Financial 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].

Financial Performance - Total revenue increased by 3% year-over-year, from $6486 million to $6690 million[4] - Gross profit increased by 2% year-over-year, from $1198 million to $1220 million[4] - Adjusted net income decreased by 3% year-over-year, from $190 million to $184 million[4] - Diluted adjusted EPS increased by 4% year-over-year, from $449 to $468[4] Sales Performance - New vehicle same store unit growth increased by 7% year-over-year[3,6] - Used vehicle gross profit increased by 12% year-over-year[3,4] - After-sales gross profit reached a record $568 million, with margin expansion exceeding 140 bps[3] AutoNation Finance - AutoNation Finance originations reached $460 million[3,13] - AutoNation Finance portfolio balance increased significantly from $566 million to $1451 million, with AN equity funding increasing from 61% to 74%[15] Capital Allocation - Share repurchases amounted to $225 million, reducing share count by 3%[3] - Capital expenditures were approximately 20% lower than in the first quarter of 2024[25]

Core Insights - AutoNation, Inc. (AN) has shown moderate performance over the past year, with a stock price increase of approximately 8% as the company continues to generate substantial cash flow and reduce its share count [1] Group 1 - The company has been successful in generating significant cash flow, which is a positive indicator for its financial health [1] - AutoNation has been actively reducing its share count, which can enhance shareholder value by increasing earnings per share [1] - Despite its positive performance, the stock has faced challenges and is not immune to market fluctuations [1]

Group 1: Earnings Performance - AutoNation reported quarterly earnings of $4.68 per share, exceeding the Zacks Consensus Estimate of $4.35 per share, and showing an increase from $4.49 per share a year ago, representing an earnings surprise of 7.59% [1] - The company posted revenues of $6.69 billion for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 1.75%, compared to $6.49 billion in the same quarter last year [2] - Over the last four quarters, AutoNation has surpassed consensus EPS estimates two times and topped consensus revenue estimates two times [2] Group 2: Stock Performance and Outlook - AutoNation shares have increased by approximately 2.1% since the beginning of the year, while the S&P 500 has declined by 6.8% [3] - The current consensus EPS estimate for the upcoming quarter is $4.47 on revenues of $6.72 billion, and for the current fiscal year, it is $18.22 on revenues of $27.02 billion [7] - The estimate revisions trend for AutoNation is mixed, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market in the near future [6] Group 3: Industry Context - The Automotive - Retail and Whole Sales industry is currently in the top 21% 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 - AutoNation reported Q1 2025 revenue of $6.7 billion, a 4% increase year-over-year on a same-store basis[2]. - Total revenue for Q1 2025 was $6,690.4 million, a 3.2% increase from $6,485.7 million in Q1 2024[21]. - Total revenue for Q1 2025 was $6,655.0 million, up from $6,380.8 million in Q1 2024, marking a 4.3% increase[38]. - New vehicle revenue reached $3.2 billion, up $300 million or 10% compared to the previous year[10]. - New vehicle revenue increased by 9.0% to $3,248.1 million, while used vehicle revenue decreased by 3.7% to $1,922.4 million[24]. - New vehicle revenue increased by 10.2% to $3,247.6 million in Q1 2025 from $2,947.4 million in Q1 2024[38]. - Net income decreased to $175.5 million, compared to $190.1 million in the same quarter last year, resulting in diluted earnings per share of $4.45[21]. - EPS for the quarter was $4.45, down 1% from $4.49 a year ago, while adjusted EPS increased by 4% to $4.68[6]. Sales Performance - Same-store new vehicle retail unit sales increased by 7% to 62,379 units, while used vehicle retail unit sales decreased by 2% to 66,787 units[5]. - Retail new vehicle unit sales increased by 6.0% to 62,387 units, while retail used vehicle unit sales decreased by 1.6% to 68,000 units[27]. - Retail vehicle unit sales for new vehicles rose to 62,379 in Q1 2025, an increase of 7.1% from 58,227 in Q1 2024[38]. Profitability - Record After-Sales gross profit of $568 million, reflecting a 4% increase year-over-year[6]. - Gross profit rose to $1,219.9 million, reflecting a 1.8% increase compared to $1,197.9 million in the previous year[24]. - Total gross profit increased to $1,213.6 million in Q1 2025 from $1,179.0 million in Q1 2024, a growth of 2.9%[38]. - The gross profit per new vehicle retailed decreased by 15.8% to $2,803, while the gross profit per used vehicle retailed increased by 12.8% to $1,662[24]. - Gross profit from new vehicles declined to 5.4% in Q1 2025 compared to 6.6% in Q1 2024[39]. - Gross profit from used vehicle retail increased to 6.3% in Q1 2025 from 5.6% in Q1 2024[39]. - Total gross profit as a percentage of revenue slightly decreased to 18.2% in Q1 2025 from 18.5% in Q1 2024[39]. Expenses and Costs - SG&A as a percentage of gross profit increased to 67.4%, up from 65.6% in the prior year[10]. - The company reported a decrease in selling, general, and administrative expenses to $821.9 million, down from $793.1 million[24]. - Capital expenditures decreased to $75.2 million in Q1 2025 from $93.7 million in Q1 2024[30]. Liquidity and Capital Management - AutoNation's liquidity as of March 31, 2025, was $1.6 billion, including $71 million in cash[11]. - The company repurchased 1.4 million shares for $225 million at an average price of approximately $165 per share[9]. - Stock repurchases surged to $224.8 million in Q1 2025, significantly higher than $38.7 million in Q1 2024, with shares repurchased increasing from 0.2 million to 1.4 million[30]. - The leverage ratio stood at 2.56x, well below the covenant limit of 3.75x, indicating strong financial health[30]. Segment Performance - The finance and insurance segment reported a net revenue increase of 5.3% to $352.5 million[24]. - Interest and fee income increased to $41.9 million in Q1 2025 from $21.8 million in Q1 2024, a variance of $20.1 million[28]. - Total interest margin after provision for loan losses rose to $9.1 million in Q1 2025, compared to $4.6 million in Q1 2024, reflecting an increase of $4.5 million[28]. Revenue Mix - New vehicle revenue mix increased to 48.8% in Q1 2025 from 46.2% in Q1 2024[39]. - Used vehicle revenue mix decreased to 28.5% in Q1 2025 from 30.8% in Q1 2024[39]. - Parts and service revenue mix remained consistent at 17.4% in Q1 2025 compared to 17.8% in Q1 2024[39].

Core Viewpoint - The Zacks Auto Retail and Wholesale industry shows robust prospects despite a challenging tariff environment, driven by a diversified product mix and multiple income streams [1] Industry Overview - The automotive sector's performance is heavily reliant on retail and wholesale networks, involving operations through dealerships and retail chains, including the sale of new and used vehicles, light trucks, auto parts, and providing repair and maintenance services [2] - The industry's success is closely tied to economic conditions, with higher disposable income leading to increased investment in big-ticket items, while tighter budgets result in reduced discretionary spending [2] - The COVID-19 pandemic has significantly reshaped the industry, increasing the focus on e-commerce [2] Factors Influencing Industry Prospects - Auto retailers benefit from a diversified product mix and multiple income streams, which reduce risk and position them for long-term growth, generating income from new and used vehicle retail, finance, insurance, and automotive repair [3] - Strategic acquisitions are being utilized by auto dealers to expand into new markets, thereby increasing market share and enhancing offerings [4] - Investment in digital platforms aligns with consumer preferences for online transactions, enabling dealers to reach a broader audience and drive higher profitability [4] Tariff Impact - A 25% tariff on imported vehicles and auto parts, imposed by the U.S. government, is expected to increase manufacturing costs and disrupt supply chains, potentially raising car prices by $5,000 to $15,000 [5] - Rising vehicle prices may lead consumers to consider used vehicles, increasing demand and prices for used cars, which could negatively impact new and used vehicle retailers' top-line growth [5] Industry Ranking and Performance - The Zacks Auto Retail & Wholesale industry ranks 46, placing it in the top 19% of around 250 Zacks industries, indicating bright near-term prospects [6][7] - The industry has outperformed the S&P 500 and the Auto, Tires, and Truck sector over the past year, returning 8.8% compared to the S&P 500's growth of 5.2% and the sector's decline of 9.8% [10] Current Valuation - The industry is currently trading at an EV/EBITDA ratio of 8.18X, significantly lower than the S&P 500's 15.58X and the sector's 14.97X [13] - Over the past five years, the industry has traded between 4.78X and 10.79X, with a median of 7.13X [14] Company Highlights - **Lithia Motors, Inc. (LAD)**: A leading automotive retailer with strategic acquisitions increasing market share and enhancing its portfolio. The company achieved a cost-saving plan of $200 million and expects an additional $50-$70 million in interest cost savings in 2025 [19][20] - **AutoNation, Inc. (AN)**: One of the largest automotive retailers, improving its finance division and after-sales gross profit margin by nearly 250 basis points since 2019. The company anticipates mid-single-digit growth in its after-sales business [23][24][25] - **Group 1 Automotive, Inc. (GPI)**: A leading automotive retailer focusing on acquisitions and restructuring to improve operational efficiency. The company expects year-over-year growth of 9.91% in sales and 4.51% in EPS for 2025 [29][30]

Core Insights - AutoNation has appointed Jeremy Tucker as Chief Marketing Officer, effective April 21, 2025, who will report directly to CEO Mike Manley [1][2] - Tucker brings extensive experience in brand loyalty, team leadership, and innovative marketing strategies, aligning with AutoNation's commitment to customer excellence [2][3] - His previous roles include Executive Vice President and Global Chief Marketing Officer at Spin Master, where he led franchise development and brand growth in over 100 countries [3][4] Leadership Experience - Tucker has a proven track record in high-performing teams and transformative results, having served as Chief Marketing Officer at Planet Fitness, where he accelerated digital transformation and boosted membership [4] - At Nissan, he was responsible for U.S. marketing, leading to four consecutive years of market share growth through impactful marketing campaigns [4] - His experience at The Walt Disney Company involved repositioning the Disney Princess franchise, increasing its global market share [4] Company Background - AutoNation is one of the largest automotive retailers in the U.S., offering a wide range of new and used vehicles, financing, parts, and maintenance services [7] - The company has raised over $40 million for cancer-related causes, demonstrating its commitment to community impact [7]

Financial Performance - For the year ended December 31, 2024, net income was $692.2 million, with diluted earnings per share of $16.92, compared to net income of $1.0 billion and diluted earnings per share of $22.74 in 2023[172]. - Total revenue for 2024 was $26,765.4 million, a decrease of $183.5 million or 0.7% compared to 2023[221]. - Gross profit for 2024 was $4,785.4 million, a decline of 6.73% from $5,131.5 million in 2023[330]. - Operating income fell by $346.4 million or 21.0% to $1,305.5 million in 2024[192]. - Net income from continuing operations for 2024 was $692.2 million, a decrease of 32.2% compared to $1,020.2 million in 2023[330]. Revenue Breakdown - New vehicle sales accounted for 49% of total revenue and 16% of total gross profit, while used vehicle sales accounted for 29% of total revenue and 9% of total gross profit[168]. - New vehicle revenue increased to $13,048.2 million in 2024, up 2.2% from $12,767.4 million in 2023[330]. - Used vehicle revenue decreased to $7,719.9 million in 2024, down 5.8% from $8,198.5 million in 2023[330]. - Parts and service revenue increased by $110.5 million or 2.5% to $4,503.5 million, contributing to a gross profit margin of 46.1%[196][197]. Sales Performance - Retail vehicle unit sales for new vehicles increased by 10,169 units or 4.2% to 254,715 units in 2024, while used vehicle sales decreased by 8,111 units or 3.0% to 265,908 units[192]. - Retail new vehicle unit sales increased to 254,715 in 2024, up 10,169 units or 4.2% from 2023[223]. - Retail used vehicle unit sales decreased to 265,908 in 2024, down 8,111 units or 3.0% from 2023[223]. Inventory and Supply - New vehicle inventory units increased to approximately 42,600 as of December 31, 2024, compared to 35,300 in 2023[178]. - Days supply for new vehicles increased to 39 days in 2024 from 36 days in 2023, while used vehicle supply decreased to 37 days from 39 days[193]. - The net new vehicle inventory carrying expense increased to $(73.8) million in 2024, compared to $(6.3) million in 2023, primarily due to higher floorplan interest expense[204]. Expenses and Costs - Total gross profit decreased by 7% in 2024, driven by a 27% decrease in new vehicle gross profit and a 14% decrease in used vehicle gross profit[173]. - Selling, general, and administrative expenses as a percentage of revenue remained stable at 12.2% in 2024 compared to 12.1% in 2023[193]. - SG&A expenses totaled $3,263.9 million in 2024, an increase of $10.7 million (0.3%) from 2023[242]. Segment Performance - Segment income for Domestic decreased to $254.9 million in 2024, down $160.5 million or 38.6% from 2023, impacted by lower gross profits across new and used vehicles[225]. - Segment income for Import fell to $476.6 million in 2024, a decrease of $158.4 million or 24.9% compared to 2023, primarily due to reduced new vehicle gross profit margins[229]. - Premium Luxury total revenue decreased by $126.5 million (1.2%) in 2024 compared to 2023, primarily due to declines in new and used vehicle revenue[231]. Cash Flow and Debt - Net cash provided by operating activities decreased to $314.7 million in 2024 from $724.0 million in 2023, a decline of 56.5%[274]. - As of December 31, 2024, total long-term debt, net of current maturities, was $2.6 billion, down from $3.1 billion in 2023[266]. - The company reported a net cash used in financing activities of $300.6 million in 2024, compared to $172.5 million in 2023, indicating a significant increase in cash outflow[337]. Strategic Initiatives - The company is investing significantly in strategic initiatives, including the expansion of its AutoNation Finance business and AutoNation USA used vehicle stores[56]. - The company continues to grow its AutoNation Finance business, increasing finance penetration rates associated with vehicles sold through its stores[282]. Cybersecurity and Operational Risks - The company relies on information technology and is exposed to cybersecurity risks that could disrupt operations and impact financial results[56]. - The CDK outage negatively impacted same store unit volume and productivity in vehicle sales and service processes in the latter half of June 2024[207]. Market Conditions - The automotive retail industry remains sensitive to economic conditions, impacting vehicle sales and profit margins[293]. - The U.S. industry new vehicle unit sales increased to 16.0 million in 2024 from 15.6 million in 2023, indicating a recovery in market conditions[169].

Financial Data and Key Metrics Changes - Total revenue for Q4 2024 was $7.2 billion, an increase of 7% year-over-year, and 8% on a same-store basis [28] - Gross profit was $1.24 billion, up 5% sequentially and 3% year-over-year on a same-store basis [29] - Adjusted net income was $199 million, compared to $216 million a year ago, with adjusted EPS at $4.97, five cents below Q4 2023 [33] Business Line Data and Key Metrics Changes - New vehicle sales saw a 12% same-store unit volume growth, with domestic segment sales up 17% and premium luxury segment sales up 12% [21][22] - Used vehicle gross profit increased by 14% year-over-year, driven by improved inventory management [22] - AutoNation Finance originated $1.1 billion in loans during 2024, with a portfolio now exceeding $1.1 billion and a delinquency rate of less than 3% [12][48] Market Data and Key Metrics Changes - Hybrid vehicle sales increased approximately 50% year-over-year, representing nearly 20% of unit sales, while battery electric vehicle sales rose over 25% [36] - New vehicle inventory at year-end was below 43,000 units, down from 46,000 units at the end of Q3 2024 [38] - After-sales gross profit increased by more than 5% year-over-year, achieving record gross profit for both Q4 and the full year [24][51] Company Strategy and Development Direction - The company plans to continue focusing on after-sales growth, technician recruitment, and retention, as well as enhancing customer financial services [65] - Capital allocation will prioritize high-return opportunities, including share repurchases and potential M&A activities [145][150] - The company divested eight stores that did not fit its model, allowing for capital redeployment into share repurchases [17][26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about pent-up demand for new vehicles and anticipated moderate unit growth in early 2025, with expectations for stabilization in unit profitability [62][63] - The company expects continued resilience in customer financial services volumes and profitability, alongside a stable used car market [64] - Management acknowledged uncertainties in the economic environment and geopolitical factors but emphasized the company's ability to deliver strong results across various conditions [61][66] Other Important Information - The company repurchased approximately $100 million of shares during Q4 2024, bringing total share repurchases for the year to $460 million, representing a 7% reduction in shares outstanding [26][59] - AutoNation was recognized by Fortune magazine as one of the world's most admired companies for the eighth consecutive year [18] Q&A Session Summary Question: Impact of post-election consumer sentiment on sales - Management noted improved consumer sentiment post-election and expected this trend to continue into early 2025, with a strong exit rate in new vehicle sales [72][75] Question: OEMs' approach to EV inventory - Management indicated that OEMs are adjusting their strategies regarding EVs and hybrids, balancing inventory levels while recognizing the growing demand for hybrids [78][81] Question: Funding needs for AutoNation Finance - Management discussed the expected increase in nonrecourse financing for AutoNation Finance, projecting a growth in funding levels as the portfolio matures [94][97] Question: After-sales growth expectations - Management highlighted the focus on technician recruitment and the potential for mid-single-digit growth in after-sales, emphasizing the importance of customer retention [100][106] Question: SG&A improvements and future expectations - Management indicated that SG&A as a percentage of gross profit improved in Q4 2024, with expectations for modest improvements in 2025 as the company continues to drive growth [114][118] Question: Used vehicle margin stabilization - Management acknowledged that while used vehicle margins have moderated, they expect opportunities for growth in dollar terms rather than percentage terms due to market dynamics [132][134] Question: Collision business recovery - Management anticipated a seasonal recovery in the collision business as they move into spring, despite challenges faced in the previous year [138][140] Question: Capital allocation strategy - Management reiterated that capital allocation decisions will focus on maximizing shareholder returns, balancing between share repurchases and potential acquisitions [144][150]

Fourth Quarter 2024 Earnings Release February 11, 2025 1 Forward-Looking Statements This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Words such as "anticipates," "expects," "estimates," "intends," "goals," "targets," "projects," "plans," "believes," ...