AutoNation(AN)2025-04-25 21:20Financial Performance - For the three months ended March 31, 2025, net income was $175.5 million, with diluted earnings per share of $4.45, compared to net income of $190.1 million and diluted earnings per share of $4.49 in the same period of 2024[121]. - Total revenue for the three months ended March 31, 2025, was $6,690.4 million, representing a 3.2% increase from $6,485.7 million in 2024[137]. - Operating income for the period was $336.0 million, a slight decrease of 1.3% from $340.3 million in 2024[137]. - Total gross profit for the three months ended March 31, 2025, was $1,219.9 million, up 1.8% from $1,197.9 million in 2024[137]. - The company reported net cash used in operating activities of $52.6 million for the three months ended March 31, 2025, compared to net cash provided of $294.5 million for the same period in 2024[213]. Revenue Breakdown - New vehicle sales accounted for 49% of total revenue and 14% of total gross profit, while used vehicle sales accounted for 29% of total revenue and 10% of total gross profit[117]. - New vehicle revenue increased by 9.0% to $3,248.1 million in 2025 from $2,979.3 million in 2024[137]. - Retail used vehicle revenue decreased by 2.3% to $1,792.1 million in 2025 from $1,833.8 million in 2024[137]. - Total revenue for used vehicles decreased to $1,922.4 million, a decline of 3.7% from $1,996.1 million in Q1 2024[152]. - Same store retail used vehicle revenue decreased by 2.1% to $1,766.5 million, attributed to a decrease in unit volume[153]. Sales and Inventory - U.S. industry retail new vehicle unit sales increased approximately 8% in Q1 2025 compared to Q1 2024, driven by higher manufacturer vehicle production and increased consumer demand[118]. - Retail vehicle unit sales for new vehicles increased by 6.0% to 62,387 units in 2025 from 58,863 units in 2024[137]. - New vehicle inventory units were 39,300 as of March 31, 2025, compared to 38,200 in the previous year, with cumulative write-downs of $1.3 million[125]. - Inventory days supply for new vehicles improved to 38 days in 2025 from 44 days in 2024, while used vehicles increased to 36 days from 31 days[138]. Segment Performance - Domestic segment revenue decreased by 2.2% to $1,717.4 million, primarily due to a decline in used vehicle revenue, which was impacted by lower unit volume and average selling prices[165]. - Import segment revenue increased by 3.4% to $2,047.3 million, driven by a 5.5% increase in new vehicle revenue, largely due to higher average selling prices[168]. - Premium Luxury segment revenue rose by 6.7% to $2,576.5 million, with new vehicle revenue increasing by 14.5% to $1,325.9 million[170]. - Premium Luxury segment income increased by 4.1% to $178.7 million, supported by higher gross profit across new vehicles and finance and insurance[170]. Expenses and Costs - SG&A expenses increased to $821.9 million in Q1 2025 from $793.1 million in Q1 2024, with SG&A as a percentage of total gross profit rising to 67.4% from 66.2%[179]. - Floorplan interest expense decreased to $46.5 million in Q1 2025 from $49.4 million in Q1 2024, primarily due to lower average interest rates[182]. - Other interest expense decreased to $42.3 million in Q1 2025 from $44.6 million in Q1 2024, driven by lower average debt balances[184]. Investments and Acquisitions - The company made cash payments of $69.6 million for business acquisitions during the three months ended March 31, 2025, having purchased one Domestic store and one Import store[199]. - The company is investing significantly in strategic initiatives, including the expansion of AutoNation Finance and AutoNation USA used vehicle stores[224]. Financial Position - As of March 31, 2025, the company's long-term debt, net of current maturities, was $3,104.5 million, an increase from $2,613 million as of December 31, 2024[203]. - The company had a leverage ratio of 2.56x and an interest coverage ratio of 4.33x as of March 31, 2025, both of which were in compliance with the covenants under its credit agreement[209]. - Cash and cash equivalents increased to $70.5 million as of March 31, 2025, compared to $59.8 million at December 31, 2024[189]. Market Conditions and Risks - Tariffs announced by the U.S. government in Q1 2025 could increase costs or consumer prices and limit inventory availability, potentially impacting business operations[120]. - The automotive retail industry is sensitive to economic conditions, including unemployment levels and consumer confidence, which could affect the company's performance[224]. - The company is subject to various risks associated with originating and servicing auto finance loans, which could adversely affect its business[224]. - The company’s operations are subject to extensive governmental laws and regulations, which could impact its business and financial results[224].