• Total Revenue: $6.6 billion, a decrease of 4% from the previous year.

• Gross Profit: $1.2 billion, increased 2% sequentially but down from 2023.

• Gross Profit Margin: 18% of revenue, unchanged from the second quarter.

• Adjusted SG&A: 67.4% of gross profit, decreased 3% from a year ago.

• Adjusted Net Income: $162 million, compared to $244 million a year ago.

• Adjusted EPS: $4.02 for the quarter.

• New Vehicle Unit Sales: Same-store units increased 2% year-over-year.

• Used Vehicle PVR: Approximately $1,600 per vehicle.

• AN Finance Loan Originations: Over $700 million year-to-date.

• After-Sales Gross Profit: Record performance, with annual growth over $0.5 billion since 2019.

• Store Divestitures: Seven domestic stores and one import store, generating over $150 million in proceeds.

• Floor Plan Interest Expense: $61 million, up $22 million from a year ago.

• Inventory Levels: 46,000 units at the end of September, representing 52 days of sales.

• Adjusted Free Cash Flow: $467 million year-to-date through September.

• Leverage: 2.5 times EBITDA, in line with long-term target.

• Warning! GuruFocus has detected 3 Warning Signs with AN.

Release Date: October 25, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• AutoNation Inc (NYSE:AN) increased its market share in new vehicle sales, reversing previous declines due to a systems outage.

• The after-sales team achieved an all-time record gross profit, contributing significantly to the company's overall performance.

• AutoNation Inc (NYSE:AN) successfully divested eight stores, generating over $150 million in proceeds, which can be reallocated for future investments.

• The company reported strong growth in its AutoNation Finance business, originating over $700 million in new loans year-to-date.

• Despite challenges, AutoNation Inc (NYSE:AN) outpaced the overall industry in new unit sales, with same-store units increasing by 2% across all segments.

Negative Points

• The CDK systems outage significantly impacted performance, costing approximately $0.21 per share in the quarter.

• Severe weather events led to the temporary closure of around 50 stores, affecting sales and service operations.

• Used vehicle sales decreased compared to the previous year, partly due to inventory constraints from the CDK outage.

• Higher interest expenses, particularly from floor plan debt, negatively impacted the company's financial results.

• The company's total revenue decreased by 4% from the previous year, driven by declines in used vehicle sales and moderated selling prices.

Q & A Highlights

Q: Can you discuss the potential opportunities in the parts and service side, especially with the increase in warranty work from stop sales? A: Michael Manley, CEO, highlighted that there is significant opportunity to grow customer pay penetration, particularly in the three to seven-year vehicle segment. He noted that OEM partners are focused on winning back customers to the franchise network, which could drive growth in this area. Manley also mentioned that the vehicle park is expected to grow, providing further opportunities for expansion in the parts and service business.