AutoNation(US:AN)2025-10-23 20:39Financial Performance - Net income for the three months ended September 30, 2025, was $215.1 million, with diluted earnings per share of $5.65, compared to $185.8 million and $4.61 in the same period of 2024[138]. - Total revenue for the three months ended September 30, 2025, was $7,037.4 million, an increase of 6.9% compared to $6,586.1 million in the same period of 2024[158]. - Gross profit for the three months ended September 30, 2025, was $1,238.4 million, a 4.7% increase from $1,182.8 million in the same period of 2024[158]. - Operating income for the three months ended September 30, 2025, was $287.6 million, compared to $247.4 million in the same period of 2024, reflecting a 16.2% increase[158]. - Total revenue for Q3 2025 was $6,936.8 million, an increase of 6.5% compared to $6,514.8 million in Q3 2024[161]. Vehicle Sales and Revenue - For the nine months ended September 30, 2025, new vehicle sales accounted for 49% of total revenue and 14% of total gross profit[133]. - New vehicle revenue reached $3,415.6 million, up 7.7% from $3,171.2 million year-over-year, while retail used vehicle revenue increased by 7.6% to $1,874.3 million[158]. - Retail vehicle unit sales for new vehicles increased by 4.8% to 66,189 units, while used vehicle sales rose by 3.7% to 68,896 units in the three months ended September 30, 2025[158]. - New vehicle unit sales in the Domestic segment increased by 11.5% to 19,610 units in Q3 2025 from 17,583 units in Q3 2024[199]. - Retail used vehicle unit sales increased by 3.7% to 68,896 units in the first nine months of 2025 compared to 66,454 units in the same period of 2024[199]. Gross Profit and Margins - Total gross profit increased by 5% in Q3 2025, driven by a 12% increase in finance and insurance gross profit and a 7% increase in parts and service gross profit[139]. - New vehicle gross profit decreased by 15% in Q3 2025 due to higher average vehicle costs and a shift towards hybrid and electric vehicles[139]. - The gross profit margin for new vehicles decreased to 4.4% in Q3 2025 from 5.6% in Q3 2024, while the gross profit margin for used vehicles (retail) decreased slightly to 5.5% from 6.1%[159]. - Total variable operations gross profit per vehicle retailed decreased by 2.5% to $4,652 in Q3 2025 compared to $4,769 in Q3 2024[158]. - Retail gross profit as a percentage of retail revenue was 5.5% for Q3 2025, down from 6.1% in Q3 2024[177]. Inventory and Supply Chain - The new vehicle inventory at September 30, 2025, was 43,200 units, down from 46,000 units in 2024[143]. - Inventory days supply for new vehicles improved to 47 days in September 2025 from 52 days in September 2024, indicating better inventory management[159]. - Net new vehicle inventory carrying expense decreased during the three months ended September 30, 2025, due to a decrease in floorplan interest expense[175]. Finance and Insurance - The finance and insurance segment contributed 5.3% to total revenue for the three months ended September 30, 2025, compared to 5.1% in the same period of 2024[159]. - Finance and insurance net revenue increased to $368.3 million, a 10.7% rise from $332.6 million in Q3 2024[161]. - Gross profit per vehicle retailed in finance and insurance for Q3 2025 was $2,775, a 7.2% increase from $2,588 in Q3 2024[192]. - Same store finance and insurance revenue increased by $35.7 million (10.7%) in Q3 2025 compared to Q3 2024, attributed to higher vehicle unit volume[194]. Expenses and Profitability - Total SG&A expenses for the three months ended September 30, 2025, were $850.1 million, an increase from $811.3 million in the same period in 2024, primarily due to higher compensation and acquisition-related expenses[229]. - SG&A expenses as a percentage of total gross profit remained flat at 68.6% for the three months ended September 30, 2025, compared to the same period in 2024[230]. - The effective income tax rate increased to 25.2% in Q3 2025 from 24.9% in Q3 2024, and for the nine months ended September 30, 2025, it was 27.7% compared to 25.0% in the same period of 2024[242]. Debt and Cash Flow - Long-term debt, net of current maturities, increased to $3,163.9 million as of September 30, 2025, from $2,613.0 million at the end of 2024[257]. - The company had net cash used in operating activities of $38.6 million for the nine months ended September 30, 2025, compared to net cash provided of $164.9 million during the same period in 2024, primarily due to a $384.5 million increase in auto loans receivable[269]. - The leverage ratio was 2.35x as of September 30, 2025, well below the maximum requirement of 3.75x, while the interest coverage ratio was 4.79x, exceeding the minimum requirement of 3.00x[265]. Strategic Initiatives - The company plans to expand its AutoNation Finance business and AutoNation USA used vehicle stores, indicating a strategic focus on growth initiatives[277]. - The company expects income related to arranging customer financing to shift to AutoNation Finance, potentially offsetting decreases in finance and insurance gross profit[193]. Market Trends and Regulations - The 2025 Budget Reconciliation Act introduced provisions with implications for the automotive retail industry, particularly in taxation and consumer incentives[137]. - The U.S. industry retail new vehicle unit sales increased approximately 5% in Q3 2025 compared to Q3 2024, driven by sustained consumer demand[134].