Executive Summary

Q1 2025 printed adjusted EPS of $6.82 and revenue of $4.15B; EPS beat S&P Global consensus while revenue missed, reflecting stronger margins/parts & service against softer used volumes and new GPU compression . Estimates: EPS cons $6.66 vs actual $6.82; revenue cons $4.35B vs actual $4.15B (beat on EPS, miss on revenue)*.
Management emphasized resilience from Parts & Service (record gross profit), disciplined pricing (prioritized margin over volume late in March amid tariff uncertainty), and ongoing Tekion rollout with early productivity benefits .
Guidance/tone: FY25 adjusted tax rate ~25.2% (slightly lower vs prior), CapEx ~$250M in 2025/2026 but contingent on tariffs; SG&A could drift to mid–high 60s of gross profit if volumes fall; deleveraging focus post Herb Chambers close with proceeds from planned divestitures .
Near-term catalysts: clarity on tariff implementation (OEM pricing/incentives, luxury supply cadence), Tekion acceleration, and Herb Chambers closing (anticipated Q2), with revolver/new vehicle floor plan upsized conditional on deal close .

What Went Well and What Went Wrong

What Went Well

Parts & Service delivered another all-time record; same-store gross profit up 5%, customer pay gross up 6%, margin expanded 170 bps to 58.3% .
F&I PVR improved sequentially to $2,263; total front-end yield held resilient at $4,854 even with industry normalization .
Tekion rollout expanded beyond the pilot; early signs of productivity and guest experience improvements, with a path to material SG&A savings as applications and integration fees are unplugged over time (“one customer profile” CRM across departments) .

What Went Wrong

Used retail units down ~8–10% YoY; used retail GPU slid to $1,587 amid tighter supply and price pressure; new GPU compressed to $3,449 as margins normalize and Stellantis remained a headwind .
Weather disruptions weighed on Q1 traffic across multiple regions (Georgia, Carolinas, Indiana, St. Louis, North Florida) and DC/Baltimore exposure faced macro uncertainty, damping gross profit versus select peers .
Tariff uncertainty created late-March pull-forward and inventory risk; certain German luxury OEMs paused shipments, pressuring near-term luxury days supply .

Financial Results

Headline financials (chronological: Q3 2024 → Q4 2024 → Q1 2025)

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($USD Billions)	$4.237	$4.505	$4.149
Gross Profit ($USD Millions)	$718.0	$749.9	$724.2
Gross Margin (%)	16.9%	16.6%	17.5%
Diluted EPS (GAAP)	$6.37	$6.54	$6.71
Adjusted EPS (non-GAAP)	$6.35	$7.26	$6.82
SG&A as % of Gross Profit	65.0%	63.6%	63.0%
Adjusted Operating Margin (%)	5.6%	5.7%	5.8%

YoY context (Q1 2025 vs Q1 2024): revenue -1%, gross profit -3%, with parts & service gross +3%; diluted EPS down $0.51 YoY; SG&A as % GP +54 bps .

Segment breakdown (Revenue and Gross Profit)

Segment	Q3 2024 Revenue ($MM)	Q3 2024 GP ($MM)	Q4 2024 Revenue ($MM)	Q4 2024 GP ($MM)	Q1 2025 Revenue ($MM)	Q1 2025 GP ($MM)
New Vehicles	$2,163.5	$150.4	$2,457.1	$172.1	$2,138.1	$143.1
Used Vehicles	$1,294.7	$59.4	$1,258.5	$53.1	$1,235.8	$64.5
Parts & Service	$593.1	$337.1	$590.4	$340.1	$587.6	$342.7
F&I (net)	$185.4	$171.2	$198.5	$184.6	$187.0	$173.9

Operating KPIs

KPI	Q3 2024	Q4 2024	Q1 2025
New Units Sold	42,607	47,255	41,496
Used Retail Units Sold	37,347	35,328	35,415
New Vehicle GPU ($)	$3,529	$3,641	$3,449
Used Retail GPU ($)	$1,501	$1,449	$1,587
F&I PVR ($)	$2,141	$2,236	$2,261
Front-End Yield ($)	$4,723	$4,939	$4,854
New Days Supply	63	47	44
Used Days Supply	38	37	31

Consensus vs Actual (Q1 2025)

Metric	Consensus	Actual	Result
EPS ($)	6.65574*	6.82	Beat*
Revenue ($)	4,348,554,290*	4,148,500,000	Miss*

Values marked with * are retrieved from S&P Global.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Adjusted Tax Rate	FY 2025	~25.3%	~25.2%	Slightly lowered
SG&A as % of GP	FY 2025	Mid-60s	Mid–high 60s risk if volumes fall	Potentially raised (conditional)
CapEx	2025, 2026	~$250M each year	~$250M each year; contingent on tariffs	Maintained; with caveat
TCA Pretax Income/Deferral	FY 2025	~$8M pretax; ~$2.35 EPS hit from deferral	Q2 2025 negative non-cash deferral; future periods under review due to tariffs	Timing/profile updated; under review
Deleveraging Focus	18–24 months	Emphasized deleveraging	Reiterated post Herb Chambers close; net proceeds $250–$275M targeted from divestitures	Maintained; quantified proceeds

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024, Q4 2024)	Current Period (Q1 2025)	Trend
Tekion rollout & efficiency	4-store pilot with efficiency gains and lower cost base	Expanded beyond pilot; Koons transition; target all stores by end ‘26/early ‘27; “one customer profile” CRM; material SG&A savings over time	Accelerating rollout; broader scope
Tariffs/macro	Pre-election optimism; SAAR glide path; potential GPU normalization	Late-March demand pull-forward; 56% of new units US-produced; OEMs vary on approach; predicting volumes/new GPU trends challenging	Elevated uncertainty; operational discipline
Stellantis performance	Significant Q4 headwind; expected improvement over time	Volume +3% vs national -12%; still ~$125 PVR headwind; mix/incentive issues persist	Gradual progress; still a headwind
Parts & Service strength	Same-store gross +11% (Q4); customer pay +13%	Record gross; same-store gross +5%; margin +170 bps; customers advancing service to pre-empt tariff impacts	Durable outperformance
Regional dynamics	Weather impacts; election “Trump bump” in Q4	Weather disruptions across Southeast/Mid-Atlantic; DC/Baltimore weakness	Transitory headwinds
Regulatory/legal	FTC administrative proceeding; company lawsuit pending	No change; continues as a disclosed contingency	Ongoing

Management Commentary

“We posted another all-time record in gross profit for our parts and service business.” — David Hult .
“We recently expanded the rollout [of Tekion]… early signs of improvement in productivity and the guest experience.” — David Hult .
“We generated $4.1 billion in revenue… gross profit of $724 million… adjusted EPS was $6.82… adjusted EBITDA was $240 million.” — David Hult .
“Adjusted SG&A as a percentage of gross profit came in at 64%… adjusted tax rate… 24.7%… forecast full year… 25.2%.” — Michael Welch .
“If tariffs result in a decrease in volume… would slow down the deferral impact… less in ‘25 and more in ‘26 and ‘27.” — Michael Welch (on TCA deferral timing) .
“Don’t chase volume. We can’t replace the cars that we have—focus on gross profit.” — David Hult .

Q&A Highlights

TCA accounting/tariffs: Management expects negative non-cash deferral in Q2 and notes tariff-driven volume shifts could push deferrals into later years .
Tekion savings: Material SG&A benefit from unplugging legacy applications/integration fees; productivity per employee expected to rise; full conversion by end ‘26/early ‘27 .
Gross performance vs peers: Weather and regional mix weighed; strategy prioritized margin over volume given tariff uncertainty and non-replaceable inventory .
SG&A guardrails: Mid–high 60s if volume declines materially; variable comp/advertising levers will be pulled quickly .
Luxury supply/tariffs: German OEM shipment pauses created short-term inventory tightness; near-term days supply lower than desired .

Estimates Context

Q1 2025 EPS beat consensus ($6.66 cons vs $6.82 actual) on cost discipline and parts & service strength; revenue missed ($4.35B cons vs $4.15B actual) amid used volume softness and cautious new pricing strategy*. Actuals: adjusted EPS $6.82, revenue $4.15B . Consensus: EPS 6.65574; revenue 4,348,554,290*.
Expect analysts to recalibrate: 1) Parts & Service trajectory and margin expansion, 2) SG&A sensitivity to volumes under tariff scenarios, 3) TCA deferral timing into 2026–2027 tied to SAAR. Values retrieved from S&P Global.

Key Takeaways for Investors

Parts & Service is the structural earnings anchor; margin expansion and customer retention (avg ~71k miles through shops in IR deck) support mid-single-digit growth through cycles .
Tekion deployment is a multi-year SG&A/productivity lever; anticipate steady savings realization and operational uplift as Koons completes Tekion and broader rollout continues .
Near-term strategy emphasizes margin preservation over unit growth; expect resilient front-end yield despite normalization in GPUs and tariff uncertainties .
TCA earnings cadence will be back-end loaded: negative deferral in Q2 and potential push-out into 2026–2027; monitor quarterly disclosures for updated timing .
Deleveraging remains a central capital allocation priority post Herb Chambers close; incremental liquidity from upsized facilities and divestiture proceeds ($250–$275M) should support balance sheet flexibility .
Watch OEM behavior on tariffs (incentives vs prices) and luxury supply chain normalization; ABG’s 56% U.S.-produced mix provides relative insulation .
Estimate revisions likely modestly positive on EPS (cost/parts & service) but cautious on revenue trajectory until tariff clarity and used supply improves*. Values retrieved from S&P Global.

Additional primary sources reviewed:

Q1 2025 Form 10‑Q (full quarter financials, segments, liquidity) .
Q1 2025 earnings call transcript (prepared remarks, Q&A) .
Q4 2024 press release and call (trend context) .
Q3 2024 press release (trend context) .
8‑K noting call transcript furnished and tariff/Herb Chambers commentary .