On October 25, 2024, AutoNation Inc (AN, Financial) released its 8-K filing for the third quarter of 2024, showcasing a mixed performance. The company reported earnings per share (EPS) of $4.61, exceeding the analyst estimate of $4.46, while revenue came in at $6.6 billion, slightly below the expected $6.71 billion.
Company Overview
AutoNation Inc (AN, Financial) is the second largest automotive dealer in the United States, with 2023 revenue of about $27 billion. The company operates over 250 dealerships and 53 collision centers, along with 23 AutoNation USA used-vehicle stores, a captive lender, four auction sites, and three parts distributors across 21 states, primarily in Sunbelt metropolitan areas. New-vehicle sales account for nearly half of its revenue, complemented by used vehicles, parts, repair services, and auto financing.
Performance and Challenges
AutoNation Inc (AN, Financial) faced a challenging quarter with a 4% year-over-year decline in revenue, primarily due to lower average selling prices and a decrease in used vehicle unit sales. Despite these challenges, the company achieved a 2% growth in same-store new vehicle unit sales, which contributed to its EPS surpassing expectations. The quarter was also impacted by the residual effects of a CDK outage in July, which reduced EPS by an estimated $0.21 per share.
Financial Achievements
AutoNation Inc (AN, Financial) reported a record after-sales gross profit of $558 million, highlighting the strength of its parts and service segment. The company's finance arm, AN Finance, continued to grow with $700 million in year-to-date originations. These achievements underscore the company's ability to leverage its diverse revenue streams to mitigate challenges in vehicle sales.
Key Financial Metrics
| Metric | Q3 2024 | Q3 2023 | YoY Change |
|---|---|---|---|
| Revenue | $6.6 billion | $6.89 billion | -4% |
| Gross Profit | $1.18 billion | $1.29 billion | -9% |
| Operating Income | $350.7 million | $419.5 million | -16% |
| Net Income | $185.8 million | $243.7 million | -24% |
| Diluted EPS | $4.61 | $5.54 | -17% |
Analysis and Commentary
AutoNation Inc (AN, Financial) demonstrated resilience in a challenging market environment, with its diversified business model providing a buffer against declines in vehicle sales. The company's focus on after-sales services and financial products has proven beneficial, as evidenced by the record gross profit in these areas. However, the decrease in used vehicle sales and the impact of the CDK outage highlight areas of concern that the company will need to address moving forward.
“We are pleased to deliver solid operating results for the third quarter driven primarily by new vehicle unit sales growth, continued After-Sales momentum, and disciplined cost controls. We were able to navigate through a challenging environment, which included the lingering effects of the CDK outage, which we are relieved to now have behind us, weather challenges, and OEM stop-sale orders,” said Mike Manley, AutoNation’s Chief Executive Officer.
AutoNation Inc (AN, Financial) remains focused on shareholder returns and is optimistic about the moderating interest rates and OEM support actions. The company's strategic divestitures and share repurchase program further demonstrate its commitment to enhancing shareholder value.
Explore the complete 8-K earnings release (here) from AutoNation Inc for further details.
