# AUTONATION, INC. (AN) FY 2024 MD&A Verbatim Item 7 Management's Discussion and Analysis from AUTONATION, INC.'s 10-K for fiscal year 2024. SEC filing source: https://www.sec.gov/Archives/edgar/data/350698/000035069825000029/an-20241231.htm Accession: 0000350698-25-000029 Filing date: 2025-02-14 Report date: 2024-12-31 Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high Company profile: /company/AN/ All MD&A years: /company/AN/mda/ Previous year: /company/AN/mda/fy2023/ (FY 2023) Next year: /company/AN/mda/fy2025/ (FY 2025) ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with Part I, including matters set forth in the “Risk Factors” section of this Form 10-K, and our Consolidated Financial Statements and notes thereto included in Part II, Item 8 of this Form 10-K. This section of this Form 10-K includes discussion of year-to-year comparisons between 2024 and 2023. Discussion of year-to-year comparisons between 2023 and 2022 (other than for AutoNation Finance, a new reportable segment, for which discussion is included herein) can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. Except to the extent that differences among reportable segments are material to an understanding of our business taken as a whole, we present the discussion in Management’s Discussion and Analysis of Financial Condition and Results of Operations on a consolidated basis. Certain amounts have been reclassified from the previously reported financial statements to conform to the financial statement presentation of the current period. Overview AutoNation, Inc., through its subsidiaries, is one of the largest automotive retailers in the United States. As of December 31, 2024, we owned and operated 325 new vehicle franchises from 243 stores located in the United States, predominantly in major metropolitan markets in the Sunbelt region. Our stores, which we believe include some of the most recognizable and well known in our key markets, sell 31 different new vehicle brands. The core brands of new vehicles that we sell, representing approximately 88% of the new vehicles that we sold in 2024, are manufactured by Toyota (including Lexus), Honda, Ford, General Motors, BMW, Mercedes-Benz, Stellantis, and Volkswagen (including Audi and Porsche). As of December 31, 2024, we also owned and operated 52 AutoNation-branded collision centers, 24 AutoNation USA used vehicle stores, 4 AutoNation-branded automotive auction operations, 3 parts distribution centers, a mobile automotive repair and maintenance business, and an auto finance company. We offer a diversified range of automotive products and services, including new vehicles, used vehicles, “parts and service” (also referred to as “After-Sales”), which includes automotive repair and maintenance services as well as wholesale parts and collision businesses, and automotive “finance and insurance” products (also referred to as “Customer Financial Services”), which include vehicle service and other protection products, as well as the arranging of financing for vehicle purchases through third-party finance sources. We also offer indirect financing through our captive auto finance company on vehicles we sell. As of December 31, 2024, we had four reportable segments: Domestic, Import, Premium Luxury, and AutoNation Finance. Our Domestic segment is comprised of retail automotive franchises that sell new vehicles manufactured by Ford, General Motors, and Stellantis. Our Import segment is comprised of retail automotive franchises that sell new vehicles manufactured primarily by Toyota, Honda, Hyundai, Subaru, and Nissan. Our Premium Luxury segment is comprised of retail automotive franchises that sell new vehicles manufactured primarily by Mercedes-Benz, BMW, Lexus, Audi, and Jaguar Land Rover. The franchises in each of our Domestic, Import, and Premium Luxury segments also sell used vehicles, parts and automotive repair and maintenance services, and automotive finance and insurance products. AutoNation Finance is our captive auto finance company, which provides indirect financing to qualified retail customers on vehicles we sell. For the year ended December 31, 2024, new vehicle sales accounted for 49% of our total revenue and 16% of our total gross profit. Used vehicle sales accounted for 29% of our total revenue and 9% of our total gross profit. Our parts and service operations, while comprising 17% of our total revenue, contributed 46% of our total gross profit. Our finance and insurance sales, while comprising 5% of our total revenue, contributed 28% of our total gross profit. Market Conditions Full-year U.S. industry new vehicle unit sales were 16.0 million in 2024, as compared to 15.6 million in 2023, and 13.9 million in 2022. Although still below historical levels, new vehicle inventory levels continued to increase during 2024 due to higher levels of manufacturer vehicle production. The increasing supply and availability of new vehicle inventory, which varies by make and model, has resulted in moderation of new vehicle pricing and margins, which we expect will continue 27 Table of Contents in 2025. Additionally, the increased availability and affordability of new vehicles and an increase in manufacturer new vehicle incentives, including low-interest financing and customer rebates, has resulted in a shift in mix from used vehicles to new vehicles. Lower new vehicle sales in recent years has also resulted in lower availability of used vehicle inventory, particularly for late model vehicles. System Outage Due to CDK Cyber Incident On June 19, 2024, we were notified by CDK that it was experiencing a cyber incident impacting its systems, including the systems necessary to support our DMS, which supports our dealership operations, including our Core Functions. The incident resulted in outages of our DMS and Core Functions, also referred to as the CDK outage, causing disruption and adverse impacts to our business, including our productivity. Access to our DMS and Core Functions was restored as of June 29, 2024. Certain ancillary systems and integrations, such as those that help automate ordering, scheduling, payment, sales, and reporting processes, were restored by the end of July with residual impacts resolved by the end of the third quarter 2024. See “Results of Operations” below for a discussion on the financial impact of the CDK outage to our 2024 results. Results of Operations We had net income of $692.2 million and diluted earnings per share of $16.92 in 2024, as compared to net income of $1.0 billion and diluted earnings per share of $22.74 in 2023. Our total gross profit decreased 7% during 2024, as compared to 2023, driven by decreases in new vehicle gross profit of 27%, used vehicle gross profit of 14%, and finance and insurance gross profit of 4%, partially offset by an increase in parts and service gross profit of 3%. New vehicle gross profit was adversely impacted by a decrease in gross profit per vehicle retailed (“PVR”) resulting from increasing supply and availability of new vehicle inventory, which has resulted in moderation of margins. Used vehicle gross profit was adversely impacted by a decrease in used vehicle unit volume and a shift in mix towards lower-priced entry-level vehicles, which have relatively lower average gross profit PVR. Finance and insurance gross profit was adversely impacted by an increase in retail vehicle sales financed through our captive auto finance company, which we expect will be offset by greater profitability generated by our AutoNation Finance business over time. Parts and service results benefited primarily from an increase in gross profit from warranty service and customer-pay service. SG&A expenses were impacted by certain one-time costs related to the CDK outage, principally consisting of compensation of approximately $43 million paid to commission-based associates to ensure business continuity. These costs were largely offset by a decrease in performance-driven compensation expense partly resulting from the CDK outage. In addition, floorplan interest expense increased primarily due to higher average vehicle floorplan balances. As a result of the CDK outage and its residual effects, we estimate earnings per share in 2024 were negatively impacted by approximately $1.75 per share, without taking into account any potential recoveries related to the incident. The estimated impact is comprised of internal estimates of lost income and the one-time costs incurred related to the incident, described above. Net income during 2024 benefited from an after-tax net gain of $35.3 million related to business/property dispositions, net of asset impairments, partially offset by after-tax franchise rights impairments of $9.4 million and after-tax self-insured losses of $8.8 million primarily related to weather-related catastrophes. During 2023, net income was adversely impacted by an after-tax loss of $12.4 million from weather-related catastrophes. Inventory Management Our new and used vehicle inventories are stated at the lower of cost or net realizable value in our Consolidated Balance Sheets. We monitor our vehicle inventory levels based on current economic conditions and seasonal sales trends. Our new vehicle inventory units at December 31, 2024 and 2023, were approximately 42,600 and 35,300, respectively. We have typically not experienced significant losses on the sale of new vehicle inventory, in part due to incentives provided by manufacturers to promote sales of new vehicles and our inventory management practices. We monitor our new vehicle inventory values as compared to net realizable values. Our new vehicle inventory was net of cumulative write- 28 Table of Contents downs of $2.0 million at December 31, 2024. We had no new vehicle inventory cumulative write-downs at December 31, 2023. We recondition the majority of used vehicles acquired for retail sale in our parts and service departments and capitalize the related costs to the used vehicle inventory. We monitor our used vehicle inventory values as compared to net realizable values. Typically, used vehicles that are not sold on a retail basis are sold at wholesale auctions. Our used vehicle inventory balance was net of cumulative write-downs of $7.8 million at December 31, 2024, and $12.2 million at December 31, 2023. Parts, accessories, and other inventory are carried at the lower of cost or net realizable value. We estimate the amount of potentially damaged and/or obsolete inventory based upon historical experience, manufacturer return policies, and industry trends. Our parts, accessories, and other inventory balance was net of cumulative write-downs of $8.3 million at December 31, 2024, and $7.8 million at December 31, 2023. Critical Accounting Estimates We prepare our Consolidated Financial Statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”), which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. We evaluate our estimates on an ongoing basis and we base our estimates on historical experience and various other assumptions we believe to be reasonable. Actual outcomes could differ materially from those estimates in a manner that could have a material effect on our Consolidated Financial Statements. Set forth below are the accounting estimates that we have identified as critical to our business operations and an understanding of our results of operations, based on the high degree of judgment or complexity in their application. See Note 1 of the Notes to Consolidated Financial Statements for a discussion of other significant accounting policies. Goodwill Goodwill for our reporting units is tested for impairment annually on April 30 or more frequently when events or changes in circumstances indicate that the carrying value of a reporting unit exceeds its fair value. We may first perform a qualitative assessment to determine whether it is more likely than not that a reporting unit is impaired. When assessing goodwill for impairment, our decision to perform a qualitative assessment for an individual reporting unit is influenced by a number of factors, including the carrying value of the reporting unit’s goodwill, the significance of the excess of the reporting unit’s estimated fair value over carrying value at the last quantitative assessment date, the amount of time in between quantitative fair value assessments, macroeconomic conditions, automotive industry and market conditions, and our operating performance. We elected to perform quantitative tests for our annual goodwill impairment testing as of April 30, 2024, and no impairment charges resulted from these quantitative tests. The quantitative goodwill impairment test is dependent on many variables used to determine the fair value of each reporting unit. See Note 19 of the Notes to Consolidated Financial Statements for a description of the valuation method and related estimates and assumptions used in our quantitative impairment testing. The fair values of the Domestic, Import, Premium Luxury, AutoNation Finance, and Collision Center reporting units substantially exceeded their carrying values as of April 30, 2024. The fair value of the Mobile Service reporting unit, which relates to the mobile automotive repair and maintenance business we acquired in the first quarter of 2023, exceeded carrying value by approximately 25%. The key assumptions used in our estimate of fair value for our Mobile Service reporting unit included revenue growth rates to calculate projected future cash flows. As a measure of sensitivity, if the revenue growth rates decreased by 20%, the fair value would have still slightly exceeded the carrying value of the Mobile Service reporting unit. This result and discussion is not intended to address all potential outcomes that could have resulted if different assumptions had been used given the number of assumptions used in determining fair value and the degree of sensitivity to changes in such assumptions. As of December 31, 2024, we have $223.4 million of goodwill related to the Domestic reporting unit, $524.3 million related to the Import reporting unit, $481.7 million related to the Premium Luxury reporting unit, $140.5 million related to the Mobile Service reporting unit, $78.4 million related to the AutoNation Finance reporting unit, and $4.6 million related to the Collision Centers reporting unit. 29 Table of Contents Other Intangible Assets Our principal identifiable intangible assets are individual store rights under franchise agreements with vehicle manufacturers, which have indefinite lives and are tested for impairment annually as of April 30 or more frequently when events or changes in circumstances indicate that impairment may have occurred. We may first perform a qualitative assessment to determine whether it is more likely than not that a franchise right asset is impaired. We elected to perform quantitative tests for our annual franchise rights impairment testing as of April 30, 2024, and no impairment charges resulted from these quantitative tests. We identified 15 stores that, while they each had franchise rights fair value in excess of or equal to carrying value, had lower relative performance compared to our total store population. We will continue to monitor these stores, as well as all stores, for events or changes in circumstances that may indicate potential impairment. The remainder of our stores had franchise rights with calculated fair values that substantially exceeded their carrying values as of April 30, 2024. The quantitative franchise rights impairment test is dependent on many variables used to determine the fair value of each store’s franchise rights. See Note 19 of the Notes to Consolidated Financial Statements for a description of the valuation method and related estimates and assumptions used in our quantitative impairment testing. Based on a sensitivity analysis of these estimates and assumptions, including if the fair value of each of our franchise rights had been determined to be a hypothetical 10% lower as of the valuation date of April 30, 2024, the resulting impairment charge would have been approximately $3 million. The sensitivity analysis performed, including the effect of a hypothetical 10% decrease in fair value estimates, is not intended to provide a sensitivity analysis of every potential outcome. During the fourth quarter of 2024, we concluded that a triggering event had occurred that indicated the fair values of franchise rights for two stores may have been less than their carrying values. Therefore, we performed quantitative franchise rights impairment tests for these stores during the fourth quarter of 2024. As a result of the quantitative tests, we determined the franchise rights for both stores were fully impaired, and we recorded non-cash franchise rights impairment charges of $12.5 million during the fourth quarter of 2024. As of December 31, 2024, we had 79 stores with franchise rights totaling $861.2 million. 30 Table of Contents Reported Operating Data [[GREPCENT_TABLE]] [["","Years Ended December 31,"],["($ in millions, except per vehicle data)","","","","","2024 vs. 2023","","","","2023 vs. 2022"],["2024","","2023","","Variance Favorable / (Unfavorable)","","% Variance","","2022","","Variance Favorable / (Unfavorable)","","% Variance"],["Revenue:"],["New vehicle","$","13,048.2","","","$","12,767.4","","","$","280.8","","","2.2","","","$","11,754.4","","","$","1,013.0","","","8.6"],["Retail used vehicle","7,076.8","","","7,639.5","","","(562.7)","","","(7.4)","","","9,020.9","","","(1,381.4)","","","(15.3)"],["Wholesale","643.1","","","559.0","","","84.1","","","15.0","","","640.9","","","(81.9)","","","(12.8)"],["Used vehicle","7,719.9","","","8,198.5","","","(478.6)","","","(5.8)","","","9,661.8","","","(1,463.3)","","","(15.1)"],["Finance and insurance, net","1,360.1","","","1,418.8","","","(58.7)","","","(4.1)","","","1,437.3","","","(18.5)","","","(1.3)"],["Total variable operations(1)","22,128.2","","","22,384.7","","","(256.5)","","","(1.1)","","","22,853.5","","","(468.8)","","","(2.1)"],["Parts and service","4,614.6","","","4,533.7","","","80.9","","","1.8","","","4,100.6","","","433.1","","","10.6"],["Other","22.6","","","30.5","","","(7.9)","","","","","30.9","","","(0.4)"],["Total revenue","$","26,765.4","","","$","26,948.9","","","$","(183.5)","","","(0.7)","","","$","26,985.0","","","$","(36.1)","","","(0.1)"],["Gross profit:"],["New vehicle","$","775.5","","","$","1,061.8","","","$","(286.3)","","","(27.0)","","","$","1,366.6","","","$","(304.8)","","","(22.3)"],["Retail used vehicle","414.4","","","493.1","","","(78.7)","","","(16.0)","","","538.3","","","(45.2)","","","(8.4)"],["Wholesale","24.1","","","14.9","","","9.2","","","","","14.8","","","0.1"],["Used vehicle","438.5","","","508.0","","","(69.5)","","","(13.7)","","","553.1","","","(45.1)","","","(8.2)"],["Finance and insurance","1,360.1","","","1,418.8","","","(58.7)","","","(4.1)","","","1,437.3","","","(18.5)","","","(1.3)"],["Total variable operations(1)","2,574.1","","","2,988.6","","","(414.5)","","","(13.9)","","","3,357.0","","","(368.4)","","","(11.0)"],["Parts and service","2,209.0","","","2,139.3","","","69.7","","","3.3","","","1,900.3","","","239.0","","","12.6"],["Other","2.3","","","3.6","","","(1.3)","","","","","8.0","","","(4.4)"],["Total gross profit","4,785.4","","","5,131.5","","","(346.1)","","","(6.7)","","","5,265.3","","","(133.8)","","","(2.5)"],["AutoNation Finance income (loss)","(9.3)","","","(13.9)","","","4.6","","","","","(37.6)","","","23.7"],["Selling, general, and administrative expenses","3,263.9","","","3,253.2","","","(10.7)","","","(0.3)","","","3,026.1","","","(227.1)","","","(7.5)"],["Depreciation and amortization","240.7","","","220.5","","","(20.2)","","","","","200.3","","","(20.2)"],["Franchise rights impairment","12.5","","","\u2014","","","(12.5)","","","","","\u2014","","","\u2014"],["Other income, net","(46.5)","","","(8.0)","","","38.5","","","","","(23.2)","","","(15.2)"],["Operating income","1,305.5","","","1,651.9","","","(346.4)","","","(21.0)","","","2,024.5","","","(372.6)","","","(18.4)"],["Non-operating income (expense) items:"],["Floorplan interest expense","(218.9)","","","(144.7)","","","(74.2)","","","","","(41.4)","","","(103.3)"],["Other interest expense","(179.7)","","","(181.4)","","","1.7","","","","","(134.9)","","","(46.5)"],["Other income (loss), net","9.8","","","24.4","","","(14.6)","","","","","(14.7)","","","39.1"],["Income from continuing operations before income taxes","$","916.7","","","$","1,350.2","","","$","(433.5)","","","(32.1)","","","$","1,833.5","","","$","(483.3)","","","(26.4)"],["Retail vehicle unit sales:"],["New vehicle","254,715","","","244,546","","","10,169","","","4.2","","","229,971","","","14,575","","","6.3"],["Used vehicle","265,908","","","274,019","","","(8,111)","","","(3.0)","","","299,806","","","(25,787)","","","(8.6)"],["","520,623","","","518,565","","","2,058","","","0.4","","","529,777","","","(11,212)","","","(2.1)"],["Revenue per vehicle retailed:"],["New vehicle","$","51,227","","","$","52,209","","","$","(982)","","","(1.9)","","","$","51,113","","","$","1,096","","","2.1"],["Used vehicle","$","26,614","","","$","27,879","","","$","(1,265)","","","(4.5)","","","$","30,089","","","$","(2,210)","","","(7.3)"],["Gross profit per vehicle retailed:"],["New vehicle","$","3,045","","","$","4,342","","","$","(1,297)","","","(29.9)","","","$","5,942","","","$","(1,600)","","","(26.9)"],["Used vehicle","$","1,558","","","$","1,800","","","$","(242)","","","(13.4)","","","$","1,795","","","$","5","","","0.3"],["Finance and insurance","$","2,612","","","$","2,736","","","$","(124)","","","(4.5)","","","$","2,713","","","$","23","","","0.8"],["Total variable operations(2)","$","4,898","","","$","5,734","","","$","(836)","","","(14.6)","","","$","6,309","","","$","(575)","","","(9.1)"],["(1) Total variable operations includes new vehicle, used vehicle (retail and wholesale), and finance and insurance results."],["(2) Total variable operations gross profit per vehicle retailed is calculated by dividing the sum of new vehicle, retail used vehicle, and finance and insurance gross profit by total retail vehicle unit sales."]] [[/GREPCENT_TABLE]] 31 Table of Contents [[GREPCENT_TABLE]] [["","Years Ended December 31,"],["","2024 (%)","","2023 (%)","","2022 (%)"],["Revenue mix percentages:"],["New vehicle","48.8","","","47.4","","","43.6"],["Used vehicle","28.8","","","30.4","","","35.8"],["Parts and service","17.2","","","16.8","","","15.2"],["Finance and insurance, net","5.1","","","5.3","","","5.3"],["Other","0.1","","","0.1","","","0.1"],["Total","100.0","","","100.0","","","100.0"],["Gross profit mix percentages:"],["New vehicle","16.2","","","20.7","","","26.0"],["Used vehicle","9.2","","","9.9","","","10.5"],["Parts and service","46.2","","","41.7","","","36.1"],["Finance and insurance","28.4","","","27.6","","","27.3"],["Other","\u2014","","","0.1","","","0.1"],["Total","100.0","","","100.0","","","100.0"],["Operating items as a percentage of revenue:"],["Gross profit:"],["New vehicle","5.9","","","8.3","","","11.6"],["Used vehicle-retail","5.9","","","6.5","","","6.0"],["Parts and service","47.9","","","47.2","","","46.3"],["Total","17.9","","","19.0","","","19.5"],["Selling, general, and administrative expenses","12.2","","","12.1","","","11.2"],["Operating income","4.9","","","6.1","","","7.5"],["Other operating items as a percentage of total gross profit:"],["Selling, general, and administrative expenses","68.2","","","63.4","","","57.5"],["Operating income","27.3","","","32.2","","","38.4"],["","December 31,"],["","2024","","2023"],["Days supply:"],["New vehicle (industry standard of selling days)","39 days","","36 days"],["Used vehicle (trailing calendar month days)","37 days","","39 days"]] [[/GREPCENT_TABLE]] 32 Table of Contents Same Store Operating Data We have presented below our operating results on a same store basis to reflect our internal performance. The “Same Store” amounts presented below include the results of our stores for the identical months in each period presented in the comparison, commencing with the first full month in which the store was owned by us. Results from divested stores are excluded from both current and prior periods. Therefore, the amounts presented in the year 2023 column that is being compared to the year 2024 column may differ from the amounts presented in the year 2023 column that is being compared to the year 2022 column. We believe the presentation of this information provides a meaningful comparison of period-over-period results of our operations. [[GREPCENT_TABLE]] [["","Years Ended December 31,","","Years Ended December 31,"],["($ in millions, except per vehicle data)","2024","","2023","","Variance Favorable / (Unfavorable)","","% Variance","","2023","","2022","","Variance Favorable / (Unfavorable)","","% Variance"],["Revenue:"],["New vehicle","$","12,909.0","","","$","12,627.3","","","$","281.7","","","2.2","","","$","12,572.1","","","$","11,698.7","","","$","873.4","","","7.5"],["Retail used vehicle","6,826.2","","","7,495.5","","","(669.3)","","","(8.9)","","","7,385.6","","","8,959.6","","","(1,574.0)","","","(17.6)"],["Wholesale","613.6","","","547.6","","","66.0","","","12.1","","","544.5","","","633.6","","","(89.1)","","","(14.1)"],["Used vehicle","7,439.8","","","8,043.1","","","(603.3)","","","(7.5)","","","7,930.1","","","9,593.2","","","(1,663.1)","","","(17.3)"],["Finance and insurance, net","1,326.9","","","1,398.1","","","(71.2)","","","(5.1)","","","1,385.5","","","1,430.2","","","(44.7)","","","(3.1)"],["Total variable operations(1)","21,675.7","","","22,068.5","","","(392.8)","","","(1.8)","","","21,887.7","","","22,722.1","","","(834.4)","","","(3.7)"],["Parts and service","4,503.5","","","4,393.0","","","110.5","","","2.5","","","4,431.8","","","4,073.3","","","358.5","","","8.8"],["Other","22.5","","","30.4","","","(7.9)","","","","","30.1","","","30.5","","","(0.4)"],["Total revenue","$","26,201.7","","","$","26,491.9","","","$","(290.2)","","","(1.1)","","","$","26,349.6","","","$","26,825.9","","","$","(476.3)","","","(1.8)"],["Gross profit:"],["New vehicle","$","769.5","","","$","1,052.9","","","$","(283.4)","","","(26.9)","","","$","1,048.4","","","$","1,361.8","","","$","(313.4)","","","(23.0)"],["Retail used vehicle","403.3","","","485.0","","","(81.7)","","","(16.8)","","","477.1","","","536.1","","","(59.0)","","","(11.0)"],["Wholesale","26.8","","","15.7","","","11.1","","","","","16.3","","","15.9","","","0.4"],["Used vehicle","430.1","","","500.7","","","(70.6)","","","(14.1)","","","493.4","","","552.0","","","(58.6)","","","(10.6)"],["Finance and insurance","1,326.9","","","1,398.1","","","(71.2)","","","(5.1)","","","1,385.5","","","1,430.2","","","(44.7)","","","(3.1)"],["Total variable operations(1)","2,526.5","","","2,951.7","","","(425.2)","","","(14.4)","","","2,927.3","","","3,344.0","","","(416.7)","","","(12.5)"],["Parts and service","2,163.3","","","2,089.4","","","73.9","","","3.5","","","2,097.9","","","1,882.4","","","215.5","","","11.4"],["Other","2.1","","","3.6","","","(1.5)","","","","","3.4","","","7.9","","","(4.5)"],["Total gross profit","$","4,691.9","","","$","5,044.7","","","$","(352.8)","","","(7.0)","","","$","5,028.6","","","$","5,234.3","","","$","(205.7)","","","(3.9)"],["Retail vehicle unit sales:"],["New vehicle","251,642","","","241,749","","","9,893","","","4.1","","","240,327","","","229,098","","","11,229","","","4.9"],["Used vehicle","254,481","","","268,010","","","(13,529)","","","(5.0)","","","263,642","","","297,970","","","(34,328)","","","(11.5)"],["Total","506,123","","","509,759","","","(3,636)","","","(0.7)","","","503,969","","","527,068","","","(23,099)","","","(4.4)"],["Revenue per vehicle retailed:"],["New vehicle","$","51,299","","","$","52,233","","","$","(934)","","","(1.8)","","","$","52,312","","","$","51,064","","","$","1,248","","","2.4"],["Used vehicle","$","26,824","","","$","27,967","","","$","(1,143)","","","(4.1)","","","$","28,014","","","$","30,069","","","$","(2,055)","","","(6.8)"],["Gross profit per vehicle retailed:"],["New vehicle","$","3,058","","","$","4,355","","","$","(1,297)","","","(29.8)","","","$","4,362","","","$","5,944","","","$","(1,582)","","","(26.6)"],["Used vehicle","$","1,585","","","$","1,810","","","$","(225)","","","(12.4)","","","$","1,810","","","$","1,799","","","$","11","","","0.6"],["Finance and insurance","$","2,622","","","$","2,743","","","$","(121)","","","(4.4)","","","$","2,749","","","$","2,714","","","$","35","","","1.3"],["Total variable operations(2)","$","4,939","","","$","5,760","","","$","(821)","","","(14.3)","","","$","5,776","","","$","6,314","","","$","(538)","","","(8.5)"],["(1) Total variable operations includes new vehicle, used vehicle (retail and wholesale), and finance and insurance results."],["(2) Total variable operations gross profit per vehicle retailed is calculated by dividing the sum of new vehicle, retail used vehicle, and finance and insurance gross profit by total retail vehicle unit sales."]] [[/GREPCENT_TABLE]] 33 Table of Contents [[GREPCENT_TABLE]] [["","Years Ended December 31,","","Years Ended December 31,"],["","2024 (%)","","2023 (%)","","2023 (%)","","2022 (%)"],["Revenue mix percentages:"],["New vehicle","49.3","","","47.7","","","47.7","","","43.6"],["Used vehicle","28.4","","","30.4","","","30.1","","","35.8"],["Parts and service","17.2","","","16.6","","","16.8","","","15.2"],["Finance and insurance, net","5.1","","","5.3","","","5.3","","","5.3"],["Other","\u2014","","","\u2014","","","0.1","","","0.1"],["Total","100.0","","","100.0","","","100.0","","","100.0"],["Gross profit mix percentages:"],["New vehicle","16.4","","","20.9","","","20.8","","","26.0"],["Used vehicle","9.2","","","9.9","","","9.8","","","10.5"],["Parts and service","46.1","","","41.4","","","41.7","","","36.0"],["Finance and insurance","28.3","","","27.7","","","27.6","","","27.3"],["Other","\u2014","","","0.1","","","0.1","","","0.2"],["Total","100.0","","","100.0","","","100.0","","","100.0"],["Operating items as a percentage of revenue:"],["Gross profit:"],["New vehicle","6.0","","","8.3","","","8.3","","","11.6"],["Used vehicle-retail","5.9","","","6.5","","","6.5","","","6.0"],["Parts and service","48.0","","","47.6","","","47.3","","","46.2"],["Total","17.9","","","19.0","","","19.1","","","19.5"]] [[/GREPCENT_TABLE]] 34 Table of Contents New Vehicle [[GREPCENT_TABLE]] [["","Years Ended December 31,"],["($ in millions, except per vehicle data)","2024","","2023","","2024 vs. 2023","","","","2023 vs. 2022"],["Variance Favorable / (Unfavorable)","","% Variance","","2022","","Variance Favorable / (Unfavorable)","","% Variance"],["Reported:"],["Revenue","$","13,048.2","","","$","12,767.4","","","$","280.8","","","2.2","","","$","11,754.4","","","$","1,013.0","","","8.6"],["Gross profit","$","775.5","","","$","1,061.8","","","$","(286.3)","","","(27.0)","","","$","1,366.6","","","$","(304.8)","","","(22.3)"],["Retail vehicle unit sales","254,715","","","244,546","","","10,169","","","4.2","","","229,971","","","14,575","","","6.3"],["Revenue per vehicle retailed","$","51,227","","","$","52,209","","","$","(982)","","","(1.9)","","","$","51,113","","","$","1,096","","","2.1"],["Gross profit per vehicle retailed","$","3,045","","","$","4,342","","","$","(1,297)","","","(29.9)","","","$","5,942","","","$","(1,600)","","","(26.9)"],["Gross profit as a percentage of revenue","5.9%","","8.3%","","","","","","11.6%"],["Inventory days supply (industry standard of selling days)","39 days","","36 days"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","Years Ended December 31,"],["","2024","","2023","","2024 vs. 2023","","2023","","2022","","2023 vs. 2022"],["","Variance Favorable / (Unfavorable)","","% Variance","","Variance Favorable / (Unfavorable)","","% Variance"],["Same Store:"],["Revenue","$","12,909.0","","","$","12,627.3","","","$","281.7","","","2.2","","","$","12,572.1","","","$","11,698.7","","","$","873.4","","","7.5"],["Gross profit","$","769.5","","","$","1,052.9","","","$","(283.4)","","","(26.9)","","","$","1,048.4","","","$","1,361.8","","","$","(313.4)","","","(23.0)"],["Retail vehicle unit sales","251,642","","","241,749","","","9,893","","","4.1","","","240,327","","","229,098","","","11,229","","","4.9"],["Revenue per vehicle retailed","$","51,299","","","$","52,233","","","$","(934)","","","(1.8)","","","$","52,312","","","$","51,064","","","$","1,248","","","2.4"],["Gross profit per vehicle retailed","$","3,058","","","$","4,355","","","$","(1,297)","","","(29.8)","","","$","4,362","","","$","5,944","","","$","(1,582)","","","(26.6)"],["Gross profit as a percentage of revenue","6.0%","","8.3%","","","","","","8.3%","","11.6%"]] [[/GREPCENT_TABLE]] The following discussion of new vehicle results is on a same store basis. The difference between reported amounts and same store amounts in the above tables of $139.2 million, $140.1 million, and $55.7 million in new vehicle revenue and $6.0 million, $8.9 million, and $4.8 million in new vehicle gross profit for 2024, 2023, and 2022, respectively, is related to acquisition and divestiture activity, as applicable in a given year. 2024 compared to 2023 Same store new vehicle revenue increased during 2024, as compared to 2023, due to an increase in same store unit volume, partially offset by a decrease in same store revenue PVR. Same store unit volume benefited from the increasing supply and availability of new vehicle inventory, particularly for Import manufacturers, and sustained consumer demand. Same store unit volume also benefited from an increase in vehicle affordability, partially due to an increase in manufacturer incentives, including low-interest financing and rebates. The increase in same store unit volume was partially offset by a decrease in productivity as a result of the CDK outage, which disrupted our vehicle sales, inventory, and customer relationship management functions in the latter half of June 2024. Same store new vehicle revenue and gross profit PVR both decreased during 2024, as compared to 2023, primarily due to increasing supply and availability of new vehicle inventory, which has resulted in moderation of pricing and margins. Same store new vehicle revenue PVR was also adversely impacted by decreases in manufacturers’ suggested retail prices and a shift in mix away from Premium Luxury vehicles, which have relatively higher average selling prices. 35 Table of Contents Net New Vehicle Inventory Carrying Benefit (Expense) The following table details net new vehicle inventory carrying benefit (expense), consisting of new vehicle floorplan interest expense, net of floorplan assistance earned (amounts received from manufacturers specifically to support store financing of new vehicle inventory). Floorplan assistance is accounted for as a component of new vehicle gross profit in accordance with U.S. GAAP. [[GREPCENT_TABLE]] [["","Years Ended December 31,"],["($ in millions)","2024","","2023","","Variance 2024 vs. 2023","","2022","","Variance 2023 vs. 2022"],["Floorplan assistance","$","136.8","","","$","125.8","","","$","11.0","","","$","108.9","","","$","16.9"],["New vehicle floorplan interest expense","(210.6)","","","(132.1)","","","(78.5)","","","(35.5)","","","(96.6)"],["Net new vehicle inventory carrying benefit (expense)","$","(73.8)","","","$","(6.3)","","","$","(67.5)","","","$","73.4","","","$","(79.7)"]] [[/GREPCENT_TABLE]] 2024 compared to 2023 The net new vehicle inventory carrying expense increased in 2024, as compared to 2023, due to an increase in floorplan interest expense, partially offset by an increase in floorplan assistance. Floorplan interest expense increased primarily due to higher average floorplan balances. Floorplan assistance increased due to higher new vehicle unit sales and an increase in the average floorplan assistance rate per unit. Floorplan interest rates are variable and, therefore, increase and decrease with changes in the underlying benchmark interest rates. From the first quarter of 2020, when the Federal Reserve cut interest rates to near 0%, up until the third quarter of 2023, we had a net new vehicle inventory carrying benefit. Additionally, over this same period, our average vehicle floorplan balances were significantly lower than historical standards due to manufacturers’ new vehicle inventory supply constraints. With the increases in new vehicle inventory supply and interest rates, floorplan interest expense has increased significantly. If interest rates remain at their current levels or increase without a corresponding increase in floorplan assistance or a decrease in average new vehicle inventory levels, we would expect that we will continue to incur a net new vehicle inventory carrying expense. 36 Table of Contents Used Vehicle [[GREPCENT_TABLE]] [["","Years Ended December 31,"],["","","","","","2024 vs. 2023","","","","2023 vs. 2022"],["($ in millions, except per vehicle data)","2024","","2023","","Variance Favorable / (Unfavorable)","","% Variance","","2022","","Variance Favorable / (Unfavorable)","","% Variance"],["Reported:"],["Retail revenue","$","7,076.8","","","$","7,639.5","","","$","(562.7)","","","(7.4)","","","$","9,020.9","","","$","(1,381.4)","","","(15.3)"],["Wholesale revenue","643.1","","","559.0","","","84.1","","","15.0","","","640.9","","","(81.9)","","","(12.8)"],["Total revenue","$","7,719.9","","","$","8,198.5","","","$","(478.6)","","","(5.8)","","","$","9,661.8","","","$","(1,463.3)","","","(15.1)"],["Retail gross profit","$","414.4","","","$","493.1","","","$","(78.7)","","","(16.0)","","","$","538.3","","","$","(45.2)","","","(8.4)"],["Wholesale gross profit","24.1","","","14.9","","","9.2","","","","","14.8","","","0.1"],["Total gross profit","$","438.5","","","$","508.0","","","$","(69.5)","","","(13.7)","","","$","553.1","","","$","(45.1)","","","(8.2)"],["Retail vehicle unit sales","265,908","","","274,019","","","(8,111)","","","(3.0)","","","299,806","","","(25,787)","","","(8.6)"],["Revenue per vehicle retailed","$","26,614","","","$","27,879","","","$","(1,265)","","","(4.5)","","","$","30,089","","","$","(2,210)","","","(7.3)"],["Gross profit per vehicle retailed","$","1,558","","","$","1,800","","","$","(242)","","","(13.4)","","","$","1,795","","","$","5","","","0.3"],["Gross profit as a % of retail revenue","5.9%","","6.5%","","","","","","6.0%"],["Inventory days supply (trailing calendar month days)","37 days","","39 days"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","Years Ended December 31,"],["","2024","","2023","","2024 vs. 2023","","2023","","2022","","2023 vs. 2022"],["","Variance Favorable / (Unfavorable)","","% Variance","","Variance Favorable / (Unfavorable)","","% Variance"],["Same Store:"],["Retail revenue","$","6,826.2","","","$","7,495.5","","","$","(669.3)","","","(8.9)","","","$","7,385.6","","","$","8,959.6","","","$","(1,574.0)","","","(17.6)"],["Wholesale revenue","613.6","","","547.6","","","66.0","","","12.1","","","544.5","","","633.6","","","(89.1)","","","(14.1)"],["Total revenue","$","7,439.8","","","$","8,043.1","","","$","(603.3)","","","(7.5)","","","$","7,930.1","","","$","9,593.2","","","$","(1,663.1)","","","(17.3)"],["Retail gross profit","$","403.3","","","$","485.0","","","$","(81.7)","","","(16.8)","","","$","477.1","","","$","536.1","","","$","(59.0)","","","(11.0)"],["Wholesale gross profit","26.8","","","15.7","","","11.1","","","","","16.3","","","15.9","","","0.4"],["Total gross profit","$","430.1","","","$","500.7","","","$","(70.6)","","","(14.1)","","","$","493.4","","","$","552.0","","","$","(58.6)","","","(10.6)"],["Retail vehicle unit sales","254,481","","","268,010","","","(13,529)","","","(5.0)","","","263,642","","","297,970","","","(34,328)","","","(11.5)"],["Revenue per vehicle retailed","$","26,824","","","$","27,967","","","$","(1,143)","","","(4.1)","","","$","28,014","","","$","30,069","","","$","(2,055)","","","(6.8)"],["Gross profit per vehicle retailed","$","1,585","","","$","1,810","","","$","(225)","","","(12.4)","","","$","1,810","","","$","1,799","","","$","11","","","0.6"],["Gross profit as a % of retail revenue","5.9%","","6.5%","","","","","","6.5%","","6.0%"]] [[/GREPCENT_TABLE]] The following discussion of used vehicle results is on a same store basis. The difference between reported amounts and same store amounts in the above tables of $250.6 million, $144.0 million, and $61.3 million in retail used vehicle revenue and $11.1 million, $8.1 million, and $2.2 million in retail used vehicle gross profit for 2024, 2023, and 2022, respectively, is related to acquisition and divestiture activity, as well as the opening of AutoNation USA used vehicle stores, as applicable in a given year. 2024 compared to 2023 Same store retail used vehicle revenue decreased during 2024, as compared to 2023, due to a decrease in same store unit volume and a decrease in same store revenue PVR. The decrease in same store unit volume, particularly for mid- to higher-priced used vehicles, is the result of the shift in mix from used vehicles to new vehicles due in part to lower availability and levels of late model used vehicles, as well as increasing supply of new vehicle inventory, an increase in manufacturer new vehicle incentives, and moderation of new vehicle pricing. In addition, same store unit volume was adversely impacted by the CDK outage, which resulted in a decrease in productivity from the disruption to our vehicle sales, inventory, and customer relationship management functions in the latter half of June 2024 and less than optimal levels and mix of used vehicle inventory at the start of the third quarter of 2024. 37 Table of Contents Same store used vehicle revenue PVR and gross profit PVR decreased during 2024, as compared to 2023, primarily due to a shift in mix towards lower-priced entry-level vehicles, which have relatively lower average selling prices and gross profit PVR. 38 Table of Contents Parts & Service [[GREPCENT_TABLE]] [["","Years Ended December 31,"],["","","","","","2024 vs. 2023","","","","2023 vs. 2022"],["($ in millions)","2024","","2023","","Variance Favorable / (Unfavorable)","","% Variance","","2022","","Variance Favorable / (Unfavorable)","","% Variance"],["Reported:"],["Revenue","$","4,614.6","","","$","4,533.7","","","$","80.9","","","1.8","","","$","4,100.6","","","$","433.1","","","10.6"],["Gross profit","$","2,209.0","","","$","2,139.3","","","$","69.7","","","3.3","","","$","1,900.3","","","$","239.0","","","12.6"],["Gross profit as a percentage of revenue","47.9%","","47.2%","","","","","","46.3%"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","Years Ended December 31,"],["","","","","","2024 vs. 2023","","","","","","2023 vs. 2022"],["","2024","","2023","","Variance Favorable / (Unfavorable)","","% Variance","","2023","","2022","","Variance Favorable / (Unfavorable)","","% Variance"],["Same Store:"],["Revenue","$","4,503.5","","","$","4,393.0","","","$","110.5","","","2.5","","","$","4,431.8","","","$","4,073.3","","","$","358.5","","","8.8"],["Gross profit","$","2,163.3","","","$","2,089.4","","","$","73.9","","","3.5","","","$","2,097.9","","","$","1,882.4","","","$","215.5","","","11.4"],["Gross profit as a percentage of revenue","48.0%","","47.6%","","","","","","47.3%","","46.2%"]] [[/GREPCENT_TABLE]] Parts and service revenue is primarily derived from vehicle repairs and maintenance paid directly by customers or via reimbursement from manufacturers and others under warranty programs, as well as from wholesale parts sales, the preparation of vehicles for sale, and collision services. The following discussion of parts and service is on a same store basis. The difference between reported amounts and same store amounts in the above tables of $111.1 million, $140.7 million, and $27.3 million in parts and service revenue and $45.7 million, $49.9 million, and $17.9 million in parts and service gross profit for 2024, 2023, and 2022, respectively, is related to acquisition and divestiture activity, as well as the opening of AutoNation USA used vehicle stores, as applicable in a given year. 2024 compared to 2023 Same store parts and service revenue increased during 2024, as compared to 2023, primarily due to increases in revenue associated with warranty service of $95.3 million and customer-pay service of $40.1 million, partially offset by a decrease in wholesale parts sales of $27.8 million. Same store parts and service gross profit increased during 2024, as compared to 2023, primarily due to an increase in gross profit associated with warranty service of $66.4 million and customer-pay service of $10.9 million. Parts and service revenue and gross profit associated with warranty service benefited from improved parts and labor rates, an increase in repair order volume, and higher value repair orders. Customer-pay revenue and gross profit benefited from higher value repair orders. The increases in parts and service revenue and gross profit were partially offset by the CDK outage, which disrupted our sales and service processes, resulting in a decrease in repair order volume and parts sales. 39 Table of Contents Finance and Insurance [[GREPCENT_TABLE]] [["","Years Ended December 31,"],["($ in millions, except per vehicle data)","","","","","2024 vs. 2023","","","","2023 vs. 2022"],["2024","","2023","","Variance Favorable / (Unfavorable)","","% Variance","","2022","","Variance Favorable / (Unfavorable)","","% Variance"],["Reported:"],["Revenue and gross profit","$","1,360.1","","","$","1,418.8","","","$","(58.7)","","","(4.1)","","","$","1,437.3","","","$","(18.5)","","","(1.3)"],["Gross profit per vehicle retailed","$","2,612","","","$","2,736","","","$","(124)","","","(4.5)","","","$","2,713","","","$","23","","","0.8"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","Years Ended December 31,"],["","","","","","2024 vs. 2023","","","","","","2023 vs. 2022"],["","2024","","2023","","Variance Favorable / (Unfavorable)","","% Variance","","2023","","2022","","Variance Favorable / (Unfavorable)","","% Variance"],["Same Store:"],["Revenue and gross profit","$","1,326.9","","","$","1,398.1","","","$","(71.2)","","","(5.1)","","","$","1,385.5","","","$","1,430.2","","","$","(44.7)","","","(3.1)"],["Gross profit per vehicle retailed","$","2,622","","","$","2,743","","","$","(121)","","","(4.4)","","","$","2,749","","","$","2,714","","","$","35","","","1.3"]] [[/GREPCENT_TABLE]] Revenue on finance and insurance products represents commissions earned by us for the placement of: (i) loans and leases with third-party financial institutions in connection with customer vehicle purchases financed, (ii) vehicle service contracts with third-party providers, and (iii) other vehicle protection products with third-party providers. We sell these products on a commission basis, and we also participate in the future underwriting profit on certain products pursuant to retrospective commission arrangements with the issuers of those products. As we continue to grow our AutoNation Finance business and increase our finance penetration rates associated with vehicles sold through our stores, we expect that income related to arranging customer financing will shift to AutoNation Finance and that the resulting decrease in finance and insurance gross profit will be offset by greater profitability generated by our AutoNation Finance business. Interest income on financing provided through AutoNation Finance is recognized over the contractual term of the related loans. See “AutoNation Finance” for additional information. The following discussion of finance and insurance results is on a same store basis. The difference between reported amounts and same store amounts in finance and insurance revenue and gross profit in the above tables of $33.2 million, $20.7 million, and $7.1 million for 2024, 2023, and 2022, respectively, is related to acquisition and divestiture activity, as well as the opening of AutoNation USA used vehicle stores, as applicable in a given year. 2024 compared to 2023 Same store finance and insurance revenue and gross profit decreased during 2024, as compared to 2023, due to decreases in finance and insurance gross profit PVR and used vehicle unit volume, partially offset by an increase in new vehicle unit volume. Finance and insurance gross profit PVR was adversely impacted by an increase in retail vehicle sales financed through our captive auto finance company, as well as a decrease in product penetration, driven in part by the CDK outage, which disrupted our finance and insurance sales process including our ability to offer certain products. The decreases in finance and insurance gross profit PVR were partially offset by higher realized margins on certain vehicle protection products. 40 Table of Contents Segment Results In the following table of financial data, revenue and segment income of our reportable segments are reconciled to consolidated revenue and consolidated operating income, respectively. [[GREPCENT_TABLE]] [["","Years Ended December 31,"],["","","","","","2024 vs. 2023","","","","2023 vs. 2022"],["($ in millions)","2024","","2023","","Variance Favorable / (Unfavorable)","","% Variance","","2022","","Variance Favorable / (Unfavorable)","","% Variance"],["Revenue:"],["Domestic","$","7,140.3","","","$","7,573.2","","","$","(432.9)","","","(5.7)","","","$","7,987.5","","","$","(414.3)","","","(5.2)"],["Import","8,156.9","","","7,880.9","","","276.0","","","3.5","","","7,690.3","","","190.6","","","2.5"],["Premium Luxury","10,139.9","","","10,266.4","","","(126.5)","","","(1.2)","","","10,278.1","","","(11.7)","","","(0.1)"],["Total Franchised Dealerships","25,437.1","","","25,720.5","","","(283.4)","","","(1.1)","","","25,955.9","","","(235.4)","","","(0.9)"],["Corporate and other","1,328.3","","","1,228.4","","","99.9","","","8.1","","","1,029.1","","","199.3","","","19.4"],["Total consolidated revenue","$","26,765.4","","","$","26,948.9","","","$","(183.5)","","","(0.7)","","","$","26,985.0","","","$","(36.1)","","","(0.1)"],["Segment income(1):"],["Domestic","$","254.9","","","$","415.4","","","$","(160.5)","","","(38.6)","","","$","565.3","","","$","(149.9)","","","(26.5)"],["Import","476.6","","","635.0","","","(158.4)","","","(24.9)","","","734.2","","","(99.2)","","","(13.5)"],["Premium Luxury","675.7","","","836.5","","","(160.8)","","","(19.2)","","","969.1","","","(132.6)","","","(13.7)"],["Total Franchised Dealerships","1,407.2","","","1,886.9","","","(479.7)","","","(25.4)","","","2,268.6","","","(381.7)","","","(16.8)"],["AutoNation Finance income (loss)","(9.3)","","","(13.9)","","","4.6","","","","","(37.6)","","","23.7"],["Corporate and other(2)","(311.3)","","","(365.8)","","","54.5","","","","","(247.9)","","","(117.9)"],["Floorplan interest expense","218.9","","","144.7","","","(74.2)","","","","","41.4","","","(103.3)"],["Operating income","$","1,305.5","","","$","1,651.9","","","$","(346.4)","","","(21.0)","","","$","2,024.5","","","$","(372.6)","","","(18.4)"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["Retail new vehicle unit sales:"],["Domestic","69,268","","","67,471","","","1,797","","","2.7","","","66,375","","","1,096","","","1.7"],["Import","116,242","","","108,068","","","8,174","","","7.6","","","95,886","","","12,182","","","12.7"],["Premium Luxury","69,205","","","69,007","","","198","","","0.3","","","67,710","","","1,297","","","1.9"],["","254,715","","","244,546","","","10,169","","","4.2","","","229,971","","","14,575","","","6.3"],["Retail used vehicle unit sales:"],["Domestic","74,851","","","84,552","","","(9,701)","","","(11.5)","","","97,642","","","(13,090)","","","(13.4)"],["Import","90,761","","","91,146","","","(385)","","","(0.4)","","","100,131","","","(8,985)","","","(9.0)"],["Premium Luxury","73,435","","","75,334","","","(1,899)","","","(2.5)","","","83,858","","","(8,524)","","","(10.2)"],["Other","26,861","","","22,987","","","3,874","","","16.9","","","18,175","","","4,812","","","26.5"],["","265,908","","","274,019","","","(8,111)","","","(3.0)","","","299,806","","","(25,787)","","","(8.6)"],["(1) Segment income for the Domestic, Import, and Premium Luxury reportable segments is a non-GAAP measure and is defined as operating income less floorplan interest expense."],["(2) Comprised of our non-franchised businesses, including AutoNation USA used vehicle stores, collision centers, parts distribution centers, auction operations, and AutoNation Mobile Service, all of which do not meet the quantitative thresholds for reportable segments. \u201cCorporate and other\u201d income (loss) also includes unallocated corporate overhead expenses and other income items."]] [[/GREPCENT_TABLE]] 41 Table of Contents Domestic The Domestic segment operating results included the following: [[GREPCENT_TABLE]] [["","Years Ended December 31,"],["","","","","","2024 vs. 2023","","","","2023 vs. 2022"],["($ in millions)","2024","","2023","","Variance Favorable / (Unfavorable)","","% Variance","","2022","","Variance Favorable / (Unfavorable)","","% Variance"],["Revenue:"],["New vehicle","$","3,527.1","","","$","3,525.0","","","$","2.1","","","0.1","","","$","3,409.1","","","$","115.9","","","3.4"],["Used vehicle","2,057.5","","","2,428.4","","","(370.9)","","","(15.3)","","","3,022.3","","","(593.9)","","","(19.7)"],["Parts and service","1,146.0","","","1,184.7","","","(38.7)","","","(3.3)","","","1,092.7","","","92.0","","","8.4"],["Finance and insurance, net","402.5","","","432.0","","","(29.5)","","","(6.8)","","","460.3","","","(28.3)","","","(6.1)"],["Other","7.2","","","3.1","","","4.1","","","","","3.1","","","\u2014"],["Total Revenue","$","7,140.3","","","$","7,573.2","","","$","(432.9)","","","(5.7)","","","$","7,987.5","","","$","(414.3)","","","(5.2)"],["Segment income","$","254.9","","","$","415.4","","","$","(160.5)","","","(38.6)","","","$","565.3","","","$","(149.9)","","","(26.5)"],["Retail new vehicle unit sales","69,268","","","67,471","","","1,797","","","2.7","","","66,375","","","1,096","","","1.7"],["Retail used vehicle unit sales","74,851","","","84,552","","","(9,701)","","","(11.5)","","","97,642","","","(13,090)","","","(13.4)"]] [[/GREPCENT_TABLE]] 2024 compared to 2023 Domestic revenue decreased during 2024, as compared to 2023, primarily due to a decrease in used vehicle revenue and the divestitures we completed in the third quarter of 2024. Used vehicle revenue was adversely impacted by a decrease in unit volume due to a shift in mix from used vehicles to new vehicles, and a decrease in revenue PVR due to a shift in mix towards lower-priced entry-level vehicles, which have relatively lower average selling prices. Domestic revenue was also adversely impacted by the CDK outage, which disrupted our vehicle sales, inventory, and customer relationship management functions in the latter half of June 2024, and its residual effects in the third quarter of 2024. The decreases in Domestic revenue were partially offset by an increase in new vehicle unit volume as a result of the increasing supply and availability of new vehicle inventory, an increase in manufacturer incentives, including low-interest financing and rebates, and sustained consumer demand. Domestic segment income decreased during 2024, as compared to 2023, primarily due to decreases in new vehicle gross profit, used vehicle gross profit, and finance and insurance gross profit. New vehicle gross profit was adversely impacted by continued moderation of margins resulting from the increasing supply and availability of new vehicle inventory. Used vehicle gross profit was adversely impacted by a shift in mix towards lower-priced entry-level vehicles, which have a relatively lower average gross profit PVR, and a decrease in used vehicle unit volume due in part to the shift in mix from used vehicles to new vehicles. Finance and insurance gross profit was adversely impacted by the decrease in used vehicle unit volume and an increase in retail vehicle sales financed through our captive auto finance company. Domestic segment income was also adversely impacted by decreases in gross profit resulting from the CDK outage. 42 Table of Contents Import The Import segment operating results included the following: [[GREPCENT_TABLE]] [["","Years Ended December 31,"],["","","","","","2024 vs. 2023","","","","2023 vs. 2022"],["($ in millions)","2024","","2023","","Variance Favorable / (Unfavorable)","","% Variance","","2022","","Variance Favorable / (Unfavorable)","","% Variance"],["Revenue:"],["New vehicle","$","4,320.0","","","$","3,996.0","","","$","324.0","","","8.1","","","$","3,473.0","","","$","523.0","","","15.1"],["Used vehicle","2,162.5","","","2,222.2","","","(59.7)","","","(2.7)","","","2,652.7","","","(430.5)","","","(16.2)"],["Parts and service","1,194.7","","","1,150.1","","","44.6","","","3.9","","","1,050.9","","","99.2","","","9.4"],["Finance and insurance, net","470.9","","","490.1","","","(19.2)","","","(3.9)","","","494.1","","","(4.0)","","","(0.8)"],["Other","8.8","","","22.5","","","(13.7)","","","","","19.6","","","2.9"],["Total Revenue","$","8,156.9","","","$","7,880.9","","","$","276.0","","","3.5","","","$","7,690.3","","","$","190.6","","","2.5"],["Segment income","$","476.6","","","$","635.0","","","$","(158.4)","","","(24.9)","","","$","734.2","","","$","(99.2)","","","(13.5)"],["Retail new vehicle unit sales","116,242","","","108,068","","","8,174","","","7.6","","","95,886","","","12,182","","","12.7"],["Retail used vehicle unit sales","90,761","","","91,146","","","(385)","","","(0.4)","","","100,131","","","(8,985)","","","(9.0)"]] [[/GREPCENT_TABLE]] 2024 compared to 2023 Import revenue increased during 2024, as compared to 2023, primarily due to increases in new vehicle revenue and parts and service revenue, partially offset by a decrease in used vehicle revenue. New vehicle revenue benefited from an increase in new vehicle unit volume due to the increasing supply and availability of new vehicle inventory and sustained consumer demand. Parts and service revenue benefited from increases in revenue associated with warranty service and the preparation of vehicles for sale. Used vehicle revenue was adversely impacted by a decrease in used vehicle revenue PVR due to the shift in mix towards lower-priced entry-level used vehicles, which have relatively lower average selling prices. Import revenue was also adversely impacted by the CDK outage, which disrupted our vehicle sales, inventory, and customer relationship management functions in the latter half of June 2024, and its residual effects in the third quarter of 2024. Import segment income decreased during 2024, as compared to 2023, primarily due to a decrease in new vehicle gross profit PVR due to continued moderation of margins resulting from the increasing supply and availability of new vehicle inventory. Import segment income was adversely impacted by an increase in SG&A expenses, largely due to the acquisitions we completed in 2023 and the one-time compensation paid to commission-based associates during the CDK outage, as well as decreases in gross profit resulting from the CDK outage. 43 Table of Contents Premium Luxury The Premium Luxury segment operating results included the following: [[GREPCENT_TABLE]] [["","Years Ended December 31,"],["","","","","","2024 vs. 2023","","","","2023 vs. 2022"],["($ in millions)","2024","","2023","","Variance Favorable / (Unfavorable)","","% Variance","","2022","","Variance Favorable / (Unfavorable)","","% Variance"],["Revenue:"],["New vehicle","$","5,201.1","","","$","5,246.4","","","$","(45.3)","","","(0.9)","","","$","4,872.3","","","$","374.1","","","7.7"],["Used vehicle","2,837.0","","","2,979.5","","","(142.5)","","","(4.8)","","","3,499.8","","","(520.3)","","","(14.9)"],["Parts and service","1,667.4","","","1,593.1","","","74.3","","","4.7","","","1,448.6","","","144.5","","","10.0"],["Finance and insurance, net","434.1","","","446.2","","","(12.1)","","","(2.7)","","","453.8","","","(7.6)","","","(1.7)"],["Other","0.3","","","1.2","","","(0.9)","","","","","3.6","","","(2.4)"],["Total Revenue","$","10,139.9","","","$","10,266.4","","","$","(126.5)","","","(1.2)","","","$","10,278.1","","","$","(11.7)","","","(0.1)"],["Segment income","$","675.7","","","$","836.5","","","$","(160.8)","","","(19.2)","","","$","969.1","","","$","(132.6)","","","(13.7)"],["Retail new vehicle unit sales","69,205","","","69,007","","","198","","","0.3","","","67,710","","","1,297","","","1.9"],["Retail used vehicle unit sales","73,435","","","75,334","","","(1,899)","","","(2.5)","","","83,858","","","(8,524)","","","(10.2)"]] [[/GREPCENT_TABLE]] 2024 compared to 2023 Premium Luxury revenue decreased during 2024, as compared to 2023, primarily due to decreases in new and used vehicle revenue. New vehicle revenue was adversely impacted by the continued moderation of pricing resulting from the increasing supply and availability of new vehicle inventory. Used vehicle revenue was adversely impacted by a decrease in unit volume due to the shift in mix from used vehicles to new vehicles, and a decrease in revenue PVR due to the shift in mix towards lower-priced entry-level used vehicles, which have relatively lower average selling prices. Premium Luxury revenue was also adversely impacted by the CDK outage, which disrupted our vehicle sales, inventory, and customer relationship management functions in the latter half of June 2024, and its residual effects in the third quarter of 2024. The decreases in Premium Luxury revenue were partially offset by increases in parts and service revenue associated with warranty service and customer-pay service. Premium Luxury segment income decreased during 2024, as compared to 2023, primarily due to a decrease in new vehicle gross profit. New vehicle gross profit was adversely impacted by a decrease in new vehicle gross profit PVR due to continued moderation of margins resulting from the increasing supply and availability of new vehicle inventory. Premium Luxury segment income was also adversely impacted by an increase in floorplan interest expense and decreases in gross profit resulting from the CDK outage. 44 Table of Contents AutoNation Finance AutoNation Finance (“ANF”), our captive auto finance company, provides indirect financing to qualified retail customers on vehicles we sell. This business provides us an opportunity to extend our relationship with the customer beyond the vehicle sale and participate in the customer’s entire vehicle ownership cycle. As a result, we are able to diversify our sources of income, generate additional profits, cash flows, and sales, and increase customer retention. Prior to October 2023, ANF also purchased retail vehicle installment sales contracts through third-party dealers. ANF income (loss) includes the interest and fee income generated by auto loans receivable less the interest expense associated with the debt issued or used to fund these receivables, a provision for estimated credit losses on the auto loans receivable originated or acquired, direct expenses, and gains or losses on the sale of auto loans receivable. Interest income on auto loans receivable is recognized over the contractual term of the related loans. ANF income (loss) does not include amortization of intercompany discounts or intercompany dealer participation fees. The following table presents the components of ANF income (loss): [[GREPCENT_TABLE]] [["","","2024","","%(1)","","2023","","%(1)","","2022","","","%(1)"],["Interest margin:"],["Interest and fee income","","$","118.4","","","15.7","%","","$","84.0","","","20.9","%","","$","20.6","","","","22.5","%"],["Interest expense","","(39.8)","","","(5.3)","%","","(20.8)","","","(5.2)","%","","(4.7)","","","","(5.1)","%"],["Total interest margin","","78.6","","","10.4","%","","63.2","","","15.7","%","","15.9","","","","17.3","%"],["Provision for credit losses","","(57.5)","","","(7.6)","%","","(45.9)","","","(11.4)","%","","(44.0)","","","","NM"],["Total interest margin after provision for loan losses","","21.1","","","2.8","%","","17.3","","","4.3","%","","(28.1)","","","","NM"],["Direct expenses(2)","","(37.8)","","","(5.0)","%","","(39.3)","","","(9.8)","%","","(9.5)","","","","(10.4)","%"],["Gain on sale of auto loans receivable","","7.4","","","1.0","%","","8.1","","","2.0","%","","\u2014","","","","\u2014","%"],["AutoNation Finance income (loss)","","$","(9.3)","","","(1.2)","%","","$","(13.9)","","","(3.5)","%","","$","(37.6)","","","","NM"],["NM - Not meaningful"],["(1) Percentage of total average managed receivables (annualized amounts for 2022)."],["(2) Direct expenses are comprised primarily of compensation expenses and loan administration costs incurred by our auto finance company."]] [[/GREPCENT_TABLE]] 2024 compared to 2023 ANF loss decreased during 2024, as compared to 2023, primarily due to increased interest income from the growth in managed receivables and a declining expected credit loss rate. Managed receivables increased during the year as we continue to grow our ANF business and increase our finance penetration rates associated with vehicles sold through our stores. The declining expected credit loss rate reflects the improved credit quality of new loan originations and the sale of third-party receivables originated through third-party dealers. In addition, ANF continues to realize operational efficiencies as the portfolio scales, resulting in reduced direct expenses as a percentage of the managed portfolio. 2023 compared to 2022 We acquired CIG Financial, which we renamed AutoNation Finance, on October 1, 2022. ANF loss decreased during 2023, as compared to 2022, as 2022 reflects the initial credit loss expense of $34.2 million associated with the auto loan portfolio acquired in 2022. Interest margin increased in 2023, as compared to 2022, as 2023 reflects a full calendar year of activity as compared to one quarter of activity in 2022, as well as the growth in managed receivables. 45 Table of Contents The following tables present selected loan origination and loan performance information: [[GREPCENT_TABLE]] [["","","2024","","2023","","2022"],["Loan Origination Information"],["Loans originated","","$","1,057.3","","$","336.0","","$","66.5"],["Vehicle units financed","","31,492","","13,148","","3,278"],["Penetration rate(1)","","6.0","%","","2.5","%","","0.6","%"],["Weighted average contract rate","","12.2","%","","16.9","%","","18.9","%"],["Weighted average credit score (2)","","678","","623","","595"],["Weighted average loan-to-value (3)","","104.0","%","","104.8","%","","106.7","%"],["Weighted average term (in months)","","72.0","","67.0","","61.0"],["(1) Units financed as a percentage of total new and used vehicle retail units sold."],["(2) Represents weighted average FICO scores for receivables with obligors that have a FICO score at the time of application. For receivables with co-borrowers, we use the primary borrower\u2019s FICO score. FICO scores are not a significant factor in our proprietary credit model, which relies on information from credit bureaus and other information."],["(3) Front-end loan-to-value represents the ratio of the amount financed to the total collateral value, which is measured as the vehicle selling price plus applicable taxes, title, and fees."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","","2024","","2023","","2022"],["Loan Performance Information"],["Total average managed receivables","","$","753.7","","","$","401.4","","","$","366.9"],["Allowance for credit losses as a percentage of ending managed receivables","","5.0","%","","10.3","%","","15.3","%"],["Net credit losses on managed receivables","","$","34.5","","","$","41.0","","","$","8.0"],["Annualized net credit losses as a percentage of total average managed receivables","","4.6","%","","10.2","%","","8.7","%"],["Past due accounts as a percentage of ending managed receivables","","2.6","%","","6.5","%","","5.2","%"],["Average recovery rate (1)","","37.2","%","","43.1","%","","47.7","%"],["(1) Represents the average percentage of the outstanding principal balance we receive when a vehicle is repossessed and liquidated, generally at wholesale auctions."]] [[/GREPCENT_TABLE]] We typically use non-recourse funding facilities, including warehouse facilities and asset-backed term funding transactions, as well as free cash flows from operations to fund the auto loans receivable of ANF. See Notes 6 and 11 of the Notes to Consolidated Financial Statements for more information about our auto loans receivables and related non-recourse debt, respectively. 46 Table of Contents Selling, General, and Administrative Expenses Our SG&A expenses consist primarily of compensation, including store and corporate salaries, commissions, and incentive-based compensation, as well as advertising (net of reimbursement-based manufacturer advertising rebates), and store and corporate overhead expenses, which include occupancy costs, outside service costs, information technology expenses, service loaner and rental inventory expenses, legal, accounting, and professional services, and general corporate expenses. The following table presents the major components of our SG&A. [[GREPCENT_TABLE]] [["","Years Ended December 31,"],["","","","","","2024 vs. 2023","","","","2023 vs. 2022"],["($ in millions)","2024","","2023","","Variance Favorable / (Unfavorable)","","% Variance","","2022","","Variance Favorable / (Unfavorable)","","% Variance"],["Reported:"],["Compensation","$","2,107.8","","","$","2,126.9","","","$","19.1","","","0.9","","","$","2,061.3","","","$","(65.6)","","","(3.2)"],["Advertising","255.5","","","243.5","","","(12.0)","","","(4.9)","","","184.3","","","(59.2)","","","(32.1)"],["Store and corporate overhead","900.6","","","882.8","","","(17.8)","","","(2.0)","","","780.5","","","(102.3)","","","(13.1)"],["Total","$","3,263.9","","","$","3,253.2","","","$","(10.7)","","","(0.3)","","","$","3,026.1","","","$","(227.1)","","","(7.5)"],["SG&A as a % of total gross profit:"],["Compensation","44.0","","","41.4","","","(260)","","","bps","","39.1","","","(230)","","","bps"],["Advertising","5.4","","","4.8","","","(60)","","","bps","","3.6","","","(120)","","","bps"],["Store and corporate overhead","18.8","","","17.2","","","(160)","","","bps","","14.8","","","(240)","","","bps"],["Total","68.2","","","63.4","","","(480)","","","bps","","57.5","","","(590)","","","bps"]] [[/GREPCENT_TABLE]] 2024 compared to 2023 SG&A expenses slightly increased in 2024, as compared to 2023, primarily due to certain one-time compensation of approximately $43 million paid to commission-based associates to ensure business continuity as a result of the CDK outage, acquisitions and newly opened stores, an increase in transportation-related costs for parts and service customers, and an increase in advertising expenses to support vehicle sales. The increases in SG&A expenses were partially offset by a decrease in performance-driven compensation expenses partly resulting from the CDK outage, which disrupted our sales and service processes, and divestitures. As a percentage of total gross profit, SG&A expenses increased to 68.2% during 2024, from 63.4% in 2023, primarily due to moderation of gross profit, as well as the decrease in gross profit resulting from the CDK outage and the one-time compensation paid to commission-based associates during the year. Other Income, Net (Operating) Other Income, Net includes the gains or losses associated with business/property divestitures, legal settlements, and asset impairments, among other items. During 2024, we recognized net gains of $55.1 million related to business/property divestitures, which were partially offset by asset impairments of $9.3 million. Non-Operating Income (Expenses) Floorplan Interest Expense Floorplan interest rates are variable and, therefore, increase and decrease with changes in the underlying benchmark interest rates. Floorplan interest expense was $218.9 million in 2024 and $144.7 million in 2023. The increase in floorplan interest expense of $74.2 million in 2024, as compared to 2023, was primarily due to higher average vehicle floorplan balances. 47 Table of Contents Interest Expense Other interest expense includes the interest related to non-vehicle long-term debt, commercial paper, and finance lease obligations. Other interest expense was $179.7 million in 2024 compared to $181.4 million in 2023. The decrease in interest expense of $1.7 million was driven by lower average interest rates, partially offset by higher average debt balances. Other Income (Loss), Net During 2024 and 2023, we recognized net gains of $14.5 million and $16.4 million, respectively, related to changes in the cash surrender value of corporate-owned life insurance (“COLI”) for deferred compensation plan participants as a result of changes in market performance of the underlying investments. Gains and losses related to the COLI are substantially offset by corresponding increases and decreases, respectively, in the deferred compensation obligations, which are reflected in SG&A expenses. During 2024 and 2023, we recorded a net unrealized loss of $7.0 million and a net unrealized gain of $5.2 million, respectively, related to the change in fair value of the underlying securities of our minority equity investments. During the period that we hold our minority equity investments, unrealized gains and losses will be recorded as the fair market values of securities with readily determinable fair values change over time, or as observable price changes are identified for securities without readily determinable fair values. See Note 19 of the Notes to Consolidated Financial Statements for more information. Income Tax Provision Income taxes are provided based upon our anticipated underlying annual blended federal and state income tax rates, adjusted, as necessary, for any discrete tax matters occurring during the period. As we operate in various states, our effective tax rate is also dependent upon our geographic revenue mix. Our effective income tax rate was 24.5% in 2024 and 24.4% in 2023. Discontinued Operations Discontinued operations are related to stores that were sold or terminated prior to January 1, 2014. Results from discontinued operations, net of income taxes, were primarily related to a gain on the sale of real estate in the first quarter of 2023 associated with a store that was closed prior to January 1, 2014. Liquidity and Capital Resources We manage our liquidity to ensure access to sufficient funding at acceptable costs to fund our ongoing operating requirements and future capital expenditures while continuing to meet our financial obligations. We believe that our cash and cash equivalents, funds generated through operations, and amounts available under our revolving credit facility, commercial paper program, secured used vehicle floorplan facilities, and non-recourse warehouse facilities will be sufficient to fund our working capital requirements, fund the origination of auto loans receivable, service our debt, pay our tax obligations and commitments and contingencies, and meet any seasonal operating requirements for the foreseeable future. Depending on market conditions, we may from time to time issue debt, including in private or public offerings, to augment our liquidity, to reduce our cost of capital, or for general corporate purposes. In addition, we may seek to securitize auto loans receivable to provide funding for our auto finance company. 48 Table of Contents Available Liquidity Resources We had the following sources of liquidity available for the years ended December 31, 2024 and 2023: [[GREPCENT_TABLE]] [["(In millions)","December 31, 2024","","December 31, 2023"],["Cash and cash equivalents","$","59.8","","","$","60.8"],["Revolving credit facility","$","1,899.2","","(1)","$","1,899.2"],["Secured used vehicle floorplan facilities(2)","$","0.4","","","$","0.9"],["Non-recourse warehouse facilities(3)","$","1.1","","","$","\u2014"]] [[/GREPCENT_TABLE]] (1)    At December 31, 2024, we had $0.8 million of letters of credit outstanding. In addition, we use the revolving credit facility under our credit agreement as a liquidity backstop for borrowings under the commercial paper program. We had $630.0 million of commercial paper notes outstanding at December 31, 2024. See Note 11 of the Notes to Consolidated Financial Statements for additional information. (2)    Based on the eligible used vehicle inventory that could have been pledged as collateral. See Note 7 of the Notes to Consolidated Financial Statements for additional information. (3)    Based on the eligible auto loans receivable that have been pledged as collateral. See Note 11 of the Notes to Consolidated Financial Statements for additional information. In the ordinary course of business, we are required to post performance and surety bonds, letters of credit, and/or cash deposits as financial guarantees of our performance primarily relating to insurance matters. At December 31, 2024, surety bonds, letters of credit, and cash deposits totaled $124.3 million, including the $0.8 million of letters of credit issued under our revolving credit facility. We do not currently provide cash collateral for outstanding letters of credit. In February 2022, we filed an automatic shelf registration statement with the SEC that enables us to offer for sale, from time to time and as the capital markets permit, an unspecified amount of common stock, preferred stock, debt securities, warrants, subscription rights, depositary shares, stock purchase contracts, and units. In addition, we own a significant portion of our new vehicle franchise store locations and other locations associated with our non-franchised businesses, as well as other properties. At December 31, 2024, these properties had a net book value of $2.8 billion. None of these properties are mortgaged or encumbered. Capital Allocation Our capital allocation strategy is focused on growing long-term value per share. We invest capital in our business to maintain and upgrade our existing facilities and to build new facilities for existing franchises and new AutoNation USA used vehicle stores, as well as for other strategic and technology initiatives. We also deploy capital opportunistically to complete acquisitions or investments, build facilities for newly awarded franchises, and/or repurchase our common stock and/or debt. Our capital allocation decisions are based on factors such as the expected rate of return on our investment, the market price of our common stock versus our view of its intrinsic value, the market price of our debt, the potential impact on our capital structure, our ability to complete acquisitions that meet our strategic objectives, market and vehicle brand criteria, and/or return on investment threshold, and limitations set forth in our debt agreements. 49 Table of Contents Share Repurchases Our Board of Directors from time to time authorizes the repurchase of shares of our common stock up to a certain monetary limit. A summary of shares repurchased under our share repurchase program authorized by our Board of Directors follows: [[GREPCENT_TABLE]] [["(In millions, except per share data)","2024","","2023","","2022"],["Shares repurchased","2.9","","","6.4","","","15.6"],["Aggregate purchase price(1)","$","460.0","","","$","863.6","","","$","1,710.2"],["Average purchase price per share","$","160.86","","","$","134.68","","","$","109.86"],["(1) Excludes the excise tax accrual imposed under the Inflation Reduction Act of $4.2 million for 2024 and $8.1 million for 2023."]] [[/GREPCENT_TABLE]] The decision to repurchase shares at any given point in time is based on such factors as the market price of our common stock versus our view of its intrinsic value, the potential impact on our capital structure (including compliance with our maximum leverage ratio, minimum interest coverage ratio, and other financial covenants in our debt agreements as well as our available liquidity), and the expected return on competing uses of capital such as acquisitions or investments, capital investments in our current businesses, or repurchases of our debt. As of December 31, 2024, $860.8 million remained available under our stock repurchase limit most recently authorized by our Board of Directors. Capital Expenditures The following table sets forth information regarding our capital expenditures over the past three years: [[GREPCENT_TABLE]] [["(In millions)","2024","","2023","","2022"],["Purchases of property and equipment","$","328.5","","","$","410.3","","","$","329.0"]] [[/GREPCENT_TABLE]] Acquisitions and Divestitures During 2024, we did not purchase any stores. During 2023, we acquired RepairSmith, a mobile solution for automotive repair and maintenance, which we renamed AutoNation Mobile Service, and we also purchased one Domestic store, five Import stores, and one Premium Luxury store. During 2022, we acquired CIG Financial, an auto finance company, which we renamed AutoNation Finance, and we also purchased three Domestic stores and one Import store. We divested seven Domestic stores and one Import store during 2024. We divested one Domestic store during 2023. We divested three Premium Luxury stores during 2022. [[GREPCENT_TABLE]] [["(In millions)","2024","","2023","","2022"],["Cash used in business acquisitions, net(1)","$","\u2014","","","$","(271.4)","","","$","(191.6)"],["Cash received from business divestitures, net","$","156.0","","","$","23.2","","","$","55.2"],["(1) Excludes finance leases."]] [[/GREPCENT_TABLE]] 50 Table of Contents Debt The following table sets forth our non-vehicle long-term debt as of December 31, 2024 and 2023: [[GREPCENT_TABLE]] [["","","","","","","(in millions)"],["Debt Description","","Maturity Date","","Interest Payable","","2024","","2023"],["3.5% Senior Notes","","November 15, 2024","","May 15 and November 15","","$","\u2014","","","$","450.0"],["4.5% Senior Notes","","October 1, 2025","","April 1 and October 1","","450.0","","","450.0"],["3.8% Senior Notes","","November 15, 2027","","May 15 and November 15","","300.0","","","300.0"],["1.95% Senior Notes","","August 1, 2028","","February 1 and August 1","","400.0","","","400.0"],["4.75% Senior Notes","","June 1, 2030","","June 1 and December 1","","500.0","","","500.0"],["2.4% Senior Notes","","August 1, 2031","","February 1 and August 1","","450.0","","","450.0"],["3.85% Senior Notes","","March 1, 2032","","March 1 and September 1","","700.0","","","700.0"],["Revolving credit facility","","July 18, 2028","","Monthly","","\u2014","","","\u2014"],["Finance leases and other debt","","Various dates through 2041","","","","350.0","","","362.2"],["","","","","","","3,150.0","","","3,612.2"],["Less: unamortized debt discounts and debt issuance costs","","(17.9)","","","(21.9)"],["Less: current maturities","","(518.5)","","","(462.4)"],["Long-term debt, net of current maturities","","$","2,613.6","","","$","3,127.9"]] [[/GREPCENT_TABLE]] In November 2024, we repaid the outstanding $450.0 million of 3.5% Senior Notes due 2024. Our 4.5% Senior Notes due 2025 will mature on October 1, 2025, and were, therefore, reclassified to current during the fourth quarter of 2024. We had $630.0 million and $440.0 million of commercial paper notes outstanding as of December 31, 2024 and 2023, respectively. We had non-recourse debt under our warehouse facilities of $801.5 million at December 31, 2024, and $209.4 million at December 31, 2023, and non-recourse debt under term securitizations of consolidated variable interest entities (“VIEs”) of $24.7 million at December 31, 2024, and $50.5 million at December 31, 2023. A downgrade in our credit ratings could negatively impact the interest rate payable on our 4.5% Senior Notes, 3.8% Senior Notes, and 4.75% Senior Notes and could negatively impact our ability to issue, or the interest rates for, commercial paper notes. Additionally, an increase in our leverage ratio could negatively impact the interest rates charged for borrowings under our revolving credit facility. See Note 11 of the Notes to Consolidated Financial Statements for more information on our non-vehicle long-term debt, commercial paper, and non-recourse debt. Restrictions and Covenants Our amended and restated credit agreement and the indentures for our senior unsecured notes contain customary covenants that place restrictions on us, including our ability to incur additional or guarantee other indebtedness, to create liens or other encumbrances, to engage in sale and leaseback transactions, to sell (or otherwise dispose of) assets, and to merge or consolidate with other entities. Our failure to comply with the covenants contained in our amended and restated credit agreement and the indentures for our senior unsecured notes could result in the acceleration of other indebtedness of AutoNation. Under our amended and restated credit agreement, we are required to remain in compliance with a maximum leverage ratio and a minimum interest coverage ratio. The leverage ratio is a contractually defined amount principally reflecting non-vehicle debt divided by a measure of earnings. The interest coverage ratio is a contractually defined amount reflecting a measure of earnings divided by certain interest expense principally associated with vehicle floorplan payable and non-vehicle debt. The specific terms of the leverage and interest coverage ratios can be found in our amended and restated credit agreement, which is filed with our Quarterly Report on Form 10-Q for the quarter ended June 30, 2023. 51 Table of Contents As of December 31, 2024, we were in compliance with the covenants under our credit agreement and the indentures for our senior unsecured notes. At December 31, 2024, our leverage and interest coverage ratios were as follows: [[GREPCENT_TABLE]] [["","December 31, 2024"],["","Requirement","","Actual"],["Leverage ratio","\u2264 3.75x","","2.45x"],["Interest coverage ratio","\u2265 3.00x","","4.24x"]] [[/GREPCENT_TABLE]] Vehicle Floorplan Payable The components of vehicle floorplan payable are as follows: [[GREPCENT_TABLE]] [["(In millions)","2024","","2023"],["Vehicle floorplan payable - trade","$","2,216.2","","","$","1,760.0"],["Vehicle floorplan payable - non-trade","1,493.5","","","1,622.4"],["Vehicle floorplan payable","$","3,709.7","","","$","3,382.4"]] [[/GREPCENT_TABLE]] Vehicle floorplan facilities are due on demand, but in the case of new vehicle inventories, are generally paid within several business days after the related vehicles are sold. Vehicle floorplan facilities are primarily collateralized by vehicle inventories and related receivables. See Note 7 of the Notes to Consolidated Financial Statements for more information on our vehicle floorplan payable. Cash Flows The following table summarizes the changes in our cash provided by (used in) operating, investing, and financing activities: [[GREPCENT_TABLE]] [["","Years Ended December 31,"],["(In millions)","2024","","2023","","2022"],["Net cash provided by operating activities","$","314.7","","","$","724.0","","","$","1,668.1"],["Net cash provided by (used in) investing activities","$","12.3","","","$","(569.9)","","","$","(479.3)"],["Net cash used in financing activities","$","(300.6)","","","$","(172.5)","","","$","(1,154.0)"]] [[/GREPCENT_TABLE]] Cash Flows from Operating Activities Our primary sources of operating cash flows result from the sale of vehicles, finance and insurance products, and parts and automotive repair and maintenance services, proceeds from vehicle floorplan payable-trade, and collections on auto loans receivable for vehicles sold through our stores. Our primary uses of cash from operating activities are repayments of vehicle floorplan payable-trade, purchases of inventory, personnel-related expenditures, originations of loans receivable for vehicles sold through our stores, and payments related to taxes and leased properties. 2024 compared to 2023 Net cash provided by operating activities decreased during 2024, as compared to 2023, primarily due to an increase in originations of auto loans receivable for vehicles sold through our stores as we continued to grow our AutoNation Finance business and increase our finance penetration rates associated with vehicles sold through our stores, as well as a decrease in earnings, partially offset by a decrease in working capital requirements. Cash Flows from Investing Activities Net cash flows from investing activities consist primarily of cash used in capital additions and activity from business acquisitions, business divestitures, property dispositions, originations and collections of auto loans receivable acquired through third-party dealers, and other transactions. In September 2023, we discontinued acquiring installment contracts from third-party dealers. We will make facility and infrastructure upgrades and improvements from time to time as we identify projects that are required to maintain our current business or that we expect to provide us with acceptable rates of return. 52 Table of Contents 2024 compared to 2023 During 2024, we had net cash provided by investing activities, as compared to net cash used in investing activities during 2023, primarily due to a decrease in cash used in business acquisitions, an increase in cash received from business divestitures, a decrease in originations of loans receivable acquired through third-party dealers, and a decrease in capital expenditures. Cash Flows from Financing Activities Net cash flows from financing activities primarily include repurchases of common stock, debt activity, and changes in vehicle floorplan payable-non-trade. 2024 compared to 2023 Cash flows from financing activities include changes in vehicle floorplan payable-non-trade totaling net repayments of $113.5 million during 2024 compared to net proceeds of $425.3 million during 2023, and changes in commercial paper notes outstanding totaling net proceeds of $190.0 million during 2024 compared to net proceeds of $390.0 million during 2023. In November 2024, we repaid the outstanding $450.0 million of 3.5% Senior Notes due 2024. During 2024, we continued to grow our AutoNation Finance business and increase our finance penetration rates associated with vehicles sold through our stores. As a result, we borrowed $1.5 billion and repaid $946.7 million under our non-recourse debt facilities in 2024. During 2023, we borrowed $324.0 million and repaid $392.7 million under our non-recourse debt facilities. During 2024, we repurchased 2.9 million shares of common stock for an aggregate purchase price of $460.0 million (average purchase price per share of $160.86), excluding the excise tax imposed under the Inflation Reduction Act. During 2023, we repurchased 6.4 million shares of our common stock for an aggregate purchase price of $863.6 million (average purchase price per share of $134.68), excluding the excise tax imposed under the Inflation Reduction Act. 53 Table of Contents Material Cash Requirements The following table summarizes our current and long-term material cash requirements as of December 31, 2024. The amounts presented are based upon, among other things, the terms of any relevant agreements. Future events that may occur related to the following payment obligations could cause actual payments to differ significantly from these amounts. [[GREPCENT_TABLE]] [["","Payments Due by Period"],["(In millions)","Total","","Less Than 1Year(2025)","","1 - 3 Years(2026 and2027)","","3 - 5 Years(2028 and2029)","","More Than 5 Years(2030 andthereafter)"],["Vehicle floorplan payable (Note 7)(1)","$","3,709.7","","","$","3,709.7","","","$","\u2014","","","$","\u2014","","","$","\u2014"],["Non-vehicle long-term debt, including finance leases (Note 11)(1)(2)","3,150.0","","","519.0","","","330.0","","","433.2","","","1,867.8"],["Commercial paper (Note 11)(1)","630.0","","","630.0","","","\u2014","","","\u2014","","","\u2014"],["Interest payments(3)","584.2","","","115.2","","","181.2","","","147.9","","","139.9"],["Operating lease and other commitments (Note 10)(1)(4)","571.3","","","65.3","","","114.7","","","97.8","","","293.5"],["Deferred compensation obligations (Note 1)(1)(5)","139.5","","","7.9","","","\u2014","","","\u2014","","","131.6"],["Estimated chargeback liability (Note 12)(1)(6)","209.3","","","117.2","","","77.7","","","13.8","","","0.6"],["Estimated self-insurance obligations (Note 13)(1)(7)","120.2","","","52.2","","","37.5","","","15.5","","","15.0"],["Purchase obligations and other commitments(8)","334.9","","","243.6","","","66.3","","","23.4","","","1.6"],["Total","$","9,449.1","","","$","5,460.1","","","$","807.4","","","$","731.6","","","$","2,450.0"]] [[/GREPCENT_TABLE]] (1)See Notes to Consolidated Financial Statements. (2)Amounts for non-vehicle long-term debt obligations reflect principal payments and are not reduced for unamortized debt discounts of $3.9 million or debt issuance costs of $14.0 million. (3)Primarily represents scheduled fixed interest payments on our outstanding senior unsecured notes and finance leases. Estimates of future interest payments for vehicle floorplan payables and commercial paper are excluded due to the short-term nature of these facilities. (4)Amounts for operating lease commitments do not include certain operating expenses such as maintenance, insurance, and real estate taxes. Additionally, operating leases that are on a month-to-month basis are not included. (5)Due to uncertainty regarding timing of payments expected beyond one year, long-term obligations for deferred compensation arrangements have been classified in the “More Than 5 Years” column. (6)Our estimated chargeback obligations do not have scheduled maturities, however, the timing of future payments is estimated based on historical patterns. (7)Our estimated self-insurance obligations are based on management estimates and actuarial calculations. Although these obligations do not have scheduled maturities, the timing of future payments is estimated based on historical patterns. (8)Primarily represents purchase orders and contracts in connection with real estate construction projects and information technology and communication systems, as well as acquisition-related commitments. We expect that the amounts above will be funded through cash flows from operations or borrowings under our commercial paper program or credit agreement. In the case of payments due upon the maturity of our debt instruments, we currently expect to be able to refinance such instruments in the normal course of business. 54 Table of Contents The table above excludes the non-recourse debt that relates to auto loans receivable funded through asset-backed term securitizations and/or warehouse facilities. These receivables can only be used as collateral to settle obligations of this non-recourse debt. In addition, the investors and/or creditors in the non-recourse debt have no recourse to our assets for payment of the debt beyond the related receivables, the amounts on deposit in reserve accounts, and the restricted cash from collections on auto loans receivable. Non-recourse debt, net of unamortized debt discounts and issuance costs, totaled $826.0 million at December 31, 2024. See Note 6 and Note 11 to the Consolidated Financial Statements for more information. In the ordinary course of business, we are required to post performance and surety bonds, letters of credit, and/or cash deposits as financial guarantees of our performance. At December 31, 2024, surety bonds, letters of credit, and cash deposits totaled $124.3 million, of which $0.8 million were letters of credit. We do not currently provide cash collateral for outstanding letters of credit. We have negotiated a letter of credit sublimit as part of our revolving credit facility. The amount available to be borrowed under this revolving credit facility is reduced on a dollar-for-dollar basis by the cumulative amount of any outstanding letters of credit. As further discussed in Note 14 of the Notes to Consolidated Financial Statements, there are various tax matters where the ultimate resolution may result in us owing additional tax payments. Off-Balance Sheet Arrangements As of December 31, 2024, we did not have any significant off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K. Forward-Looking Statements Our business, financial condition, results of operations, cash flows, and prospects, and the prevailing market price and performance of our common stock may be adversely affected by a number of factors, including the matters discussed below. Certain statements and information set forth in this Annual Report on Form 10-K, including, without limitation, statements regarding our strategic initiatives, partnerships, or investments, including AutoNation Finance, statements regarding our expectations for the future performance of our business and the automotive retail industry, including during 2025, statements regarding the impact of the CDK outage on our business and the availability of insurance or other sources of recovery, as well as other written or oral statements made from time to time by us or by our authorized executive officers on our behalf that describe our objectives, goals, or plans constitute “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, including statements that describe our objectives, plans or goals are, or may be deemed to be, forward-looking statements. Words such as “anticipate,” “expect,” “estimate,” “intend,” “goal,” “target,” “project,” “plan,” “believe,” “continue,” “may,” “will,” “could,” and variations of such words and similar expressions are intended to identify such forward-looking statements. Our forward-looking statements reflect our current expectations concerning future results and events, and they involve known and unknown risks, uncertainties and other factors that are difficult to predict and may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by these statements. These forward-looking statements speak only as of the date of this report, and we undertake no obligation to revise or update these statements to reflect subsequent events or circumstances. The risks, uncertainties, and other factors that our stockholders and prospective investors should consider include, but are not limited to, the following: •The automotive retail industry is sensitive to changing economic conditions and various other factors, including, but not limited to, unemployment levels, consumer confidence, fuel prices, interest rates, and tariffs. Our business and results of operations are substantially dependent on new and used vehicle sales levels in the United States and in our particular geographic markets, as well as the gross profit margins that we can achieve on our sales of vehicles, all of which are very difficult to predict. •Our new vehicle sales are impacted by the incentive, marketing, and other programs of vehicle manufacturers. •We are dependent upon the success and continued financial viability of the vehicle manufacturers and distributors with which we hold franchises. In addition, we rely on various third-party suppliers for key products and services. 55 Table of Contents •We are subject to restrictions imposed by, and significant influence from, vehicle manufacturers that may adversely impact our business, financial condition, results of operations, cash flows, and prospects, including our ability to acquire additional stores. •We are investing significantly in various strategic initiatives, including the planned expansion of our AutoNation Finance business, our AutoNation USA used vehicle stores, and our AutoNation Mobile Service business, and if they are not successful, we will have incurred significant expenses without the benefit of improved financial results. •If we are not able to maintain and enhance our retail brands and reputation or to attract consumers to our own digital channels, or if events occur that damage our retail brands, reputation, or sales channels, our business and financial results may be harmed. •We are subject to various risks associated with originating and servicing auto finance loans through indirect lending to customers, any of which could have an adverse effect on our business. •New laws, regulations, or governmental policies in response to climate change, including fuel economy and greenhouse gas emission standards, or changes to existing standards, could adversely impact our business, results of operations, financial condition, cash flow, and prospects. •We are subject to numerous legal and administrative proceedings, which, if the outcomes are adverse to us, could materially adversely affect our business, results of operations, financial condition, cash flows, and prospects. •Our operations are subject to extensive governmental laws and regulations. If we are found to be in purported violation of or subject to liabilities under any of these laws or regulations, or if new laws or regulations are enacted that adversely affect our operations, our business, operating results, and prospects could suffer. •We depend on information technology for our business and are subject to risks related to cybersecurity threats and incidents, including those affecting our third-party suppliers and other service providers. A failure of our information systems or any cybersecurity breaches or unauthorized disclosure of confidential information could have a material adverse effect on our business, disrupt our business, and adversely impact our reputation and results of operations. •Our debt agreements contain certain financial ratios and other restrictions on our ability to conduct our business, and our substantial indebtedness could adversely affect our financial condition and operations and prevent us from fulfilling our debt service obligations. •We are subject to interest rate risk in connection with our vehicle floorplan payables, revolving credit facility, commercial paper program, and warehouse facilities that could have a material adverse effect on our profitability. •Goodwill and other intangible assets comprise a significant portion of our total assets. We must test our goodwill and other intangible assets for impairment at least annually, which could result in a material, non-cash write-down of goodwill or franchise rights and could have a material adverse impact on our results of operations and shareholders’ equity. •Our minority equity investments with readily determinable fair values are required to be measured at fair value each reporting period, which could adversely impact our results of operations and financial condition. The carrying values of our minority equity investments that do not have readily determinable fair values are required to be adjusted for observable price changes or impairments, both of which could adversely impact our results of operations and financial condition. •Our largest stockholders, as a result of their ownership stakes in us, may have the ability to exert substantial influence over actions to be taken or approved by our stockholders. In addition, future share repurchases and fluctuations in the levels of ownership of our largest stockholders could impact the volume of trading, liquidity, and market price of our common stock. •Natural disasters and adverse weather events, including the effects of climate change, can disrupt our business. 56 Table of Contents Additional Information Investors and others should note that we announce material financial information using our company website (www.autonation.com), our investor relations website (investors.autonation.com), SEC filings, press releases, public conference calls, and webcasts. Information about AutoNation, its business, and its results of operations may also be announced by posts on AutoNation’s X feed (www.x.com/autonation). The information that we post on our website and social media channels could be deemed to be material information. As a result, we encourage investors, the media, and others interested in AutoNation to review the information that we post on those websites and social media channels. Our social media channels may be updated from time to time on our investor relations website. The information on or accessible through our websites and social media channels is not incorporated by reference in this Annual Report on Form 10-K.