (income approach) based on market participant assumptions. These assumptions include year-over-year and terminal growth rates, weighted average cost of capital, future gross margins, and future selling, general and administrative expenses. The results of our quantitative goodwill impairment tests during the second quarter of 2024 and as of October 1, 2024, indicated that the fair value of these reporting units exceeded their carrying values. We performed qualitative impairment assessments on the remaining reporting units as of October 1, 2024. The results of our qualitative impairment assessments of goodwill related to the remaining reporting units indicated that the fair values of the reporting units more likely than not exceeded their carrying values.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 20, 2026 | Showing above |
| 2024 | Feb 26, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Mar 1, 2021 | |
| 2019 | Mar 2, 2020 | |
| 2018 | Feb 28, 2019 | |
| 2017 | Feb 27, 2018 | |
| 2016 | Feb 23, 2017 | |
| 2015 | Feb 19, 2016 | |
About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.