Annual report [Section 13 and 15(d), not S-K Item 405]

Intangible Assets and Goodwill

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Intangible Assets and Goodwill
 12 Months Ended
Dec. 31, 2025
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible Assets and Goodwill Goodwill and Intangible Assets
In accordance with Accounting Standards Codification (“ASC”) Topic 350, “Intangibles - Goodwill and Other,” we test goodwill for impairment at least annually (as of April 30 of each year) or more frequently if indications of impairment exist. The ASC also states that if an entity determines, based on an assessment of certain qualitative factors, that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then a quantitative goodwill impairment test is unnecessary. We evaluated our Franchised Dealership Segment reporting unit on a qualitative basis as substantial cushion existed between the calculated fair value and associated carrying values in the prior year evaluation and there were not any meaningful events or trends which would significantly erode this cushion. We evaluated our Powersports Segment reporting unit on a quantitative basis.
In performing the quantitative test in the Powersports Segment reporting unit for impairment of goodwill, we primarily used the income approach method of valuation that includes the discounted cash flow (“DCF”) method that utilizes inputs, including projected revenues, margin, terminal growth rates, discount rates and a market capitalization reconciliation.
We completed our annual impairment testing as of April 30, 2025 and determined there was no impairment of goodwill in either reporting unit evaluated.
In evaluating the recoverability of our indefinite lived franchise assets, we utilized a multi-period excess earnings method (“MPEEM”) model using unobservable inputs (Level 3) to estimate the fair value of the franchise assets for each of our franchises with recorded franchise assets. The significant assumptions in our MPEEM model include projected revenue, projected operating margins, a discount rate (and estimates in the discount rate inputs) and residual growth rates. We completed our annual impairment testing as of April 30, 2025 and determined that several of our franchise assets’ fair values did not exceed the carrying values, resulting in a non-cash pre-tax franchise asset impairment charge of $172.4 million to reduce the carrying value to fair value as of April 30, 2025. After the effect of impairment charges, the carrying value of our franchise assets totaled approximately $454.1 million at December 31, 2025, and is included in other intangible assets, net in the accompanying consolidated balance sheet as of such date.
The changes in the carrying amount of goodwill for the year ended 2025 and 2024 were as follows:
Franchised
Dealerships
Segment		 EchoPark Segment Powersports Segment Total
(In millions)
Balance at December 31, 2023 (1) $ 229.8  $ —  $ 24.0  $ 253.8 
Additions through current year acquisitions 8.1  —  3.3  11.4 
Reductions from dispositions (0.2) —  —  (0.2)
Prior year acquisition allocations 93.5  —  —  93.5 
Balance at December 31, 2024 (1) $ 331.2  $ —  $ 27.3  $ 358.5 
Additions through current year acquisitions 64.2  —  —  64.2 
Reductions from dispositions (0.7) —  —  (0.7)
Prior year acquisition allocations (0.2) —  —  (0.2)
Balance at December 31, 2025 (1) $ 394.5  $ —  $ 27.3  $ 421.8 
(1) Net of accumulated impairment losses of $1.1 billion and $202.9 million related to the Franchised Dealerships Segment and the EchoPark Segment, respectively.

During the quarter ended September 30, 2024, we identified an error related to the goodwill associated with the purchase of certain franchise assets in a business combination in the year ended December 31, 2021. As a result, we recorded a $93.5 million adjustment to goodwill to provide for deferred income tax liabilities.
The changes in the carrying amount of franchise assets for 2025 and 2024 were as follows:
  Franchised Dealerships Segment EchoPark Segment Powersports Segment
Total
(In millions)
Balance at December 31, 2023 $ 371.7  $ —  $ 45.7  $ 417.4 
Additions through current year acquisitions 10.9  —  2.0  12.9 
Balance at December 31, 2024 $ 382.6  $ —  $ 47.7  $ 430.3 
Additions through current year acquisitions 202.0  —  —  202.0 
Reductions from dispositions (5.1) —  (0.7) (5.8)
Reductions from impairment (165.9) —  (6.5) (172.4)
Balance at December 31, 2025 $ 413.6  $ —  $ 40.5  $ 454.1