Group 1 - Asbury Group (ABG) and AutoNation (AN) are significant players in the U.S. auto dealership market, showcasing strong operational performance [3] - The auto dealership sector is experiencing growth driven by increased consumer demand and favorable market conditions [3] - Both companies are strategically positioned to capitalize on market trends, enhancing their competitive advantage [3]

Core Insights - AutoNation, Inc. reported second-quarter 2025 adjusted earnings of $5.46 per share, a 37% increase year over year, exceeding the Zacks Consensus Estimate of $4.70, driven by strong revenues across various segments [1] - Total revenues for the quarter reached $6.97 billion, surpassing the Zacks Consensus Estimate of $6.80 billion and up from $6.48 billion in the same quarter of 2024 [1] Revenue Breakdown - New vehicle revenues increased by 8.8% year over year to $3.40 billion, exceeding the estimate of $3.24 billion, with retail units sold totaling 65,847, a 7.5% increase [2] - Retail used-vehicle revenues rose 5.8% to $1.85 billion, surpassing the projection of $1.76 billion, with used vehicle retail units sold totaling 69,736, a 6.5% increase [3] - Wholesale used vehicle revenues decreased by 16.5% to $140 million, missing the estimate of $164.2 million, although gross profit increased significantly [4] - Finance and insurance business revenues amounted to $367.7 million, a 13.5% increase year over year, beating the projection of $327 million [4] - Parts and service business revenues grew by 9.3% to $1.22 billion, exceeding the estimate of $1.18 billion [5] Segment Performance - Domestic segment revenues rose 10.4% year over year to $1.92 billion, surpassing the projection of $1.75 billion, with income climbing 82.9% to $92 million [6] - Import segment revenues increased 6.4% to $2.15 billion, exceeding the forecast of $2.02 billion, with income rising 23.3% to $133.4 million [6] - Premium Luxury segment sales increased by 6.6% to $2.56 billion, slightly missing the projection of $2.57 billion, but income rose 26.9% to $180.1 million [7] Financial Position - As of June 30, 2025, the company's liquidity stood at $1.8 billion, including $63 million in cash and nearly $1.8 billion available under its revolving credit facility [8] - Inventory was valued at $3.46 billion, with non-vehicle debt at $3.76 billion [9] - Capital expenditure for the quarter was $79 million, and the company repurchased 1.5 million shares for $254 million during the first half of 2025 [9]

Core Insights - AutoNation reported strong Q2 FY2025 results with adjusted earnings per share of $5.46, exceeding analyst estimates of $4.70, while revenue reached $7.0 billion, surpassing the forecast of $6.85 billion [1][2] - The company is focusing on diversifying its revenue streams, particularly in After-Sales and Customer Financial Services, to mitigate reliance on new vehicle sales [4][9] - Despite revenue growth, GAAP net income and earnings per share declined due to significant non-cash asset impairment charges [1][8] Financial Performance - Adjusted EPS (Non-GAAP) was $5.46, a 37% increase year-over-year from $3.99 [2] - GAAP EPS fell to $2.26, down 29% from $3.20 in Q2 2024 [2] - Revenue increased by 8% year-over-year, driven by new vehicles, used vehicles, and After-Sales [5] - Gross profit reached $1.28 billion, a 10% increase from the previous year, with a gross margin percentage of 18.3% [2][7] Business Model and Strategy - AutoNation operates a diverse business model, including new and used vehicle sales, parts and service, and finance and insurance products [3] - The company has prioritized After-Sales and Customer Financial Services, which together contributed 75.7% of the gross profit mix [4][9] - Digital retailing initiatives are ongoing, allowing customers to complete more steps of the buying process online [9] Segment Performance - Domestic segment income increased by 83% to $92 million, while Import and Premium Luxury segments saw income increases of 23% to $133 million and 27% to $180 million, respectively [6] - Customer Financial Services revenue rose by 13%, and After-Sales revenue climbed by 12% [5] Operational Efficiency - SG&A expenses as a percentage of adjusted gross profit improved to 66.2% from 67.3% year-over-year [10] - The company completed its first asset-backed securitization for $700 million, enhancing its liquidity position [11] Future Outlook - Management did not provide formal guidance for the next quarter but expressed confidence in cash flow generation and capital deployment [12]

PART I. FINANCIAL INFORMATION This section presents AutoNation, Inc.'s unaudited condensed consolidated financial statements, management's discussion, and market risk disclosures [ITEM 1. FINANCIAL STATEMENTS](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) AutoNation's unaudited condensed consolidated financial statements, including balance sheets, income, equity, and cash flows, are presented with detailed notes [Unaudited Condensed Consolidated Balance Sheets](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) The company's unaudited condensed consolidated balance sheets detail assets, liabilities, and shareholders' equity at specific dates | Metric | June 30, 2025 (Millions) | December 31, 2024 (Millions) | Change (Millions) | % Change | | :-------------------------------- | :----------------------- | :------------------------- | :---------------- | :--------- | | Total Assets | $13,571.0 | $13,001.7 | $569.3 | 4.4% | | Cash and cash equivalents | $62.9 | $59.8 | $3.1 | 5.2% | | Receivables, net | $868.2 | $1,066.3 | $(198.1) | (18.6)% | | Inventory | $3,445.6 | $3,360.0 | $85.6 | 2.5% | | Auto loans receivable, net | $1,702.4 | $1,057.1 | $645.3 | 61.0% | | Total Current Liabilities | $5,693.3 | $6,312.2 | $(618.9) | (9.8)% | | Long-term debt, net | $3,112.0 | $2,613.6 | $498.4 | 19.1% | | Non-recourse debt, net | $1,419.6 | $797.7 | $621.9 | 78.0% | | Total Shareholders' Equity | $2,469.5 | $2,457.3 | $12.2 | 0.5% | [Unaudited Condensed Consolidated Statements of Income](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Income) The company's unaudited condensed consolidated statements of income detail revenues, expenses, and net income for the periods presented | Metric | 3 Months Ended June 30, 2025 (Millions) | 3 Months Ended June 30, 2024 (Millions) | Change (Millions) | % Change | | :-------------------------------- | :------------------------------------ | :------------------------------------ | :---------------- | :--------- | | Total Revenue | $6,974.4 | $6,480.4 | $494.0 | 7.6% | | New vehicle revenue | $3,396.3 | $3,122.5 | $273.8 | 8.8% | | Used vehicle revenue | $1,985.0 | $1,911.1 | $73.9 | 3.9% | | Parts and service revenue | $1,221.1 | $1,117.1 | $104.0 | 9.3% | | Finance and insurance, net revenue | $367.7 | $324.0 | $43.7 | 13.5% | | Total Gross Profit | $1,275.4 | $1,163.1 | $112.3 | 9.7% | | Operating Income | $217.6 | $275.0 | $(57.4) | (20.9)% | | Income Before Income Taxes | $138.4 | $174.2 | $(35.8) | (20.6)% | | Net Income | $86.4 | $130.2 | $(43.8) | (33.6)% | | Basic EPS | $2.29 | $3.22 | $(0.93) | (28.9)% | | Diluted EPS | $2.26 | $3.20 | $(0.94) | (29.4)% | - Net income and diluted EPS for Q2 2025 were significantly impacted by non-cash goodwill and franchise rights impairments totaling **$122.8 million after-tax**[142](index=142&type=chunk) [Unaudited Condensed Consolidated Statements of Shareholders' Equity](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Shareholders%27%20Equity) The company's unaudited condensed consolidated statements of shareholders' equity show changes in equity components over time | Metric | June 30, 2025 (Millions) | December 31, 2024 (Millions) | Change (Millions) | % Change | | :-------------------------------- | :----------------------- | :------------------------- | :---------------- | :--------- | | Total Shareholders' Equity | $2,469.5 | $2,457.3 | $12.2 | 0.5% | | Retained earnings | $5,588.9 | $5,331.8 | $257.1 | 4.8% | | Treasury stock, at cost | $(3,131.9) | $(2,895.4) | $(236.5) | (8.2)% | - The company repurchased **$253.8 million** of common stock during the six months ended June 30, 2025, compared to **$350.0 million** in the same period of 2024[13](index=13&type=chunk)[78](index=78&type=chunk)[242](index=242&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The company's unaudited condensed consolidated statements of cash flows categorize cash activities into operating, investing, and financing | Metric | 6 Months Ended June 30, 2025 (Millions) | 6 Months Ended June 30, 2024 (Millions) | Change (Millions) | | :-------------------------------- | :------------------------------------ | :------------------------------------ | :---------------- | | Net cash provided by (used in) operating activities | $(230.3) | $234.9 | $(465.2) | | Net cash used in investing activities | $(210.5) | $(136.4) | $(74.1) | | Net cash provided by (used in) financing activities | $434.8 | $(65.7) | $500.5 | | Increase (decrease) in cash, cash equivalents, and restricted cash | $(6.0) | $32.8 | $(38.8) | - The shift in operating cash flow was primarily due to a **$324.4 million increase in auto loans receivable** and approximately **$225 million in increased working capital requirements**[262](index=262&type=chunk) - Financing activities were boosted by **$1.3 billion in non-recourse debt borrowings** (including **$700.0 million in asset-backed term securitizations**) and **$500.0 million from 5.89% Senior Notes due 2035**[15](index=15&type=chunk)[267](index=267&type=chunk)[268](index=268&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Detailed explanatory notes to the unaudited condensed consolidated financial statements provide context and additional information [1. INTERIM FINANCIAL STATEMENTS](index=7&type=section&id=1.%20INTERIM%20FINANCIAL%20STATEMENTS) This note describes the company's operations and the basis of presentation for interim financial statements, including new accounting standards - AutoNation operates **322 new vehicle franchises** from **244 stores**, **52 collision centers**, **26 used vehicle stores**, **4 auction operations**, **3 parts distribution centers**, a mobile repair business, and an auto finance company as of June 30, 2025[16](index=16&type=chunk) - Core new vehicle brands (Toyota, Honda, Ford, GM, BMW, Mercedes-Benz, Stellantis, Volkswagen) represented approximately **88% of new vehicle sales** for the six months ended June 30, 2025[16](index=16&type=chunk) - New accounting standards ASU 2023-09 (Income Tax Disclosures) and ASU 2024-03 (Expense Disaggregation Disclosures) are not expected to impact consolidated financial statements but will require additional disclosures[21](index=21&type=chunk)[22](index=22&type=chunk) [2. REVENUE RECOGNITION](index=8&type=section&id=2.%20REVENUE%20RECOGNITION) This note details the company's revenue recognition policies and disaggregates revenue by category and contract balances | Revenue Category | 3 Months Ended June 30, 2025 (Millions) | 3 Months Ended June 30, 2024 (Millions) | 6 Months Ended June 30, 2025 (Millions) | 6 Months Ended June 30, 2024 (Millions) | | :------------------------- | :------------------------------------ | :------------------------------------ | :------------------------------------ | :------------------------------------ | | New vehicle | $3,396.3 | $3,122.5 | $6,644.4 | $6,101.8 | | Used vehicle | $1,985.0 | $1,911.1 | $3,907.4 | $3,907.2 | | Parts and service | $1,221.1 | $1,117.1 | $2,385.1 | $2,289.5 | | Finance and insurance, net | $367.7 | $324.0 | $720.2 | $658.7 | | Total Revenue | $6,974.4 | $6,480.4 | $13,664.8 | $12,966.1 | | Metric | June 30, 2025 (Millions) | December 31, 2024 (Millions) | | :-------------------------------- | :----------------------- | :------------------------- | | Receivables from contracts with customers, net | $628.7 | $774.0 | | Contract Asset (Current) | $19.6 | $20.4 | | Contract Asset (Long-Term) | $2.2 | $2.8 | | Contract Liability (Current) | $44.7 | $43.9 | | Contract Liability (Long-Term) | $74.6 | $72.9 | - Estimated future revenue from Vehicle Care Program (VCP) performance obligations is **$115.0 million**, with **$40.4 million** expected in the next 12 months[28](index=28&type=chunk) [3. AUTONATION FINANCE INCOME (LOSS)](index=11&type=section&id=3.%20AUTONATION%20FINANCE%20INCOME%20(LOSS)) This note provides a breakdown of AutoNation Finance's income or loss, including interest, fees, and credit loss provisions | Metric | 3 Months Ended June 30, 2025 (Millions) | 3 Months Ended June 30, 2024 (Millions) | 6 Months Ended June 30, 2025 (Millions) | 6 Months Ended June 30, 2024 (Millions) | | :-------------------------------- | :------------------------------------ | :------------------------------------ | :------------------------------------ | :------------------------------------ | | Interest and fee income | $48.6 | $26.5 | $90.5 | $48.3 | | Interest expense | $(17.8) | $(8.7) | $(31.7) | $(15.7) | | Provision for credit losses | $(19.2) | $(7.7) | $(38.1) | $(17.9) | | AutoNation Finance income (loss) | $2.0 | $0.7 | $2.1 | $(4.3) | - ANF income increased due to growth in average managed receivables and improved credit quality of new loan originations, leading to decreased expected credit loss rates[216](index=216&type=chunk)[217](index=217&type=chunk) [4. EARNINGS PER SHARE](index=12&type=section&id=4.%20EARNINGS%20PER%20SHARE) This note details the calculation of basic and diluted earnings per share, highlighting impacts from impairments and outages | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net Income (Millions) | $86.4 | $130.2 | $261.9 | $320.3 | | Basic EPS | $2.29 | $3.22 | $6.82 | $7.77 | | Diluted EPS | $2.26 | $3.20 | $6.73 | $7.72 | - Q2 2025 EPS was adversely impacted by non-cash goodwill and franchise rights impairments[34](index=34&type=chunk)[142](index=142&type=chunk) - Q2 2024 EPS was negatively impacted by the CDK Global system outage, estimated at **$1.55 per share**[34](index=34&type=chunk)[35](index=35&type=chunk) [5. RECEIVABLES, NET](index=12&type=section&id=5.%20RECEIVABLES%2C%20NET) This note provides a breakdown of receivables, net, including contracts-in-transit, trade, and manufacturer receivables | Component | June 30, 2025 (Millions) | December 31, 2024 (Millions) | Change (Millions) | % Change | | :-------------------------------- | :----------------------- | :------------------------- | :---------------- | :--------- | | Contracts-in-transit and vehicle receivables | $438.9 | $560.2 | $(121.3) | (21.7)% | | Trade receivables | $154.0 | $168.5 | $(14.5) | (8.6)% | | Manufacturer receivables | $218.5 | $267.1 | $(48.6) | (18.2)% | | Total Receivables, net | $868.2 | $1,066.3 | $(198.1) | (18.6)% | - Receivables from manufacturers or distributors totaled **$218.5 million** at June 30, 2025, representing a concentration of credit risk[118](index=118&type=chunk) [6. AUTO LOANS RECEIVABLE](index=13&type=section&id=6.%20AUTO%20LOANS%20RECEIVABLE) This note details auto loans receivable, including total balances, allowance for credit losses, and past due status | Metric | June 30, 2025 (Millions) | December 31, 2024 (Millions) | Change (Millions) | % Change | | :-------------------------------- | :----------------------- | :------------------------- | :---------------- | :--------- | | Total auto loans receivable | $1,761.4 | $1,103.8 | $657.6 | 59.6% | | Auto loans receivable, net | $1,702.4 | $1,057.1 | $645.3 | 61.0% | | Allowance for expected credit losses | $78.2 | $54.8 | $23.4 | 42.7% | | Provision for credit losses (6 months) | $39.4 | $17.9 | $21.5 | 120.1% | | Write-offs (6 months) | $31.4 | $28.2 | $3.2 | 11.3% | | Recoveries (6 months) | $15.4 | $12.2 | $3.2 | 26.2% | | Past Due Status | June 30, 2025 (Millions) | December 31, 2024 (Millions) | | :-------------------------------- | :----------------------- | :------------------------- | | 31-60 Days Past Due | $32.3 | $20.6 | | 61-90 Days Past Due | $7.6 | $5.5 | | Greater than 90 Days Past Due | $2.3 | $2.7 | | Total Past Due | $42.2 | $28.8 | | Current | $1,719.2 | $1,075.0 | | Total | $1,761.4 | $1,103.8 | - The allowance for credit losses is determined using a vintage-level statistical model incorporating historical data and a one-year forecast of U.S. disposable personal income[42](index=42&type=chunk) [7. INVENTORY AND VEHICLE FLOORPLAN PAYABLE](index=16&type=section&id=7.%20INVENTORY%20AND%20VEHICLE%20FLOORPLAN%20PAYABLE) This note details inventory and vehicle floorplan payable, including new and used vehicle inventory and associated financing | Component | June 30, 2025 (Millions) | December 31, 2024 (Millions) | Change (Millions) | % Change | | :-------------------------------- | :----------------------- | :------------------------- | :---------------- | :--------- | | New vehicles inventory | $2,330.7 | $2,341.4 | $(10.7) | (0.5)% | | Used vehicles inventory | $856.0 | $754.1 | $101.9 | 13.5% | | Total Inventory | $3,445.6 | $3,360.0 | $85.6 | 2.5% | | Vehicle floorplan payable - trade | $2,045.8 | $2,216.2 | $(170.4) | (7.7)% | | Vehicle floorplan payable - non-trade | $1,610.1 | $1,493.5 | $116.6 | 7.8% | | Total Vehicle floorplan payable | $3,655.9 | $3,709.7 | $(53.8) | (1.4)% | | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | New vehicle inventory days supply | 49 days | 67 days | | Used vehicle inventory days supply | 39 days | 34 days | - New vehicle floorplan facilities had a weighted-average interest rate of **6.0%** at June 30, 2025 (down from **6.1%** at Dec 31, 2024), with **$3.1 billion** borrowed against a **$4.7 billion capacity**[50](index=50&type=chunk) [8. GOODWILL AND INTANGIBLE ASSETS, NET](index=17&type=section&id=8.%20GOODWILL%20AND%20INTANGIBLE%20ASSETS%2C%20NET) This note details goodwill and intangible assets, net, including impairment charges for goodwill and franchise rights | Component | June 30, 2025 (Millions) | December 31, 2024 (Millions) | Change (Millions) | % Change | | :-------------------------------- | :----------------------- | :------------------------- | :---------------- | :--------- | | Goodwill | $1,385.5 | $1,452.9 | $(67.4) | (4.6)% | | Franchise rights - indefinite-lived | $851.5 | $861.2 | $(9.7) | (1.1)% | | Other intangible assets, net | $892.8 | $905.9 | $(13.1) | (1.4)% | - A non-cash goodwill impairment charge of **$65.3 million** was recorded for the Mobile Service reporting unit due to its fair value being less than its carrying value, reflecting reduced forecasted cash flows and growth rates[54](index=54&type=chunk)[96](index=96&type=chunk) - Non-cash franchise rights impairment charges of **$71.7 million** were recorded for nine stores, primarily Domestic franchises, due to underperformance relative to expectations[56](index=56&type=chunk)[100](index=100&type=chunk) [9. DEBT](index=18&type=section&id=9.%20DEBT) This note provides a breakdown of the company's debt, including long-term, non-recourse, and commercial paper outstanding | Debt Type | June 30, 2025 (Millions) | December 31, 2024 (Millions) | Change (Millions) | % Change | | :-------------------------------- | :----------------------- | :------------------------- | :---------------- | :--------- | | Long-term debt, net of current maturities | $3,112.0 | $2,613.6 | $498.4 | 19.1% | | Non-recourse debt, net of current portion | $1,419.6 | $797.7 | $621.9 | 78.0% | | Commercial paper outstanding | $130.0 | $630.0 | $(500.0) | (79.4)% | - Issued **$500.0 million** aggregate principal amount of **5.89% Senior Notes due 2035** on February 24, 2025[59](index=59&type=chunk)[249](index=249&type=chunk) - Issued **$700.0 million** in non-recourse notes payable related to asset-backed term securitizations in May 2025[73](index=73&type=chunk)[253](index=253&type=chunk) [10. INCOME TAXES](index=21&type=section&id=10.%20INCOME%20TAXES) This note details the company's income tax provision and effective income tax rates, highlighting the impact of non-deductible charges | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Income tax provision (Millions) | $52.0 | $44.0 | $110.5 | $107.2 | | Effective income tax rate | 37.6% | 25.3% | 29.7% | 25.1% | - The higher effective tax rate in 2025 reflects the non-deductible goodwill impairment charge recorded in the second quarter[75](index=75&type=chunk)[236](index=236&type=chunk) [11. SHAREHOLDERS' EQUITY](index=21&type=section&id=11.%20SHAREHOLDERS%27%20EQUITY) This note details changes in shareholders' equity, including common stock repurchases and remaining authorization | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Shares repurchased (millions) | 0.2 | 2.0 | 1.5 | 2.2 | | Aggregate purchase price (Millions) | $29.0 | $311.3 | $253.8 | $350.0 | | Average purchase price per share | $157.57 | $159.52 | $164.07 | $159.39 | - **$607.0 million** remained available under the stock repurchase limit as of June 30, 2025[78](index=78&type=chunk)[243](index=243&type=chunk) [12. ACQUISITIONS AND DIVESTITURES](index=22&type=section&id=12.%20ACQUISITIONS%20AND%20DIVESTITURES) This note details business acquisitions and divestitures, including cash paid for new store purchases - Purchased one Domestic and one Import store during the six months ended June 30, 2025[80](index=80&type=chunk)[245](index=245&type=chunk) | Metric | 6 Months Ended June 30, 2025 (Millions) | 6 Months Ended June 30, 2024 (Millions) | | :-------------------------------- | :------------------------------------ | :------------------------------------ | | Cash paid for business acquisitions, net | $(69.6) | $0.0 | [13. CASH FLOW INFORMATION](index=22&type=section&id=13.%20CASH%20FLOW%20INFORMATION) This note provides supplemental cash flow information, including non-cash activities and interest/income tax payments | Metric | June 30, 2025 (Millions) | December 31, 2024 (Millions) | | :-------------------------------- | :----------------------- | :------------------------- | | Cash and cash equivalents | $62.9 | $59.8 | | Restricted cash | $34.5 | $43.6 | | Total cash, cash equivalents, and restricted cash | $97.4 | $103.4 | | Non-Cash Activity (6 Months) | 2025 (Millions) | 2024 (Millions) | | :-------------------------------- | :-------------- | :-------------- | | Operating lease liabilities | $85.2 | $35.7 | | Finance lease liabilities | $33.6 | $16.0 | - Interest payments (net) were **$167.3 million** and income tax payments (net) were **$190.9 million** for the six months ended June 30, 2025[86](index=86&type=chunk) [14. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS](index=22&type=section&id=14.%20FINANCIAL%20INSTRUMENTS%20AND%20FAIR%20VALUE%20MEASUREMENTS) This note details financial instruments and fair value measurements, including debt, equity investments, and asset impairments | Metric | June 30, 2025 (Millions) | December 31, 2024 (Millions) | | :-------------------------------- | :----------------------- | :------------------------- | | Fixed rate long-term debt (carrying value) | $3,279.0 | $2,782.1 | | Fixed rate long-term debt (fair value) | $3,156.2 | $2,578.6 | | Equity investments with readily determinable fair values | $10.2 | $20.0 | | Equity investments without readily determinable fair values | $50.3 | $49.8 | | Asset Impairment (6 Months Ended June 30, 2025) | Fair Value (Millions) | Gain/(Loss) (Millions) | | :-------------------------------- | :-------------------- | :--------------------- | | Goodwill | $75.2 | $(65.3) | | Franchise rights | $42.7 | $(71.7) | | Long-lived assets held and used | $13.5 | $(3.2) | | Long-lived assets held for sale | $30.4 | $(2.4) | - Unrealized losses of **$9.8 million** were recognized on equity securities for the six months ended June 30, 2025[91](index=91&type=chunk) [15. COMMITMENTS AND CONTINGENCIES](index=26&type=section&id=15.%20COMMITMENTS%20AND%20CONTINGENCIES) This note outlines the company's commitments and contingencies, including legal proceedings and insurance recoveries - No material adverse effect is expected from legal proceedings, and accruals for loss contingencies are reviewed quarterly[109](index=109&type=chunk) - Received **$10 million** in cyber insurance recoveries in July 2025 related to the CDK outage, with expectations for additional recoveries[110](index=110&type=chunk) - Estimated lessee rental payment obligations for assigned leases range from 2027 to 2034, totaling approximately **$4 million** at June 30, 2025[112](index=112&type=chunk) [16. BUSINESS AND CREDIT CONCENTRATIONS](index=27&type=section&id=16.%20BUSINESS%20AND%20CREDIT%20CONCENTRATIONS) This note details business and credit concentrations, including geographic sales, brand reliance, and third-party IT provider risks - Approximately **65% of retail new vehicle unit sales** for the six months ended June 30, 2025, were generated in Florida, California, and Texas[115](index=115&type=chunk) - Core new vehicle brands (Toyota, Honda, Ford, GM, BMW, Mercedes-Benz, Stellantis, Volkswagen) represented approximately **88% of new vehicle sales**, indicating a concentration of risk[116](index=116&type=chunk) - The company is subject to concentration risk from third-party IT service providers, such as the dealer management system provider (CDK Global)[117](index=117&type=chunk) [17. SEGMENT INFORMATION](index=27&type=section&id=17.%20SEGMENT%20INFORMATION) This note provides financial information by reportable segment, including Domestic, Import, Premium Luxury, and AutoNation Finance - Reportable segments are Domestic, Import, Premium Luxury, and AutoNation Finance[119](index=119&type=chunk) - "Corporate and other" includes non-franchised businesses and unallocated corporate overhead[120](index=120&type=chunk) | Segment (3 Months Ended June 30) | Revenue (Millions) | Segment Income (Millions) | | :--------------------------------------- | :----------------- | :------------------------ | | Domestic | $1,920.5 | $92.0 | | Import | $2,148.3 | $133.4 | | Premium Luxury | $2,555.8 | $180.1 | | Total Franchised Dealerships | $6,624.6 | $405.5 | | AutoNation Finance income (loss) | N/A | $2.0 | | Corporate and other | $349.8 | $(235.2) | | Total consolidated revenue / Operating income | $6,974.4 | $217.6 | | Segment (6 Months Ended June 30, 2025) | Revenue (Millions) | Segment Income (Millions) | | :--------------------------------------- | :----------------- | :------------------------ | | Domestic | $3,637.9 | $161.0 | | Import | $4,195.6 | $259.6 | | Premium Luxury | $5,132.3 | $358.8 | | Total Franchised Dealerships | $12,965.8 | $779.4 | | AutoNation Finance income (loss) | N/A | $2.1 | | Corporate and other | $699.0 | $(319.7) | | Total consolidated revenue / Operating income | $13,664.8 | $553.6 | [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=33&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management's discussion and analysis covers AutoNation's financial performance, market conditions, operational results, inventory, accounting estimates, and liquidity [Overview](index=33&type=section&id=Overview) This section provides an overview of AutoNation's business operations and the contribution of various revenue sources to total revenue and gross profit - AutoNation operates **322 new vehicle franchises**, **52 collision centers**, **26 used vehicle stores**, **4 auction operations**, **3 parts distribution centers**, a mobile repair business, and an auto finance company[130](index=130&type=chunk) | Revenue Source (6 Months Ended June 30, 2025) | % of Total Revenue | % of Total Gross Profit | | :-------------------------------------------- | :----------------- | :---------------------- | | New vehicle sales | 49% | 14% | | Used vehicle sales | 29% | 10% | | Parts and service | 17% | 47% | | Finance and insurance | 5% | 29% | [Market Conditions](index=33&type=section&id=Market%20Conditions) This section discusses U.S. industry retail new vehicle sales trends, profitability expectations, and the impact of tax provisions and tariffs - U.S. industry retail new vehicle unit sales increased approximately **5% in Q2 2025** compared to Q2 2024, due to higher manufacturer production and sustained consumer demand[134](index=134&type=chunk) - New vehicle unit profitability is expected to continue moderating throughout 2025, potentially impacted by recently announced tariffs[135](index=135&type=chunk)[137](index=137&type=chunk) - The 2025 Budget Reconciliation Act provides beneficial tax provisions for dealerships and new car buyers but creates uncertainty in the EV market due to accelerated phasing out of EV tax credits[138](index=138&type=chunk) [Results of Operations](index=34&type=section&id=Results%20of%20Operations) This section details the company's financial results, including net income, diluted EPS, total gross profit, and SG&A expenses, highlighting impairment impacts | Metric | 3 Months Ended June 30, 2025 (Millions) | 3 Months Ended June 30, 2024 (Millions) | Change (Millions) | % Change | | :-------------------------------- | :------------------------------------ | :------------------------------------ | :---------------- | :--------- | | Net Income | $86.4 | $130.2 | $(43.8) | (33.6)% | | Diluted EPS | $2.26 | $3.20 | $(0.94) | (29.4)% | | Total Gross Profit | $1,275.4 | $1,163.1 | $112.3 | 9.7% | | Parts and service gross profit | N/A | N/A | $62.0 | 11.6% | | Finance and insurance gross profit | N/A | N/A | $43.7 | 13.5% | | Used vehicle gross profit | N/A | N/A | $14.0 | 12.6% | | New vehicle gross profit | N/A | N/A | $(7.0) | (3.7)% | - Net income was adversely impacted by **$122.8 million after-tax** in non-cash goodwill and franchise rights impairments[142](index=142&type=chunk) - SG&A expenses increased due to performance-driven compensation, partially offset by **$43 million** in one-time compensation paid in the prior year due to the CDK outage[141](index=141&type=chunk)[224](index=224&type=chunk) [Inventory Management](index=34&type=section&id=Inventory%20Management) This section details the company's inventory levels for new and used vehicles, including days supply and cumulative write-downs | Metric | June 30, 2025 | June 30, 2024 | | :-------------------------------- | :------------ | :------------ | | New vehicle inventory units | 42,600 | 47,000 | | New vehicle inventory days supply | 49 days | 67 days | | Used vehicle inventory days supply | 39 days | 34 days | | Inventory Type | Cumulative Write-downs (Millions) at June 30, 2025 | Cumulative Write-downs (Millions) at December 31, 2024 | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | | New vehicle | $1.0 | $2.0 | | Used vehicle | $7.1 | $7.8 | | Parts, accessories, and other | $9.5 | $8.3 | [Critical Accounting Estimates](index=35&type=section&id=Critical%20Accounting%20Estimates) This section discusses critical accounting estimates, focusing on goodwill and other intangible assets, including impairment methodologies and impacts [Goodwill](index=35&type=section&id=Goodwill) This section details the goodwill impairment charge for the Mobile Service reporting unit, reflecting reduced forecasted cash flows and growth rates - A non-cash goodwill impairment charge of **$65.3 million** was recorded for the Mobile Service reporting unit in Q2 2025, reflecting updated expectations of performance and reduced forecasted cash flows[149](index=149&type=chunk)[96](index=96&type=chunk) - A **20% decrease in revenue growth rates** for the Mobile Service reporting unit would have resulted in an additional **$30 million goodwill impairment charge**[150](index=150&type=chunk) - Goodwill balances at June 30, 2025: Domestic (**$222.0M**), Import (**$523.2M**), Premium Luxury (**$482.1M**), Mobile Service (**$75.2M**), AutoNation Finance (**$78.4M**), Collision Center (**$4.6M**)[151](index=151&type=chunk) [Other Intangible Assets](index=36&type=section&id=Other%20Intangible%20Assets) This section details impairment charges for franchise rights, primarily for Domestic franchises, due to underperformance relative to expectations - Non-cash franchise rights impairment charges of **$71.7 million** were recorded for nine stores (primarily Domestic franchises) in Q2 2025, reducing their carrying value to estimated fair values due to underperformance[153](index=153&type=chunk)[100](index=100&type=chunk) - A hypothetical **10% lower fair value** for franchise rights would have resulted in an incremental impairment charge of approximately **$7 million**[154](index=154&type=chunk) - As of June 30, 2025, the company had **76 stores** with franchise rights totaling **$851.5 million**[155](index=155&type=chunk) [Reported Operating Data](index=37&type=section&id=Reported%20Operating%20Data) This section presents key reported operating data, including total revenue, gross profit, SG&A expenses, operating income, and PVR metrics | Metric (3 Months Ended June 30) | 2025 (Millions) | 2024 (Millions) | Change (Millions) | % Change | | :-------------------------------- | :-------------- | :-------------- | :---------------- | :------- | | Total Revenue | $6,974.4 | $6,480.4 | $494.0 | 7.6% | | Total Gross Profit | $1,275.4 | $1,163.1 | $112.3 | 9.7% | | Selling, general, and administrative expenses | $854.7 | $825.8 | $(28.9) | (3.5)% | | Operating income | $217.6 | $275.0 | $(57.4) | (20.9)% | | PVR Metric (3 Months Ended June 30) | 2025 | 2024 | Change | % Change | | :------------------------------------ | :----- | :----- | :------- | :------- | | New vehicle gross profit PVR | $2,785 | $3,108 | $(323) | (10.4)% | | Used vehicle gross profit PVR | $1,622 | $1,638 | $(16) | (1.0)% | | Finance and insurance gross profit PVR | $2,712 | $2,556 | $156 | 6.1% | | Revenue Mix (3 Months Ended June 30, 2025) | % of Total Revenue | % of Total Gross Profit | | :----------------------------------------- | :----------------- | :---------------------- | | New vehicle | 48.7% | 14.4% | | Used vehicle | 28.5% | 9.8% | | Parts and service | 17.5% | 46.9% | | Finance and insurance, net | 5.3% | 28.8% | [Same Store Operating Data](index=39&type=section&id=Same%20Store%20Operating%20Data) This section presents same-store operating data, including total revenue, gross profit, and retail unit sales for new and used vehicles, along with PVR metrics | Metric (Same Store, 3 Months Ended June 30) | 2025 (Millions) | 2024 (Millions) | Change (Millions) | % Change | | :------------------------------------------ | :-------------- | :-------------- | :---------------- | :------- | | Total Revenue | $6,904.1 | $6,383.4 | $520.7 | 8.2% | | Total Gross Profit | $1,263.4 | $1,145.8 | $117.6 | 10.3% | | New vehicle retail unit sales | 65,334 | 60,608 | 4,726 | 7.8% | | Used vehicle retail unit sales | 68,398 | 64,364 | 4,034 | 6.3% | | PVR Metric (Same Store, 3 Months Ended June 30) | 2025 | 2024 | Change | % Change | | :---------------------------------------------- | :----- | :----- | :------- | :------- | | New vehicle gross profit PVR | $2,795 | $3,113 | $(318) | (10.2)% | | Used vehicle gross profit PVR | $1,627 | $1,642 | $(15) | (0.9)% | | Finance and insurance gross profit PVR | $2,711 | $2,561 | $150 | 5.9% | [New Vehicle](index=41&type=section&id=New%20Vehicle) This section details new vehicle performance, including revenue, gross profit, retail unit sales, and PVR, highlighting inventory and market impacts | Metric (Same Store, 3 Months Ended June 30) | 2025 | 2024 | Change | % Change | | :------------------------------------------ | :----- | :----- | :------- | :------- | | Revenue (Millions) | $3,372.0 | $3,088.7 | $283.3 | 9.2% | | Gross profit (Millions) | $182.6 | $188.7 | $(6.1) | (3.2)% | | Retail vehicle unit sales | 65,334 | 60,608 | 4,726 | 7.8% | | Revenue per vehicle retailed | $51,612 | $50,962 | $650 | 1.3% | | Gross profit per vehicle retailed | $2,795 | $3,113 | $(318) | (10.2)% | - New vehicle unit volume increased due to better marketing/sales, increased inventory, manufacturer incentives, and recovery from the CDK outage[164](index=164&type=chunk) - New vehicle gross profit PVR decreased due to increased inventory supply leading to moderation of margins[166](index=166&type=chunk) [New Vehicle Inventory Carrying Expense](index=42&type=section&id=New%20Vehicle%20Inventory%20Carrying%20Expense) This section details net new vehicle inventory carrying expense, including floorplan assistance and interest expense, and factors influencing changes | Metric (3 Months Ended June 30) | 2025 (Millions) | 2024 (Millions) | Change (Millions) | | :-------------------------------- | :-------------- | :-------------- | :---------------- | | Floorplan assistance | $34.7 | $31.6 | $3.1 | | New vehicle floorplan interest expense | $(43.6) | $(52.3) | $8.7 | | Net new vehicle inventory carrying expense | $(8.9) | $(20.7) | $11.8 | - Net new vehicle inventory carrying expense decreased due to lower average interest rates and floorplan balances, and increased floorplan assistance from higher new vehicle sales[172](index=172&type=chunk)[173](index=173&type=chunk) [Used Vehicle](index=43&type=section&id=Used%20Vehicle) This section details used vehicle performance, including retail and wholesale revenue, gross profit, and retail unit sales, highlighting market shifts | Metric (Same Store, 3 Months Ended June 30) | 2025 (Millions) | 2024 (Millions) | Change (Millions) | % Change | | :------------------------------------------ | :-------------- | :-------------- | :---------------- | :------- | | Retail revenue | $1,815.2 | $1,717.5 | $97.7 | 5.7% | | Wholesale revenue | $138.3 | $164.9 | $(26.6) | (16.1)% | | Total revenue | $1,953.5 | $1,882.4 | $71.1 | 3.8% | | Retail gross profit | $111.3 | $105.7 | $5.6 | 5.3% | | Wholesale gross profit | $12.4 | $4.6 | $7.8 | N/A | | Retail vehicle unit sales | 68,398 | 64,364 | 4,034 | 6.3% | | Gross profit per vehicle retailed | $1,627 | $1,642 | $(15) | (0.9)% | - Retail used vehicle unit volume increased, recovering from the CDK outage impact in the prior year[175](index=175&type=chunk) - Wholesale used vehicle revenue decreased due to a shift to lower-value used vehicles[175](index=175&type=chunk)[177](index=177&type=chunk) [Parts and Service](index=45&type=section&id=Parts%20and%20Service) This section details parts and service revenue and gross profit, highlighting growth drivers such as repair order volume and technician headcount | Metric (Same Store, 3 Months Ended June 30) | 2025 (Millions) | 2024 (Millions) | Change (Millions) | % Change | | :------------------------------------------ | :-------------- | :-------------- | :---------------- | :------- | | Revenue | $1,211.9 | $1,086.7 | $125.2 | 11.5% | | Gross Profit | $594.4 | $526.2 | $68.2 | 13.0% | | Gross profit as a percentage of revenue | 49.0% | 48.4% | 0.6% | N/A | - Revenue increases were primarily from customer-pay service (**$40.2M**), warranty service (**$38.2M**), and vehicle preparation (**$33.3M**)[181](index=181&type=chunk) - Growth was driven by increased repair order volume (partially due to recovery from CDK outage), higher technician headcount, and improved efficiency[183](index=183&type=chunk) [Finance and Insurance](index=46&type=section&id=Finance%20and%20Insurance) This section details finance and insurance revenue and gross profit, highlighting growth drivers such as vehicle unit volume and product penetration | Metric (Same Store, 3 Months Ended June 30) | 2025 (Millions) | 2024 (Millions) | Change (Millions) | % Change | | :------------------------------------------ | :-------------- | :-------------- | :---------------- | :------- | | Revenue and gross profit | $362.5 | $320.0 | $42.5 | 13.3% | | Gross profit per vehicle retailed | $2,711 | $2,561 | $150 | 5.9% | - Growth was driven by increases in vehicle unit volume, higher realized margins on vehicle service contracts, and higher product penetration[189](index=189&type=chunk) - Expected shift in income from arranging customer financing to AutoNation Finance as the captive finance business grows[188](index=188&type=chunk) [Segment Results](index=47&type=section&id=Segment%20Results) This section provides a breakdown of financial results by reportable segment, including Domestic, Import, Premium Luxury, and Corporate and other | Segment (3 Months Ended June 30) | Revenue (Millions) | Segment Income (Millions) | % Change in Segment Income | | :------------------------------- | :----------------- | :------------------------ | :------------------------- | | Domestic | $1,920.5 | $92.0 | 82.9% | | Import | $2,148.3 | $133.4 | 23.3% | | Premium Luxury | $2,555.8 | $180.1 | 26.9% | | Corporate and other | $349.8 | $(235.2) | (194.0)% | - Corporate and other segment income (loss) was significantly impacted by goodwill and franchise rights impairments[192](index=192&type=chunk) [Domestic](index=48&type=section&id=Domestic) This section details the Domestic segment's revenue, segment income, new vehicle revenue, and retail unit sales, highlighting growth drivers | Metric (3 Months Ended June 30) | 2025 (Millions) | 2024 (Millions) | Change (Millions) | % Change | | :-------------------------------- | :-------------- | :-------------- | :---------------- | :------- | | Total Revenue | $1,920.5 | $1,739.4 | $181.1 | 10.4% | | Segment income | $92.0 | $50.3 | $41.7 | 82.9% | | New vehicle revenue | $985.1 | $841.9 | $143.2 | 17.0% | | New vehicle retail unit sales | 19,354 | 16,583 | 2,771 | 16.7% | - Domestic revenue increased primarily due to a **16.7% increase in new vehicle unit volume**, contributing to market share growth and recovery from the CDK outage[195](index=195&type=chunk) - Segment income growth was largely driven by a **22.4% increase in finance and insurance gross profit**, benefiting from higher vehicle unit volume and a **$289 increase in F&I gross profit PVR**[194](index=194&type=chunk)[196](index=196&type=chunk) [Import](index=50&type=section&id=Import) This section details the Import segment's revenue, segment income, new vehicle revenue, and retail unit sales, highlighting growth drivers | Metric (3 Months Ended June 30) | 2025 (Millions) | 2024 (Millions) | Change (Millions) | % Change | | :-------------------------------- | :-------------- | :-------------- | :---------------- | :------- | | Total Revenue | $2,148.3 | $2,018.8 | $129.5 | 6.4% | | Segment income | $133.4 | $108.2 | $25.2 | 23.3% | | New vehicle revenue | $1,129.6 | $1,067.3 | $62.3 | 5.8% | | New vehicle retail unit sales | 29,748 | 28,729 | 1,019 | 3.5% | - Import revenue increased due to higher new vehicle average selling prices (PVR up **$821**) and increased new vehicle unit volume, also benefiting from recovery from the CDK outage[201](index=201&type=chunk) - Segment income growth was primarily from a **19.5% increase in parts and service gross profit** and a **7.4% increase in finance and insurance gross profit**[200](index=200&type=chunk)[202](index=202&type=chunk) [Premium Luxury](index=52&type=section&id=Premium%20Luxury) This section details the Premium Luxury segment's revenue, segment income, new vehicle revenue, and retail unit sales, highlighting growth drivers | Metric (3 Months Ended June 30) | 2025 (Millions) | 2024 (Millions) | Change (Millions) | % Change | | :-------------------------------- | :-------------- | :-------------- | :---------------- | :------- | | Total Revenue | $2,555.8 | $2,398.4 | $157.4 | 6.6% | | Segment income | $180.1 | $141.9 | $38.2 | 26.9% | | New vehicle revenue | $1,281.6 | $1,213.3 | $68.3 | 5.6% | | New vehicle retail unit sales | 16,745 | 15,956 | 789 | 4.9% | - Premium Luxury revenue increased primarily due to a **4.9% increase in new vehicle unit volume** and a **5.0% increase in used vehicle revenue**, benefiting from market share growth and recovery from the CDK outage[206](index=206&type=chunk) - Segment income growth was driven by a **9.7% increase in parts and service gross profit** and a **14.4% increase in finance and insurance gross profit**, with F&I PVR up **$234**[205](index=205&type=chunk)[207](index=207&type=chunk) [AutoNation Finance](index=54&type=section&id=AutoNation%20Finance) This section details AutoNation Finance's income, loan originations, vehicle units financed, penetration rate, and managed receivables | Metric | 3 Months Ended June 30, 2025 (Millions) | 3 Months Ended June 30, 2024 (Millions) | 6 Months Ended June 30, 2025 (Millions) | 6 Months Ended June 30, 2024 (Millions) | | :-------------------------------- | :------------------------------------ | :------------------------------------ | :------------------------------------ | :------------------------------------ | | AutoNation Finance income (loss) | $2.0 | $0.7 | $2.1 | $(4.3) | | Loans originated | $464.4 | $234.3 | $924.8 | $395.5 | | Vehicle units financed | 13,514 | 7,259 | 26,762 | 12,354 | | Penetration rate | 10.0% | 5.7% | 10.1% | 4.8% | | Total average managed receivables | $1,613.6 | $633.4 | $1,440.4 | $563.9 | - ANF income benefited from decreased expected credit loss rates due to improved credit quality of new loan originations and the sale of third-party receivables[217](index=217&type=chunk)[220](index=220&type=chunk) - ANF continues to realize operational efficiencies as the portfolio scales, reducing direct expenses as a percentage of the managed portfolio[218](index=218&type=chunk)[221](index=221&type=chunk) [Selling, General, and Administrative Expenses](index=56&type=section&id=Selling%2C%20General%2C%20and%20Administrative%20Expenses) This section details selling, general, and administrative expenses, including compensation, advertising, and overhead, and their impact on gross profit | Component (3 Months Ended June 30) | 2025 (Millions) | 2024 (Millions) | Change (Millions) | % Change | | :--------------------------------- | :-------------- | :-------------- | :---------------- | :------- | | Compensation | $569.2 | $537.0 | $(32.2) | (6.0)% | | Advertising | $65.5 | $66.2 | $0.7 | 1.1% | | Store and corporate overhead | $220.0 | $222.6 | $2.6 | 1.2% | | Total SG&A | $854.7 | $825.8 | $(28.9) | (3.5)% | | SG&A as % of Total Gross Profit (3 Months Ended June 30) | 2025 | 2024 | Change (bps) | | :------------------------------------------------------- | :--- | :--- | :----------- | | Total | 67.0% | 71.0% | (400) bps | - Compensation expense increased due to performance-driven compensation and deferred compensation obligations, partially offset by **$43 million** in one-time compensation paid in Q2 2024 due to the CDK outage[224](index=224&type=chunk) [Non-Operating Income (Expense)](index=56&type=section&id=Non-Operating%20Income%20(Expense)) This section details non-operating income and expenses, including floorplan interest, other interest, other income/loss, and income tax provision [Floorplan Interest Expense](index=57&type=section&id=Floorplan%20Interest%20Expense) This section details floorplan interest expense, highlighting the impact of lower average interest rates and vehicle floorplan balances | Metric | 3 Months Ended June 30, 2025 (Millions) | 3 Months Ended June 30, 2024 (Millions) | Change (Millions) | | :-------------------------------- | :------------------------------------ | :------------------------------------ | :---------------- | | Floorplan interest expense | $45.3 | $53.9 | $(8.6) | - Decrease in floorplan interest expense was due to lower average interest rates and lower average vehicle floorplan balances[228](index=228&type=chunk)[229](index=229&type=chunk) [Interest Expense](index=57&type=section&id=Interest%20Expense) This section details other interest expense, noting its relative flatness in the quarter and factors influencing changes over six months | Metric | 3 Months Ended June 30, 2025 (Millions) | 3 Months Ended June 30, 2024 (Millions) | Change (Millions) | | :-------------------------------- | :------------------------------------ | :------------------------------------ | :---------------- | | Other interest expense | $46.2 | $46.8 | $(0.6) | - Other interest expense was relatively flat in Q2 2025 compared to Q2 2024[231](index=231&type=chunk) - For the six months, it decreased by **$2.9 million** due to lower average debt balances, partially offset by higher interest rates[231](index=231&type=chunk)[232](index=232&type=chunk) [Other Income (Loss), Net](index=57&type=section&id=Other%20Income%20(Loss)%2C%20Net) This section details other income (loss), net, including gains from COLI and unrealized gains/losses on equity investments | Metric | 3 Months Ended June 30, 2025 (Millions) | 3 Months Ended June 30, 2024 (Millions) | 6 Months Ended June 30, 2025 (Millions) | 6 Months Ended June 30, 2024 (Millions) | | :-------------------------------- | :------------------------------------ | :------------------------------------ | :------------------------------------ | :------------------------------------ | | Other income (loss), net | $12.3 | $(0.1) | $(0.9) | $6.9 | | Net gains from COLI | $10.4 | $0.4 | $8.5 | $7.7 | | Unrealized gains (losses) on equity investments | $1.7 | $(1.4) | $(9.8) | $(1.8) | - Gains and losses related to COLI are substantially offset by corresponding changes in deferred compensation obligations (reflected in SG&A)[233](index=233&type=chunk) [Income Tax Provision](index=57&type=section&id=Income%20Tax%20Provision) This section details the income tax provision and effective income tax rate, highlighting the impact of non-deductible goodwill impairment | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Effective income tax rate | 37.6% | 25.3% | 29.7% | 25.1% | - The higher effective tax rate in 2025 reflects the non-deductible goodwill impairment charge recorded in the second quarter[236](index=236&type=chunk) [Liquidity and Capital Resources](index=58&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses AutoNation's liquidity and capital resources, including available liquidity, capital allocation, share repurchases, and debt [Available Liquidity Resources](index=58&type=section&id=Available%20Liquidity%20Resources) This section details available liquidity resources, including cash and cash equivalents, revolving credit facility, and unmortgaged properties | Metric | June 30, 2025 (Millions) | December 31, 2024 (Millions) | | :-------------------------------- | :----------------------- | :------------------------- | | Cash and cash equivalents | $62.9 | $59.8 | | Revolving credit facility (available) | $1,899.2 | $1,899.2 | - The company has a **$1.9 billion revolving credit facility** with no outstanding borrowings and **$0.8 million in letters of credit** at June 30, 2025[60](index=60&type=chunk)[238](index=238&type=chunk) - Owns properties with a net book value of **$2.8 billion** at June 30, 2025, none of which are mortgaged[240](index=240&type=chunk) [Capital Allocation](index=58&type=section&id=Capital%20Allocation) This section outlines the company's capital allocation strategy, focusing on long-term value growth through investments, acquisitions, and repurchases - Capital allocation strategy focuses on growing long-term value per share through investments in existing/new facilities, strategic/technology initiatives, opportunistic acquisitions, and share/debt repurchases[241](index=241&type=chunk) [Share Repurchases](index=59&type=section&id=Share%20Repurchases) This section details common stock repurchase activity, including shares repurchased, aggregate purchase price, and remaining authorization | Metric (6 Months Ended June 30) | 2025 | 2024 | | :-------------------------------- | :--- | :--- | | Shares repurchased (millions) | 1.5 | 2.2 | | Aggregate purchase price (Millions) | $253.8 | $350.0 | | Average purchase price per share | $164.07 | $159.39 | - **$607.0 million** remained available under the stock repurchase limit as of June 30, 2025[243](index=243&type=chunk) [Capital Expenditures](index=59&type=section&id=Capital%20Expenditures) This section details capital expenditures, specifically purchases of property and equipment for the periods presented | Metric (6 Months Ended June 30) | 2025 (Millions) | 2024 (Millions) | | :-------------------------------- | :-------------- | :-------------- | | Purchases of property and equipment | $154.2 | $181.2 | [Acquisitions and Divestitures](index=59&type=section&id=Acquisitions%20and%20Divestitures) This section details business acquisitions and divestitures, including new store purchases and cash paid for acquisitions - Purchased one Domestic and one Import store during the six months ended June 30, 2025, with cash paid for business acquisitions, net, of **$69.6 million**[245](index=245&type=chunk)[246](index=246&type=chunk) - No stores were divested[245](index=245&type=chunk)[246](index=246&type=chunk) [Debt](index=60&type=section&id=Debt) This section details the company's debt structure, including long-term, non-recourse, and commercial paper, and recent issuances | Debt Type | June 30, 2025 (Millions) | December 31, 2024 (Millions) | | :-------------------------------- | :----------------------- | :------------------------- | | Long-term debt, net of current maturities | $3,112.0 | $2,613.6 | | Non-recourse debt, net of current portion | $1,419.6 | $797.7 | | Commercial paper outstanding | $130.0 | $630.0 | - Issued **$500.0 million of 5.89% Senior Notes due 2035** and **$700.0 million in non-recourse notes payable** related to asset-backed term securitizations in Q2 2025[249](index=249&type=chunk)[253](index=253&type=chunk) [Restrictions and Covenants](index=60&type=section&id=Restrictions%20and%20Covenants) This section confirms the company's compliance with debt covenants, including leverage and interest coverage ratios - The company was in compliance with all debt covenants as of June 30, 2025[258](index=258&type=chunk) | Covenant | Requirement | Actual (June 30, 2025) | | :-------------------- | :---------- | :--------------------- | | Leverage ratio | ≤ 3.75x | 2.33x | | Interest coverage ratio | ≥ 3.00x | 4.63x | [Vehicle Floorplan Payable](index=61&type=section&id=Vehicle%20Floorplan%20Payable) This section details vehicle floorplan payable, distinguishing between trade and non-trade components | Component | June 30, 2025 (Millions) | December 31, 2024 (Millions) | | :-------------------------------- | :----------------------- | :------------------------- | | Vehicle floorplan payable - trade | $2,045.8 | $2,216.2 | | Vehicle floorplan payable - non-trade | $1,610.1 | $1,493.5 | | Total Vehicle floorplan payable | $3,655.9 | $3,709.7 | [Cash Flows](index=61&type=section&id=Cash%20Flows) This section provides a detailed breakdown of cash flows from operating, investing, and financing activities [Cash Flows from Operating Activities](index=61&type=section&id=Cash%20Flows%20from%20Operating%20Activities) This section details net cash provided by or used in operating activities, highlighting the impact of auto loans receivable and working capital | Metric | 6 Months Ended June 30, 2025 (Millions) | 6 Months Ended June 30, 2024 (Millions) | | :-------------------------------- | :------------------------------------ | :------------------------------------ | | Net cash provided by (used in) operating activities | $(230.3) | $234.9 | - Shift to net cash used in operating activities was primarily due to a **$324.4 million increase in auto loans receivable** and approximately **$225 million in increased working capital requirements**[262](index=262&type=chunk) [Cash Flows from Investing Activities](index=62&type=section&id=Cash%20Flows%20from%20Investing%20Activities) This section details net cash used in investing activities, highlighting increased cash for acquisitions and decreased collections on auto loans | Metric | 6 Months Ended June 30, 2025 (Millions) | 6 Months Ended June 30, 2024 (Millions) | | :-------------------------------- | :------------------------------------ | :------------------------------------ | | Net cash used in investing activities | $(210.5) | $(136.4) | - Increased cash used in investing activities due to a **$69.6 million increase in cash for acquisitions** and a **$35.2 million decrease in collections on auto loans receivable** acquired through third-party dealers[265](index=265&type=chunk) [Cash Flows from Financing Activities](index=62&type=section&id=Cash%20Flows%20from%20Financing%20Activities) This section details net cash provided by or used in financing activities, highlighting debt borrowings and stock repurchases | Metric | 6 Months Ended June 30, 2025 (Millions) | 6 Months Ended June 30, 2024 (Millions) | | :-------------------------------- | :------------------------------------ | :------------------------------------ | | Net cash provided by (used in) financing activities | $434.8 | $(65.7) | - Net cash provided by financing activities was driven by **$1.3 billion in non-recourse debt borrowings** (including **$700.0 million in term securitizations**) and **$500.0 million from Senior Notes issuance**, partially offset by **$253.8 million in common stock repurchases**[267](index=267&type=chunk)[268](index=268&type=chunk)[269](index=269&type=chunk) [Forward-Looking Statements](index=62&type=section&id=Forward-Looking%20Statements) This section outlines factors that could impact future results, including economic conditions, dependence on manufacturers, and strategic initiative risks - Business is sensitive to economic conditions (unemployment, consumer confidence, fuel prices, interest rates, tariffs) and dependent on new/used vehicle sales levels and gross profit margins[270](index=270&type=chunk)[271](index=271&type=chunk) - Risks include dependence on vehicle manufacturers, success of strategic initiatives (AutoNation Finance, Mobile Service), legal/regulatory proceedings, cybersecurity threats, debt covenants, interest rate risk, and goodwill/intangible asset impairment[271](index=271&type=chunk) [Additional Information](index=64&type=section&id=Additional%20Information) This section lists channels used by AutoNation to disseminate material financial information to the public - AutoNation uses its company website (www.autonation.com), investor relations website (investors.autonation.com), SEC filings, press releases, public conference calls, webcasts, and X feed (www.x.com/autonation) to disseminate material financial information[273](index=273&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=64&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section details AutoNation's exposure to market risks, primarily interest rate risk and equity price risk, quantifying potential impacts [Interest Rate Risk](index=64&type=section&id=Interest%20Rate%20Risk) This section details the company's exposure to interest rate risk, quantifying the impact of rate changes on variable-rate debt | Metric | June 30, 2025 (Millions) | December 31, 2024 (Millions) | | :-------------------------------- | :----------------------- | :------------------------- | | Variable rate vehicle floorplan payable | $3,700.0 | $3,700.0 | | Commercial paper outstanding | $130.0 | $630.0 | | Fixed rate senior unsecured notes | $3,300.0 | $2,800.0 | - A **100 basis point change in interest rates** would result in an approximate change to annual floorplan interest expense of **$36.6 million** and commercial paper interest expense of **$1.3 million** at June 30, 2025[276](index=276&type=chunk)[277](index=277&type=chunk) - All auto loans receivable were fixed-rate, funded primarily through variable- and fixed-rate non-recourse debt[279](index=279&type=chunk) [Equity Price Risk](index=64&type=section&id=Equity%20Price%20Risk) This section details the company's exposure to equity price risk, quantifying the potential impact of changes in equity investment values | Metric | June 30, 2025 (Millions) | December 31, 2024 (Millions) | | :-------------------------------- | :----------------------- | :------------------------- | | Equity investments with readily determinable fair values | $10.2 | $20.0 | | Equity investments without readily determinable fair values | $50.3 | $49.8 | - A hypothetical **10% change in equity prices** would result in an approximate **$1.0 million change** for readily determinable fair value investments and **$5.0 million** for those without[280](index=280&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=65&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) This section confirms the effectiveness of AutoNation's disclosure controls and procedures and reports no material changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=65&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures as of June 30, 2025 - Disclosure controls and procedures were evaluated and deemed effective as of June 30, 2025[281](index=281&type=chunk) [Changes in Internal Control over Financial Reporting](index=65&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section reports no material changes in internal control over financial reporting during the last fiscal quarter - No material changes in internal control over financial reporting occurred during the last fiscal quarter[282](index=282&type=chunk) PART II. OTHER INFORMATION This section provides additional information, including risk factors, equity security sales, other disclosures, and exhibits [ITEM 1A. RISK FACTORS](index=66&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section refers readers to comprehensive risk factors detailed in the company's most recent Annual and Quarterly Reports - Readers should refer to the risk factors in the Annual Report on Form 10-K for the year ended December 31, 2024, and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2025[284](index=284&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=66&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section details common stock repurchase activity during the quarter and the remaining authorization under the repurchase program | Period (3 Months Ended June 30, 2025) | Total Number of Shares Purchased | Avg. Price Paid Per Share | Approximate Dollar Value of Shares That May Yet Be Purchased (Millions) | | :------------------------------------ | :------------------------------- | :------------------------ | :-------------------------------------------------------------------- | | April 1, 2025 - April 30, 2025 | 183,982 | $157.57 | $607.0 | | May 1, 2025 - May 31, 2025 | — | $— | $607.0 | | June 1, 2025 - June 30, 2025 | — | $— | $607.0 | | Total | 183,982 | N/A | N/A | - The most recent stock repurchase authorization was for an additional **$1.0 billion** on April 26, 2024, with no expiration date[286](index=286&type=chunk) [ITEM 5. OTHER INFORMATION](index=66&type=section&id=ITEM%205.%20OTHER%20INFORMATION) This section confirms no director or officer adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter - No director or officer adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q2 2025[287](index=287&type=chunk) [ITEM 6. EXHIBITS](index=67&type=section&id=ITEM%206.%20EXHIBITS) This section lists all exhibits filed as part of the Form 10-Q, including required certifications from the Chief Executive Officer and Chief Financial Officer, as well as Inline XBRL documents - Includes CEO and CFO certifications (Exhibits 31.1, 31.2, 32.1, 32.2) and Inline XBRL documents (Exhibits 101, 104)[288](index=288&type=chunk) [SIGNATURE](index=68&type=section&id=SIGNATURE) This section contains the official signature block, confirming the report was duly authorized and signed on behalf of AutoNation, Inc. by its Senior Vice President and Chief Accounting Officer - The report was signed by Kimberly R. Dees, Senior Vice President and Chief Accounting Officer, on July 25, 2025[292](index=292&type=chunk)

Core Insights - AutoNation reported revenue of $6.97 billion for the quarter ended June 2025, reflecting a year-over-year increase of 7.6% and surpassing the Zacks Consensus Estimate of $6.8 billion by 2.62% [1] - The company's EPS was $5.46, up from $3.99 in the same quarter last year, resulting in an EPS surprise of 16.17% compared to the consensus estimate of $4.70 [1] Financial Performance Metrics - Retail vehicle unit sales totaled 135,583, exceeding the four-analyst average estimate of 130,325 [4] - Revenue per new vehicle retailed was $51,579, slightly below the average estimate of $51,872.62 [4] - Revenue per used vehicle retailed was $26,457, also below the average estimate of $27,368.63 [4] - Gross profit per vehicle retailed in finance and insurance was $2,712, surpassing the average estimate of $2,598.93 [4] - Used vehicle retail sales reached 69,736, exceeding the average estimate of 66,701 [4] - Parts and service revenue was $1.22 billion, above the five-analyst average estimate of $1.19 billion, marking a year-over-year increase of 9.3% [4] - Finance and insurance net revenue was $367.7 million, exceeding the average estimate of $337.81 million and representing a year-over-year increase of 13.5% [4] - Used vehicle revenue was $1.99 billion, surpassing the average estimate of $1.92 billion, with a year-over-year increase of 3.9% [4] - New vehicle revenue was $3.4 billion, slightly above the average estimate of $3.31 billion, reflecting an 8.8% year-over-year increase [4] - Other revenue was reported at $4.3 million, matching the average estimate but showing a year-over-year decline of 24.6% [4] - Retail used vehicle revenue was $1.85 billion, exceeding the average estimate of $1.78 billion, with a year-over-year increase of 5.8% [4] - Wholesale used vehicle revenue was $140 million, below the average estimate of $150.25 million, representing a year-over-year decline of 16.5% [4] Stock Performance - AutoNation's shares returned +0.1% over the past month, compared to the Zacks S&P 500 composite's +4.6% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

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 [14] - Adjusted net income rose to $209 million, up 29% from $163 million a year ago [18] - Adjusted EPS was $5.46 for the quarter, an increase of $1.47 or 37% from the previous year [18] Business Line Data and Key Metrics Changes - New vehicle sales increased by 8% year-over-year, with domestic segment sales up 19% [5][19] - Used vehicle gross profit increased by 13% year-over-year, with unit sales up 6% [6][23] - Customer financial services gross profit also rose by 13%, with finance penetration stable at around 75% [8][24] Market Data and Key Metrics Changes - New vehicle unit volumes increased by 7% year-over-year, with hybrid sales up over 40% [19] - Used vehicle retail unit sales improved by 6% year-over-year, driven by growth in both lower and higher-priced vehicles [21] - Average FICO scores on originations improved to 698 from 675 year-over-year, with delinquency rates down to 2.4% [27] Company Strategy and Development Direction - The company is focused on maintaining market share while optimizing tariff efficiency and pricing structures [12] - There is a commitment to explore M&A opportunities to add scale and density in existing markets [35] - The company aims to enhance its mobile service business while ensuring efficient use of technician resources [38][39] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the second half of 2025, expecting stable margins despite potential fluctuations [56][58] - The company is encouraged by recent legislative provisions that could stimulate vehicle purchases [13] - There is a focus on balancing vehicle pricing and affordability to avoid stifling demand [90] Other Important Information - The company completed its inaugural asset-backed securitization, which was oversubscribed, allowing for increased debt funding levels [28][29] - Adjusted free cash flow for the first half totaled $394 million, representing 100% of adjusted net income [32] - The company received $10 million in insurance recoveries related to the previous year's CDK outage [34] Q&A Session Summary Question: Discussion on M&A opportunities and market flexibility - Management indicated a cautious approach post-tariff announcement but noted an improvement in the M&A pipeline and a commitment to both share repurchases and M&A [46][48] Question: Insights on July sales performance and consumer landscape - Management noted a strong first half and expressed optimism for the second half, despite some fluctuations in sales patterns [54][60] Question: Update on AutoNation USA strategy - Management confirmed that additional openings are planned, focusing on markets with existing density to enhance performance [82][86] Question: Aftersales business performance and pricing - Management highlighted a balance between volume and pricing, with a focus on maintaining competitive pricing while managing costs [75][78] Question: Update on AutoNation Finance and its coexistence with legacy business - Management discussed the growth of AutoNation Finance and its impact on profitability, emphasizing the importance of managing the portfolio effectively [104]

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 |