AutoNation (AN) Q4 2024 earnings summary

Executive summary

• Q4 2024 saw strong performance with 12% same-store new unit volume growth, robust after-sales and financial services, and a transformational year for AN Finance, despite earlier disruptions from the CDK outage.

• AN Finance originations tripled year-over-year to $1.1 billion, with improved credit quality and reduced delinquencies below 3%, and most of the legacy sub-prime portfolio sold.

• Eight underperforming stores were divested at attractive valuations, with proceeds used for share repurchases and portfolio optimization actions yielding $156M in store sale proceeds.

• Recognized by Fortune as the most admired automotive retailer for the fifth consecutive year and as one of the "World's Most Admired Companies" for 2025.

• Actively managed portfolio through divestitures and additions, with significant growth in Customer Financial Services (CFS) and After-Sales.

Financial highlights

• Q4 2024 revenue was $7.2 billion, up 7% year-over-year (8% same-store); gross profit reached $1.24 billion, up 2% year-over-year.

• Adjusted net income was $199 million, down 8% year-over-year; adjusted EPS was $4.97, down 1% year-over-year.

• Q4 net income was $186.1 million, down 14% year-over-year; Q4 operating income was $339.5 million, down 3%.

• Adjusted free cash flow for 2024 was $750 million, with a 105% net income to free cash flow conversion rate.

• SG&A as a percentage of gross profit was 67.1% (66.3% adjusted) in Q4 2024.

Outlook and guidance

• Expect moderate new vehicle unit growth in 2025, especially in the first half, with unit profitability stabilizing above historical levels.

• Used vehicle market expected to remain stable, with continued focus on cost, pricing, and inventory management.

• After-sales business projected to grow mid-single digits annually, with technician recruitment and retention as key constraints.

• AN Finance anticipated to reach profitability by end of 2025, with inaugural ABS offering expected in Q2 2025.

• Management remains focused on delivering attractive shareholder returns and ongoing cost discipline.