AutoNation(US:AN)2026-02-12 22:24Financial Performance - For the year ended December 31, 2025, AutoNation reported net income of $649.1 million and diluted earnings per share of $17.04, compared to net income of $692.2 million and diluted earnings per share of $16.92 in 2024[162]. - Total revenue for 2025 reached $27,631.4 million, an increase of 3.2% compared to $26,765.4 million in 2024[182]. - Total gross profit for 2025 was $4,948.5 million, reflecting a 3.4% increase from $4,785.4 million in 2024[182]. - Operating income decreased by 5.0% to $1,239.9 million in 2025 from $1,305.5 million in 2024[182]. - SG&A expenses increased to $3,362.2 million in 2025, up from $3,263.9 million in 2024, primarily due to higher compensation and advertising expenses[227]. - The effective income tax rate increased to 26.6% in 2025 from 24.5% in 2024, influenced by non-deductible goodwill impairment charges[234]. Revenue Breakdown - New vehicle sales accounted for 49% of total revenue and 13% of total gross profit, while used vehicle sales accounted for 28% of total revenue and 9% of total gross profit[158]. - New vehicle revenue increased by 3.5% to $13,501.3 million in 2025 from $13,048.2 million in 2024[182]. - Retail used vehicle revenue grew by 2.7% to $7,269.1 million in 2025, while wholesale revenue decreased by 15.3% to $544.9 million[182]. - Parts and service operations contributed 48% of total gross profit despite only comprising 17% of total revenue, indicating a strong margin in this segment[158]. - Parts and service revenue increased to $4,763.0 million, a 6.0% increase from $4,493.3 million in 2024[185]. Inventory and Sales - AutoNation's new vehicle inventory units were approximately 43,800 as of December 31, 2025, compared to 42,600 in 2024, with cumulative write-downs of $1.2 million[169]. - Used vehicle inventory units were approximately 33,100 as of December 31, 2025, down from 34,000 in 2024, with cumulative write-downs of $5.8 million[170]. - Same store retail vehicle unit sales increased by 1.6% to 528,822 units in 2025 compared to 520,623 units in 2024[184]. - Retail new vehicle unit sales in the Domestic segment reached 74,680 in 2025, an increase of 5,412 units or 7.8% from 2024[209]. Profit Margins - Total gross profit increased by 3% in 2025, driven by a 7% increase in parts and service gross profit and an 8% increase in finance and insurance gross profit, while new vehicle gross profit decreased by 14%[163]. - New vehicle gross profit margin fell to 4.9% in 2025 from 5.9% in 2024[183]. - Gross profit per vehicle retailed for 2025 was $2,769, an increase of $157 or 6.0% compared to 2024[203]. - Gross profit as a percentage of revenue for parts and service improved to 48.7% in 2025 from 47.9% in 2024[198]. Impairments and Charges - The company recorded non-cash goodwill impairment charges of $65.3 million related to its Mobile Service reporting unit during the second quarter of 2025[174]. - Franchise rights impairment charges totaled $71.7 million during the second quarter of 2025, with an additional $22.0 million recorded in the fourth quarter[179][181]. Financing and Debt - As of December 31, 2025, the company's long-term debt, net of current maturities, was $3,704.8 million, an increase from $2,613.6 million in 2024[246]. - The leverage ratio as of December 31, 2025, was 2.44x, which is below the maximum requirement of 3.75x[253]. - The company issued $500.0 million of 5.89% Senior Notes due 2035 and $600.0 million of 4.45% Senior Notes due 2029 in 2025[263]. Cash Flow and Investments - The company had net cash provided by operating activities of $111.9 million in 2025, a decrease of $202.8 million compared to $314.7 million in 2024[255]. - Net cash used in investing activities was $687.0 million in 2025, compared to net cash provided of $12.3 million in 2024, primarily due to increased cash used for acquisitions[260]. - The company acquired five stores for an aggregate purchase price of $459.1 million in 2025, while no stores were acquired in 2024[260]. Market Conditions - The U.S. industry new vehicle unit sales reached 16.3 million in 2025, up from 16.0 million in 2024 and 15.6 million in 2023, reflecting a recovery in vehicle production and supply[159]. - The automotive retail industry is sensitive to economic conditions, impacting vehicle sales and gross profit margins[274].