Core Viewpoint - AutoNation, Inc. has shown resilience in a challenging car-buying environment, achieving a moderate performance with a 6% gain over the past year [1] Company Performance - The company has effectively navigated through difficulties in the automotive market, highlighting the strength of its service-oriented business model [1]

Financial Performance - For the year ended December 31, 2025, AutoNation reported net income of $649.1 million and diluted earnings per share of $17.04, compared to net income of $692.2 million and diluted earnings per share of $16.92 in 2024[162]. - Total revenue for 2025 reached $27,631.4 million, an increase of 3.2% compared to $26,765.4 million in 2024[182]. - Total gross profit for 2025 was $4,948.5 million, reflecting a 3.4% increase from $4,785.4 million in 2024[182]. - Operating income decreased by 5.0% to $1,239.9 million in 2025 from $1,305.5 million in 2024[182]. - SG&A expenses increased to $3,362.2 million in 2025, up from $3,263.9 million in 2024, primarily due to higher compensation and advertising expenses[227]. - The effective income tax rate increased to 26.6% in 2025 from 24.5% in 2024, influenced by non-deductible goodwill impairment charges[234]. Revenue Breakdown - New vehicle sales accounted for 49% of total revenue and 13% of total gross profit, while used vehicle sales accounted for 28% of total revenue and 9% of total gross profit[158]. - New vehicle revenue increased by 3.5% to $13,501.3 million in 2025 from $13,048.2 million in 2024[182]. - Retail used vehicle revenue grew by 2.7% to $7,269.1 million in 2025, while wholesale revenue decreased by 15.3% to $544.9 million[182]. - Parts and service operations contributed 48% of total gross profit despite only comprising 17% of total revenue, indicating a strong margin in this segment[158]. - Parts and service revenue increased to $4,763.0 million, a 6.0% increase from $4,493.3 million in 2024[185]. Inventory and Sales - AutoNation's new vehicle inventory units were approximately 43,800 as of December 31, 2025, compared to 42,600 in 2024, with cumulative write-downs of $1.2 million[169]. - Used vehicle inventory units were approximately 33,100 as of December 31, 2025, down from 34,000 in 2024, with cumulative write-downs of $5.8 million[170]. - Same store retail vehicle unit sales increased by 1.6% to 528,822 units in 2025 compared to 520,623 units in 2024[184]. - Retail new vehicle unit sales in the Domestic segment reached 74,680 in 2025, an increase of 5,412 units or 7.8% from 2024[209]. Profit Margins - Total gross profit increased by 3% in 2025, driven by a 7% increase in parts and service gross profit and an 8% increase in finance and insurance gross profit, while new vehicle gross profit decreased by 14%[163]. - New vehicle gross profit margin fell to 4.9% in 2025 from 5.9% in 2024[183]. - Gross profit per vehicle retailed for 2025 was $2,769, an increase of $157 or 6.0% compared to 2024[203]. - Gross profit as a percentage of revenue for parts and service improved to 48.7% in 2025 from 47.9% in 2024[198]. Impairments and Charges - The company recorded non-cash goodwill impairment charges of $65.3 million related to its Mobile Service reporting unit during the second quarter of 2025[174]. - Franchise rights impairment charges totaled $71.7 million during the second quarter of 2025, with an additional $22.0 million recorded in the fourth quarter[179][181]. Financing and Debt - As of December 31, 2025, the company's long-term debt, net of current maturities, was $3,704.8 million, an increase from $2,613.6 million in 2024[246]. - The leverage ratio as of December 31, 2025, was 2.44x, which is below the maximum requirement of 3.75x[253]. - The company issued $500.0 million of 5.89% Senior Notes due 2035 and $600.0 million of 4.45% Senior Notes due 2029 in 2025[263]. Cash Flow and Investments - The company had net cash provided by operating activities of $111.9 million in 2025, a decrease of $202.8 million compared to $314.7 million in 2024[255]. - Net cash used in investing activities was $687.0 million in 2025, compared to net cash provided of $12.3 million in 2024, primarily due to increased cash used for acquisitions[260]. - The company acquired five stores for an aggregate purchase price of $459.1 million in 2025, while no stores were acquired in 2024[260]. Market Conditions - The U.S. industry new vehicle unit sales reached 16.3 million in 2025, up from 16.0 million in 2024 and 15.6 million in 2023, reflecting a recovery in vehicle production and supply[159]. - The automotive retail industry is sensitive to economic conditions, impacting vehicle sales and gross profit margins[274].

Core Insights - AutoNation, Inc. reported fourth-quarter 2025 adjusted earnings of $5.08 per share, a 2% increase year over year, surpassing the Zacks Consensus Estimate of $4.91. However, revenues of $6.93 billion fell short of the Zacks Consensus Estimate of $7.14 billion and declined from $7.21 billion in the fourth quarter of 2024 [2][11]. Revenue Breakdown - New vehicle revenues decreased by 8.8% year over year to $3.44 billion, missing the estimate of $3.64 billion due to lower sales volume. Retail units sold were 64,841, down 9.2% year over year, and also below the projection of 73,642 units [3][11]. - The average selling price (ASP) per new vehicle unit was $53,073, a 0.4% increase year over year, exceeding the estimate of $49,384. However, gross profit from this segment fell by 26.7% year over year to $155.5 million, missing the estimate of $171.1 million [4][11]. - Retail used-vehicle revenues reached $1.76 billion, surpassing the projection of $1.71 billion, despite a 2.9% year-over-year decline in used vehicle retail units sold to 62,926, which missed the estimate of 66,669 units. The ASP per used vehicle was $27,933, up 3% year over year, exceeding the estimate of $25,669. Gross profit from this segment fell by 9.2% year over year to $90.5 million, missing the estimate of $97.5 million [5][11]. - Wholesale used vehicle revenues dropped by 13.1% to $133.2 million, missing the estimate of $150.5 million. Gross profit increased to $7.3 million from $4.7 million, matching the estimate [6]. - Finance and insurance business revenues were $369.4 million, a 0.9% increase year over year, but below the projection of $370.4 million. Gross profit was also $369.4 million, matching the year-over-year increase but missing the estimate [6]. - Parts and service revenues rose by 6.1% to $1.22 billion, although it missed the estimate of $1.23 billion. Gross profit from this segment increased by 6% year over year to $591.8 million, beating the estimate of $577.2 million [7]. Segment Performance - Domestic segment revenues increased by 1.2% year over year to $1.89 billion, missing the projection of $1.91 billion. The segment's income rose by 19.3% to $79.9 million but fell short of the estimate of $85.2 million [8]. - Import segment revenues decreased by 2.7% year over year to $2.05 billion, missing the forecast of $2.19 billion. The segment's income declined by 11.4% to $106.8 million, lagging behind the estimate of $136.7 million [8]. - Premium Luxury segment sales fell by 8.9% to $2.64 billion, matching the projection. The segmental income declined by 20.3% year over year to $165.4 million, missing the estimate of $196.1 million [9]. Financial Position - As of December 31, 2025, AutoNation's liquidity was $1.8 billion, including $59 million in cash and nearly $1.7 billion available under its revolving credit facility. The company's inventory was valued at $3.4 billion, and non-vehicle debt stood at $3.98 billion. Capital expenditure for the quarter was $86.3 million [12]. - During the quarter, AutoNation repurchased 1.7 million shares for $350 million, with $968 million remaining under its share repurchase program [12].

Core Viewpoint - AutoNation is experiencing strong financial performance, leading to an optimistic price target increase by Wells Fargo analyst Colin Langan from $222 to $230, indicating a potential upside of 6.16% from the current trading price of $216.65 [1][2][5] Financial Performance - For the full year, AutoNation's revenue increased by 3% to $27.6 billion, while adjusted earnings per share (EPS) rose by 16% to $20.22 [3][5] - The company generated over $1 billion in adjusted free cash flow despite a challenging sales environment, showcasing its financial resilience [2][5] - In the fourth quarter, adjusted EPS was $5.08, reflecting a 2% increase year-over-year, although adjusted net income slightly decreased to $186 million from $199 million the previous year [3] Stock Performance - AutoNation's stock is currently priced at $216.65, reflecting an increase of 6.19% or $12.63, with fluctuations between a low of $203.10 and a high of $223.41 on the trading day [4] - Over the past year, the stock has reached a high of $228.92 and a low of $148.33, with a market capitalization of approximately $7.9 billion [4]

AutoNation said fourth-quarter comparisons were difficult, citing a post-election sales surge in Q4 2024 that drove a light vehicle SAAR of 16.7 million. Manley also pointed to demand being pulled forward earlier in the year as consumers reacted to tariff announcements and purchased vehicles before the expiration of government incentives tied to electric-related powertrains.He noted that adjusted earnings exclude business interruption insurance recoveries related to the second quarter 2024 CDK incident, tot ...

Core Insights - AutoNation, Inc. reported fourth-quarter adjusted earnings that surpassed analyst expectations despite a revenue decline, demonstrating the resilience of its diversified operating model [1] - Shares increased by over 9% intra-day following the earnings report [1] Financial Performance - Adjusted earnings per share were $5.08, exceeding the consensus estimate of $4.91 [1] - Revenue for the quarter was $6.9 billion, which was below the expected $7.22 billion and represented a 4% decline from the same period last year [1] Sales Performance - Same-store retail new vehicle unit sales decreased by 10.2% year over year, attributed to tough comparisons from the previous year and elevated sales earlier in 2025 due to tariffs and the expiration of government electric-vehicle incentives [2] After-Sales Business - The company achieved record fourth-quarter gross profit in its After-Sales business, supported by 4% same-store growth [3] - Record quarterly Customer Financial Services profit per unit was reported, highlighting the strength of its diversified revenue streams [3] Expansion and Acquisitions - AutoNation Finance expanded its portfolio to $2.2 billion while improving profitability and funding [4] - The company completed strategic acquisitions in Baltimore, Chicago, and Denver, enhancing its brand mix and geographic footprint [4]

U.S. Stock Market - U.S. stocks traded higher, with the S&P 500 gaining around 1.6% on Friday [1] - The Dow increased by 2.01% to 49,891.59, while the NASDAQ climbed 1.84% to 22,954.50 [1] - Information technology shares rose by 2.5%, whereas communication services stocks fell by 2% [1] AutoNation, Inc. Performance - AutoNation, Inc. shares jumped more than 7% after reporting fourth-quarter results [2] - The company posted adjusted earnings per share of $5.08, a 2% increase year over year, surpassing the analyst consensus estimate of $4.85 [2] - Sales of $6.929 billion fell short of the consensus estimate of $7.200 billion [2] Commodity Market - Oil prices increased by 0.5% to $63.60, while gold rose by 1.6% to $4,969.00 [3] - Silver prices decreased by 0.8% to $76.140, and copper prices rose by 0.7% to $5.8590 [3] European Market - European shares were higher, with the eurozone's STOXX 600 gaining 0.65% [4] - Spain's IBEX 35 Index rose by 1.02%, London's FTSE 100 increased by 0.42%, Germany's DAX gained 0.56%, and France's CAC 40 rose by 0.31% [4] Asian Market - Asian markets closed mostly lower, with Japan's Nikkei falling by 0.88% and China's Shanghai Composite declining by 0.64% [5] - Hong Kong's Hang Seng Index gained 0.14%, while India's BSE Sensex fell by 0.60% [5] Economic Indicators - The U.S. Manheim Used Vehicle Value Index rose by 2.4% month-over-month in January [6] - The University of Michigan's consumer sentiment index increased by 0.9 points to a reading of 57.3 in February, exceeding market estimates of 55 [6]

U.S. Stock Market - U.S. stocks traded higher, with the S&P 500 gaining around 1.6% on Friday [1] - The Dow increased by 2.01% to 49,891.59, while the NASDAQ climbed 1.84% to 22,954.50 [1] - Information technology shares rose by 2.5%, while communication services stocks fell by 2% [1] AutoNation, Inc. - Shares of AutoNation, Inc. jumped more than 7% after posting fourth-quarter results [2] - The company reported adjusted earnings per share of $5.08, a 2% increase year over year, beating the analyst consensus estimate of $4.85 [2] - Sales of $6.929 billion missed the consensus estimate of $7.200 billion [2] Commodity Market - Oil traded up 0.5% to $63.60, while gold increased by 1.6% to $4,969.00 [3] - Silver traded down 0.8% to $76.140, and copper rose 0.7% to $5.8590 [3] European Markets - European shares were higher, with the eurozone's STOXX 600 gaining 0.65% [4] - Spain's IBEX 35 Index rose 1.02%, London's FTSE 100 increased by 0.42%, Germany's DAX gained 0.56%, and France's CAC 40 rose 0.31% [4] Asian Markets - Asian markets closed mostly lower, with Japan's Nikkei falling 0.88% and China's Shanghai Composite declining 0.64% [5] - Hong Kong's Hang Seng Index gained 0.14%, while India's BSE Sensex fell 0.60% [5] Economic Indicators - The U.S. Manheim Used Vehicle Value Index rose 2.4% month-over-month in January [6] - The University of Michigan's consumer sentiment index increased by 0.9 points to 57.3 in February, surpassing market estimates of 55 [6]

Financial Data and Key Metrics Changes - AutoNation reported a solid fourth quarter with a 3% revenue growth and an 8% adjusted net income growth, leading to a 16% increase in adjusted earnings per share [3][4] - Adjusted free cash flow exceeded $1 billion, up approximately 39% from 2025, with a capital deployment of over $1.5 billion, half of which was allocated to share repurchases [3][10] - The balance sheet remained healthy, with year-end leverage largely unchanged from the prior year at 2.44x EBITDA [4][30] Business Line Data and Key Metrics Changes - Same-store unit sales of new vehicles decreased by 10% in Q4, with a significant decline of 60% in battery electric vehicles and 10% in hybrid powertrain vehicles [5][18] - Used vehicle gross profit increased by 5% for the full year, despite a 6% decline in profit per unit for Q4 [7][20] - Customer Financial Services (CFS) unit profitability grew by 8% year-over-year, with record gross profit per unit achieved [8][21] Market Data and Key Metrics Changes - The industry faced tougher sales comparisons in Q4 2025, with a light vehicle SAR of 16.7 million in Q4 2024, impacting sales negatively [4][18] - New vehicle inventory amounted to 45 days of supply, up from 39 days in Q4 2024 [19] - The used vehicle market remains tight, with a focus on acquiring vehicles through internal channels [21] Company Strategy and Development Direction - AutoNation expanded its presence in key markets through acquisitions, including a Ford and Mazda store in Denver and an Audi and Mercedes store in Chicago [11][29] - The company aims to maintain a balanced capital allocation strategy, focusing on both M&A opportunities and share repurchases [30][56] - The strategy includes improving after-sales growth and maintaining strong cash flow to support future investments [34][27] Management's Comments on Operating Environment and Future Outlook - Management expects the market to be slightly down in 2026 compared to 2025, with potential benefits from tax changes and improved used vehicle market conditions [32][34] - There is a focus on maintaining performance in the CFS business while being aware of consumer sensitivity to monthly payments [33][78] - Management is optimistic about the growth trajectory in after-sales and the potential for continued profitability in the AN Finance portfolio [33][43] Other Important Information - Adjusted EPS for Q4 was $5.08, a 2% increase from the previous year, while full-year adjusted EPS was $20.22, up 16% from 2024 [18][10] - The company repurchased $785 million worth of shares, reducing share count by 10% year-over-year [29][30] Q&A Session Summary Question: Regarding the new car business and unit numbers - Management noted a reduction in OEM dealer-facing incentives and a significant drop in EV volume, which contributed to the decline in same-store sales [38][40] Question: On AutoNation Finance's profitability cadence - Management expressed confidence in continued profitability growth, with a starting point of $6 million in Q4 and expectations for improvement throughout 2026 [41][42] Question: Capital spending and M&A market outlook - Management indicated that 2026 capital spending levels would be similar to 2025, with ongoing opportunities in the M&A market [52][54] Question: Trends in hybrid and electric vehicle GPUs - Management observed a decline in hybrid GPUs and flat performance for battery electric vehicles, with expectations for improvement in hybrid margins in 2026 [60][62] Question: Consumer credit availability and affordability pressures - Management acknowledged significant growth in monthly payments and anticipated some relief in charged APR, while emphasizing the importance of affordability in the new car market [77][78]

Financial Data and Key Metrics Changes - The company reported a 3% revenue growth and an 8% adjusted net income growth for the fourth quarter and full year, with adjusted earnings per share (EPS) increasing by 16% [3][12] - Adjusted free cash flow exceeded $1 billion, up approximately 39% from 2024, with a 10% reduction in shares outstanding due to share repurchases [3][10] - The fourth quarter adjusted net income was $186 million, compared to $199 million a year ago, while full-year adjusted net income increased 8% to $757 million [17][18] Business Line Data and Key Metrics Changes - Same-store unit sales of new vehicles decreased by 10% in the fourth quarter, with a significant decline of 60% in battery electric vehicles (BEVs) [5][18] - Used vehicle gross profit increased by 5% for the full year, despite a 6% decline in profit per unit for the fourth quarter [7][20] - Customer Financial Services (CFS) unit profitability grew by 8% year-over-year, with total gross profit for CFS reaching record levels [8][9] Market Data and Key Metrics Changes - The fourth quarter faced tougher sales comparisons due to a surge in sales in Q4 2024, leading to a light vehicle SAAR of 16.7 million [4] - The company expanded its presence in key markets, acquiring several dealerships in Denver, Chicago, and Baltimore [11] - The used vehicle market remains tight, with the company sourcing over 90% of its vehicles through internal channels [21] Company Strategy and Development Direction - The company plans to continue focusing on capital allocation, with a balanced approach between reinvestment in the business and shareholder returns [29][30] - There is an emphasis on maintaining profitability in the CFS business while expanding the AN Finance portfolio [33] - The company aims to optimize vehicle acquisition and improve customer experience in the used vehicle market [20][84] Management's Comments on Operating Environment and Future Outlook - Management expects the market to be slightly down in 2026 compared to 2025, with potential benefits from tax rates and bonus depreciation [32] - The company anticipates stability in new unit profitability and improvements in the used vehicle market year-over-year [32][33] - Affordability pressures are a key concern, with management noting the importance of customer sensitivity to monthly payments [78][79] Other Important Information - The company deployed over $1.5 billion in capital, with half reinvested in the business and half returned to shareholders through share repurchases [29][30] - The balance sheet remains healthy, with leverage largely unchanged from the prior year at 2.44x EBITDA [30] Q&A Session Summary Question: Regarding the new car business and unit numbers - Management noted a reduction in OEM dealer incentives and a significant drop in EV volume as key factors affecting sales performance [39][40] Question: On AutoNation Finance's profitability trajectory - Management expressed confidence in continued profitability growth, with a strong starting point for 2026 [42][43] Question: Capital spending and M&A market outlook - Management indicated that 2026 capital spending levels would be similar to 2025, with ongoing opportunities in the M&A market [52][55] Question: Trends in hybrid and electric vehicle gross profit margins - Management highlighted a significant pullback in OEM incentives and expected stabilization of margins for hybrids, while improvements for BEVs may take longer [60][61] Question: Consumer credit availability and affordability pressures - Management acknowledged rising monthly payments and anticipated some relief in charged APR, emphasizing the need for competitive pricing in after-sales [78][79]