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AUTONATION, INC. (AN)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 revenue rose to $7.21B with 8% same‑store growth; adjusted EPS was $4.97 as new unit volumes grew 12% same‑store and after‑sales/CFS gross profit advanced mid‑single digits .
  • New GPU increased sequentially for the first time since Q4’21 ($2,969, +$165 vs Q3), driven by stronger premium luxury mix; total variable PVR improved sequentially to $4,974, though still below prior year .
  • After‑sales delivered 48.4% gross margin (+110 bps YoY) on external demand and productivity, underpinning durability as parts & service now ~45% of gross profit mix in Q4 .
  • AutoNation Finance originated $1.1B in 2024, ended Q4 at 75% non‑recourse funding, and targets run‑rate profitability by end‑2025; inaugural ABS expected in Q2’25—supporting capital efficiency and long‑term ROE accretion .
  • Estimate comparison: S&P Global consensus for Q4 2024 EPS/Revenue was unavailable at time of analysis due to API rate limits; no beat/miss assessment vs consensus could be made (Values retrieved from S&P Global).*

What Went Well and What Went Wrong

What Went Well

  • Premium luxury strength and incentives improved new vehicle mix; sequential new GPU rose to $2,969, first sequential increase since Q4’21, aided by premium luxury performance and seasonal mix .
  • After‑sales momentum: same‑store gross profit +5% YoY; margin reached 48.4% (+110 bps YoY) on mix (warranty/customer pay), higher parts/labor rates, tech efficiency and higher value ROs—driving ~45% of total gross profit mix .
  • AN Finance execution: $1.1B 2024 originations; portfolio quality improved (avg FICO up), delinquencies 2.6%, 75% non‑recourse funding, a $7.4M pretax gain on subprime sale; run‑rate profitability by end‑2025 .

What Went Wrong

  • New vehicle gross profit declined YoY on lower unit profitability ($2,971 same‑store vs $3,665 LY), despite higher units; total variable PVR down to $4,974 vs $5,225 LY .
  • Higher floorplan interest expense ($55M, +$9M YoY) amid inventory normalization pressured below‑the‑line results; net new vehicle carrying expense was ($18M) in Q4 .
  • Adjusted SG&A as % of gross profit rose YoY (66.3% vs 65.1% LY), reflecting cost inflation and investments, though down vs Q3 (67.4%) .

Financial Results

Headline P&L (GAAP and non‑GAAP)

MetricQ4 2023Q3 2024Q4 2024
Revenue ($B)$6.77 $6.59 $7.21
Gross Profit ($B)$1.22 $1.18 $1.24
Operating Income ($M)$349.9 $350.7 $339.5
Net Income ($M)$216.2 $185.8 $186.1
Diluted EPS ($)$5.04 $4.61 $4.64
Adjusted EPS ($)$5.02 $4.02 $4.97
Gross Margin (%)18.0% 18.0% 17.2%
Op. Margin (% Rev)5.2% 5.3% 4.7%
SG&A / Gross Profit (Adj)65.1% 67.4% 66.3%
After‑Sales GP Margin (%)47.3% 47.7% 48.4%

Segment Results (Revenue and Segment Income)

SegmentQ4 2023 Revenue ($B)Q3 2024 Revenue ($B)Q4 2024 Revenue ($B)Q4 2023 Segment Income ($M)Q3 2024 Segment Income ($M)Q4 2024 Segment Income ($M)
Domestic$1.80 $1.77 $1.87 $73.9 $62.4 $67.0
Import$2.02 $2.05 $2.11 $136.9 $119.2 $120.5
Premium Luxury$2.64 $2.43 $2.90 $195.3 $154.7 $207.6

Key KPIs and Operating Metrics

KPIQ4 2023Q3 2024Q4 2024
Retail New Vehicle Units (000s)64.7 63.2 71.4
Retail Used Vehicle Units (000s)65.2 66.5 64.8
New GPU ($/unit)$3,653 $2,804 $2,969
Used GPU ($/unit)$1,455 $1,589 $1,538
F&I PVR ($/unit)$2,674 $2,588 $2,686
Total Variable PVR ($/unit)$5,225 $4,769 $4,974
New Days’ Supply36 52 39
Used Days’ Supply39 36 37
Parts & Service GP ($M)$539.9 $558.2 $558.4

Estimates vs Actuals

  • S&P Global consensus for Q4 2024 EPS and Revenue was unavailable due to rate limits; we cannot assess beats/misses this quarter (Values retrieved from S&P Global).*

Guidance Changes

Metric/TopicPeriodPrior Guidance/CommentaryCurrent Guidance/CommentaryChange
New Vehicle GPU trajectory2025Normalization moderating; seasonal lift expected in Q4’24 Expect moderation to continue but stabilize above historical over time Maintained; more constructive on stabilization
After‑Sales growthMedium‑termMid‑single‑digit annual growth Mid‑single‑digit annual growth reiterated Maintained
SG&A as % of GP (Adj)2025Not explicit; Q3 at 67.4% Modest improvement; Q1 likely mid‑67% before improving through year New specificity
AutoNation Finance profitabilityYE 2025Run‑rate profitable by end‑2025 Run‑rate profitable by end‑2025 reiterated Maintained
AN Finance funding/ABS1H 2025First ABS in 1H’25 Inaugural ABS offering expected in Q2’25 Narrowed timing
Leverage targetOngoing2x–3x EBITDA 2x–3x EBITDA; 2.45x at Q4 Maintained
CapEx2025~ $300M/yr Settling around current range ($329M in 2024) Maintained
Quantitative revenue/EPS guidance2025None providedNone providedNo change

Earnings Call Themes & Trends

TopicQ2 2024 MentionsQ3 2024 MentionsQ4 2024 CurrentTrend
New GPU normalizationGPUs down but “encouraging trends”; new GPU $3,108; CDK impact noted Stabilization; Q4 seasonal lift expected First sequential increase since Q4’21; expect moderation with eventual stabilization above historical Improving sequentially; structural moderation
After‑sales growth & marginsMargin +60 bps YoY to 48.0% in Q2; resilient despite outage Record after‑sales GP; margin 47.7%; mid‑single‑digit LT growth Margin 48.4% (+110 bps); LT mid‑single‑digit growth reiterated Sustained strength
AN Finance scale & fundingYTD originations; captive seen 2.5–3x more profitable LT ~$1B portfolio approaching; run‑rate profitable by end‑2025; ABS planned 1H’25 $1.1B 2024 originations; 75% non‑recourse; ABS in Q2’25; profitability by end‑2025 Scaling; funding more capital‑light
Supply/mix (HEV/BEV/ICE)—Expect Q4 mix lift from premium luxury; used supply constrained in mid/high tiers Hybrids +~50% YoY units; BEVs +~25%; anticipate OEMs balancing BEV inventories; hybrid demand remains strong Favorable hybrid demand; BEV inventory normalization
Capital allocation$350M YTD repurchases by Q2; focus on FCF conversion M&A valuations thawing; repurchases ~76% of adj FCF YTD $460M FY repurchases (7% share count); disciplined M&A; leverage 2.45x Consistent buybacks; selective M&A
CDK outage impactSignificant Q2 EPS impact ($1.55) Residual headwinds in Q3 ($0.21 EPS) Fully behind; Q4 normalized Resolved

Management Commentary

  • “We highlighted the quarter was the delivery of 12% same‑store new unit volume growth… volume growth in this area bodes well for the future of our Aftersales and Financial services business” – CEO Mike Manley .
  • “AN Finance had an outstanding 2024… portfolio now stands north of $1.1 billion… delinquencies are less than 3%… expect to achieve [profitability] on a run rate basis by the end of 2025” – CEO .
  • “Our aftersales gross profit margin… 48.4%, up 110 basis points from a year ago, reflecting improved parts and labor rates, higher tech efficiency… higher value repair orders” – CFO Tom Szlosek .
  • “We repurchased approximately $100 million of shares during the fourth quarter… bringing our full year share repurchases to $460 million… 7% reduction in shares during the year” – CEO .

Q&A Highlights

  • Macro/“Trump bump”: Management sees improved consumer confidence and affordability; expects strong YoY comps in Q1’25 and flattening into 2H; OEMs pivoting on powertrains, hybrids tight, BEV inventories being cleared .
  • New GPU outlook: Sequential increase in Q4 driven by luxury mix; normalization moderating vs 2023; focus shifting to resilient profit streams in CFS and after‑sales .
  • AN Finance funding: Non‑recourse funding at ~75% in 2024; first ABS targeted for Q2’25; advanced rates expected ~90% as program matures .
  • SG&A trajectory: Expect modest improvement through 2025 with seasonal Q1 uptick (mid‑67% of GP); ongoing cost discipline .
  • After‑sales margin durability: Mix toward warranty/customer pay and productivity help; wholesale parts/collision softness aided margins in 2024 but could reverse as collision recovers .

Estimates Context

  • Wall Street (S&P Global) consensus estimates for Q4 2024 EPS and revenue were unavailable at analysis time due to S&P Global API rate limits; as a result, we cannot provide beat/miss analysis this quarter (Values retrieved from S&P Global).*

Where estimates may need to adjust once available:

  • Sequential new GPU improvement and stronger premium luxury mix could support upward revisions to near‑term margin assumptions, while ongoing normalization tempers full‑year GPU .
  • After‑sales margin expansion and mid‑single‑digit growth cadence may lift profit mix assumptions toward higher recurring gross profit .
  • AN Finance’s ABS timing (Q2’25) and funding mix may reduce capital intensity and improve consolidated ROE vs prior models .

Key Takeaways for Investors

  • Mix and margin: New GPU increased sequentially on premium luxury strength, but management still expects normalization; watch OEM incentive trends and mix shifts (hybrid vs BEV) as key margin drivers .
  • Recurring engine: After‑sales delivered 48.4% margins and continues to grow mid‑single digits, underpinning resilience as it comprises ~45–50% of gross profit .
  • Captive finance scaling: $1.1B in 2024 originations, 75% non‑recourse funding, and Q2’25 ABS are catalysts for capital efficiency and potential ROE accretion; run‑rate profitability targeted by YE’25 .
  • Capital allocation: $460M buybacks (7% share count reduction) in 2024 with leverage at 2.45x (target 2–3x); continued repurchases and selective M&A remain in play .
  • Inventory discipline: New days’ supply down to 39 (from 52 in Q3) and used at 37, positioning AN for spring seasonality and supporting pricing dynamics .
  • Watch risks: Elevated floorplan costs (albeit declining with rates), potential collision/wholesale parts mix reversal, and tariff/geopolitical risks to volume and pricing .
  • Near‑term trading: Narrative likely centers on sequential GPU uptick, after‑sales margin expansion, and AN Finance ABS/profitability milestones; lack of formal guidance keeps focus on delivery versus these operational markers .

*Values retrieved from S&P Global.