Financial Data and Key Metrics Changes - Total revenue for Q2 2025 was $7 billion, an increase of 8% year over year on both total and same store basis [12] - Adjusted net income rose to $209 million, up 29% from $163 million a year ago [15] - Adjusted EPS was $5.46 for the quarter, an increase of $1.47 or 37% from a year ago [15][8] - Same store gross profit increased by 10% year over year to $1.3 billion, with a gross profit margin of 18.3%, up 40 basis points from a year ago [13] Business Line Data and Key Metrics Changes - New vehicle sales increased by 8% year over year, with domestic segment sales up 19% [4][17] - Used vehicle gross profit increased by 13% year over year, with unit sales up 6% [5][21] - Customer financial services gross profit also increased by 13%, with finance penetration stable at around 75% [6][22] - After sales revenue grew by 12% year over year, with gross profit margins expanding by 100 basis points to record levels [28][29] Market Data and Key Metrics Changes - New vehicle unit volumes increased by 7% year over year, with hybrid sales up over 40% and battery electric sales up nearly 20% [17] - Used vehicle retail unit sales improved by 6% year over year, with stable average retail prices [20] - The company ended the quarter with 41,000 new vehicle units in inventory, representing 49 days of supply [18] Company Strategy and Development Direction - The company is focused on growth and efficiency across all business lines, with a strong emphasis on technician recruitment and retention [7][35] - There is a commitment to explore M&A opportunities to add scale and density in existing markets, while also returning capital to shareholders through share repurchases [32][34] - The company aims to leverage its broad portfolio of brands to cushion against potential new tariffs [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the second half of 2025, despite some fluctuations in sales patterns due to tariff uncertainties [56][59] - The company expects to maintain market share and is encouraged by provisions in recent federal statutes that could stimulate vehicle purchases [11] - Management noted that the mobile service business, while facing challenges, has the potential to contribute positively to income as it matures [36][39] Other Important Information - The company completed its inaugural asset-backed securitization, which was oversubscribed, allowing for increased debt funding levels [26][27] - Adjusted free cash flow for the first half totaled $394 million, representing 100% of adjusted net income [30] - The company received $10 million in insurance recoveries related to the previous year's CDK outage, with expectations for more recoveries in 2025 [31] Q&A Session Summary Question: What kind of flexibility do you have regarding M&A opportunities? - Management indicated a cautious approach post-tariff announcement but noted an improvement in the M&A pipeline and a commitment to both M&A and share repurchases [45][46] Question: What are your thoughts on the consumer landscape and demand outlook? - Management believes there is still pent-up demand and expects stability in margins, despite potential fluctuations in sales patterns [56][58] Question: Can you provide an update on AutoNation USA and its strategy? - Management stated that growth will be more deliberate, focusing on density in markets to ensure success [82][84] Question: How do you see the competition in the used vehicle market? - Management acknowledged competition but emphasized the large market size and the company's small share, indicating plenty of growth opportunities [95][96] Question: Can you discuss the performance of AutoNation Finance? - Management highlighted that AutoNation Finance is driving growth and has a superior attach rate compared to other lenders, positively influencing overall business performance [101][105]

Group 1: Earnings Performance - AutoNation reported quarterly earnings of $5.46 per share, exceeding the Zacks Consensus Estimate of $4.70 per share, and up from $3.99 per share a year ago, representing an earnings surprise of +16.17% [1] - The company posted revenues of $6.97 billion for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 2.62% and increasing from $6.48 billion year-over-year [2] - Over the last four quarters, AutoNation has surpassed consensus EPS estimates three times and topped consensus revenue estimates three times [2] Group 2: Stock Performance and Outlook - AutoNation shares have increased approximately 17.9% since the beginning of the year, outperforming the S&P 500's gain of 8.2% [3] - The current consensus EPS estimate for the upcoming quarter is $4.70 on revenues of $6.76 billion, and for the current fiscal year, it is $18.90 on revenues of $27.29 billion [7] - The estimate revisions trend for AutoNation was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Group 3: Industry Context - The Automotive - Retail and Whole Sales industry is currently in the top 32% of over 250 Zacks industries, suggesting a favorable outlook for stocks within this sector [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Performance - Total revenue increased by 8% year-over-year, from $6480 million in 2Q 2024 to $6974 million in 2Q 2025[4] - Gross profit increased by 10% year-over-year, from $1163 million in 2Q 2024 to $1275 million in 2Q 2025[4] - Adjusted net income increased by 29% year-over-year, from $163 million in 2Q 2024 to $209 million in 2Q 2025[4] - Diluted adjusted EPS increased by 37% year-over-year, from $399 in 2Q 2024 to $546 in 2Q 2025[4] Sales Performance - New vehicle unit sales increased by 8% year-over-year on a same-store basis[3] - Used vehicle gross profit increased by 12% year-over-year on a same-store basis[3] - After-sales gross profit increased by 13% year-over-year on a same-store basis, with gross margin expansion greater than 100 bps[3] - AutoNation Finance originations increased by 100%[3] AutoNation Finance - AutoNation Finance originations increased from $395 million in 1H 2024 to $924 million in 1H 2025[13] - AutoNation Finance portfolio balance increased from $772 million in 1H 2024 to $1761 million in 1H 2025[14] - Penetration rate of AutoNation Finance reached 10% of units sold in 2Q 2025, up from 6% in 2Q 2024[15] Capital Allocation - Capital expenditures decreased by approximately 15% compared to 1H 2024[22] - The company repurchased over 15 million shares at an average price of $164[22] - Leverage ratio decreased to 233x, below the mid-point of the company's targeted range[22, 29]

[Press Release & Financial Highlights](index=1&type=section&id=Press%20Release%20%26%20Financial%20Highlights) AutoNation's Q2 and YTD 2025 results show strong revenue and adjusted EPS growth, driven by robust segment performance and strategic capital allocation [Second Quarter 2025 Highlights](index=1&type=section&id=Second%20Quarter%202025%20Highlights) AutoNation reported a strong second quarter 2025, with an 8% increase in revenue to $7.0 billion and a 37% rise in Adjusted Diluted EPS [Executive Summary](index=1&type=section&id=Executive%20Summary) AutoNation's Q2 2025 revenue increased 8% to $7.0 billion, with Adjusted EPS rising to $5.46 despite a GAAP EPS decrease - AutoNation reported second quarter 2025 revenue of **$7.0 billion**, an increase of **8%** compared to the same period a year ago[2](index=2&type=chunk) - Second quarter 2025 EPS was **$2.26** compared to $3.20 a year ago, while Adjusted EPS was **$5.46**, increasing from $3.99 a year ago[2](index=2&type=chunk) [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Mike Manley highlighted robust business growth, improved gross profit margins, and a successful $700 million asset securitization - CEO Mike Manley highlighted robust growth across the entire business, including **double-digit growth in Customer Financial Services and After-Sales**, and improved new vehicle market share[3](index=3&type=chunk) - Gross profits improved **40 basis points** as a percentage of revenue, indicating strong execution and productivity[3](index=3&type=chunk) - The company completed a highly successful **$700 million AN Finance asset securitization**, enabling an upsizing of the offering, a lowering of the rate, and nearly 100% debt funding[3](index=3&type=chunk) [Selected GAAP Financial Data (Q2 2025)](index=1&type=section&id=Selected%20GAAP%20Financial%20Data%20(Q2%202025)) Q2 2025 GAAP data shows 8% revenue growth to $6,974.4 million, but a 29% decrease in Diluted EPS to $2.26 Q2 2025 Selected GAAP Financial Data | Metric | 2025 (Millions) | 2024 (Millions) | YoY Change | | :-------------------------------- | :-------------- | :-------------- | :--------- | | Revenue | $6,974.4 | $6,480.4 | 8% | | Gross Profit | $1,275.4 | $1,163.1 | 10% | | Operating Income | $217.6 | $275.0 | -21% | | Net Income | $86.4 | $130.2 | -34% | | Diluted EPS | $2.26 | $3.20 | -29% | | Same-store Revenue | $6,904.1 | $6,383.4 | 8% | | Same-store Gross Profit | $1,263.4 | $1,145.8 | 10% | | Same-store New Vehicle Retail Unit Sales | 65,334 | 60,608 | 8% | | Same-store Used Vehicle Retail Unit Sales | 68,398 | 64,364 | 6% | [Selected Non-GAAP Financial Data (Q2 2025)](index=2&type=section&id=Selected%20Non-GAAP%20Financial%20Data%20(Q2%202025)) Q2 2025 Non-GAAP data reveals a 37% increase in Adjusted Diluted EPS to $5.46, excluding significant non-cash impairments Q2 2025 Selected Non-GAAP Financial Data | Metric | 2025 (Millions) | 2024 (Millions) | YoY Change | | :-------------------- | :-------------- | :-------------- | :--------- | | Adjusted Operating Income | $369.3 | $318.5 | 16% | | Adjusted Net Income | $209.2 | $162.5 | 29% | | Adjusted Diluted EPS | $5.46 | $3.99 | 37% | - 2025 Adjusted Diluted EPS excludes after-tax non-cash goodwill, franchise rights, and other asset impairments of **$123 million**, or **$3.21 per share**[8](index=8&type=chunk) - 2024 Adjusted Diluted EPS excludes one-time after-tax costs associated with the CDK outage of **$32 million**, or **$0.79 per share**[8](index=8&type=chunk) [Segment Results (Q2 2025)](index=2&type=section&id=Segment%20Results%20(Q2%202025)) All franchised dealership segments reported increased income and revenue in Q2 2025, with AutoNation Finance also showing positive income - Domestic Segment Income increased **83% to $92 million**, with revenue up **10%**[11](index=11&type=chunk) - Import Segment Income increased **23% to $133 million**, with revenue up **6%**[11](index=11&type=chunk) - Premium Luxury Segment Income increased **27% to $180 million**, with revenue up **7%**[11](index=11&type=chunk) - AutoNation Finance income was **$2 million**, reflecting higher net interest margin and operating efficiencies, partially offset by higher non-cash credit provisioning[11](index=11&type=chunk) [Year-to-Date 2025 Highlights](index=3&type=section&id=Year-to-Date%202025%20Highlights) For the first six months of 2025, AutoNation's revenue increased 5% to $13.7 billion, with Adjusted Diluted EPS rising 19% to $10.11 [Overview (YTD)](index=3&type=section&id=Overview%20(YTD)) Year-to-date 2025 revenue reached $13,664.8 million, marking a 5% increase compared to the prior year period - Year-to-date 2025 revenue was **$13,664.8 million**, an increase of **5%** compared to the year-ago period[14](index=14&type=chunk) [Selected GAAP Financial Data (YTD 2025)](index=3&type=section&id=Selected%20GAAP%20Financial%20Data%20(YTD%202025)) YTD 2025 GAAP data shows 5% revenue growth to $13,664.8 million, but a 13% decrease in Diluted EPS to $6.73 YTD 2025 Selected GAAP Financial Data | Metric | 2025 (Millions) | 2024 (Millions) | YoY Change | | :-------------------------------- | :-------------- | :-------------- | :--------- | | Revenue | $13,664.8 | $12,966.1 | 5% | | Gross Profit | $2,495.3 | $2,361.0 | 6% | | Operating Income | $553.6 | $615.3 | -10% | | Net Income | $261.9 | $320.3 | -18% | | Diluted EPS | $6.73 | $7.72 | -13% | | Same-store Revenue | $13,559.1 | $12,764.2 | 6% | | Same-store Gross Profit | $2,477.0 | $2,324.8 | 7% | | Same-store New Vehicle Retail Unit Sales | 127,713 | 118,835 | 7% | | Same-store Used Vehicle Retail Unit Sales | 135,185 | 132,214 | 2% | [Selected Non-GAAP Financial Data (YTD 2025)](index=3&type=section&id=Selected%20Non-GAAP%20Financial%20Data%20(YTD%202025)) YTD 2025 Non-GAAP data indicates a 19% increase in Adjusted Diluted EPS to $10.11, with strong same-store revenue and gross profit growth YTD 2025 Selected Non-GAAP Financial Data | Metric | 2025 (Millions) | 2024 (Millions) | YoY Change | | :-------------------- | :-------------- | :-------------- | :--------- | | Adjusted Operating Income | $703.7 | $666.1 | 6% | | Adjusted Net Income | $393.4 | $352.6 | 12% | | Adjusted Diluted EPS | $10.11 | $8.50 | 19% | - Same-store Revenue increased **6% to $13.6 billion**, primarily reflecting increased new vehicle unit sales and higher average new vehicle selling prices[16](index=16&type=chunk) - Same-store Gross Profit increased **7% to $2.5 billion**[16](index=16&type=chunk) [Segment Results (YTD 2025)](index=4&type=section&id=Segment%20Results%20(YTD%202025)) All franchised dealership segments reported increased income and revenue year-to-date 2025, with AutoNation Finance turning profitable - Domestic Segment Income increased **28% to $161 million**, with revenue up **4%**[23](index=23&type=chunk) - Import Segment Income increased **10% to $260 million**, with revenue up **5%**[23](index=23&type=chunk) - Premium Luxury Segment Income increased **14% to $359 million**, with revenue up **7%**[23](index=23&type=chunk) - AutoNation Finance income was **$2 million**, compared to a loss of $4 million a year ago, reflecting higher net interest margin and operating efficiencies[23](index=23&type=chunk) [Capital Allocation, Liquidity, and Leverage](index=2&type=section&id=Capital%20Allocation%2C%20Liquidity%2C%20and%20Leverage) AutoNation demonstrated solid capital allocation and maintained strong liquidity, repurchasing $254 million in stock and generating $394 million in adjusted free cash flow [Capital Allocation (YTD 2025)](index=2&type=section&id=Capital%20Allocation%20(YTD%202025)) For the first half of 2025, AutoNation generated $394 million in adjusted free cash flow and repurchased 1.5 million shares for $254 million - For the first six months ended June 30, 2025, adjusted free cash flow was **$394 million**, or **100% of adjusted net income**[9](index=9&type=chunk) - During the first half of 2025, AutoNation repurchased **1.5 million shares** of common stock for an aggregate purchase price of **$254 million**, or approximately **$164 per share**[10](index=10&type=chunk) - AutoNation has more than **$607 million** of repurchase authorization remaining under its current share repurchase program[10](index=10&type=chunk) [Liquidity and Debt (Q2 2025)](index=3&type=section&id=Liquidity%20and%20Debt%20(Q2%202025)) As of June 30, 2025, AutoNation maintained $1.8 billion in liquidity and successfully completed a $700 million asset-backed securitization - As of June 30, 2025, AutoNation had **$1.8 billion of liquidity**, including **$63 million in cash** and **$1.8 billion of availability** under its revolving credit facility[12](index=12&type=chunk) - The Company's covenant leverage ratio was **2.33x** at quarter end, with **$3.8 billion of non-vehicle debt** outstanding[12](index=12&type=chunk) - During the second quarter of 2025, AutoNation completed its inaugural asset-backed term securitization, generating **$700 million in funding** for its auto loan portfolio at a weighted-average fixed interest rate of **4.90%**[12](index=12&type=chunk) [Company Information & Disclosures](index=4&type=section&id=Company%20Information%20%26%20Disclosures) This section provides an overview of AutoNation's business, clarifies non-GAAP measures, outlines forward-looking statement risks, and defines operating segments [About AutoNation, Inc.](index=4&type=section&id=About%20AutoNation%2C%20Inc.) AutoNation is a leading US automotive retailer offering vehicles, financing, parts, and services, actively supporting cancer-related causes through DRV PNK - AutoNation is one of the largest automotive retailers in the United States, offering innovative products and exceptional services[19](index=19&type=chunk) - The company provides a wide variety of new and used vehicles, customer financing, parts, and expert maintenance and repair services through a nationwide network of dealerships[19](index=19&type=chunk) - Through its DRV PNK initiative, AutoNation has raised over **$40 million** for cancer-related causes[19](index=19&type=chunk) [Non-GAAP Financial Measures Disclosure](index=4&type=section&id=Non-GAAP%20Financial%20Measures%20Disclosure) This section clarifies the use of non-GAAP financial measures to enhance transparency, emphasizing they are not a substitute for GAAP results - Non-GAAP financial measures are included to improve the transparency of the Company's disclosure and provide a meaningful presentation of results excluding items not related to ongoing core business operations[21](index=21&type=chunk) - Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are provided as required by SEC rules[21](index=21&type=chunk) - Non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated and presented in accordance with GAAP[21](index=21&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) The report contains forward-looking statements subject to various risks and uncertainties that could cause actual results to differ materially from expectations - Statements regarding strategic initiatives, partnerships, investments, shareholder returns, and future business performance are considered forward-looking[22](index=22&type=chunk)[25](index=25&type=chunk) - These statements involve known and unknown risks, uncertainties, and other factors that are difficult to predict and may cause actual results to be materially different[25](index=25&type=chunk) - Key risks include economic conditions, ability to implement strategies, gross profit margins, market share, cyber incidents, and changes in automotive laws and regulations[25](index=25&type=chunk) [Segment Definitions](index=4&type=section&id=Segment%20Definitions) AutoNation's operations are categorized into Domestic, Import, Premium Luxury, and AutoNation Finance segments, based on vehicle types and financial services - Domestic segment comprises stores selling vehicles manufactured by General Motors, Ford, and Stellantis[24](index=24&type=chunk) - Import segment primarily includes stores selling vehicles manufactured by Toyota, Honda, Hyundai, Subaru, and Nissan[24](index=24&type=chunk) - Premium Luxury segment primarily consists of stores selling vehicles manufactured by Mercedes-Benz, BMW, Lexus, Audi, and Jaguar Land Rover[24](index=24&type=chunk) - AutoNation Finance is the captive auto finance company, providing indirect financing to qualified retail customers[24](index=24&type=chunk) [Unaudited Condensed Consolidated Financials](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Financials) This section presents detailed unaudited financial statements, including income, operating data, segment results, and balance sheet highlights for Q2 and YTD 2025 [Statements of Income](index=6&type=section&id=Statements%20of%20Income) The unaudited statements of income detail revenue, gross profit, operating income, and net income for Q2 and YTD 2025, noting impairment impacts Condensed Consolidated Statements of Income (Millions, except per share data) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------ | :------ | :------ | :------- | :------- | | Total Revenue | $6,974.4 | $6,480.4 | $13,664.8 | $12,966.1 | | Total Cost of Sales | $5,699.0 | $5,317.3 | $11,169.5 | $10,605.1 | | Gross Profit | $1,275.4 | $1,163.1 | $2,495.3 | $2,361.0 | | Operating Income | $217.6 | $275.0 | $553.6 | $615.3 | | Net Income | $86.4 | $130.2 | $261.9 | $320.3 | | Diluted EPS | $2.26 | $3.20 | $6.73 | $7.72 | - Goodwill impairment of **$65.3 million** and franchise rights impairment of **$71.7 million** were recorded in Q2 and YTD 2025, impacting operating income[27](index=27&type=chunk) [Supplementary Operating Data](index=7&type=section&id=Supplementary%20Operating%20Data) This section provides a detailed breakdown of revenue, gross profit, unit sales, and per-vehicle metrics, along with key operating percentages for Q2 and YTD 2025 [Revenue and Gross Profit by Category](index=7&type=section&id=Revenue%20and%20Gross%20Profit%20by%20Category) Q2 2025 revenue and gross profit by category show strong growth in finance and insurance, and parts and service, offsetting a slight decline in new vehicle gross profit Q2 2025 Revenue & Gross Profit by Category (Millions) | Category | Revenue (2025) | Revenue (2024) | YoY % Change | Gross Profit (2025) | Gross Profit (2024) | YoY % Change | | :-------------------- | :------------- | :------------- | :----------- | :------------------ | :------------------ | :----------- | | New vehicle | $3,396.3 | $3,122.5 | 8.8% | $183.4 | $190.4 | -3.7% | | Used vehicle | $1,985.0 | $1,911.1 | 3.9% | $125.4 | $111.4 | 12.6% | | Finance and insurance | $367.7 | $324.0 | 13.5% | $367.7 | $324.0 | 13.5% | | Parts and service | $1,221.1 | $1,117.1 | 9.3% | $598.6 | $536.6 | 11.6% | [Per Vehicle Data](index=7&type=section&id=Per%20Vehicle%20Data) Q2 2025 per vehicle data indicates increased new vehicle revenue and F&I gross profit per vehicle, despite slight declines in new and used vehicle gross profit per vehicle Q2 2025 Per Vehicle Data | Metric | 2025 | 2024 | $ Variance | % Variance | | :-------------------------- | :----- | :----- | :--------- | :--------- | | New Revenue per vehicle | $51,579 | $50,965 | $614 | 1.2% | | Used Revenue per vehicle | $26,457 | $26,617 | $(160) | -0.6% | | New Gross profit per vehicle | $2,785 | $3,108 | $(323) | -10.4% | | Used Gross profit per vehicle | $1,622 | $1,638 | $(16) | -1.0% | | F&I Gross profit per vehicle | $2,712 | $2,556 | $156 | 6.1% | | Total variable operations gross profit per vehicle retailed | $4,899 | $4,904 | $(5) | -0.1% | [Operating Percentages](index=8&type=section&id=Operating%20Percentages) Q2 2025 operating percentages show improved SG&A as a percentage of gross profit and shifts in revenue and gross profit mix Q2 2025 Operating Percentages | Metric | 2025 (%) | 2024 (%) | | :-------------------------------------- | :------- | :------- | | Revenue mix: New vehicle | 48.7 | 48.2 | | Revenue mix: Used vehicle | 28.5 | 29.5 | | Gross profit mix: Parts and service | 46.9 | 46.1 | | Gross profit mix: Finance and insurance | 28.8 | 27.9 | | SG&A as a Percentage of Gross Profit | 67.0 | 71.0 | | Operating income as a percentage of total gross profit | 17.1 | 23.6 | [Segment Operating Highlights](index=9&type=section&id=Segment%20Operating%20Highlights) This section details revenue, segment income, and retail unit sales performance for Domestic, Import, and Premium Luxury segments, including new vehicle brand mix [Segment Revenue and Income](index=9&type=section&id=Segment%20Revenue%20and%20Income) Q2 2025 segment revenue and income show significant growth across all franchised dealership segments, with AutoNation Finance also increasing income Q2 2025 Segment Revenue & Income (Millions) | Segment | Revenue (2025) | Revenue (2024) | YoY % Change | Segment Income (2025) | Segment Income (2024) | YoY % Change | | :-------------- | :------------- | :------------- | :----------- | :-------------------- | :-------------------- | :----------- | | Domestic | $1,920.5 | $1,739.4 | 10.4% | $92.0 | $50.3 | 82.9% | | Import | $2,148.3 | $2,018.8 | 6.4% | $133.4 | $108.2 | 23.3% | | Premium luxury | $2,555.8 | $2,398.4 | 6.6% | $180.1 | $141.9 | 26.9% | | AutoNation Finance | N/A | N/A | N/A | $2.0 | $0.7 | N/A | [Retail Unit Sales by Segment](index=9&type=section&id=Retail%20Unit%20Sales%20by%20Segment) Q2 2025 retail unit sales by segment show growth in both new and used vehicle units across Domestic, Import, and Premium Luxury categories Q2 2025 Retail Unit Sales by Segment | Segment | New Vehicle Units (2025) | New Vehicle Units (2024) | YoY % Change | Used Vehicle Units (2025) | Used Vehicle Units (2024) | YoY % Change | | :-------------- | :----------------------- | :----------------------- | :----------- | :------------------------ | :------------------------ | :----------- | | Domestic | 19,354 | 16,583 | 16.7% | 19,752 | 18,734 | 5.4% | | Import | 29,748 | 28,729 | 3.5% | 23,392 | 22,572 | 3.6% | | Premium luxury | 16,745 | 15,956 | 4.9% | 19,016 | 17,769 | 7.0% | [Brand Mix - Retail New Vehicle Units Sold](index=9&type=section&id=Brand%20Mix%20-%20Retail%20New%20Vehicle%20Units%20Sold) Q2 2025 brand mix for retail new vehicle units sold shows shifts in market share across Domestic, Import, and Premium Luxury categories Q2 2025 Brand Mix - Retail New Vehicle Units Sold (%) | Brand Category | 2025 (%) | 2024 (%) | | :--------------- | :------- | :------- | | Domestic total | 29.4 | 27.1 | | Import total | 45.2 | 46.9 | | Premium Luxury total | 25.4 | 26.0 | [AutoNation Finance Segment](index=10&type=section&id=AutoNation%20Finance%20Segment) The AutoNation Finance segment reported increased interest margin and income for Q2 and YTD 2025, driven by higher interest income despite increased credit provisioning AutoNation Finance Performance (Millions) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------------------------ | :------ | :------ | :------- | :------- | | Interest and fee income | $48.6 | $26.5 | $90.5 | $48.3 | | Interest expense | $(17.8) | $(8.7) | $(31.7) | $(15.7) | | Total interest margin | $30.8 | $17.8 | $58.8 | $32.6 | | Provision for credit losses | $(19.2) | $(7.7) | $(38.1) | $(17.9) | | AutoNation Finance income (loss) | $2.0 | $0.7 | $2.1 | $(4.3) | - Year-over-year results reflect higher net interest margin and continued operating efficiencies, partially offset by higher non-cash credit provisioning related to significant loan origination growth[11](index=11&type=chunk)[23](index=23&type=chunk)[34](index=34&type=chunk) [Capital Allocation and Balance Sheet Details](index=11&type=section&id=Capital%20Allocation%20and%20Balance%20Sheet%20Details) This section details capital expenditures, stock repurchases, inventory carrying expense, key balance sheet items, and compliance with credit agreement covenants [Capital Expenditures and Stock Repurchases](index=11&type=section&id=Capital%20Expenditures%20and%20Stock%20Repurchases) Q2 and YTD 2025 data shows capital expenditures and stock repurchases, with 1.5 million shares repurchased year-to-date for $254 million Capital Allocation (Millions) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------ | :------ | :------ | :------- | :------- | | Capital expenditures | $79.0 | $87.5 | $154.2 | $181.2 | | Stock repurchases (price) | $29.0 | $311.3 | $253.8 | $350.0 | | Shares repurchased (millions) | 0.2 | 2.0 | 1.5 | 2.2 | [New Vehicle Floorplan Assistance and Expense](index=11&type=section&id=New%20Vehicle%20Floorplan%20Assistance%20and%20Expense) Q2 and YTD 2025 data shows floorplan assistance earned and interest expense, resulting in a reduced net new vehicle inventory carrying expense New Vehicle Floorplan Assistance and Expense (Millions) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------------------ | :------ | :------ | :------- | :------- | | Floorplan assistance earned | $34.7 | $31.6 | $65.8 | $63.4 | | New vehicle floorplan interest expense | $(43.6) | $(52.3) | $(87.6) | $(98.9) | | Net new vehicle inventory carrying expense | $(8.9) | $(20.7) | $(21.8) | $(35.5) | [Balance Sheet Highlights](index=11&type=section&id=Balance%20Sheet%20and%20Other%20Highlights) Key balance sheet items as of June 30, 2025, include cash, inventory, auto loans receivable, and debt, along with new and used vehicle days supply Balance Sheet Highlights (Millions) | Metric | June 30, 2025 | Dec 31, 2024 | June 30, 2024 | | :------------------------ | :------------ | :----------- | :------------ | | Cash and cash equivalents | $62.9 | $59.8 | $85.9 | | Inventory | $3,445.6 | $3,360.0 | $3,553.9 | | Auto loans receivable, net | $1,702.4 | $1,057.1 | $709.4 | | Non-recourse debt | $1,464.6 | $826.0 | $488.3 | | Non-vehicle debt | $3,764.6 | $3,762.1 | $4,011.6 | | New days supply | 49 days | 39 days | 67 days | | Used days supply | 39 days | 37 days | 34 days | [Key Credit Agreement Covenant Compliance](index=11&type=section&id=Key%20Credit%20Agreement%20Covenant%20Compliance) AutoNation maintained strong covenant compliance at quarter-end, with a leverage ratio of 2.33x and an interest coverage ratio of 4.63x - The Company's covenant leverage ratio was **2.33x** at quarter end, well below the covenant limit of 3.75x[36](index=36&type=chunk) - The interest coverage ratio was **4.63x**, exceeding the covenant requirement of greater than or equal to 3.00x[36](index=36&type=chunk) [Comparable Basis Reconciliations](index=12&type=section&id=Comparable%20Basis%20Reconciliations) This section provides detailed reconciliations of GAAP to non-GAAP financial measures, adjusting for specific items like impairments and one-time costs [Three Months Ended June 30, 2025](index=12&type=section&id=Three%20Months%20Ended%20June%2030%2C%202025) Q2 2025 reconciliation details adjustments for impairments, leading to an adjusted operating income of $369.3 million and diluted EPS of $5.46 Q2 2025 Comparable Basis Reconciliation Summary (Millions, except per share data) | Metric | As Reported | Adjustments | Adjusted | | :-------------------- | :---------- | :---------- | :------- | | Operating Income | $217.6 | $151.7 | $369.3 | | Income Before Income Taxes | $138.4 | $141.3 | $279.7 | | Net Income | $86.4 | $122.8 | $209.2 | | Diluted EPS | $2.26 | $3.21 | $5.46 | | SG&A as a Percentage of Gross Profit | 67.0% | N/A | 66.2% | - Adjustments for Q2 2025 include **$141.3 million** for goodwill, franchise rights, and other asset impairments[38](index=38&type=chunk) - Adjusted SG&A as a Percentage of Gross Profit improved to **66.2%** from 67.3% in the prior year[38](index=38&type=chunk) [Six Months Ended June 30, 2025](index=13&type=section&id=Six%20Months%20Ended%20June%2030%2C%202025) YTD 2025 reconciliation details adjustments for impairments and equity investment losses, resulting in an adjusted operating income of $703.7 million and diluted EPS of $10.11 YTD 2025 Comparable Basis Reconciliation Summary (Millions, except per share data) | Metric | As Reported | Adjustments | Adjusted | | :-------------------- | :---------- | :---------- | :------- | | Operating Income | $553.6 | $150.1 | $703.7 | | Income Before Income Taxes | $372.4 | $152.8 | $525.2 | | Net Income | $261.9 | $131.5 | $393.4 | | Diluted EPS | $6.73 | $3.38 | $10.11 | | SG&A as a Percentage of Gross Profit | 67.2% | N/A | 66.8% | - Adjustments for YTD 2025 include **$141.3 million** for goodwill, franchise rights, and other asset impairments, and **$11.5 million** for net loss on equity investments[40](index=40&type=chunk) - Adjusted SG&A as a Percentage of Gross Profit was **66.8%**, up from 66.4% in the prior year[40](index=40&type=chunk) [Free Cash Flow](index=14&type=section&id=Free%20Cash%20Flow) For the first six months of 2025, AutoNation reported adjusted free cash flow of $393.6 million, representing 100% conversion of adjusted net income Free Cash Flow (Six Months Ended June 30, Millions) | Metric | 2025 | 2024 | | :------------------------------------------ | :----- | :----- | | Net cash provided by (used in) operating activities | $(230.3) | $234.9 | | Adjusted cash provided by operating activities | $547.8 | $700.3 | | Purchases of property and equipment | $(154.2) | $(181.2) | | Adjusted free cash flow | $393.6 | $519.1 | | Adjusted free cash flow conversion % | 100% | 147% | [Unaudited Same Store Data](index=15&type=section&id=Unaudited%20Same%20Store%20Data) This section provides unaudited same-store operating highlights, including revenue, gross profit, unit sales, and per-vehicle data, along with operating percentages [Same-Store Operating Highlights](index=15&type=section&id=Same-Store%20Operating%20Highlights) Q2 2025 same-store operating highlights show an 8.2% increase in total revenue and a 10.3% increase in total gross profit, with growth in new and used vehicle unit sales [Same-Store Revenue and Gross Profit by Category](index=15&type=section&id=Same-Store%20Revenue%20and%20Gross%20Profit%20by%20Category) Q2 2025 same-store revenue and gross profit by category show strong growth in parts and service, and finance and insurance, contributing to overall increases Q2 2025 Same-Store Revenue & Gross Profit by Category (Millions) | Category | Revenue (2025) | Revenue (2024) | YoY % Change | Gross Profit (2025) | Gross Profit (2024) | YoY % Change | | :-------------------- | :------------- | :------------- | :----------- | :------------------ | :------------------ | :----------- | | New vehicle | $3,372.0 | $3,088.7 | 9.2% | $182.6 | $188.7 | -3.2% | | Used vehicle | $1,953.5 | $1,882.4 | 3.8% | $123.7 | $110.3 | 12.1% | | Finance and insurance | $362.5 | $320.0 | 13.3% | $362.5 | $320.0 | 13.3% | | Parts and service | $1,211.9 | $1,086.7 | 11.5% | $594.4 | $526.2 | 13.0% | | Total revenue | $6,904.1 | $6,383.4 | 8.2% | N/A | N/A | N/A | | Total gross profit | N/A | N/A | N/A | $1,263.4 | $1,145.8 | 10.3% | [Same-Store Per Vehicle Data](index=15&type=section&id=Same-Store%20Per%20Vehicle%20Data) Q2 2025 same-store per vehicle data indicates increased new vehicle revenue and F&I gross profit per vehicle, with slight declines in new and used vehicle gross profit per vehicle Q2 2025 Same-Store Per Vehicle Data | Metric | 2025 | 2024 | $ Variance | % Variance | | :-------------------------- | :----- | :----- | :--------- | :--------- | | New Revenue per vehicle | $51,612 | $50,962 | $650 | 1.3% | | Used Revenue per vehicle | $26,539 | $26,684 | $(145) | -0.5% | | New Gross profit per vehicle | $2,795 | $3,113 | $(318) | -10.2% | | Used Gross profit per vehicle | $1,627 | $1,642 | $(15) | -0.9% | | F&I Gross profit per vehicle | $2,711 | $2,561 | $150 | 5.9% | | Total variable operations gross profit per vehicle retailed | $4,908 | $4,916 | $(8) | -0.2% | [Same-Store Operating Percentages](index=16&type=section&id=Same-Store%20Operating%20Percentages) Q2 2025 same-store operating percentages show shifts in revenue and gross profit mix, with total gross profit as a percentage of revenue increasing to 18.3% Q2 2025 Same-Store Operating Percentages | Metric | 2025 (%) | 2024 (%) | | :-------------------------------------- | :------- | :------- | | Revenue mix: New vehicle | 48.8 | 48.4 | | Revenue mix: Used vehicle | 28.3 | 29.5 | | Gross profit mix: Parts and service | 47.0 | 45.9 | | Gross profit mix: Finance and insurance | 28.7 | 27.9 | | Total Gross profit as % of revenue | 18.3 | 17.9 |

Core Insights - AutoNation, Inc. reported second quarter 2025 revenue of $7.0 billion, an 8% increase year-over-year, while diluted EPS decreased to $2.26 from $3.20, and adjusted EPS rose to $5.46 from $3.99 [1][7][10] Financial Performance - Revenue for the second quarter of 2025 was $6,974.4 million, up from $6,480.4 million in the same period last year, reflecting an 8% increase [3][21] - Gross profit increased by 10% to $1,275.4 million from $1,163.1 million [3][21] - Operating income decreased by 21% to $217.6 million from $275.0 million [3][21] - Net income fell by 34% to $86.4 million compared to $130.2 million a year ago [3][21] - Adjusted operating income for the quarter was $369.3 million, a 16% increase from $318.5 million [4] - Adjusted net income rose by 29% to $209.2 million from $162.5 million [4] Segment Performance - Same-store revenue increased by 8% to $6.9 billion, driven by higher new vehicle unit sales and increased average selling prices [8][12] - New vehicle revenue was $3.4 billion, up 9%, while used vehicle revenue increased by 4% to $2.0 billion [8] - After-sales revenue grew by 12% to $1.2 billion, and customer financial services revenue rose by 13% to $363 million [8] - Same-store gross profit increased by 10% to $1.3 billion [8] Capital Allocation and Liquidity - Cash used in operating activities for the first half of 2025 was $230 million, with auto loans receivable net increasing by $695 million [5] - AutoNation repurchased 1.5 million shares for $254 million, with over $607 million remaining under its repurchase authorization [6] - As of June 30, 2025, AutoNation had $1.8 billion in liquidity, including $63 million in cash [9] Market Position and Strategy - The company experienced double-digit growth in customer financial services and after-sales, alongside improved new vehicle market share [2] - The successful completion of a $700 million asset-backed securitization for its auto loan portfolio at a fixed interest rate of 4.90% [9]

Core Insights - AutoNation (AN) is expected to report quarterly earnings of $4.70 per share, reflecting a year-over-year increase of 17.8% [1] - Revenues are anticipated to reach $6.8 billion, which is a 4.9% increase from the same quarter last year [1] - The consensus EPS estimate has been revised upward by 1.6% in the past 30 days, indicating analysts' reassessment of their initial estimates [1][2] Revenue Estimates - Analysts predict 'Revenue- Parts and service' will reach $1.19 billion, marking a 6.4% increase from the prior-year quarter [3] - The 'Revenue- Finance and insurance net' is estimated at $337.81 million, reflecting a 4.3% increase from the year-ago quarter [4] - 'Revenue- Used Vehicle' is expected to be $1.92 billion, indicating a 0.7% increase from the prior-year quarter [4] - 'Revenue- New Vehicle' is projected to reach $3.31 billion, which is a 5.9% increase from the year-ago quarter [4] Sales and Profit Metrics - Total 'Retail vehicle unit sales' are expected to be 130,325, compared to 126,772 in the previous year [5] - 'Revenue per vehicle retailed - New' is forecasted to be $51,872.62, up from $50,965.00 in the same quarter last year [5] - 'Revenue per vehicle retailed - Used' is estimated at $27,368.63, compared to $26,617.00 in the same quarter last year [6] - 'Gross profit per vehicle retailed - Finance and insurance' is expected to reach $2,598.93, up from $2,556.00 in the previous year [6] Used and New Vehicle Sales - 'Retail vehicle unit sales - Used' are projected at 66,701, compared to 65,504 in the same quarter last year [7] - 'Retail vehicle unit sales - New' is estimated at 63,624, up from 61,268 in the previous year [7] - 'Gross profit per vehicle retailed - Used' is expected to be $1,612.39, slightly down from $1,638.00 in the previous year [7] - 'Gross profit per vehicle retailed - New' is projected to be $2,892.10, down from $3,108.00 in the same quarter last year [8] Market Performance - AutoNation shares have changed by +0.3% in the past month, while the Zacks S&P 500 composite has moved +5.9% [8]

Core Viewpoint - AutoNation (AN) is positioned well to potentially beat earnings estimates in its upcoming quarterly report, continuing a trend of positive earnings surprises [1][5]. Earnings Performance - For the most recent quarter, AutoNation reported earnings of $4.35 per share, missing the expected $4.68 per share by 7.59%. In the previous quarter, it exceeded expectations by reporting $4.97 per share against a consensus estimate of $4.26 per share, resulting in a surprise of 16.67% [2]. Earnings Estimates and Predictions - Recent estimates for AutoNation have been increasing, with a positive Earnings ESP (Expected Surprise Prediction) of +0.83%, indicating analysts' growing bullish sentiment on the company's near-term earnings potential [5][8]. - The combination of a positive Earnings ESP and a Zacks Rank of 3 (Hold) suggests a high likelihood of another earnings beat, with historical data showing that stocks with this combination beat estimates nearly 70% of the time [6][8]. Earnings ESP Explanation - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, with the Most Accurate Estimate reflecting the latest analyst revisions, which may provide a more accurate prediction of earnings [7].

Core Viewpoint - Wall Street anticipates a year-over-year increase in AutoNation's earnings driven by higher revenues, with the actual results being crucial for near-term stock price movements [1][2]. Earnings Expectations - AutoNation is expected to report quarterly earnings of $4.67 per share, reflecting a +17% year-over-year change, and revenues are projected to be $6.79 billion, up 4.8% from the previous year [3]. - The earnings report is scheduled for July 25, and better-than-expected results could lead to a stock price increase, while a miss may result in a decline [2]. Estimate Revisions - The consensus EPS estimate has been revised 1.3% higher in the last 30 days, indicating a reassessment by analysts [4]. - However, the Most Accurate Estimate for AutoNation is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -1.21%, suggesting a bearish outlook from analysts [12]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that a positive or negative reading can predict deviations from consensus estimates, but its predictive power is significant mainly for positive readings [9][10]. - AutoNation's current Zacks Rank is 3, which complicates the prediction of an earnings beat [12]. Historical Performance - In the last reported quarter, AutoNation exceeded expectations with earnings of $4.68 per share against an expected $4.35, resulting in a surprise of +7.59% [13]. - Over the past four quarters, AutoNation has beaten consensus EPS estimates two times [14]. Industry Comparison - Sonic Automotive, another player in the automotive retail industry, is expected to post earnings of $1.61 per share, indicating a +9.5% year-over-year change, with revenues projected at $3.65 billion, up 5.7% [18]. - Sonic Automotive's consensus EPS estimate has been revised 0.3% higher, but it also has a negative Earnings ESP of -0.16%, making predictions of an earnings beat challenging [19][20].

Industry Overview - The Zacks Auto Retail and Wholesale industry is experiencing significant changes due to evolving consumer habits, policy shifts, and strategic actions by key players [1][3] - The industry is consumer-driven, with performance closely tied to economic conditions, where increased disposable income typically leads to higher vehicle purchases [3] - The COVID-19 pandemic has accelerated the industry's shift towards online tools and e-commerce, a trend expected to continue [3] Factors Influencing Industry Dynamics - Car affordability has seen a modest improvement due to rising consumer incomes and dealer incentives, but tariffs on imported vehicles continue to pose challenges, potentially adding up to $5,700 to the cost of new cars [4] - The EV market is in a transitional phase, with first-half 2025 U.S. EV sales reaching 607,089 units, a 1.5% year-over-year increase, but a decline in demand is anticipated in the fourth quarter without government subsidies [5] - Auto retailers are making strategic acquisitions to enhance market share and diversify offerings, while also investing in digital platforms to meet changing customer expectations [2][6][7] Market Performance - The Zacks Auto Retail & Wholesale industry ranks 91, placing it in the top 37% of 245 Zacks industries, indicating positive near-term prospects [8][9] - Over the past year, the industry has outperformed the S&P 500, returning 16.3% compared to the S&P 500's 12.6% growth [10] Current Valuation - The industry is currently trading at an EV/EBITDA ratio of 8.95X, significantly lower than the S&P 500's 17.64X and the sector's 20.66X [13] Company Highlights - **Penske Automotive**: Completed acquisitions in 2024 representing nearly $2.1 billion in annualized revenues, with a strong order backlog and a low long-term debt-to-capitalization ratio of 15.5% [17][18] - **Lithia Motors**: Expanded its footprint through acquisitions, adding $3.8 billion in 2023 and $5.9 billion in 2024 in annualized revenues, with a focus on digital platforms to enhance customer experience [22][23] - **AutoNation**: Continues to grow through strategic acquisitions and digital transformation, with a recent purchase expected to add $200 million in annual revenues [25][26] - **Group 1 Automotive**: Achieved significant revenue growth through acquisitions, adding over $1 billion in 2023 and $3.9 billion in 2024, while focusing on an omnichannel strategy [31][32]

Core Insights - AutoNation, Inc. will release its financial results for the second quarter ended June 30, 2025, on July 25, 2025, before market opens [1] - A conference call and audio webcast will be held on the same day at 9:00 a.m. Eastern Time to discuss the results [1] Company Overview - AutoNation is one of the largest automotive retailers in the United States, providing a wide range of new and used vehicles, customer financing, parts, and maintenance services [3] - The company has raised over $40 million for cancer-related causes through its initiative DRV PNK, showcasing its commitment to community support [3]