AutoNation, Inc. (AN, Financial) reported a stronger-than-anticipated first-quarter revenue of $6.69 billion, surpassing analysts' expectations of $6.64 billion. The company experienced a 4% increase in same-store sales, largely driven by a substantial 10% growth in new vehicle sales.
The CEO of AutoNation, Mike Manley, highlighted the success across various sectors, noting significant growth in new vehicle volumes and an increase in market share. The focus on enhancing profitability in used vehicle units and the robust performance of Customer Financial Services further contributed to the positive results. Additionally, the company achieved record profits in its After-Sales segment.
With strong operating cash flows, AutoNation effectively managed capital by repurchasing shares and pursuing beneficial acquisitions. Despite potential challenges from tariffs, Manley expressed confidence in the resilience of AutoNation’s business model. The company benefits from diverse revenue streams, adaptable cost structures, and solid cash flow, positioning it well to maintain strong performance across different economic conditions.
AN Key Business Developments
Release Date: February 11, 2025
- Total Revenue: $7.2 billion, an increase of 7% year-over-year, 8% on a same-store basis.
- Same-Store New Unit Volume Growth: 12% increase.
- Same-Store Gross Profit Growth: 5% year-over-year increase.
- Gross Profit Margin: 17.2% of revenue, down slightly from the previous year.
- Adjusted SG&A: 66.3% of gross profit, down more than 100 basis points from the third quarter.
- Adjusted Net Income: $199 million, compared to $216 million a year ago.
- Adjusted EPS: $4.97, $0.05 below the fourth quarter of 2023.
- AN Finance Portfolio: $1.1 billion, with originations tripling over 2023.
- AN Finance Delinquencies: Less than 3% at year-end.
- Share Repurchases: $100 million during the fourth quarter, $460 million for the full year, reducing shares by 7%.
- New Vehicle Inventory: 39 days' supply at year-end, down 25% from the third quarter.
- Used Vehicle Gross Profit: Increased 14% year-over-year.
- After-Sales Gross Profit: Up more than 5% year-over-year, with a margin expansion of 110 basis points.
- Free Cash Flow: $750 million for 2024, with a 105% conversion rate of net income into free cash flow.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- AutoNation Inc (AN, Financial) achieved a 12% same-store new unit volume growth in the fourth quarter, indicating strong sales performance.
- The company reported a 5% year-over-year same-store gross profit growth, with a 110 basis point improvement in gross margin.
- AN Finance, a segment introduced in late 2022, grew its originations by three times over 2023, with a portfolio now exceeding $1.1 billion.
- AutoNation Inc (AN) was recognized by Fortune Magazine as one of the World's Most Admired Companies, marking the fifth consecutive year as America's most admired automotive retailer.
- The company repurchased approximately $100 million of shares during the fourth quarter, contributing to a 7% reduction in shares during the year, reflecting strong capital return to shareholders.
Negative Points
- The CDK outage in early summer significantly impacted business operations in the second and third quarters of 2024.
- Despite strong performance, the gross profit margin of 17.2% was slightly down from the previous year, reflecting moderation in new vehicle unit profitability.
- Higher interest expenses from floor plan debt impacted fourth-quarter results, with expenses up $9 million from a year ago.
- Adjusted net income for the fourth quarter was $199 million, down from $216 million a year ago, indicating a decline in profitability.
- The used vehicle market faced supply challenges, particularly in mid- and higher-priced tiers, affecting sales performance.
