UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, ~~2023~~2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-13107

AUTONATION, INC.

(Exact name of registrant as specified in its charter)

Delaware

73-1105145

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

200 SW 1st Avenue

Fort Lauderdale

Florida

33301

(Address of principal executive offices)

(Zip Code)

(954)769-6000

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.01 per share

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

As of April ~~18, 2023,~~24, 2024, the registrant had ~~45,608,396~~40,266,545 shares of common stock outstanding.

AUTONATION, INC.

FORM 10-Q

TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION
		Page
Item 1.	Financial Statements
	Unaudited Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023 ~~and December31, 2022~~	1
	Unaudited Condensed Consolidated Statements of Income for the Three Months Ended March 31, ~~2023~~2024 and ~~2022~~2023	2
	Unaudited Condensed Consolidated Statements of Shareholders’ Equity for the Three Months Ended March 31, ~~2023~~2024 and ~~202~~22023	3
	Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, ~~2023~~2024 and ~~2022~~2023	4
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2324
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	4749
Item 4.	Controls and Procedures	4850
PART II. OTHER INFORMATION
Item 1A.	Risk Factors	4951
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4951
Item 5.	Other Information	51
Item 6.	Exhibits	4952

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

AUTONATION, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except share and per share data)


		March 31, 2023		December 31, 2022
	March 31, 2024						March 31, 2024	December 31, 2023
ASSETS	ASSETS
CURRENT ASSETS:	CURRENT ASSETS:
CURRENT ASSETS:
CURRENT ASSETS:
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents	Cash and cash equivalents	$	58.3	$	72.6
Receivables, net	Receivables, net	742.7		858.8
Inventory	Inventory	2,196.2		2,048.3
Other current assets	Other current assets	155.8		158.3
Total Current Assets	Total Current Assets	3,153.0		3,138.0
AUTO LOANS RECEIVABLE, net of allowance for credit losses of $61.3 million and $57.5 million respectively.		326.9		303.1
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $2.0 billion and $1.9 billion, respectively		3,656.0		3,607.2
AUTO LOANS RECEIVABLE, net of allowance for credit losses of $48.1 million and $46.3 million, respectively
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $2.1 billion and $2.1 billion, respectively
OPERATING LEASE ASSETS	OPERATING LEASE ASSETS	328.8		323.5
GOODWILL	GOODWILL	1,450.2		1,320.1
OTHER INTANGIBLE ASSETS, NET	OTHER INTANGIBLE ASSETS, NET	880.3		837.0
OTHER ASSETS	OTHER ASSETS	565.6		530.8
Total Assets	Total Assets	$	10,360.8	$	10,059.7
LIABILITIES AND SHAREHOLDERS’ EQUITY	LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:	CURRENT LIABILITIES:
CURRENT LIABILITIES:
CURRENT LIABILITIES:
Vehicle floorplan payable - trade
Vehicle floorplan payable - trade
Vehicle floorplan payable - trade	Vehicle floorplan payable - trade	$	1,088.6	$	946.6
Vehicle floorplan payable - non-trade	Vehicle floorplan payable - non-trade	1,097.1		1,162.7
Accounts payable	Accounts payable	347.1		327.6
Commercial paper	Commercial paper	285.0		50.0
Current maturities of long-term debt	Current maturities of long-term debt	12.7		12.6
Current portion of non-recourse debt	Current portion of non-recourse debt	12.0		10.7
Accrued payroll and benefits		228.0		238.0

Other current liabilities
Other current liabilities
Other current liabilities	Other current liabilities	710.3		657.5
Total Current Liabilities	Total Current Liabilities	3,780.8		3,405.7
LONG-TERM DEBT, NET OF CURRENT MATURITIES	LONG-TERM DEBT, NET OF CURRENT MATURITIES	3,584.7		3,586.9
NON-RECOURSE DEBT, NET OF CURRENT PORTION	NON-RECOURSE DEBT, NET OF CURRENT PORTION	271.4		312.9
NONCURRENT OPERATING LEASE LIABILITIES	NONCURRENT OPERATING LEASE LIABILITIES	300.1		296.9
DEFERRED INCOME TAXES	DEFERRED INCOME TAXES	58.1		76.5
OTHER LIABILITIES	OTHER LIABILITIES	345.4		333.0
COMMITMENTS AND CONTINGENCIES (Note 14)	COMMITMENTS AND CONTINGENCIES (Note 14)					COMMITMENTS AND CONTINGENCIES (Note 14)
SHAREHOLDERS’ EQUITY:	SHAREHOLDERS’ EQUITY:

Common stock, par value $0.01 per share; 1,500,000,000 shares authorized; 63,562,149 shares issued at March 31, 2023, and December 31, 2022, including shares held in treasury		0.6		0.6
Common stock, par value $0.01 per share; 1,500,000,000 shares authorized; 63,562,149 shares issued at March 31, 2024, and December 31, 2023, including shares held in treasury

Common stock, par value $0.01 per share; 1,500,000,000 shares authorized; 63,562,149 shares issued at March 31, 2024, and December 31, 2023, including shares held in treasury

Common stock, par value $0.01 per share; 1,500,000,000 shares authorized; 63,562,149 shares issued at March 31, 2024, and December 31, 2023, including shares held in treasury
Additional paid-in capital	Additional paid-in capital	3.0		3.1
Retained earnings	Retained earnings	3,910.6		3,663.7
Treasury stock, at cost; 17,953,753 and 15,915,358 shares held, respectively		(1,893.9)		(1,619.6)
Treasury stock, at cost; 21,938,716 and 21,917,635 shares held, respectively
Total Shareholders’ Equity	Total Shareholders’ Equity	2,020.3		2,047.8
Total Liabilities and Shareholders’ Equity	Total Liabilities and Shareholders’ Equity	$	10,360.8	$	10,059.7

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

Table of Contents

AUTONATION, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share data)

Three Months Ended

March 31,

2023

2022

Revenue:

New vehicle

2,931.9

2,807.2

Used vehicle

2,032.6

2,572.4

Used vehicle

Parts and service

1,089.8

1,003.9

Finance and insurance, net

332.4

363.9

Finance and insurance, net

Other

12.0

5.4

TOTAL REVENUE

6,398.7

6,752.8

TOTAL REVENUE

Cost of sales:

New vehicle

2,645.0

2,462.2

New vehicle

Used vehicle

1,878.2

2,435.8

Parts and service

578.7

542.8

Parts and service

Other

10.4

3.1

TOTAL COST OF SALES

5,112.3

5,443.9

TOTAL COST OF SALES

Gross profit:

New vehicle

286.9

345.0

New vehicle

Used vehicle

154.4

136.6

Parts and service

511.1

461.1

Parts and service

Finance and insurance

332.4

363.9

Other

1.6

2.3

Other

TOTAL GROSS PROFIT

1,286.4

1,308.9

Selling, general, and administrative expenses

782.7

741.4

Selling, general, and administrative expenses

Depreciation and amortization

52.8

50.0

Other (income) expense, net

7.6

(1.5)

Other expense, net

OPERATING INCOME

443.3

519.0

Non-operating income (expense) items:

Floorplan interest expense

(27.1)

(5.2)

Other interest expense

(41.1)

(29.6)

Other income (loss), net

5.2

(6.4)

Other interest expense

Other income, net

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

380.3

477.8

Income tax provision

92.5

115.7

Income tax provision

NET INCOME FROM CONTINUING OPERATIONS

287.8

362.1

Income from discontinued operations, net of income taxes

0.9

—

Income from discontinued operations, net of income taxes

NET INCOME

288.7

362.1

BASIC EARNINGS PER SHARE:

Continuing operations

6.10

5.83

Discontinued operations

0.02

—

Discontinued operations

Net income

6.12

5.83

Weighted average common shares outstanding

47.2

62.1

Weighted average common shares outstanding

DILUTED EARNINGS PER SHARE:

Continuing operations

6.05

5.78

Continuing operations

Discontinued operations

0.02

—

Net income

6.07

5.78

Net income

Weighted average common shares outstanding

47.6

62.6

COMMON SHARES OUTSTANDING, net of treasury stock, at period end

45.6

59.7

COMMON SHARES OUTSTANDING, net of treasury stock, at period end

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

Table of Contents

AUTONATION, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In millions, except share data)


	Three Months Ended March 31, 2024																				Three Months Ended March 31, 2024
															Common Stock			Additional Paid-In Capital	Retained Earnings	Treasury Stock		Total
		Three Months Ended March 31, 2023
		Common Stock			Additional Paid-In Capital				Retained Earnings		Treasury Stock		Total
		Shares	Amount
BALANCE AT DECEMBER 31, 2022		63,562,149	$	0.6			$	3.1			$	3,663.7	$	(1,619.6)		$	2,047.8
BALANCE AT DECEMBER 31, 2023
BALANCE AT DECEMBER 31, 2023
BALANCE AT DECEMBER 31, 2023
Net income	Net income	—	—		—				288.7		—		288.7
Repurchases of common stock, including excise tax	Repurchases of common stock, including excise tax	—	—		—				—		(307.5)		(307.5)
Stock-based compensation expense	Stock-based compensation expense	—	—		15.1				—		—		15.1
Shares awarded under stock-based compensation plans, net of shares withheld for taxes	Shares awarded under stock-based compensation plans, net of shares withheld for taxes	—	—		(15.2)				(41.8)		33.2		(23.8)

BALANCE AT MARCH 31, 2023		63,562,149	$	0.6	$	3.0			$	3,910.6	$	(1,893.9)	$	2,020.3
BALANCE AT MARCH 31, 2024

BALANCE AT MARCH 31, 2024

BALANCE AT MARCH 31, 2024


	Three Months Ended March 31, 2023																				Three Months Ended March 31, 2023
															Common Stock			Additional Paid-In Capital	Retained Earnings	Treasury Stock		Total
		Three Months Ended March 31, 2022
		Common Stock			Additional Paid-In Capital				Retained Earnings		Treasury Stock		Total
		Shares	Amount
BALANCE AT DECEMBER 31, 2021		86,562,149	$	0.8			$	3.2			$	4,639.9	$	(2,266.9)		$	2,377.0
BALANCE AT DECEMBER 31, 2022
BALANCE AT DECEMBER 31, 2022
BALANCE AT DECEMBER 31, 2022
Net income	Net income	—	—		—				362.1		—		362.1
Repurchases of common stock		—	—		—				—		(380.9)		(380.9)
Repurchases of common stock, including excise tax
Stock-based compensation expense	Stock-based compensation expense	—	—		15.9				—		—		15.9
Shares awarded under stock-based compensation plans, net of shares withheld for taxes	Shares awarded under stock-based compensation plans, net of shares withheld for taxes	—	—		(16.7)				(58.1)		46.3		(28.5)

BALANCE AT MARCH 31, 2022		86,562,149	$	0.8	$	2.4			$	4,943.9	$	(2,601.5)	$	2,345.6
BALANCE AT MARCH 31, 2023
BALANCE AT MARCH 31, 2023
BALANCE AT MARCH 31, 2023

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

Table of Contents

AUTONATION, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)


		Three Months Ended
	Three Months Ended							Three Months Ended
		March 31,				March 31,
		2023		2022		2024	2023
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:	CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net income	Net income	$	288.7	$	362.1
Net income
Net income
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:
Income from discontinued operations
Income from discontinued operations
Income from discontinued operations	Income from discontinued operations	(0.9)		—
Depreciation and amortization	Depreciation and amortization	52.8		50.0
Amortization of debt issuance costs and accretion of debt discounts	Amortization of debt issuance costs and accretion of debt discounts	2.5		1.4
Stock-based compensation expense	Stock-based compensation expense	15.1		15.9
Provision for credit losses on auto loans receivable	Provision for credit losses on auto loans receivable	12.8		—
Deferred income tax provision	Deferred income tax provision	2.8		3.2
Net gain related to business/property dispositions		(1.0)		(0.3)

Non-cash impairment charges		1.4		0.4
Loss on equity investments		1.1		0.1
Loss (gain) on corporate-owned life insurance asset		(4.7)		6.7

Gain on corporate-owned life insurance asset

Gain on corporate-owned life insurance asset

Gain on corporate-owned life insurance asset

Other
Other
Other
(Increase) decrease, net of effects from business acquisitions and divestitures:	(Increase) decrease, net of effects from business acquisitions and divestitures:
Receivables	Receivables	119.5		(18.2)
Receivables
Receivables
Auto loans receivable, net
Inventory	Inventory	(147.5)		142.6
Other assets	Other assets	(28.6)		14.6
Increase (decrease), net of effects from business acquisitions and divestitures:	Increase (decrease), net of effects from business acquisitions and divestitures:
Vehicle floorplan payable - trade
Vehicle floorplan payable - trade
Vehicle floorplan payable - trade	Vehicle floorplan payable - trade	142.0		(43.3)
Accounts payable	Accounts payable	12.6		(6.6)
Other liabilities	Other liabilities	41.7		114.6
Net cash provided by continuing operations	Net cash provided by continuing operations	510.3		643.2
Net cash used in discontinued operations	Net cash used in discontinued operations	(0.3)		—
Net cash provided by operating activities	Net cash provided by operating activities	510.0		643.2
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES:	CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Purchases of property and equipment	Purchases of property and equipment	(95.3)		(56.6)
Purchases of property and equipment
Purchases of property and equipment

Proceeds from the sale of property and equipment		1.8		—
Proceeds from the disposal of assets held for sale		2.5		—
Insurance recoveries on property and equipment		—		0.3

Cash used in business acquisitions, net of cash acquired

Cash used in business acquisitions, net of cash acquired

Cash used in business acquisitions, net of cash acquired	Cash used in business acquisitions, net of cash acquired	(191.0)		—
Originations of auto loans receivable acquired through third-party dealers	Originations of auto loans receivable acquired through third-party dealers	(55.3)		—
Collections on auto loans receivable acquired through third-party dealers	Collections on auto loans receivable acquired through third-party dealers	39.3		—

Other

Other

Other	Other	(7.9)		(2.7)
Net cash used in continuing operations	Net cash used in continuing operations	(305.9)		(59.0)
Net cash used in discontinued operations	Net cash used in discontinued operations	—		—
Net cash used in investing activities	Net cash used in investing activities	(305.9)		(59.0)

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

Table of Contents

AUTONATION, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Continued)


	Three Months Ended							Three Months Ended
						March 31,
						2024	2023
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Repurchases of common stock
Repurchases of common stock
Repurchases of common stock

		Three Months Ended
		March 31,
		2023		2022
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Repurchases of common stock		(315.7)		(342.3)

Net proceeds from (payments of) commercial paper

Proceeds from 3.85% Senior Notes due 2032		—		698.8

Net proceeds from (payments of) commercial paper

Net proceeds from (payments of) commercial paper	Net proceeds from (payments of) commercial paper	235.0		(340.0)
Proceeds from non-recourse debt	Proceeds from non-recourse debt	39.3		—
Payments of non-recourse debt	Payments of non-recourse debt	(80.5)		—
Payment of debt issuance costs		—		(6.4)

Net payments of vehicle floorplan payable - non-trade
Net payments of vehicle floorplan payable - non-trade
Net payments of vehicle floorplan payable - non-trade	Net payments of vehicle floorplan payable - non-trade	(67.3)		(15.1)
Payments of other debt obligations	Payments of other debt obligations	(3.1)		(3.0)
Proceeds from the exercise of stock options	Proceeds from the exercise of stock options	1.3		0.9
Payments of tax withholdings for stock-based awards	Payments of tax withholdings for stock-based awards	(25.1)		(29.4)

Net cash used in continuing operations	Net cash used in continuing operations	(216.1)		(36.5)
Net cash used in continuing operations
Net cash used in continuing operations
Net cash used in discontinued operations	Net cash used in discontinued operations	—		—
Net cash used in financing activities	Net cash used in financing activities	(216.1)		(36.5)
INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	(12.0)		547.7
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH at beginning of period	CASH, CASH EQUIVALENTS, AND RESTRICTED CASH at beginning of period	95.4		60.6
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH at end of period	CASH, CASH EQUIVALENTS, AND RESTRICTED CASH at end of period	$	83.4	$	608.3

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

Table of ~~Contents~~C ontents

AUTONATION, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except per share data)

1.INTERIM FINANCIAL STATEMENTS

Business and Basis of Presentation

AutoNation, Inc., through its subsidiaries, is one of the largest automotive retailers in the United States. As of March 31, ~~2023,~~2024, we owned and operated ~~344~~347 new vehicle franchises from ~~248~~251 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 3332 different new vehicle brands. The core brands of new vehicles that we sell, representing approximately ~~89%~~88% of the new vehicles that we sold during the three months ended March 31, ~~2023,~~2024, are manufactured by Toyota (including Lexus), Honda, Ford, ~~BMW,~~ General Motors, BMW, Mercedes-Benz, Stellantis, and Volkswagen (including Audi and Porsche). As of March 31, ~~2023,~~2024, we also owned and operated 5352 AutoNation-branded collision centers, 1523 AutoNation USA used vehicle stores, 4 AutoNation-branded automotive auction operations, 3 parts distribution centers, ~~an auto finance company, and~~ a mobile automotive repair and maintenance ~~business.~~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 ~~on certain vehicles we sell, as well as on installment contracts acquired by~~through our captive finance company ~~through third-party independent dealers.~~on vehicles we sell. For convenience, the terms “AutoNation,” “Company,” and “we” are used to refer collectively to AutoNation, Inc. and its subsidiaries, unless otherwise required by the context. Our store and other operations are conducted by our subsidiaries.

The accompanying Unaudited Condensed Consolidated Financial Statements include the accounts of AutoNation, Inc. and its subsidiaries; intercompany accounts and transactions have been eliminated. The accompanying Unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. Additionally, operating results for interim periods are not necessarily indicative of the results that can be expected for a full year. The Unaudited Condensed Consolidated Financial Statements herein should be read in conjunction with our audited Consolidated Financial Statements and notes thereto included within our most recent Annual Report on Form 10-K. These Unaudited Condensed Consolidated Financial Statements reflect, in the opinion of management, all material adjustments (which include only normal recurring adjustments) necessary to fairly state, in all material respects, our financial position and results of operations for the periods presented.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and 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. In preparing these financial statements, management has made its best estimates and judgments of certain amounts included in the financial statements. We base our estimates and judgments on historical experience and other assumptions that we believe are reasonable. However, application of these accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ materially from these estimates. We periodically evaluate estimates and assumptions used in the preparation of the financial statements and make changes on a prospective basis when adjustments are necessary. Such estimates and assumptions affect, among other things, our goodwill, indefinite-lived intangible asset, and long-lived asset valuations; inventory valuation; equity investment valuation; assets held for sale; assessments of variable consideration and related constraints ~~related to~~associated with retrospective commissions; accruals for chargebacks against revenue recognized from the sale of finance and insurance products; accruals related to self-insurance programs; certain legal proceedings; assessment of the annual income tax expense; valuation of deferred income taxes and income tax contingencies; the allowance for expected credit losses; and measurement of performance-based compensation costs.

Certain reclassifications of amounts previously reported have been made to the accompanying Unaudited Condensed Consolidated Financial Statements in order to maintain consistency and comparability between periods presented.

Table of C ontents

AUTONATION, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except per share data)

Recent Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures,that requires presentation of specific categories of reconciling items, as well as reconciling items that meet a quantitative threshold, in the reconciliation between the income tax provision and the income tax provision using statutory tax rates. The standard also requires disclosure of income taxes paid disaggregated by jurisdiction with separate disclosure of income taxes paid to individual jurisdictions that meet a quantitative threshold. The amendments in this accounting standard are effective for fiscal years beginning after December 15, 2024, on a prospective basis. Early adoption and retrospective application are permitted. We do not expect the adoption of this accounting standard to have an impact on our consolidated financial statements, but will require certain additional disclosures.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, that requires disclosure of significant segment expenses that are regularly reviewed by the chief operating decision maker and included within each reported measure of segment profit or loss. The standard also requires disclosure of the composition of other segment items included in the measure of segment profit or loss that are not separately disclosed. The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. We do not expect the adoption of this accounting standard to have an impact on our consolidated financial statements, but will require certain additional disclosures.

TTable of C ~~able of Contents~~ontents

AUTONATION, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

2. REVENUE RECOGNITION

Disaggregation of Revenue

The significant majority of our revenue is from contracts with customers. Taxes assessed by governmental authorities that are directly imposed on revenue transactions are excluded from ~~revenue.~~revenue and expenses. In the following tables, revenue is disaggregated by major lines of goods and services and timing of transfer of goods and services. ~~We have determined that these categories depict how the nature, amount, timing, and uncertainty of our revenue and cash flows are affected by economic factors.~~ The tables ~~below~~ also include a reconciliation of the disaggregated revenue to reportable segment revenue.


			Three Months Ended March 31, 2023
			Domestic		Import		Premium Luxury		Corporate and other(1)		Total
		Three Months Ended March 31, 2024														Three Months Ended March 31, 2024
		Domestic											Domestic	Import	Premium Luxury		Corporate and other(1)	Total
Major Goods/Service Lines	Major Goods/Service Lines
New vehicle
New vehicle
New vehicle	New vehicle		$	828.0	$	856.4	$	1,247.5	$	—	$	2,931.9
Used vehicle	Used vehicle		612.3		542.1		745.8		132.4		2,032.6
Parts and service	Parts and service		287.6		268.4		386.2		147.6		1,089.8
Finance and insurance, net	Finance and insurance, net		102.3		112.4		105.0		12.7		332.4
Other	Other		0.9		10.0		0.4		0.7		12.0
			$	1,831.1	$	1,789.3	$	2,484.9	$	293.4	$	6,398.7
		$

Timing of Revenue Recognition	Timing of Revenue Recognition
Timing of Revenue Recognition
Timing of Revenue Recognition
Goods and services transferred at a point in time
Goods and services transferred at a point in time
Goods and services transferred at a point in time	Goods and services transferred at a point in time		$	1,629.3	$	1,586.9	$	2,159.3	$	194.8	$	5,570.3
Goods and services transferred over time(2)	Goods and services transferred over time(2)		201.8		202.4		325.6		98.6		828.4
			$	1,831.1	$	1,789.3	$	2,484.9	$	293.4	$	6,398.7
		$


			Three Months Ended March 31, 2022
			Domestic		Import		Premium Luxury		Corporate and other(1)		Total
		Three Months Ended March 31, 2023														Three Months Ended March 31, 2023
		Domestic											Domestic	Import	Premium Luxury		Corporate and other(1)	Total
Major Goods/Service Lines	Major Goods/Service Lines
New vehicle
New vehicle
New vehicle	New vehicle		$	822.5	$	881.6	$	1,103.1	$	—	$	2,807.2
Used vehicle	Used vehicle		823.1		707.6		916.1		125.6		2,572.4
Parts and service	Parts and service		268.7		255.5		351.9		127.8		1,003.9
Finance and insurance, net	Finance and insurance, net		119.2		126.4		107.2		11.1		363.9
Other	Other		0.9		3.0		0.4		1.1		5.4
			$	2,034.4	$	1,974.1	$	2,478.7	$	265.6	$	6,752.8
		$

Timing of Revenue Recognition	Timing of Revenue Recognition
Timing of Revenue Recognition
Timing of Revenue Recognition
Goods and services transferred at a point in time
Goods and services transferred at a point in time
Goods and services transferred at a point in time	Goods and services transferred at a point in time		$	1,850.7	$	1,783.8	$	2,186.4	$	186.5	$	6,007.4
Goods and services transferred over time(2)	Goods and services transferred over time(2)		183.7		190.3		292.3		79.1		745.4
			$	2,034.4	$	1,974.1	$	2,478.7	$	265.6	$	6,752.8
		$

(1) “Corporate and other” is comprised of our ~~other~~non-franchised businesses, including AutoNation USA used vehicle stores, collision centers, parts distribution centers, auction operations, and ~~RepairSmith, our mobile automotive repair and maintenance business.~~AutoNation Mobile Service.

(2) Represents revenue recognized during the period for automotive repair and maintenance services.

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~~AUTONATION, INC.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Continued)~~

Transaction Price Allocated to Remaining Performance Obligations

We sell a vehicle maintenance program (the AutoNation Vehicle Care Program or “VCP”) under which a customer purchases a specific number of maintenance services to be redeemed at an AutoNation location over a five-year term from the

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AUTONATION, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

date of purchase. We satisfy our performance obligations related to this program and recognize revenue as the maintenance services are rendered, since the customer benefits when we have completed the maintenance service.

The following table includes estimated revenue expected to be recognized in the future related to VCP performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period:

Revenue Expected to Be Recognized by Period
Total Next 12 Months 13 - 36 Months 37 - 60 Months
Revenue expected to be recognized on VCP contracts sold as of period end $ 102.2 $ 35.1 $ 49.3 $ 17.8


	Revenue Expected to Be Recognized by Period
	Total		Next 12 Months		13 - 36 Months		37 - 60 Months
Revenue expected to be recognized on VCP contracts sold as of period end	$	108.5	$	37.2	$	53.0	$	18.3

As a practical expedient, since all other automotive repair and maintenance services are generally performed within one year or less, we do not disclose estimated revenue expected to be recognized in the future for all other automotive repair and maintenance performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period or when we expect to recognize such revenue.

Contract Assets and Liabilities

When the timing of our provision of goods or services is different from the timing of payments made by our customers, we recognize either a contract asset (performance precedes contractual due date) or a contract liability (customer payment precedes performance). Contract assets primarily relate to our right to consideration for work in process not yet billed at the reporting date associated with automotive repair and maintenance services, as well as our estimate of variable consideration that has been included in the transaction price for certain finance and insurance products (retrospective commissions). These contract assets are reclassified to receivables when the right to consideration becomes unconditional. Contract liabilities primarily relate to upfront payments received from customers for the sale of VCP contracts.

Our receivables from contracts with customers are included in Receivables, net, our current contract asset is included in Other Current Assets, our long-term contract asset is included in Other Assets, our current contract liability is included in Other Current Liabilities, and our long-term contract liability is included in Other Liabilities in our Unaudited Condensed Consolidated Balance Sheets.

The following table provides the balances of our receivables from contracts with customers and our current and long-term contract assets and contract liabilities:


		March 31, 2023		December 31, 2022
	March 31, 2024					March 31, 2024	December 31, 2023
Receivables from contracts with customers, net	Receivables from contracts with customers, net	$	541.8	$	634.5
Contract Asset (Current)	Contract Asset (Current)	$	21.0	$	27.7
Contract Asset (Long-Term)	Contract Asset (Long-Term)	$	4.4	$	8.6
Contract Liability (Current)	Contract Liability (Current)	$	41.2	$	41.8
Contract Liability (Long-Term)	Contract Liability (Long-Term)	$	67.1	$	66.6

The change in the balances of our contract assets and contract liabilities primarily result from the timing differences between our performance and the customer’s payment, as well as changes in the estimated transaction price related to variable consideration for performance obligations satisfied in previous periods. The following table presents revenue recognized during

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~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Continued)~~

the period from amounts included in the contract liability balance at the beginning of the period and adjustments to revenue related to performance obligations satisfied in previous periods:


		Three Months Ended March 31,
		2023		2022
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
		2024
		2024
		2024
Amounts included in contract liability at the beginning of the period
Amounts included in contract liability at the beginning of the period
Amounts included in contract liability at the beginning of the period	Amounts included in contract liability at the beginning of the period	$	9.4	$	9.0
Performance obligations satisfied in previous periods	Performance obligations satisfied in previous periods	$	(2.3)	$	3.8
Performance obligations satisfied in previous periods
Performance obligations satisfied in previous periods

Other significant changes include contract assets reclassified to receivables of $16.9 million for the three months ended March 31, 2024, and $25.7 million for the three months ended March 31, ~~2023, and $28.0 million for the three months ended March 31, 2022.~~2023.

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AUTONATION, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

3.EARNINGS PER SHARE

Basic earnings per share (“EPS”) is computed by dividing net income by the weighted average number of common shares outstanding for the period, including vested restricted stock unit (“RSU”) awards. Diluted EPS is ~~computed~~calculated using the treasury stock method by dividing net income by the weighted average number of shares outstanding, noted above, ~~adjusted for~~including the dilutive effect of unvested RSU awards and stock options.

The following table presents the calculation of basic and diluted EPS:

Three Months Ended

March 31,

Three Months Ended

March 31,

2023

2022

Net income from continuing operations

287.8

362.1

Net income from continuing operations

Income from discontinued operations, net of income taxes

0.9

—

Income from discontinued operations, net of income taxes

Net income

288.7

362.1

Basic weighted average common shares outstanding

47.2

62.1

Basic weighted average common shares outstanding

Dilutive effect of unvested RSUs and stock options

0.4

0.5

Dilutive effect of unvested RSUs and stock options

Diluted weighted average common shares outstanding

47.6

62.6

Basic EPS amounts(1):

Continuing operations

6.10

5.83

Discontinued operations

0.02

—

Discontinued operations

Net income

6.12

5.83

Diluted EPS amounts(1):

Continuing operations

6.05

5.78

Discontinued operations

0.02

—

Discontinued operations

Net income

6.07

5.78

(1) EPS amounts are calculated discretely and, therefore, may not add up to the total due to rounding.

A summary of anti-dilutive equity instruments excluded from the computation of diluted EPS is as follows:

Three Months Ended
March 31,
2023 2022
Anti-dilutive equity instruments excluded from the computation of diluted EPS 0.1 0.1


	Three Months Ended
	March 31,
	2024	2023
Anti-dilutive equity instruments excluded from the computation of diluted EPS	0.1	0.1

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~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Continued)~~

4.RECEIVABLES, NET

The components of receivables, net of allowances for expected credit losses, are as follows:


		March 31, 2023		December 31, 2022
	March 31, 2024					March 31, 2024	December 31, 2023
Contracts-in-transit and vehicle receivables	Contracts-in-transit and vehicle receivables	$	334.7	$	441.1
Trade receivables	Trade receivables	167.3		156.6
Manufacturer receivables	Manufacturer receivables	179.6		174.4
Income taxes receivable (see Note 9)	Income taxes receivable (see Note 9)	—		20.2
Other	Other	62.8		68.2
		744.4		860.5
	882.0
Less: allowances for expected credit losses	Less: allowances for expected credit losses	(1.7)		(1.7)
Receivables, net	Receivables, net	$	742.7	$	858.8

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AUTONATION, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

Contracts-in-transit and vehicle receivables primarily represent receivables from financial institutions for the portion of the vehicle sales price financed by our customers. Trade receivables represent amounts due for parts and services sold, excluding amounts due from manufacturers, as well as receivables from finance organizations for commissions on the sale of finance and insurance products. Manufacturer receivables represent amounts due from manufacturers for holdbacks, rebates, incentives, floorplan assistance, and warranty claims. We evaluate our receivables for collectability based on past collection experience, current information, and reasonable and supportable forecasts.

5.AUTO LOANS RECEIVABLE

Auto loans receivable include amounts due from customers related to retail vehicle sales financed through our auto finance company (referred to as AutoNation Finance), as well as retail vehicle installment sales contracts acquired through third-party independent ~~dealers.~~dealers prior to October 2023. Auto loans receivable are presented net of an allowance for expected credit losses. Auto loans receivable represent a large group of smaller-balance homogeneous loans, which we consider to be part of one class of financing receivable and one portfolio segment for purposes of determining our allowance for expected credit losses.

~~Interest~~AutoNation Finance operating results include the interest and fee income ~~and expenses related to~~generated by auto loans ~~represent~~receivable less the interest expense associated with the debt issued to fund these receivables, a provision for estimated credit losses, and direct expenses. AutoNation Finance ~~income (loss), which is~~operating results are included as a component of Other ~~(Income)~~ Expense, Net (within Operating Income). Interest income on auto loans receivable is recognized when earned based on contractual loan terms. Direct costs associated with loan originations are capitalized and amortized using the effective interest method.

Auto Loans Receivable, Net

The components of auto loans receivable, net of unearned discounts and allowances for expected credit losses, at March 31, ~~2023,~~2024, and December 31, ~~2022,~~2023, are as follows:


	March 31, 2024					March 31, 2024	December 31, 2023

		March 31, 2023		December 31, 2022

Total auto loans receivable

Total auto loans receivable

Total auto loans receivable	Total auto loans receivable	$	403.2	$	377.0
Accrued interest and fees	Accrued interest and fees	4.4		4.4
Deferred loan origination costs	Deferred loan origination costs	0.7		0.5
Less: unearned discounts	Less: unearned discounts	(20.1)		(21.3)
Less: allowances for expected credit losses	Less: allowances for expected credit losses	(61.3)		(57.5)
Auto loans receivable, net	Auto loans receivable, net	$	326.9	$	303.1

Credit Quality

We utilize proprietary credit scoring models to rate the risk of default for customers that apply for financing by evaluating customer credit history and certain credit application ~~information. Our evaluation considers~~ information, ~~such as payment history for prior or existing credit accounts, as well as application~~including information such as income, collateral, and down payment.

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~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Continued)~~

The scoring models yield credit program tiers that reflect our internal credit risk ratings and represent the relative likelihood of repayment. Customers with the highest probability of repayment are “Platinum” customers. Customers assigned a lower credit tier are determined to have a lower probability of repayment. For loans that are approved, theThe assigned credit tier influences the terms of the agreement, such as the required loan-to-value ratio and interest rate. After origination, credit tier assignments by customer are generally not updated.

~~We monitor the credit quality of the auto loans receivable on an ongoing basis and also validate the accuracy of the credit scoring models periodically.~~ Loan performance is reviewed on a recurring basis to identify whether the assigned credit tiers adequately reflect the customers’ likelihood of repayment, and if needed, adjustments are made to the scoring models on a prospective basis.

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AUTONATION, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

Auto Loans Receivable by Major Credit Program

The following ~~table presents~~tables present auto loans receivable as of March 31, 2024, and December 31, 2023, disaggregated by major credit program ~~tier:~~tier, in descending order of highest likelihood of repayment:

Fiscal Year of Origination(1)
2023 2022 2021 2020 2019 Prior to 2019 Total
Credit Program Tier:
Platinum $ 13.0 $ 19.9 $ 11.6 $ 5.4 $ 6.2 $ 1.6 $ 57.7
Gold 18.1 49.1 26.4 11.1 8.8 2.6 116.1
Silver 22.7 54.9 26.2 8.8 6.4 1.4 120.4
Bronze 14.6 36.3 14.7 6.3 3.0 0.7 75.6
Copper 6.3 16.4 6.6 2.1 1.5 0.5 33.4
Total auto loans receivable $ 74.7 $ 176.6 $ 85.5 $ 33.7 $ 25.9 $ 6.8 $ 403.2
Current-period gross write-offs $ — $ 8.0 $ 5.4 $ 1.4 $ 0.9 $ 0.3 $ 16.0

~~(1)~~ ~~Classified based on credit grade assigned when customer was initially approved for financing.~~



	Fiscal Year of Origination
As of March 31, 2024	2024		2023		2022		2021		2020		Prior to 2020		Total
Credit Program Tier(1):
Palladium	$	15.8	$	—	$	—	$	—	$	—	$	—	$	15.8
Rhodium	27.6		23.1		0.1		—		—		—		50.8
Platinum	112.7		118.5		13.2		7.2		2.8		2.6		257.0
Gold	17.9		57.6		31.8		16.1		5.6		4.0		133.0
Silver	0.2		45.0		28.7		13.7		4.2		2.1		93.9
Bronze	—		5.9		0.6		5.0		1.3		0.1		12.9
Copper	—		0.2		0.1		2.3		0.4		0.1		3.1
Total auto loans receivable	$	174.2	$	250.3	$	74.5	$	44.3	$	14.3	$	8.9	$	566.5

Current-period gross write-offs	$	0.1	$	5.9	$	4.3	$	2.7	$	0.8	$	0.2	$	14.0

	Fiscal Year of Origination
As of December 31, 2023	2023		2022		2021		2020		2019		Prior to 2019		Total
Credit Program Tier(1):
Rhodium	$	27.6	$	0.1	$	—	$	—	$	—	$	—	$	27.7
Platinum	136.3		14.7		8.2		3.3		3.1		0.5		166.1
Gold	64.3		35.9		18.5		6.8		4.5		0.8		130.8
Silver	50.2		33.0		16.2		5.2		2.8		0.3		107.7
Bronze	6.7		0.7		6.0		1.5		0.1		—		15.0
Copper	0.3		0.2		2.8		0.5		0.1		—		3.9
Total auto loans receivable	$	285.4	$	84.6	$	51.7	$	17.3	$	10.6	$	1.6	$	451.2

(1) Classified based on credit grade assigned when customer was initially approved for financing.

Allowance for Credit Losses

The allowance for credit losses represents the net credit losses expected over the remaining contractual life of our auto loans receivable. The allowance for credit losses is determined using a vintage-level statistical model that captures the relationship between historical changes in gross losses and the lifetime loss curves by month on book, credit tiers at origination, and seasonality, adjusted for expected recoveries based on historical recovery trends. The credit loss model also incorporates reasonable and supportable forecasts about the future utilizing a forecast of a macroeconomic variable, specifically, the change in U.S. disposable personal income, which we believe is most strongly correlated to evaluating and predicting expected credit losses of our auto loans receivable. We utilize a reasonable and supportable forecast period of one year, after which we immediately revert to historical experience.

We periodically consider whether the use of alternative variables would result in improved credit loss model accuracy and revise the model when appropriate. We also consider whether qualitative adjustments are necessary for factors that are not reflected in the quantitative methods but impact the measurement of estimated credit losses. Such adjustments include the expectations of the impact of recent economic trends on customer behavior.

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AUTONATION, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

The net loss estimate is calculated by applying the loss rates developed using the methods described above to the amortized cost basis of the auto loans receivable. The change in the allowance for credit losses is recognized through an adjustment to the provision for credit losses.

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~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Continued)~~

Rollforward of Allowance for Credit Losses

The following is a rollforward of our allowance for expected credit losses for auto loans receivable for the three months ended March 31, 2024 and 2023:


	~~Three Months Ended~~
	~~March 31, 2023~~
~~Balance as of beginning of year~~	$	~~57.5~~
~~Provision for credit losses~~	~~12.8~~

~~Write-offs~~	~~(16.0)~~
~~Recoveries(1)~~	~~7.0~~
~~Balance as of March 31, 2023~~	$	~~61.3~~

~~(1)~~ ~~Net of costs incurred to recover vehicle collateral.~~


	Three Months Ended
	March 31,
	2024		2023
Balance as of beginning of year	$	46.3	$	57.5
Provision for credit losses	10.2		12.8

Write-offs	(14.0)		(16.0)
Recoveries(1)	5.6		7.0

Balance as of end of period	$	48.1	$	61.3

(1) Includes proceeds from the recovery of vehicle collateral, net of costs incurred.

Past Due Auto Loans Receivable

An account is considered delinquent if 95% of the required principal and interest payments have not been received as of the date such payments were due. All loans continue to accrue interest until repayment, write-off, or when a loan reaches 75 days past due. If payment is received after a loan has stopped accruing interest due to reaching 75 days past due, the loan will be deemed current and the accrual of interest resumes. When a write-off occurs, accrued interest is written off by reversing interest income. Payments received on nonaccrual assets are recorded using a combination of the cost recovery method and the cash basis method depending on whether the related loan has been written off. In general, accounts are written off on the last business day of the month during which the earliest of the following occurs: the receivable is 120 days or more delinquent as of the last business day of the month, the vehicle has been repossessed and liquidated, or the related vehicle has been in repossession inventory for at least 60 days. The following ~~tables present~~table presents past due auto loans receivable, as of March 31, ~~2023,~~2024, and December 31, ~~2022:~~2023:


		Age Analysis of Past-Due Auto Loans Receivable as of
		March 31, 2023		December 31, 2022
	Age Analysis of Past-Due Auto Loans Receivable as of										Age Analysis of Past-Due Auto Loans Receivable as of
	March 31, 2024								March 31, 2024			December 31, 2023
31-60 Days	31-60 Days	$	13.8	$	13.0
61-90 Days	61-90 Days	4.0		4.1		61-90 Days	4.7	5.4			5.4
Greater than 90 Days	Greater than 90 Days	2.2		2.6		Greater than 90 Days	2.9	3.1			3.1
Total Past Due	Total Past Due	$	20.0	$	19.7

Current	Current	383.2		357.3
Current
Current							542.5			422.0
Total	Total	$	403.2	$	377.0

Table of C ontents

AUTONATION, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

6.INVENTORY AND VEHICLE FLOORPLAN PAYABLE

The components of inventory are as follows:


		March 31, 2023		December 31, 2022
	March 31, 2024					March 31, 2024	December 31, 2023
New vehicles	New vehicles	$	1,248.3	$	1,009.7
Used vehicles	Used vehicles	693.3		789.1
Parts, accessories, and other	Parts, accessories, and other	254.6		249.5
Inventory	Inventory	$	2,196.2	$	2,048.3

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~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Continued)~~

The components of vehicle floorplan payable are as follows:


		March 31, 2023		December 31, 2022
	March 31, 2024					March 31, 2024	December 31, 2023
Vehicle floorplan payable - trade	Vehicle floorplan payable - trade	$	1,088.6	$	946.6
Vehicle floorplan payable - non-trade	Vehicle floorplan payable - non-trade	1,097.1		1,162.7
Vehicle floorplan payable	Vehicle floorplan payable	$	2,185.7	$	2,109.3

Vehicle floorplan payable-trade reflects amounts borrowed to finance the purchase of specific new and, to a lesser extent, used vehicle inventories with the corresponding manufacturers’ captive finance subsidiaries (“trade lenders”). Vehicle floorplan payable-non-trade represents amounts borrowed to finance the purchase of specific new and, to a lesser extent, used vehicle inventories with non-trade lenders, as well as amounts borrowed under our secured used vehicle floorplan facilities. Changes in vehicle floorplan payable-trade are reported as operating cash flows and changes in vehicle floorplan payable-non-trade are reported as financing cash flows in the accompanying Unaudited Condensed Consolidated Statements of Cash Flows.

Our inventory costs are generally reduced by manufacturer holdbacks, incentives, floorplan assistance, and non-reimbursement-based manufacturer advertising rebates, while the related vehicle floorplan payables are reflective of the gross cost of the vehicle. The vehicle floorplan payables, as shown in the above table, may also be higher than the inventory cost due to the timing of the sale of a vehicle and payment of the related liability.

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.

At March 31, ~~2023,~~2024, our new vehicle floorplan facilities utilized ~~LIBOR-based,~~ Prime-based and SOFR-based interest rates. Our new vehicle floorplan outstanding had a weighted-average interest rate of ~~6.5%~~7.0% at March 31, ~~2023,~~2024, and ~~5.9%~~7.1% at December 31, ~~2022.~~2023. As of March 31, ~~2023,~~2024, the aggregate capacity under our new vehicle floorplan facilities to finance our new vehicle inventory was approximately ~~$4.6~~$4.7 billion, of which ~~$1.7~~$2.8 billion had been borrowed.

At March 31, ~~2023,~~2024, our used vehicle floorplan facilities utilized ~~LIBOR-based,~~ Prime-based and SOFR-based interest rates. Our used vehicle floorplan outstanding had a weighted-average interest rate of ~~6.5%~~6.8% at March 31, ~~2023,~~2024, and ~~5.9%~~6.9% at December 31, ~~2022.~~2023. As of March 31, ~~2023,~~2024, the aggregate capacity under our used vehicle floorplan facilities with various lenders to finance a portion of our used vehicle inventory was ~~$683.6~~$810.0 million, of which ~~$443.7~~$499.6 million had been borrowed. The remaining borrowing capacity of ~~$239.9~~$310.4 million was limited to ~~$0.4~~$0.3 million based on the eligible used vehicle inventory that could have been pledged as collateral.

Table of C ontents

AUTONATION, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

7.GOODWILL AND INTANGIBLE ASSETS, NET

Goodwill and intangible assets, net, consist of the following:

March 31,
2023 December 31,
2022
Goodwill (1)
$ 1,450.2

$ 1,320.1
Franchise rights - indefinite-lived $ 821.0 $ 816.2
Other intangibles 70.8 30.7
891.8 846.9
Less: accumulated amortization (11.5) (9.9)
Other intangible assets, net $ 880.3 $ 837.0

~~(1)~~ The change in goodwill from the prior period is due to the acquisition of the mobile repair and maintenance business we acquired in January 2023. Such goodwill is reflected in our Mobile Service reporting unit.


	March 31, 2024		December 31, 2023
Goodwill	$	1,454.7	$	1,465.8

Franchise rights - indefinite-lived	$	875.7	$	876.2
Other intangibles	68.0		68.0
	943.7		944.2
Less: accumulated amortization	(18.1)		(16.4)
Other intangible assets, net	$	925.6	$	927.8

~~See Note 13 of the Notes to Unaudited Condensed Consolidated Financial Statements for information about our annual impairment tests of goodwill and franchise rights.~~

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~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Continued)~~

8.DEBT

Non-Vehicle Long-Term Debt

Non-vehicle long-term debt consisted of the following:

Debt Description

Maturity Date

Interest Payable

March 31,
2023

December 31,
2022

Debt Description

Maturity Date

Interest Payable

March 31,
2024

December 31,
2023

3.5% Senior Notes

November 15, 2024

May 15 and November 15

450.0

4.5% Senior Notes

October 1, 2025

April 1 and October 1

450.0

3.8% Senior Notes

November 15, 2027

May 15 and November 15

300.0

1.95% Senior Notes

August 1, 2028

February 1 and August 1

400.0

4.75% Senior Notes

June 1, 2030

June 1 and December 1

500.0

2.4% Senior Notes

August 1, 2031

February 1 and August 1

450.0

3.85% Senior Notes

March 1, 2032

March 1 and September 1

700.0

Revolving credit facility

March 26, 2025

Monthly

—

Finance leases and other debt

Various dates through 2041

372.4

375.5

3,622.4

3,625.5

3,609.7

Less: unamortized debt discounts and debt issuance costs

(25.0)

(26.0)

Less: current maturities

(12.7)

(12.6)

Long-term debt, net of current maturities

3,584.7

3,586.9

Senior Unsecured Notes and Credit Agreement

Our 3.5% Senior Notes due 2024 will mature on November 15, 2024, and were, therefore, reclassified to current during the fourth quarter of 2023.

The interest rates payable on our 3.5% Senior Notes, 4.5% Senior Notes, 3.8% Senior Notes, and 4.75% Senior Notes are subject to adjustment upon the occurrence of certain credit rating events as provided in the indentures for these senior unsecured notes.

Under our amended and restated credit agreement, we have a ~~$1.8~~$1.9 billion revolving credit facility that matures on ~~March 26, 2025.~~July 18, 2028. The credit agreement also contains an accordion feature that allows us, subject to credit availability and certain other conditions, to increase the amount of the revolving credit facility, together with any added term loans, by up to $500.0 million in the aggregate. As of March 31, ~~2023,~~2024, we had no borrowings outstanding under our revolving credit facility. We have a $200.0 million letter of credit sublimit as part of ~~our~~the revolving credit facility. The amount available to be borrowed under the revolving credit facility is reduced on a dollar-for-dollar basis by the cumulative amount of any outstanding letters of credit,

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AUTONATION, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

which was ~~$0.7~~$0.8 million at March 31, ~~2023,~~2024, leaving a borrowing capacity under ~~the revolving~~our credit ~~facility~~agreement of ~~$1.8~~$1.9 billion at March 31, ~~2023.~~2024.

Our revolving credit facility under ~~the~~our amended and restated credit agreement provides for a commitment fee on undrawn amounts ranging from 0.125% to 0.20% and interest on borrowings at SOFR plus a credit spread adjustment of 0.10% or the base rate, in each case plus an applicable margin. The applicable margin ranges from 1.125% to 1.50% for SOFR borrowings and 0.125% to 0.50% for base rate borrowings. The interest rate charged for our revolving credit facility is affected by our leverage ratio.

Within the meaning of Regulation S-X, Rule 3-10, AutoNation, Inc. (the parent company) has no independent assets or operations. If guarantees of our subsidiaries were to be issued under our existing registration statement, we expect that such guarantees would be full and unconditional and joint and several, and any subsidiaries other than the guarantor subsidiaries would be minor.

Other Long-Term Debt

At March 31, ~~2023,~~2024, we had finance leases and other debt obligations of ~~$372.4~~$359.7 million, which are due at various dates through 2041.

Commercial Paper

We have a commercial paper program pursuant to which we may issue short-term, unsecured commercial paper notes on a private placement basis up to a maximum aggregate amount outstanding at any time of ~~$1.0~~$1.9 billion. The interest rate for the commercial paper notes varies based on duration and market conditions. The maturities of the commercial paper notes may vary, but may not exceed 397 days from the date of issuance. Proceeds from the issuance of commercial paper notes are used to

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~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Continued)~~

repay borrowings under the revolving credit facility, to finance acquisitions, and for strategic initiatives, working capital, capital expenditures, share repurchases, and/or other general corporate purposes. We plan to use the revolving credit facility under our credit agreement as a liquidity backstop for borrowings under the commercial paper program. A downgrade in our credit ratings could negatively impact our ability to issue, or the interest rates for, commercial paper notes.

At March 31, ~~2023,~~2024, we had $285.0 million of commercial paper notes outstanding with a weighted-average annual interest rate of ~~5.55%~~5.9% and a weighted-average remaining term of 34 days. At December 31, ~~2022,~~2023, we had ~~$50.0~~$440.0 million of commercial paper notes outstanding with a weighted-average annual interest rate of ~~4.30%~~5.9% and a weighted-average remaining term of ~~1 day.~~6 days.

Non-Recourse Debt

Non-recourse debt relates to auto loans receivable of our captive auto finance company funded through non-recourse funding facilities, including warehouse facilities and asset-backed term funding transactions.

We have ~~two~~three warehouse facility agreements with certain banking institutions through wholly-owned, bankruptcy-remote, special purpose entities, primarily to finance the purchase and origination of auto loans receivable. We fund auto loans receivable through these warehouse facilities, which are secured by the eligible auto loans receivable pledged as collateral.

Additionally, we have term securitizations that were put in place to provide long-term funding for certain auto loans receivable initially funded through the warehouse facilities. In these transactions, a pool of auto loans receivable is sold to a bankruptcy-remote, special purpose entity that, in turn, transfers the receivables to a special purpose securitization trust (“term securitization trust”). The term securitization trust issues asset-backed securities, secured or otherwise supported by the transferred receivables, and the proceeds from the sale of the asset-backed securities are used to finance the securitized receivables.

We are required to evaluate the term securitization trusts for consolidation. We retain the servicing rights for the auto loans receivable that were funded through the term securitizations. In our capacity as servicer of the underlying auto loans receivable, we have the power to direct the activities of the trusts that most significantly impact the economic performance of the trusts. In addition, we have the obligation to absorb losses (subject to limitations) and the rights to receive any returns of the trusts, which could be significant. Accordingly, we are the primary beneficiary of the trusts and are required to consolidate them.

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AUTONATION, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

We recognize transfers of auto loans receivable into the warehouse facilities and term securitizations (together, “non-recourse debt”) as secured borrowings, which result in recording the auto loans receivable and the related non-recourse debt on our Unaudited Condensed Consolidated Balance Sheets. The non-recourse debt is structured to legally isolate the auto loans receivable, which can only be used as collateral to settle obligations of the related non-recourse debt. The term securitization trusts and investors and the creditors of the warehouse facilities 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 outstanding at March 31, ~~2023,~~2024, and December 31, ~~2022,~~2023, consisted of the following:


		March 31, 2023		December 31, 2022
	March 31, 2024					March 31, 2024	December 31, 2023
Warehouse facilities	Warehouse facilities	$	162.3	$	181.8
Term securitization debt of consolidated VIEs	Term securitization debt of consolidated VIEs	125.3		146.9
		287.6		328.7
	346.3
Less: unamortized debt discounts and debt issuance costs	Less: unamortized debt discounts and debt issuance costs	(4.2)		(5.1)
Less: current maturities	Less: current maturities	(12.0)		(10.7)
Non-recourse debt, net of current maturities	Non-recourse debt, net of current maturities	$	271.4	$	312.9

The timing of principal payments on the non-recourse debt is based on the timing of principal collections and defaults on the related auto loans receivable. The current portion of non-recourse debt represents the portion of the payments received from the auto loans receivable that are due to be distributed as principal payments on the non-recourse debt in the following period.

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~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Continued)~~

We generally enter into warehouse facility agreements for one-year terms and typically renew the agreements annually. One of the warehouse facilities matures onin October ~~1, 2023,~~2024, and ~~the other~~another matures ~~on December 17, 2023.~~in January 2025. In February 2024, we entered into a new warehouse facility that matures in February 2025. Aggregate commitments under the warehouse facilities total ~~$350.0~~$450.0 million.

The term securitization debt of consolidated VIEs consists of various notes with interest rates ranging from ~~0.69%~~1.79% to ~~4.85%~~4.45% and maturity dates ranging from ~~August 2024~~April 2027 to May 2028. Term securitization debt is expected to become due and be paid prior to the final legal maturities based on amortization of the auto loans receivable pledged as collateral. The term securitization agreements require certain funds to be held in restricted cash accounts to provide additional collateral for the borrowings or to be applied to make payments on the securitization debt. Restricted cash of consolidated VIEs under the various term securitization agreements totaled ~~$15.5~~$4.0 million as of March 31, ~~2023,~~2024, and ~~$14.9~~$4.3 million as of December 31, ~~2022,~~2023, and is included in Other Current Assets and Other Assets in our Unaudited Condensed Consolidated Balance Sheets. Auto loans receivable pledged to the term securitization debt of consolidated VIEs totaled ~~$127.9~~$43.1 million as of March 31, ~~2023,~~2024, and ~~$151.4~~$50.8 million as of December 31, ~~2022.~~2023.

9.INCOME TAXES

Income taxes payable included in Other Current Liabilities totaled ~~$68.8~~$50.1 million at March 31, ~~2023,~~2024, and income taxes receivable included in Receivables, net totaled ~~$20.2~~$11.1 million at December 31, ~~2022.~~2023.

We file income tax returns in the U.S. federal jurisdiction and various states. As a matter of course, various taxing authorities, including the IRS, regularly audit us. These audits may culminate in proposed assessments which may ultimately result in our owing additional taxes. With few exceptions, we are no longer subject to U.S. federal, state, and local income tax examinations by tax authorities for years before ~~2018.~~2019. Currently, no tax years are under examination by the IRS and tax years from 2019 to 2021 are under examination by U.S. state jurisdictions. We believe that our tax positions comply with applicable tax law and that we have adequately provided for these matters.

It is our policy to account for interest and penalties associated with income tax obligations as a component of Income Tax Provision in the accompanying Unaudited Condensed Consolidated Statements of Income.

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AUTONATION, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

10.SHAREHOLDERS’ EQUITY

A summary of shares repurchased under our stock repurchase program authorized by our Board of Directors follows:

Three Months Ended
March 31,
2023 2022
Shares repurchased 2.4 3.5
Aggregate purchase price (1)
$ 305.0 $ 380.9
Average purchase price per share $ 126.37 $ 110.04
(1) Excludes excise tax accrual imposed under the Inflation Reduction Act of $2.5 million for the three months ended March 31, 2023.


	Three Months Ended
	March 31,
	2024		2023
Shares repurchased	0.2		2.4
Aggregate purchase price (1)	$	38.7	$	305.0
Average purchase price per share	$	158.40	$	126.37

(1) Excludes excise taxes imposed under the Inflation Reduction Act of $0.1 million and $2.5 million for the three months ended March 31, 2024, and March 31, 2023, respectively.

As of March 31, ~~2023, $879.4~~2024, $282.1 million remained available under our stock repurchase limit ~~most recently~~ authorized by our Board of Directors. From April 1, 2024, through April 24, 2024, we repurchased 1.4 million shares of common stock for an aggregate purchase price of $211.3 million (average purchase price per share of $155.74). In April 2024, our Board of Directors authorized the repurchase of up to an additional $1.0 billion of common stock.

We have 5.0 million authorized shares of preferred stock, par value $0.01 per share, none of which are issued or outstanding. The Board of Directors has the authority to issue the preferred stock in one or more series and to establish the rights, preferences, and dividends of such preferred stock.

A summary of shares of common stock issued in connection with the exercise of stock options follows:

Three Months Ended
March 31,
2023 2022
Shares issued (in actual number of shares) 27,135 22,396
Proceeds from the exercise of stock options $ 1.3 $ 0.9
Average exercise price per share $ 47.57 $ 38.21

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~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Continued)~~


	Three Months Ended
	March 31,
	2024		2023
Shares issued (in actual number of shares)	965		27,135
Proceeds from the exercise of stock options	$	0.1	$	1.3
Average exercise price per share	$	64.48	$	47.57

The following table presents a summary of shares of common stock issued in connection with the settlement of RSUs, as well as shares surrendered to AutoNation to satisfy tax withholding obligations in connection with the settlement of RSUs:


		Three Months Ended
		Three Months Ended
		Three Months Ended

		Three Months Ended
		March 31,
		2023	2022
		2024
		2024
		2024
Shares issued
Shares issued
Shares issued	Shares issued	0.5	0.8
Shares surrendered to AutoNation to satisfy tax withholding obligations	Shares surrendered to AutoNation to satisfy tax withholding obligations	0.2	0.3
Shares surrendered to AutoNation to satisfy tax withholding obligations
Shares surrendered to AutoNation to satisfy tax withholding obligations

11. ACQUISITIONS AND DIVESTITURES

We did not purchase any stores during the three months ended March 31, 2024. During the three months ended March 31, 2023, we acquired RepairSmith, a mobile solution for automotive repair and maintenance, which we renamed AutoNation Mobile Service, and we also purchased one store. Acquisitions are included in the Unaudited Condensed Consolidated Financial Statements from the date of acquisition. The purchase price allocations for these business combinations are preliminary and subject to final adjustments, primarily related to the valuation of working capital, deferred tax assets and liabilities, and residual goodwill. We did not purchase any stores during the three months ended March 31, 2022.

The acquisitions that occurred during the three months ended March 31, 2023, were not material to our financial condition or results of operations. Additionally, on a pro forma basis as if the results of these acquisitions had been included in our consolidated results for the entire three month ~~periods~~period ended March 31, 2023, ~~and 2022,~~ revenue and net income would not have been materially different from our reported revenue and net income for ~~these periods.~~this period.

We did not divest stores during the three months ended March 31, 2024 or 2023. We terminated two franchises during the three months ended March 31, 2024.

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AUTONATION, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

12.CASH FLOW INFORMATION

Cash, Cash Equivalents, and Restricted Cash

The total amounts presented on our statements of cash flows include cash, cash equivalents, and restricted cash. Restricted cash includes additional collateral for non-recourse debt borrowings and collections on auto loans receivable that are due to be distributed to non-recourse debt holders in the following period. The following table provides a reconciliation of cash and cash equivalents reported on our Unaudited Condensed Consolidated Balance Sheets to the total amounts reported on our Unaudited Condensed Consolidated Statements of Cash Flows:


		March 31, 2023		December 31, 2022
	March 31, 2024					March 31, 2024	December 31, 2023
Cash and cash equivalents	Cash and cash equivalents	$	58.3	$	72.6
Restricted cash included in Other Current Assets	Restricted cash included in Other Current Assets	17.8		15.6
Restricted cash included in Other Assets	Restricted cash included in Other Assets	7.3		7.2
Total cash, cash equivalents, and restricted cash	Total cash, cash equivalents, and restricted cash	$	83.4	$	95.4

Non-Cash Investing and Financing Activities

We had accrued purchases of property and equipment of $26.7 million at March 31, 2024, and $33.7 million at March 31, ~~2023, and $20.1 million at March 31, 2022.~~2023.

Three Months Ended
March 31,
2023 2022
Supplemental noncash information on adjustments to right-of-use assets, including right-of-use assets obtained in exchange for new:
Operating lease liabilities $ 15.8 $ 9.6
Finance lease liabilities $ 13.5 $ 4.7

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~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Continued)~~


	Three Months Ended
	March 31,
	2024		2023
Supplemental noncash information on adjustments to right-of-use assets, including right-of-use assets obtained in exchange for new:
Operating lease liabilities	$	35.2	$	15.8
Finance lease liabilities	$	6.9	$	13.5

Interest and Income Taxes Paid

We made interest payments, net of amounts capitalized and including interest on vehicle inventory financing, of $86.1 million during the three months ended March 31, 2024, and $58.1 million during the three months ended March 31, ~~2023, and $18.4 million during the three months ended March 31, 2022.~~2023. We made income tax payments, net of income tax refunds, of $0.2 million during the three months ended March 31, 2024, and $0.7 million during the three months ended March 31, ~~2023, and $0.5 million during the three months ended March 31, 2022.~~2023.

13.FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

The fair value of a financial instrument represents the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. Fair value estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of judgment, and therefore cannot be determined with precision.

Accounting standards define fair value as the price that would be received from selling an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Accounting standards establish a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value and also establishes the following three levels of inputs that may be used to measure fair value:


Level 1			Quoted prices (unadjusted) in active markets for identical assets or liabilities that a reporting entity can access at the measurement date

Level 2			Inputs other than quoted prices in active markets for identical assets and liabilities that are observable either directly or indirectly

Level 3			Unobservable inputs

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AUTONATION, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

The following methods and assumptions were used by us in estimating fair value disclosures for financial instruments:

•Cash and cash equivalents, receivables, other current assets, vehicle floorplan payable, accounts payable, other current liabilities, commercial paper, warehouse credit facilities, and variable rate debt: The amounts reported in the accompanying Unaudited Condensed Consolidated Balance Sheets approximate fair value due to their short-term nature or the existence of variable interest rates that approximate prevailing market rates.

•Auto loans receivable, net: Auto loans receivable are presented net of an allowance for expected credit losses, which we believe approximates fair value.

•Investments in Equity Securities: Our equity investments with readily determinable fair values are measured at fair value using Level 1 inputs. The fair value of our equity investments with readily determinable fair values totaled ~~$14.3~~$22.8 million at March 31, ~~2023,~~2024, and ~~$15.4~~$22.8 million at December 31, ~~2022.~~2023.

Our equity investment that does not have a readily determinable fair value is measured using the measurement alternative as permitted by accounting standards and was recorded at cost, to be subsequently adjusted for observable price changes. The carrying amount of our equity investment without a readily determinable fair value was $56.7 million at March 31, ~~2023,~~2024, and $56.7 million at December 31, ~~2022.~~2023. This equity investment reflects a cumulative upward adjustment of $3.4 million based on an observable price ~~change.~~change that occurred in the second quarter of 2021. We did not record any upward adjustments during the three months ended March 31, ~~2023.~~2024. Additionally, we have not recorded any impairments or downward adjustments to the carrying amount of this equity investment as of and for the three months ended March 31, ~~2023.~~2024.

Investments in equity securities are reported in Other Current Assets and Other Assets in the accompanying Unaudited Condensed Consolidated Balance Sheets. Realized and unrealized gains and losses are reported in Other Income, ~~(Loss),~~ Net (non-operating) in the Unaudited Condensed Consolidated Statements of Income and in the “Corporate and other” category of our segment information.

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~~(Continued)~~


		Three Months Ended March 31,
		2023		2022
	Three Months Ended						Three Months Ended
	March 31,						March 31,
	2024					2024		2023
Net losses recognized during the period on equity securities	Net losses recognized during the period on equity securities	$	(1.1)	$	(0.1)
Less: Net losses recognized during the period on equity securities sold during the period		—		—
Less: Net gains (losses) recognized during the period on equity securities sold during the period
Unrealized losses recognized during the reporting period on equity securities still held at the reporting date	Unrealized losses recognized during the reporting period on equity securities still held at the reporting date	$	(1.1)	$	(0.1)

•Fixed rate long-term debt: Our fixed rate long-term debt consists primarily of amounts outstanding under our senior unsecured notes. We estimate the fair value of our senior unsecured notes using quoted prices for the identical liability (Level 1). A summary of the aggregate carrying values and fair values of our senior unsecured notes is as follows:

March 31,
2023 December 31,
2022
Carrying value $ 3,225.0 $ 3,224.0
Fair value $ 2,907.2 $ 2,803.6


	March 31, 2024		December 31, 2023
Carrying value	$	3,229.1	$	3,228.1
Fair value	$	2,984.8	$	2,979.3

Nonfinancial assets such as goodwill, other intangible assets, and long-lived assets held and used, are measured at fair value when there is an indicator of impairment and recorded at fair value only when impairment is recognized or for a business combination. The fair values less costs to sell of long-lived assets orand disposal groups held for sale are assessed each reporting period they remain classified as held for sale. Subsequent changes in the held for sale long-lived asset’s or disposal ~~group's~~group’s fair value less cost to sell (increase or decrease) are reported as an adjustment to its carrying amount, except that the adjusted carrying amount cannot exceed the carrying amount of the long-lived asset or disposal group at the time it was initially classified as held for sale.

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AUTONATION, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

The following table presents assets measured and recorded at fair value on a nonrecurring basis during the three months ended March 31, ~~2023~~2024 and ~~2022:~~2023:


			2023				2022
		2024												2024			2023
Description	Description		Fair Value Measurements Using Significant Unobservable Inputs (Level 3)		Gain/(Loss)		Fair Value Measurements Using Significant Unobservable Inputs (Level 3)		Gain/(Loss)		Description	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)	Gain/(Loss)		Fair Value Measurements Using Significant Unobservable Inputs (Level 3)	Gain/(Loss)

Long-lived assets held and used	Long-lived assets held and used		$	—	$	(1.4)	$	—	$	(0.4)

Long-lived assets held and used

Long-lived assets held and used

Long-Lived Assets and Right-of-Use Assets

Fair value measurements for our long-lived assets and right-of-use assets are based on Level 3 inputs. Changes in fair value measurements are reviewed and assessed each quarter for properties and disposal groups classified as held for sale, or when an indicator of impairment exists for properties classified as held and used or for right-of-use assets. The valuation process is generally based on a combination of the market and replacement cost approaches. In certain cases, fair value measurements are based on pending agreements to sell the related assets.

In a market approach, we use transaction prices for comparable properties that have recently been sold. These transaction prices are adjusted for factors related to a specific property. We evaluate changes in local real estate markets, and/or recent market interest or negotiations related to a specific property. In a replacement cost approach, the cost to replace a specific long-lived asset is considered, which is adjusted for depreciation from physical deterioration, as well as functional and economic obsolescence, if present and measurable.

To validate the fair values determined under the valuation process noted above, we also obtain independent third-party appraisals for our properties and/or third-party brokers’ opinions of value, which are generally developed using the same valuation approaches described above, and we evaluate any recent negotiations or discussions with third-party real estate brokers related to a specific long-lived asset or market.

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~~(Continued)~~

The non-cash impairment charges related to ~~right-of-use assets and~~ long-lived assets held and used are included in Other ~~(Income)~~ Expense, Net in our Unaudited Condensed Consolidated Statements of Income and in the “Corporate and other” category of our segment information.

We had assets held for sale in continuing operations of ~~$5.7~~$134.2 million as of March 31, ~~2023,~~2024, and ~~$5.7~~$21.3 million as of December 31, ~~2022,~~2023, primarily related to inventory, goodwill, and property of disposal groups held for sale, as well as property held for sale. We had no assets held for sale in discontinued operations as of March 31, ~~2023,~~2024 and ~~$1.1 million as of~~ December 31, ~~2022, which was related to property held for sale.~~2023. Assets held for sale are included in Other Current Assets in our Unaudited Condensed ~~Consolidated Balance Sheets.~~

~~Repossessed assets~~

Repossessed assets consists of vehicles repossessed in the event of non-payment of the related auto loans receivable. Repossessed assets are recorded at their estimated fair values, based on Level 3 inputs, less estimated costs to sell. The fair value is determined based on comparable recent sales and adjusted for various factors, including the age of the vehicle and known changes in the market and in the collateral. We had repossessed assets of $3.2 million as of March 31, 2023, and $2.7 million as of December 31, 2022. Repossessed assets are included in Other Assets in our Consolidated Balance Sheets.

14.COMMITMENTS AND CONTINGENCIES

Legal Proceedings

We are involved, and will continue to be involved, in numerous legal proceedings arising out of the conduct of our business, including litigation with customers, third-party dealers, wage and hour and other employment-related lawsuits, and actions brought by governmental authorities. Some of these lawsuits purport or may be determined to be class or collective actions and seek substantial damages or injunctive relief, or both, and some may remain unresolved for several years. We establish accruals for specific legal proceedings when it is considered probable that a loss has been incurred and the amount of the loss can be reasonably estimated. Our accruals for loss contingencies are reviewed quarterly and adjusted as additional information becomes available. We disclose the amount accrued if material or if such disclosure is necessary for our financial statements to not be misleading. If a loss is not both probable and reasonably estimable, or if an exposure to loss exists in excess of the amount accrued, we assess whether there is at least a reasonable possibility that a loss, or additional loss, may have been incurred. If there is a reasonable possibility that a loss, or additional loss, may have been incurred, we disclose the estimate of the possible loss or range of loss if it is material or a statement that such an estimate cannot be made. Our evaluation of whether a loss is reasonably possible or probable is based on our assessment and consultation with legal counsel regarding the ultimate outcome of the matter.

Table of C ontents

AUTONATION, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

As of March 31, ~~2023~~2024 and ~~2022,~~2023, we have accrued for the potential impact of loss contingencies that are probable and reasonably estimable, and there was no indication of a reasonable possibility that a material loss, or additional material loss, may have been incurred. We do not believe that the ultimate resolution of these matters will have a material adverse effect on our results of operations, financial condition, or cash flows. However, the results of these matters cannot be predicted with certainty, and an unfavorable resolution of one or more of these matters could have a material adverse effect on our results of operations, financial condition, or cash flows.

Other Matters

AutoNation, acting through its subsidiaries, is the lessee under many real estate leases that provide for the use by our subsidiaries of their respective store premises. Pursuant to these leases, ~~our subsidiaries generally~~we agree to indemnify the lessor and other related parties from certain liabilities arising as a result of the use of the leased premises, including environmental liabilities, or a breach of the lease by the lessee. Additionally, from time to time, we enter into agreements with third parties in connection with the sale of assets or businesses in which we agree to indemnify the purchaser or related parties from certain liabilities or costs arising in connection with the assets or business. Also, in the ordinary course of business in connection with purchases or sales of goods and services, we enter into agreements that may contain indemnification provisions. In the event that an indemnification claim is asserted, our liability would be limited by the terms of the applicable agreement.

From time to time, primarily in connection with dispositions of automotive stores, ~~our subsidiaries~~we assign or sublet to the store purchaser ~~the subsidiaries’~~our interests in any real property leases associated with such stores. In general, ~~our subsidiaries~~we retain responsibility for the performance of certain obligations under such leases to the extent that the assignee or sublessee does not perform, whether such performance is required prior to or following the assignment or subletting of the lease. Additionally, ~~AutoNation and its subsidiaries~~we generally remain subject to the terms of any guarantees made by us ~~and our~~

T ~~able of Contents~~

~~AUTONATION, INC.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Continued)~~

~~subsidiaries~~ in connection with such leases. We generally have indemnification rights against the assignee or sublessee in the event of non-performance under these leases, as well as certain defenses. We presently have no reason to believe that we ~~or our subsidiaries~~ will be called on to perform under any such remaining assigned leases or subleases. We estimate that lessee rental payment obligations during the remaining terms of these leases with expirations ranging from 2024 to 2034 are approximately $6$5 million at March 31, ~~2023.~~2024. There can be no assurance that any performance required of ~~AutoNation or its subsidiaries required~~us under these leases would not have a material adverse effect on our business, financial condition, and cash flows.

At March 31, ~~2023,~~2024, surety bonds, letters of credit, and cash deposits totaled ~~$111.2~~$119.3 million, of which ~~$0.7~~$0.8 million were letters of credit. 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. We do not currently provide cash collateral for outstanding letters of credit.

In the ordinary course of business, we are subject to numerous laws and regulations, including automotive, environmental, health and safety, and other laws and regulations. We do not anticipate that the costs of compliance with such laws will have a material adverse effect on our business, results of operations, cash flows, or financial condition, although such outcome is possible given the nature of our operations and the extensive legal and regulatory framework applicable to our business. We do not have any material known environmental commitments or contingencies.

15.BUSINESS AND CREDIT CONCENTRATIONS

We own and operate franchised automotive stores in the United States pursuant to franchise agreements with vehicle manufacturers. During the three months ended March 31, ~~2023,~~2024, approximately ~~63%~~65% of our total retail new vehicle unit sales was generated by our stores in Florida, Texas, and California. We are subject to a concentration of risk in the event of financial distress of or other adverse event related to a major vehicle manufacturer or related lender or supplier. The core brands of vehicles that we sell, representing approximately ~~89%~~88% of the new vehicles that we sold during the three months ended March 31, ~~2023,~~2024, are manufactured by Toyota (including Lexus), Honda, Ford, ~~BMW,~~ General Motors, BMW, Mercedes-Benz, Stellantis, and Volkswagen (including Audi and Porsche). Our business could be materially adversely impacted by a bankruptcy of or other adverse event related to a major vehicle manufacturer or related lender or supplier.

We had receivables from manufacturers or distributors of ~~$179.6~~$212.0 million at March 31, ~~2023,~~2024, and ~~$174.4~~$240.5 million at December 31, ~~2022.~~2023. Additionally, a large portion of our contracts-in-transit included in Receivables, net, in the accompanying Unaudited Condensed Consolidated Balance Sheets, are due from automotive manufacturers’ captive finance subsidiaries, which provide financing directly to our new and used vehicle customers. Concentrations of credit risk with respect to non-manufacturer trade receivables are limited due to the wide variety of customers and markets in which our products are sold as

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AUTONATION, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

well as their dispersion across many different geographic areas in the United States. Consequently, at March 31, ~~2023,~~2024, we do not consider AutoNation to have any significant non-manufacturer concentrations of credit risk.

16.SEGMENT INFORMATION

At March 31, ~~2023~~2024 and ~~2022,~~2023, we had three reportable segments: (1) Domestic, (2) Import, and (3) Premium Luxury. 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 segment also sell used vehicles, parts and automotive repair and maintenance services, and automotive finance and insurance products.

“Corporate and other” is comprised of our ~~other~~non-franchised businesses, including AutoNation USA used vehicle stores, collision centers, parts distribution centers, auction operations, and ~~RepairSmith,~~ our mobile automotive repair and maintenance business, all of which generate revenues but do not meet the quantitative thresholds for reportable segments, as well as the results of our auto finance company, unallocated corporate overhead expenses, and other income items.

The reportable segments identified above are the business activities of the Company for which discrete financial information is available and for which operating results are regularly reviewed by our chief operating decision maker to allocate resources and assess performance. Our chief operating decision maker is our Chief Executive Officer.

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~~AUTONATION, INC.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Continued)~~

The following table provides information on revenues from external customers and segment income of our reportable segments:
Three Months Ended
March 31, 2023
Domestic Import Premium Luxury
Revenues from external customers $ 1,831.1 $ 1,789.3 $ 2,484.9
Segment income (1)
$ 118.5 $ 160.4 $ 226.8
Three Months Ended
March 31, 2022
Domestic Import Premium Luxury
Revenues from external customers $ 2,034.4 $ 1,974.1 $ 2,478.7
Segment income (1)
$ 149.4 $ 186.2 $ 229.5
(1) Segment income represents income for each of our reportable segments and is defined as operating income less floorplan interest expense.


	Three Months Ended
	March 31, 2024
	Domestic		Import		Premium Luxury
Revenues from external customers	$	1,756.7	$	1,979.5	$	2,414.9
Segment income (1)	$	75.2	$	128.8	$	171.6

	Three Months Ended
	March 31, 2023
	Domestic		Import		Premium Luxury
Revenues from external customers	$	1,831.1	$	1,789.3	$	2,484.9
Segment income (1)	$	118.5	$	160.4	$	226.8

(1) Segment income represents income for each of our reportable segments and is defined as operating income less floorplan interest expense.

The following is a reconciliation of total segment income for reportable segments to our consolidated income from continuing operations before income taxes:

Three Months Ended
March 31,
2023 2022
Total segment income for reportable segments $ 505.7 $ 565.1
Corporate and other (89.5) (51.3)
Other interest expense (41.1) (29.6)
Other income (loss), net 5.2 (6.4)
Income from continuing operations before income taxes $ 380.3 $ 477.8


	Three Months Ended
	March 31,
	2024		2023
Total segment income for reportable segments	$	375.6	$	505.7
Corporate and other	(84.7)		(89.5)
Other interest expense	(44.6)		(41.1)
Other income, net	7.0		5.2
Income from continuing operations before income taxes	$	253.3	$	380.3

2223

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements and notes thereto included under Part I, Item 1 of this Quarterly Report on Form 10-Q. In addition, reference should be made to our audited Consolidated Financial Statements and notes thereto and related “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our most recent Annual Report on Form 10-K.

Overview

AutoNation, Inc., through its subsidiaries, is one of the largest automotive retailers in the United States. As of March 31, ~~2023,~~2024, we owned and operated ~~344~~347 new vehicle franchises from ~~248~~251 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 3332 different new vehicle brands. The core brands of new vehicles that we sell, representing approximately ~~89%~~88% of the new vehicles that we sold during the three months ended March 31, ~~2023,~~2024, are manufactured by Toyota (including Lexus), Honda, Ford, ~~BMW,~~ General Motors, BMW, Mercedes-Benz, Stellantis, and Volkswagen (including Audi and Porsche). As of March 31, ~~2023,~~2024, we also owned and operated 5352 AutoNation-branded collision centers, 1523 AutoNation USA used vehicle stores, 4 AutoNation-branded automotive auction operations, 3 parts distribution centers, ~~an auto finance company, and~~ a mobile automotive repair and maintenance ~~business.~~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 ~~on certain vehicles we sell, as well as on installment contracts acquired by~~through our captive finance company ~~through third-party independent dealers.~~on vehicles we sell. We believe that the significant scale of our operations and the quality of our managerial talent allow us to achieve efficiencies in our key markets by, among other things, leveraging the AutoNation retail brand and advertising, implementing standardized processes, and increasing productivity across all of our stores.

At March 31, ~~2023,~~2024, we had three reportable segments: (1) Domestic, (2) Import, and (3) Premium Luxury. 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 segment also sell used vehicles, parts and automotive repair and maintenance services, and automotive finance and insurance products.

For the three months ended March 31, ~~2023,~~2024, new vehicle sales accounted for 46% of our total revenue and ~~22%~~16% of our total gross profit. Used vehicle sales accounted for ~~32%~~31% of our total revenue and ~~12%~~9% of our total gross profit. Our parts and service operations, while comprising ~~17%~~18% of our total revenue, contributed ~~40%~~46% of our total gross profit. Our finance and insurance sales, while comprising 5% of our total revenue, contributed ~~26%~~28% of our total gross profit.

Market Conditions

In the first quarter of ~~2023,~~2024, U.S. industry retail new vehicle unit sales increased 2%approximately 5% as compared to the first quarter of ~~2022, primarily as a result of increasing supply of new vehicle inventory.~~2023. Although still below historical levels, new vehicle inventory levels ~~for certain manufacturers and models improved slightly~~continued to increase during the first quarter of ~~2023, there continues~~2024 due to ~~be a shortage~~higher levels of ~~available~~manufacturer vehicle production. The increasing supply and availability of new ~~vehicles for sale as compared to historical~~vehicle inventory, ~~levels, particularly for certain models, driven largely~~which varies by ~~disruptions~~make and model, has resulted in ~~the manufacturers’ supply chains. The decline in~~moderation of new vehicle unit ~~volume~~profitability, which we expect will continue throughout 2024. Additionally, the increased availability of new vehicles and an increase in ~~recent periods~~manufacturer new vehicle incentives, including low-interest financing and customer rebates, has adversely impacted ~~the availability of~~market demand for used vehicles, particularly for higher-priced, nearly new vehicle inventory, ~~which has had an adverse impact on our~~and stabilization of used vehicle ~~sales volume. Additionally, worsening economic conditions, including rising interest rates, could adversely impact consumer demand for vehicles.~~value trends, as compared to the prior year period, has resulted in moderation of used vehicle unit profitability.

Results of Operations

During the three months ended March 31, ~~2023,~~2024, we had net income of $190.1 million and diluted earnings per share of $4.49, as compared to net income of $288.7 million and diluted earnings per share of $6.07 ~~as compared to net income of $362.1 million and diluted earnings per share of $5.78~~ during the same period in ~~2022.~~2023.

Our total gross profit decreased ~~1.7%~~6.9% during the first quarter of ~~2023~~2024 compared to the first quarter of ~~2022,~~2023, driven by decreases in new vehicle gross profit of ~~16.8%~~31.7% and ~~finance and insurance~~used vehicle gross profit of ~~8.7%~~27.8%, each as compared to the first quarter of ~~2022.~~

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2023. New vehicle gross profit was adversely impacted by a decrease in gross profit per vehicle retailed (“PVR”)

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resulting from ~~improving~~increasing supply and availability of new vehicle ~~inventory. Finance~~inventory, which has resulted in moderation of pricing and ~~insurance~~margins. Used vehicle gross profit was adversely impacted by a decrease in ~~new and~~gross profit PVR primarily due to stabilization of used vehicle ~~unit volume.~~value trends, as compared to the prior year period, as well as certain actions we took in the beginning of the first quarter of 2024 to better align used vehicle inventory with market demand and achieve a more optimal inventory supply. The decreases in gross profit were partially offset by ~~increases~~an increase in ~~used vehicle gross profit of 13.0% and~~ parts and service gross profit of ~~10.8%~~8.7%, ~~each~~ as compared to the first quarter of 2022. Used vehicle gross profit increased due to an increase in gross profit PVR, partially offset by a decrease in used vehicle unit volume. Used vehicle gross profit PVR benefited from a disciplined sourcing and pricing strategy as we focused on efficient internal sourcing of our used vehicle inventory and balancing gross profit PVR and unit volume.2023. Parts and service results benefited primarily from increases in gross profit from ~~customer-pay~~the preparation of vehicles for sale, warranty service, and ~~warranty~~customer-pay service.

~~SG&A expenses increased largely due to acquisitions and newly opened stores and expenditures associated with investments in technology and strategic initiatives.~~ Floorplan interest expense increased due to higher average ~~interest rates~~floorplan balances and higher average ~~floorplan balances. Other~~ interest ~~expense increased due to higher average interest rates and higher average debt balances.~~

~~Strategic Initiatives~~

To better service the personal transportation needs of our customers, we continue to expand our footprint through dealership acquisitions and the expansion of our AutoNation USA stores. We also continue to invest in various strategic partnerships and initiatives to expand the scope and scale of our business, broaden our product offerings, expand our reach to customers, and continue to provide a peerless customer experience.

On January 26, 2023, we acquired RepairSmith, a mobile solution for automotive repair and maintenance. RepairSmith expands AutoNation’s ability to penetrate the extensive After-Sales service market and conveniently responds to our customers’ needs by broadening the reach of our existing After-Sales network.rates.

Inventory Management

Our new and used vehicle inventories are stated at the lower of cost or net realizable value in our ~~consolidated balance sheets.~~Unaudited Condensed Consolidated Balance Sheets. We monitor our vehicle inventory levels based on current economic conditions and seasonal sales trends.

Our new vehicle inventory units at March 31, 2024 and 2023, were 38,185 and ~~2022, were~~ 21,176, ~~and 9,055,~~ respectively. While our new vehicle inventory units have increased compared to the prior year, by historical standards, our inventory unit levels are significantly lower driven largely by disruptions in the manufacturers’ supply chains. Inadequate levels of new vehicle availability could adversely affect our financial results.

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, and~~values. We had no new vehicle inventory write-downs at March 31, ~~2023, or at~~2024 and December 31, ~~2022.~~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 ~~$5.1~~$6.5 million at March 31, ~~2023,~~2024, and ~~$7.4~~$12.2 million at December 31, ~~2022.~~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 excess and 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 ~~$7.2~~$7.9 million at March 31, ~~2023,~~2024, and ~~$7.4~~$7.8 million at December 31, ~~2022.~~2023.

Critical Accounting Estimates

We prepare our Unaudited Condensed Consolidated Financial Statements in conformity with U.S. generally accepted accounting principles (“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 as of 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 Unaudited Condensed Consolidated Financial Statements. For additional discussion of our critical accounting estimates, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our most recent Annual Report on Form 10-K.

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Goodwill

Goodwill for our reporting units is tested for impairment annually as of April 30 or more frequently when events or changes in circumstances indicate that the carrying value of a reporting unit ~~more likely than not~~ exceeds its fair value. We are scheduled to complete our annual goodwill impairment test as of April 30, ~~2023.~~2024.

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.

If we do not perform a qualitative assessment, or if we determine that it is not more likely than not that the fair value of the reporting unit exceeds its carrying amount, we calculate the estimated fair value of the reporting unit using an “income” valuation approach, which discounts projected free cash flows of the reporting unit at a computed weighted average cost of capital as the discount rate. The income valuation approach requires the use of significant estimates and assumptions, which include revenue growth rates and future operating margins used to calculate projected future cash flows, weighted average cost of capital, and future economic and market conditions. In connection with this process, we also reconcile the estimated

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aggregate fair values of our reporting units to our market capitalization, including consideration of a control premium based upon our stock price and/or average stock price over a reasonable period as of the measurement date. We base our cash flow forecasts on our knowledge of the automotive industry, our recent performance, our expectations of our future performance, and other assumptions we believe to be reasonable but that are unpredictable and inherently uncertain. Actual future results may differ from those estimates. We also make certain judgments and assumptions in allocating shared assets and liabilities to determine the carrying values for each of our reporting units.

As of March 31, ~~2023,~~2024, we have ~~$236.3~~$225.0 million of goodwill related to the Domestic reporting unit, ~~$518.7~~$524.1 million related to the Import reporting unit, $482.1 million related to the Premium Luxury reporting unit, ~~$130.1~~$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.

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 are scheduled to complete our annual impairment test of our franchise rights as of April 30, ~~2023.~~2024.

We may first perform a qualitative assessment to determine whether it is more likely than not that a franchise right asset is impaired. The quantitative impairment test for franchise rights requires the comparison of the franchise rights’ estimated fair value to carrying value by store. Fair values of rights under franchise agreements are estimated using unobservable (Level 3) inputs by discounting expected future cash flows of the store. The forecasted cash flows contain inherent uncertainties, including significant estimates and assumptions related to growth rates, margins, working capital requirements, capital expenditures, and cost of capital, for which we utilize certain market participant-based assumptions, using third-party industry projections, economic projections, and other marketplace data we believe to be reasonable.

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Reported Operating Data

Historical operating results include the results of acquired businesses from the date of acquisition.

($ in millions, except per vehicle data) Three Months Ended March 31,
2023 2022 Variance
Favorable /
(Unfavorable) %
Variance
Revenue:
New vehicle $ 2,931.9 $ 2,807.2 $ 124.7 4.4
Retail used vehicle 1,884.1 2,392.2 (508.1) (21.2)
Wholesale 148.5 180.2 (31.7) (17.6)
Used vehicle 2,032.6 2,572.4 (539.8) (21.0)
Finance and insurance, net 332.4 363.9 (31.5) (8.7)
Total variable operations(1)
5,296.9 5,743.5 (446.6) (7.8)
Parts and service 1,089.8 1,003.9 85.9 8.6
Other 12.0 5.4 6.6
Total revenue $ 6,398.7 $ 6,752.8 $ (354.1) (5.2)
Gross profit:
New vehicle $ 286.9 $ 345.0 $ (58.1) (16.8)
Retail used vehicle 143.0 124.9 18.1 14.5
Wholesale 11.4 11.7 (0.3)
Used vehicle 154.4 136.6 17.8 13.0
Finance and insurance 332.4 363.9 (31.5) (8.7)
Total variable operations(1)
773.7 845.5 (71.8) (8.5)
Parts and service 511.1 461.1 50.0 10.8
Other 1.6 2.3 (0.7)
Total gross profit 1,286.4 1,308.9 (22.5) (1.7)
Selling, general, and administrative expenses 782.7 741.4 (41.3) (5.6)
Depreciation and amortization 52.8 50.0 (2.8)
Other (income) expense, net 7.6 (1.5) (9.1)
Operating income 443.3 519.0 (75.7) (14.6)
Non-operating income (expense) items:
Floorplan interest expense (27.1) (5.2) (21.9)
Other interest expense (41.1) (29.6) (11.5)
Other income (loss), net 5.2 (6.4) 11.6
Income from continuing operations before income taxes $ 380.3 $ 477.8 $ (97.5) (20.4)
Retail vehicle unit sales:
New vehicle 55,065 56,442 (1,377) (2.4)
Used vehicle 67,539 79,763 (12,224) (15.3)
122,604 136,205 (13,601) (10.0)
Revenue per vehicle retailed:
New vehicle $ 53,244 $ 49,736 $ 3,508 7.1
Used vehicle $ 27,896 $ 29,991 $ (2,095) (7.0)
Gross profit per vehicle retailed:
New vehicle $ 5,210 $ 6,112 $ (902) (14.8)
Used vehicle $ 2,117 $ 1,566 $ 551 35.2
Finance and insurance $ 2,711 $ 2,672 $ 39 1.5
Total variable operations(2)
$ 6,218 $ 6,122 $ 96 1.6
(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.


($ in millions, except per vehicle data)	Three Months Ended March 31,
	2024		2023		Variance Favorable / (Unfavorable)		% Variance
Revenue:
New vehicle	$	2,979.3	$	2,931.9	$	47.4	1.6
Retail used vehicle	1,833.8		1,884.1		(50.3)		(2.7)
Wholesale	162.3		148.5		13.8		9.3
Used vehicle	1,996.1		2,032.6		(36.5)		(1.8)
Finance and insurance, net	334.7		332.4		2.3		0.7
Total variable operations(1)	5,310.1		5,296.9		13.2		0.2
Parts and service	1,172.4		1,089.8		82.6		7.6
Other	3.2		12.0		(8.8)
Total revenue	$	6,485.7	$	6,398.7	$	87.0	1.4
Gross profit:
New vehicle	$	195.9	$	286.9	$	(91.0)	(31.7)
Retail used vehicle	101.8		143.0		(41.2)		(28.8)
Wholesale	9.7		11.4		(1.7)
Used vehicle	111.5		154.4		(42.9)		(27.8)
Finance and insurance	334.7		332.4		2.3		0.7
Total variable operations(1)	642.1		773.7		(131.6)		(17.0)
Parts and service	555.8		511.1		44.7		8.7
Other	—		1.6		(1.6)
Total gross profit	1,197.9		1,286.4		(88.5)		(6.9)
Selling, general, and administrative expenses	793.1		782.7		(10.4)		(1.3)
Depreciation and amortization	58.3		52.8		(5.5)


Other expense, net	6.2		7.6		1.4
Operating income	340.3		443.3		(103.0)		(23.2)
Non-operating income (expense) items:
Floorplan interest expense	(49.4)		(27.1)		(22.3)
Other interest expense	(44.6)		(41.1)		(3.5)
Other income, net	7.0		5.2		1.8
Income from continuing operations before income taxes	$	253.3	$	380.3	$	(127.0)	(33.4)
Retail vehicle unit sales:
New vehicle	58,863		55,065		3,798		6.9
Used vehicle	69,121		67,539		1,582		2.3
	127,984		122,604		5,380		4.4
Revenue per vehicle retailed:
New vehicle	$	50,614	$	53,244	$	(2,630)	(4.9)
Used vehicle	$	26,530	$	27,896	$	(1,366)	(4.9)
Gross profit per vehicle retailed:
New vehicle	$	3,328	$	5,210	$	(1,882)	(36.1)
Used vehicle	$	1,473	$	2,117	$	(644)	(30.4)
Finance and insurance	$	2,615	$	2,711	$	(96)	(3.5)
Total variable operations(2)	$	4,941	$	6,218	$	(1,277)	(20.5)

(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.

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Three Months Ended

March 31,

2023 (%)

2022 (%)

Revenue mix percentages:

New vehicle

45.8

41.6

Used vehicle

31.8

38.1

Used vehicle

Parts and service

17.0

14.9

Finance and insurance, net

5.2

5.4

Finance and insurance, net

Other

0.2

—

Total

100.0

Total

Gross profit mix percentages:

New vehicle

22.3

26.4

New vehicle

Used vehicle

12.0

10.4

Parts and service

39.7

35.2

Parts and service

Finance and insurance

25.8

27.8

Other

0.2

Other

Total

100.0

Operating items as a percentage of revenue:

Gross profit:

New vehicle

9.8

12.3

New vehicle

Used vehicle - retail

7.6

5.2

Parts and service

46.9

45.9

Parts and service

Total

20.1

19.4

Selling, general, and administrative expenses

12.2

11.0

Selling, general, and administrative expenses

Operating income

6.9

7.7

Other operating items as a percentage of total gross profit:

Selling, general, and administrative expenses

60.8

56.6

Operating income

34.5

39.7

Operating income

March 31,

2023

2022

March 31,

2024

Inventory days supply:

New vehicle (industry standard of selling days)

25 days

8 days

New vehicle (industry standard of selling days)

Used vehicle (trailing calendar month days)

29 days

30 days

2728

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 ~~2022 columns~~2023 column may differ from the same store amounts presented for ~~2022~~2023 in the prior year. We believe the presentation of this information provides a meaningful comparison of period-over-period results of our operations.




		Three Months Ended March 31,
($ in millions, except per vehicle data)	($ in millions, except per vehicle data)	2023		2022		Variance Favorable / (Unfavorable)		% Variance
($ in millions, except per vehicle data)
($ in millions, except per vehicle data)
Revenue:
Revenue:
Revenue:	Revenue:
New vehicle	New vehicle	$	2,909.8	$	2,792.1	$	117.7	4.2
New vehicle
New vehicle
Retail used vehicle
Retail used vehicle
Retail used vehicle	Retail used vehicle	1,832.3		2,378.1		(545.8)		(23.0)
Wholesale	Wholesale	146.3		179.5		(33.2)		(18.5)
Wholesale
Wholesale
Used vehicle
Used vehicle
Used vehicle	Used vehicle	1,978.6		2,557.6		(579.0)		(22.6)
Finance and insurance, net	Finance and insurance, net	326.4		362.5		(36.1)		(10.0)
Finance and insurance, net
Finance and insurance, net
Total variable operations(1)
Total variable operations(1)
Total variable operations(1)	Total variable operations(1)	5,214.8		5,712.2		(497.4)		(8.7)
Parts and service	Parts and service	1,072.9		997.4		75.5		7.6
Parts and service
Parts and service
Other
Other
Other	Other	11.9		5.3		6.6
Total revenue	Total revenue	$	6,299.6	$	6,714.9	$	(415.3)	(6.2)
Total revenue
Total revenue
Gross profit:
Gross profit:
Gross profit:	Gross profit:
New vehicle	New vehicle	$	284.8	$	343.5	$	(58.7)	(17.1)
New vehicle
New vehicle
Retail used vehicle
Retail used vehicle
Retail used vehicle	Retail used vehicle	139.0		124.3		14.7		11.8
Wholesale	Wholesale	11.5		11.8		(0.3)
Wholesale
Wholesale
Used vehicle
Used vehicle
Used vehicle	Used vehicle	150.5		136.1		14.4		10.6
Finance and insurance	Finance and insurance	326.4		362.5		(36.1)		(10.0)
Finance and insurance
Finance and insurance
Total variable operations(1)
Total variable operations(1)
Total variable operations(1)	Total variable operations(1)	761.7		842.1		(80.4)		(9.5)
Parts and service	Parts and service	503.1		457.9		45.2		9.9
Parts and service
Parts and service
Other
Other
Other	Other	1.3		2.2		(0.9)
Total gross profit	Total gross profit	$	1,266.1	$	1,302.2	$	(36.1)	(2.8)
Total gross profit
Total gross profit
Retail vehicle unit sales:
Retail vehicle unit sales:
Retail vehicle unit sales:	Retail vehicle unit sales:
New vehicle	New vehicle	54,654		56,224		(1,570)		(2.8)
New vehicle
New vehicle
Used vehicle	Used vehicle	65,474		79,375		(13,901)		(17.5)
		120,128		135,599		(15,471)		(11.4)
Used vehicle
Used vehicle
		124,005
		124,005
		124,005
Revenue per vehicle retailed:
Revenue per vehicle retailed:
Revenue per vehicle retailed:	Revenue per vehicle retailed:
New vehicle	New vehicle	$	53,240	$	49,660	$	3,580	7.2
New vehicle
New vehicle
Used vehicle
Used vehicle
Used vehicle	Used vehicle	$	27,985	$	29,960	$	(1,975)	(6.6)
Gross profit per vehicle retailed:	Gross profit per vehicle retailed:
Gross profit per vehicle retailed:
Gross profit per vehicle retailed:
New vehicle
New vehicle
New vehicle	New vehicle	$	5,211	$	6,109	$	(898)	(14.7)
Used vehicle	Used vehicle	$	2,123	$	1,566	$	557	35.6
Used vehicle
Used vehicle
Finance and insurance	Finance and insurance	$	2,717	$	2,673	$	44	1.6
Finance and insurance
Finance and insurance
Total variable operations(2)
Total variable operations(2)
Total variable operations(2)	Total variable operations(2)	$	6,245	$	6,123	$	122	2.0
										(1) Total variable operations includes new vehicle, used vehicle (retail and wholesale), and finance and insurance results.
(1) Total variable operations includes new vehicle, used vehicle (retail and wholesale), and finance and insurance results.

(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.	(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.								(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.

2829

Table of Contents

Three Months Ended

March 31,

2023 (%)

2022 (%)

Revenue mix percentages:

New vehicle

46.2

41.6

Used vehicle

31.4

38.1

Used vehicle

Parts and service

17.0

14.9

Finance and insurance, net

5.2

5.4

Finance and insurance, net

Other

0.2

—

Total

100.0

Total

Gross profit mix percentages:

New vehicle

22.5

26.4

New vehicle

Used vehicle

11.9

10.5

Parts and service

39.7

35.2

Parts and service

Finance and insurance

25.8

27.8

Other

0.1

Other

Total

100.0

Operating items as a percentage of revenue:

Gross profit:

New vehicle

9.8

12.3

New vehicle

Used vehicle - retail

7.6

5.2

Parts and service

46.9

45.9

Parts and service

Total

20.1

19.4

Total

2930

Table of Contents

New Vehicle




		Three Months Ended March 31,
($ in millions, except per vehicle data)	($ in millions, except per vehicle data)	2023		2022		Variance Favorable / (Unfavorable)		% Variance
($ in millions, except per vehicle data)
($ in millions, except per vehicle data)
Reported:
Reported:
Reported:	Reported:
Revenue	Revenue	$	2,931.9	$	2,807.2	$	124.7	4.4
Revenue
Revenue
Gross profit
Gross profit
Gross profit	Gross profit	$	286.9	$	345.0	$	(58.1)	(16.8)
Retail vehicle unit sales	Retail vehicle unit sales	55,065		56,442		(1,377)		(2.4)
Retail vehicle unit sales
Retail vehicle unit sales
Revenue per vehicle retailed
Revenue per vehicle retailed
Revenue per vehicle retailed	Revenue per vehicle retailed	$	53,244	$	49,736	$	3,508	7.1
Gross profit per vehicle retailed	Gross profit per vehicle retailed	$	5,210	$	6,112	$	(902)	(14.8)
Gross profit per vehicle retailed
Gross profit per vehicle retailed
Gross profit as a percentage of revenue	Gross profit as a percentage of revenue	9.8%		12.3%
Gross profit as a percentage of revenue
Gross profit as a percentage of revenue
Inventory days supply (industry standard of selling days)
Inventory days supply (industry standard of selling days)
Inventory days supply (industry standard of selling days)	Inventory days supply (industry standard of selling days)	25 days		8 days

		Three Months Ended March 31,
		2023		2022		Variance Favorable / (Unfavorable)		% Variance



		2024
		2024
		2024
Same Store:
Same Store:
Same Store:	Same Store:
Revenue	Revenue	$	2,909.8	$	2,792.1	$	117.7	4.2
Revenue
Revenue
Gross profit
Gross profit
Gross profit	Gross profit	$	284.8	$	343.5	$	(58.7)	(17.1)
Retail vehicle unit sales	Retail vehicle unit sales	54,654		56,224		(1,570)		(2.8)
Retail vehicle unit sales
Retail vehicle unit sales
Revenue per vehicle retailed
Revenue per vehicle retailed
Revenue per vehicle retailed	Revenue per vehicle retailed	$	53,240	$	49,660	$	3,580	7.2
Gross profit per vehicle retailed	Gross profit per vehicle retailed	$	5,211	$	6,109	$	(898)	(14.7)
Gross profit per vehicle retailed
Gross profit per vehicle retailed
Gross profit as a percentage of revenue	Gross profit as a percentage of revenue	9.8%		12.3%
Gross profit as a percentage of revenue
Gross profit as a percentage of revenue

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 ~~$22.1~~$42.1 million and ~~$15.1~~$4.4 million in new vehicle revenue and ~~$2.1~~$1.5 million and ~~$1.5~~$0.2 million in new vehicle gross profit for the three months ended March 31, ~~2023~~2024 and ~~2022,~~2023, respectively, is related to acquisition and divestiture activity.

First Quarter ~~2023~~2024 compared to First Quarter ~~2022~~2023

Same store new vehicle revenue increased during the three months ended March 31, ~~2023,~~2024, as compared to the same period in ~~2022,~~2023, due to an increase in same store ~~revenue PVR,~~unit volume, partially offset by a decrease in same store ~~unit volume in our Domestic and Import segments.~~revenue PVR. Same store unit volume ~~was adversely impacted by historically low~~benefited from increasing supply of new vehicle inventory, ~~levels due to manufacturer supply shortages for certain vehicle models,~~ particularly for Import ~~manufacturers.~~manufacturers, an increase in manufacturer incentives, including low-interest financing and rebates, and sustained consumer demand.

Same store new vehicle revenue ~~PVR increased during the three months ended March 31, 2023, as compared to the same period in 2022, primarily due to increases in the manufacturers’ suggested retail prices for Domestic~~ and ~~Premium Luxury vehicles and a shift in mix to Premium Luxury vehicles, which have relatively higher average selling prices.~~

~~Same store~~ gross profit PVR decreased during the three months ended March 31, ~~2023,~~2024, as compared to the same period in ~~2022,~~2023, primarily due to increasing supply and availability of new vehicle ~~inventory. The decrease~~inventory and sustained consumer demand, which has resulted in ~~gross profit PVR was partially offset by~~moderation of pricing and margins, as well as a shift in mix ~~to Premium Luxury~~towards Import vehicles ~~which~~that have relatively ~~higher~~lower average selling prices and gross profit PVR.

Table of Contents

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 GAAP.

Three Months Ended March 31,
($ in millions) 2023 2022 Variance
Floorplan assistance $ 28.3 $ 27.6 $ 0.7
New vehicle floorplan interest expense (24.4) (3.7) (20.7)
Net new vehicle inventory carrying benefit $ 3.9 $ 23.9 $ (20.0)

~~Table of Contents~~


	Three Months Ended March 31,
($ in millions)	2024		2023		Variance
Floorplan assistance	$	31.9	$	28.3	$	3.6
New vehicle floorplan interest expense	(46.6)		(24.4)		(22.2)
Net new vehicle inventory carrying benefit (expense)	$	(14.7)	$	3.9	$	(18.6)

First Quarter ~~2023~~2024 compared to First Quarter ~~2022~~2023

~~The~~During the three months ended March 31, 2024, we had a net new vehicle inventory carrying expense of $14.7 million compared to a net new vehicle inventory carrying benefit ~~decreased during the three months ended March 31, 2023, as compared to~~of $3.9 million for the same period in ~~2022, primarily due to an increase in floorplan interest expense resulting from higher average interest rates and higher average floorplan balances.~~ 2023.

Floorplan interest rates are variable and, therefore, increase and decrease with changes in the underlying benchmark interest rates. Up until the third quarter of 2023, since the first quarter of 2020, when the Federal Reserve cut interest rates to near 0%, we had a net new vehicle inventory carrying benefit. Additionally, over this same period, our average 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, resulting in a net new vehicle inventory carrying expense for the three months ended March 31, 2024. If interest rates remain at their current levels or continue to 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.

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Used Vehicle




		Three Months Ended March 31,
($ in millions, except per vehicle data)	($ in millions, except per vehicle data)	2023		2022		Variance Favorable / (Unfavorable)		% Variance
($ in millions, except per vehicle data)
($ in millions, except per vehicle data)
Reported:
Reported:
Reported:	Reported:
Retail revenue	Retail revenue	$	1,884.1	$	2,392.2	$	(508.1)	(21.2)
Retail revenue
Retail revenue
Wholesale revenue
Wholesale revenue
Wholesale revenue	Wholesale revenue	148.5		180.2		(31.7)		(17.6)
Total revenue	Total revenue	$	2,032.6	$	2,572.4	$	(539.8)	(21.0)
Total revenue
Total revenue
Retail gross profit
Retail gross profit
Retail gross profit	Retail gross profit	$	143.0	$	124.9	$	18.1	14.5
Wholesale gross profit	Wholesale gross profit	11.4		11.7		(0.3)
Wholesale gross profit
Wholesale gross profit
Total gross profit
Total gross profit
Total gross profit	Total gross profit	$	154.4	$	136.6	$	17.8	13.0
Retail vehicle unit sales	Retail vehicle unit sales	67,539		79,763		(12,224)		(15.3)
Retail vehicle unit sales
Retail vehicle unit sales
Revenue per vehicle retailed
Revenue per vehicle retailed
Revenue per vehicle retailed	Revenue per vehicle retailed	$	27,896	$	29,991	$	(2,095)	(7.0)
Gross profit per vehicle retailed	Gross profit per vehicle retailed	$	2,117	$	1,566	$	551	35.2
Gross profit per vehicle retailed
Gross profit per vehicle retailed
Retail gross profit as a percentage of retail revenue	Retail gross profit as a percentage of retail revenue	7.6%		5.2%
Retail gross profit as a percentage of retail revenue
Retail gross profit as a percentage of retail revenue
Inventory days supply (trailing calendar month days)
Inventory days supply (trailing calendar month days)
Inventory days supply (trailing calendar month days)	Inventory days supply (trailing calendar month days)	29 days		30 days

		Three Months Ended March 31,
		2023		2022		Variance Favorable / (Unfavorable)		% Variance



		2024
		2024
		2024
Same Store:
Same Store:
Same Store:	Same Store:
Retail revenue	Retail revenue	$	1,832.3	$	2,378.1	$	(545.8)	(23.0)
Retail revenue
Retail revenue
Wholesale revenue
Wholesale revenue
Wholesale revenue	Wholesale revenue	146.3		179.5		(33.2)		(18.5)
Total revenue	Total revenue	$	1,978.6	$	2,557.6	$	(579.0)	(22.6)
Total revenue
Total revenue
Retail gross profit
Retail gross profit
Retail gross profit	Retail gross profit	$	139.0	$	124.3	$	14.7	11.8
Wholesale gross profit	Wholesale gross profit	11.5		11.8		(0.3)
Wholesale gross profit
Wholesale gross profit
Total gross profit
Total gross profit
Total gross profit	Total gross profit	$	150.5	$	136.1	$	14.4	10.6
Retail vehicle unit sales	Retail vehicle unit sales	65,474		79,375		(13,901)		(17.5)
Retail vehicle unit sales
Retail vehicle unit sales
Revenue per vehicle retailed
Revenue per vehicle retailed
Revenue per vehicle retailed	Revenue per vehicle retailed	$	27,985	$	29,960	$	(1,975)	(6.6)
Gross profit per vehicle retailed	Gross profit per vehicle retailed	$	2,123	$	1,566	$	557	35.6
Gross profit per vehicle retailed
Gross profit per vehicle retailed
Retail gross profit as a percentage of retail revenue	Retail gross profit as a percentage of retail revenue	7.6%		5.2%
Retail gross profit as a percentage of retail revenue
Retail gross profit as a percentage of retail revenue

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 ~~$54.0~~$70.3 million and ~~$14.8~~$7.0 million in total used vehicle revenue and ~~$3.9~~$2.8 million and ~~$0.5~~$0.2 million in total used vehicle gross profit for the three months ended March 31, ~~2023~~2024 and ~~2022,~~2023, respectively, is related to acquisition and divestiture activity, as well as the opening of AutoNation USA stores.

First Quarter ~~2023~~2024 compared to First Quarter ~~2022~~2023

Same store retail used vehicle revenue decreased during the three months ended March 31, ~~2023,~~2024, as compared to the same period in ~~2022,~~2023, due to a decrease in same store ~~unit volume~~revenue PVR and a decrease in same store ~~revenue PVR.~~unit volume. The decrease in same store unit volume, particularly for mid- to higher-priced used vehicles, is due in part to the shift in mix from used vehicles to new vehicles. In addition, used vehicle unit volume was adversely impacted by lower availability ~~and levels~~ of ~~nearly new vehicle inventory.~~lower-priced used vehicles.

Same store used vehicle revenue and gross profit PVR decreased during the three months ended March 31, ~~2023,~~2024, as compared to the same period in ~~2022,~~2023, primarily due to stabilization of used vehicle value trends, as compared to the prior year period, and a shift in mix towards lower-priced entry-level ~~vehicles.~~

~~Same store~~vehicles, which have lower average selling prices and gross profit PVR. In the beginning of the first quarter, we took certain actions to better align used vehicle inventory with market demand and achieve a more optimal inventory supply. These actions adversely impacted used vehicle gross profit PVR ~~increased during~~for the ~~three months ended March 31, 2023, as compared to~~first quarter 2024, with sequential monthly improvement within the ~~same period~~quarter, resulting in ~~2022, primarily due to a disciplined sourcing and pricing strategy as we focused on efficient internal sourcing of our used vehicle inventory and balancing~~an increase in gross profit PVR ~~and unit volume.~~from the fourth quarter of 2023.

3233

Table of Contents

Parts and Service




		Three Months Ended March 31,
($ in millions)	($ in millions)	2023		2022		Variance Favorable / (Unfavorable)		% Variance
($ in millions)
($ in millions)
Reported:
Reported:
Reported:	Reported:
Revenue	Revenue	$	1,089.8	$	1,003.9	$	85.9	8.6
Revenue
Revenue
Gross Profit
Gross Profit
Gross Profit	Gross Profit	$	511.1	$	461.1	$	50.0	10.8
Gross profit as a percentage of revenue	Gross profit as a percentage of revenue	46.9%		45.9%
Gross profit as a percentage of revenue
Gross profit as a percentage of revenue

Same Store:

Same Store:

Same Store:	Same Store:
Revenue	Revenue	$	1,072.9	$	997.4	$	75.5	7.6
Revenue
Revenue
Gross Profit
Gross Profit
Gross Profit	Gross Profit	$	503.1	$	457.9	$	45.2	9.9
Gross profit as a percentage of revenue	Gross profit as a percentage of revenue	46.9%		45.9%
Gross profit as a percentage of revenue
Gross profit as a percentage of revenue

Parts and service revenue is primarily derived from vehicle repairs paid directly by customers or via reimbursement from manufacturers and others under warranty programs, as well as from wholesale parts sales, ~~collision services, and~~ the preparation of vehicles for ~~sale.~~sale, and collision services.

The following discussion of parts and service results is on a same store basis. The difference between reported amounts and same store amounts in the above tables of ~~$16.9~~$16.5 million and ~~$6.5~~$4.0 million in parts and service revenue and ~~$8.0~~$8.5 million and ~~$3.2~~$2.1 million in parts and service gross profit for the three months ended March 31, ~~2023~~2024 and ~~2022,~~2023, respectively, is related to acquisition and divestiture activity, as well as the opening of AutoNation USA stores.

First Quarter ~~2023~~2024 compared to First Quarter ~~2022~~2023

During the three months ended March 31, 2024, same store parts and service revenue increased compared to the same period in 2023, primarily due to increases in revenue associated with the preparation of vehicles for sale of $33.9 million, warranty service of $19.6 million, and customer-pay service of $18.2 million.

During the three months ended March 31, 2024, same store parts and service gross profit increased compared to the same period in ~~2022,~~2023, primarily due to increases in gross profit associated with the preparation of vehicles for sale of $17.0 million, warranty service of $14.4 million, and customer-pay service of ~~$27.2 million~~$7.7 million. Revenue and ~~warranty service of $11.7 million. Gross~~gross profit associated with ~~customer-pay service~~the preparation of vehicles for sale benefited from an increase in vehicle unit volume and higher value repair orders. Warranty service revenue and gross profit benefited from higher value repair orders and improved ~~margin performance largely due to improved~~ parts and labor rates, ~~negotiated with certain manufacturers.~~

partially offset by a decrease in repair order volume. Customer-pay service revenue and gross profit benefited from higher value repair orders.

3334

Table of Contents

Finance and Insurance
Three Months Ended March 31,
($ in millions, except per vehicle data) 2023 2022 Variance
Favorable /
(Unfavorable) %
Variance
Reported:
Revenue and gross profit $ 332.4 $ 363.9 $ (31.5) (8.7)
Gross profit per vehicle retailed $ 2,711 $ 2,672 $ 39 1.5
Same Store:
Revenue and gross profit $ 326.4 $ 362.5 $ (36.1) (10.0)
Gross profit per vehicle retailed $ 2,717 $ 2,673 $ 44 1.6


	Three Months Ended March 31,
($ in millions, except per vehicle data)	2024		2023		Variance Favorable / (Unfavorable)		% Variance
Reported:
Revenue and gross profit	$	334.7	$	332.4	$	2.3	0.7
Gross profit per vehicle retailed	$	2,615	$	2,711	$	(96)	(3.5)

Same Store:
Revenue and gross profit	$	326.1	$	331.8	$	(5.7)	(1.7)
Gross profit per vehicle retailed	$	2,630	$	2,713	$	(83)	(3.1)

Revenue on finance and insurance products represents commissions earned by us for the placement of: (i) loans and leases with 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 “Corporate and Other” for additional information related to AutoNation Finance.

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 ~~$6.0~~$8.6 million and ~~$1.4~~$0.6 million for the three months ended March 31, ~~2023~~2024 and ~~2022,~~2023, respectively, is related to acquisition and divestiture activity, as well as the opening of AutoNation USA stores.

First Quarter ~~2023~~2024 compared to First Quarter ~~2022~~2023

Same store finance and insurance revenue and gross profit decreased slightly during the three months ended March 31, ~~2023,~~2024, as compared to the same period in ~~2022,~~2023, due to ~~a decrease~~decreases in ~~new~~finance and insurance gross profit PVR and used vehicle unit volume, partially offset by an increase in ~~finance and insurance gross profit PVR.~~new vehicle unit volume. The ~~increase~~decrease in finance and insurance gross profit PVR was primarily due to ~~higher realized margins on~~an increase in retail vehicle ~~protection products, partially offset~~sales financed through our captive auto finance company. In addition, finance and insurance gross profit PVR was adversely impacted by a decrease in amount financed per transaction and a decrease in gross profit per transaction associated with arranging customer financing ~~and~~through third-party finance sources primarily due to the higher interest rate environment. The decreases in finance and insurance gross profit PVR were partially offset by an increase in product penetration.

3435

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. The following discussions of segment results are on a reported basis.




		Three Months Ended March 31,
($ in millions)	($ in millions)	2023		2022		Variance Favorable / (Unfavorable)		% Variance
($ in millions)
($ in millions)
Revenue:
Revenue:
Revenue:	Revenue:
Domestic	Domestic	$	1,831.1	$	2,034.4	$	(203.3)	(10.0)
Domestic
Domestic
Import
Import
Import	Import	1,789.3		1,974.1		(184.8)		(9.4)
Premium Luxury	Premium Luxury	2,484.9		2,478.7		6.2		0.3
Premium Luxury
Premium Luxury
Total
Total
Total	Total	6,105.3		6,487.2		(381.9)		(5.9)
Corporate and other	Corporate and other	293.4		265.6		27.8		10.5
Corporate and other
Corporate and other
Total consolidated revenue
Total consolidated revenue
Total consolidated revenue	Total consolidated revenue	$	6,398.7	$	6,752.8	$	(354.1)	(5.2)
Segment income(1):	Segment income(1):
Segment income(1):
Segment income(1):
Domestic
Domestic
Domestic	Domestic	$	118.5	$	149.4	$	(30.9)	(20.7)
Import	Import	160.4		186.2		(25.8)		(13.9)
Import
Import
Premium Luxury
Premium Luxury
Premium Luxury	Premium Luxury	226.8		229.5		(2.7)		(1.2)
Total	Total	505.7		565.1		(59.4)		(10.5)
Total
Total
Corporate and other
Corporate and other
Corporate and other	Corporate and other	(89.5)		(51.3)		(38.2)
Floorplan interest expense	Floorplan interest expense	27.1		5.2		(21.9)
Floorplan interest expense
Floorplan interest expense
Operating income	Operating income	$	443.3	$	519.0	$	(75.7)	(14.6)
Operating income
Operating income

Retail new vehicle unit sales:

Retail new vehicle unit sales:
									Retail new vehicle unit sales:
Domestic	Domestic	15,849		16,365		(516)		(3.2)
Import	Import	23,098		24,536		(1,438)		(5.9)
Import
Import
Premium Luxury	Premium Luxury	16,118		15,541		577		3.7
Premium Luxury
Premium Luxury
		58,863
		58,863
		58,863
		55,065		56,442		(1,377)		(2.4)
Retail used vehicle unit sales:

Retail used vehicle unit sales:
									Retail used vehicle unit sales:
Domestic	Domestic	21,203		26,596		(5,393)		(20.3)
Import	Import	22,063		26,529		(4,466)		(16.8)
Import
Import
Premium Luxury	Premium Luxury	18,768		21,949		(3,181)		(14.5)
		62,034		75,074		(13,040)		(17.4)
Premium Luxury
Premium Luxury
Other
Other
Other
		69,121
		69,121
		69,121
									(1) Segment income represents income for each of our reportable segments and is defined as operating income less floorplan interest expense.
(1) Segment income represents income for each of our reportable segments and is defined as operating income less floorplan interest expense.

(1) Segment income represents income for each of our reportable segments and is defined as operating income less floorplan interest expense.

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Domestic

The Domestic segment operating results included the following:




		Three Months Ended March 31,
($ in millions)	($ in millions)	2023		2022		Variance Favorable / (Unfavorable)		% Variance
($ in millions)
($ in millions)
Revenue:
Revenue:
Revenue:	Revenue:
New vehicle	New vehicle	$	828.0	$	822.5	$	5.5	0.7
New vehicle
New vehicle
Used vehicle
Used vehicle
Used vehicle	Used vehicle	612.3		823.1		(210.8)		(25.6)
Parts and service	Parts and service	287.6		268.7		18.9		7.0
Parts and service
Parts and service
Finance and insurance, net
Finance and insurance, net
Finance and insurance, net	Finance and insurance, net	102.3		119.2		(16.9)		(14.2)
Other	Other	0.9		0.9		—
Other
Other
Total Revenue
Total Revenue
Total Revenue	Total Revenue	$	1,831.1	$	2,034.4	$	(203.3)	(10.0)
Segment income	Segment income	$	118.5	$	149.4	$	(30.9)	(20.7)
Segment income
Segment income
Retail new vehicle unit sales
Retail new vehicle unit sales
Retail new vehicle unit sales	Retail new vehicle unit sales	15,849		16,365		(516)		(3.2)
Retail used vehicle unit sales	Retail used vehicle unit sales	21,203		26,596		(5,393)		(20.3)
Retail used vehicle unit sales
Retail used vehicle unit sales

First Quarter ~~2023~~2024 compared to First Quarter ~~2022~~2023

Domestic revenue decreased during the three months ended March 31, ~~2023,~~2024, as compared to the same period in ~~2022,~~2023, primarily due to ~~decreases~~a decrease in used vehicle ~~unit volume and used~~revenue. Used vehicle revenue ~~PVR. The~~was adversely impacted by a decrease in used vehicle unit volume is due in part to a shift in mix from used vehicles to new vehicles, and lower availability ~~and levels~~ of ~~nearly new vehicle inventory. The decrease in~~lower-priced used vehicles. In addition, used vehicle revenue PVR isdecreased primarily due to a shift in mix towards lower-priced entry-level vehicles.

Domestic segment income decreased during the three months ended March 31, ~~2023,~~2024, as compared to the same period in ~~2022,~~2023, primarily due to decreases in new and used vehicle gross profit ~~and finance and insurance gross profit.~~PVR. New vehicle gross profit PVR was adversely impacted by continued moderation of margins resulting from the increasing supply of new vehicle inventory. ~~Finance and insurance~~Used vehicle gross profit PVR was adversely impacted by stabilization of used vehicle value trends, as well as certain actions we took in the ~~decrease in~~beginning of the first quarter of 2024 to better align used vehicle ~~unit volume.~~inventory with market demand and achieve a more optimal inventory supply. Domestic segment income was also adversely impacted by an increase in floorplan interest expense. Decreases in segment income were partially offset by ~~increases~~an increase in parts and service gross profit associated with ~~customer-pay service and~~ warranty service and used vehicle gross profit due to improvements in used vehicle gross profit PVR as we focused on efficient internal sourcing of our used vehicle inventory and balancing gross profit PVR and unit volume.customer-pay service.

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Import

The Import segment operating results included the following:




		Three Months Ended March 31,
($ in millions)	($ in millions)	2023		2022		Variance Favorable / (Unfavorable)		% Variance
($ in millions)
($ in millions)
Revenue:
Revenue:
Revenue:	Revenue:
New vehicle	New vehicle	$	856.4	$	881.6	$	(25.2)	(2.9)
New vehicle
New vehicle
Used vehicle
Used vehicle
Used vehicle	Used vehicle	542.1		707.6		(165.5)		(23.4)
Parts and service	Parts and service	268.4		255.5		12.9		5.0
Parts and service
Parts and service
Finance and insurance, net
Finance and insurance, net
Finance and insurance, net	Finance and insurance, net	112.4		126.4		(14.0)		(11.1)
Other	Other	10.0		3.0		7.0
Other
Other
Total Revenue
Total Revenue
Total Revenue	Total Revenue	$	1,789.3	$	1,974.1	$	(184.8)	(9.4)
Segment income	Segment income	$	160.4	$	186.2	$	(25.8)	(13.9)
Segment income
Segment income
Retail new vehicle unit sales
Retail new vehicle unit sales
Retail new vehicle unit sales	Retail new vehicle unit sales	23,098		24,536		(1,438)		(5.9)
Retail used vehicle unit sales	Retail used vehicle unit sales	22,063		26,529		(4,466)		(16.8)
Retail used vehicle unit sales
Retail used vehicle unit sales

First Quarter ~~2023~~2024 compared to First Quarter ~~2022~~2023

Import revenue ~~decreased~~increased during the three months ended March 31, ~~2023,~~2024, as compared to the same period in ~~2022,~~2023, primarily due to ~~decreases~~an increase in ~~used~~new vehicle unit volume ~~and used vehicle revenue PVR. The decrease in used vehicle unit volume is~~ due ~~in part~~ to ~~lower availability and levels~~the increasing supply of ~~nearly~~ new vehicle ~~inventory. The decrease~~inventory and sustained consumer demand. Import revenue also benefited from the acquisitions we completed in ~~used vehicle revenue PVR is primarily due to a shift in mix towards lower-priced entry-level vehicles.~~2023.

Import segment income decreased during the three months ended March 31, ~~2023,~~2024, as compared to the same period in ~~2022,~~2023, primarily due to decreases in new and used vehicle gross profit ~~and finance and insurance gross profit.~~PVR. New vehicle gross profit PVR was adversely impacted by continued moderation of pricing and margins resulting from the increasing supply of new vehicle inventory. ~~Finance and insurance~~Used vehicle gross profit PVR was adversely impacted by stabilization of used vehicle value trends, as well as certain actions we took in the ~~decrease in~~beginning of the first quarter of 2024 to better align used vehicle ~~unit volume.~~inventory with market demand and achieve a more optimal inventory supply. Import segment income was also adversely impacted by an increase in ~~floorplan interest expense.~~SG&A expenses, largely driven by the acquisitions we completed in 2023. Decreases in segment income were partially offset by an increase in parts and service gross profit associated with the preparation of vehicles for sale.

Table of Contents

Premium Luxury

The Premium Luxury segment operating results included the following:


	Three Months Ended March 31,
($ in millions)	2024		2023		Variance Favorable / (Unfavorable)		% Variance
Revenue:
New vehicle	$	1,158.1	$	1,247.5	$	(89.4)	(7.2)
Used vehicle	736.2		745.8		(9.6)		(1.3)
Parts and service	417.2		386.2		31.0		8.0
Finance and insurance, net	103.3		105.0		(1.7)		(1.6)
Other	0.1		0.4		(0.3)
Total Revenue	$	2,414.9	$	2,484.9	$	(70.0)	(2.8)
Segment income	$	171.6	$	226.8	$	(55.2)	(24.3)
Retail new vehicle unit sales	15,393		16,118		(725)		(4.5)
Retail used vehicle unit sales	18,963		18,768		195		1.0

First Quarter 2024 compared to First Quarter 2023

Premium Luxury revenue decreased during the three months ended March 31, 2024, as compared to the same period in 2023, primarily due to decreases in new vehicle unit volume and new vehicle revenue PVR. New vehicle unit volume was adversely impacted by lower availability of higher demand vehicle models in certain markets. New vehicle revenue PVR was adversely impacted by continued moderation of pricing resulting from the increasing supply of new vehicle inventory. Decreases in Premium Luxury revenue from vehicle sales were partially offset by an increase in parts and service revenue associated with customer-pay service and the preparation of vehicles for sale.

Premium Luxury segment income decreased during the three months ended March 31, 2024, as compared to the same period in 2023, primarily due to decreases in new and used vehicle gross profit. New vehicle gross profit PVR was adversely impacted by continued moderation of margins resulting from the increasing supply of new vehicle inventory. Used vehicle gross profit PVR was adversely impacted by stabilization of used vehicle value trends, as well as certain actions we took in the beginning of the first quarter of 2024 to better align used vehicle inventory with market demand and achieve a more optimal inventory supply. Decreases in Premium Luxury segment income from vehicle sales were partially offset by increases in parts and service gross profit associated with customer-pay service and used vehicle gross profit due to improvements in used vehicle gross profit PVR as we focused on efficient internal sourcing of our used vehicle inventory and balancing gross profit PVR and unit volume.warranty service.

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~~Premium Luxury~~

~~The Premium Luxury segment operating results included the following:~~

Three Months Ended March 31,
($ in millions) 2023 2022 Variance
Favorable /
(Unfavorable) %
Variance
Revenue:
New vehicle $ 1,247.5 $ 1,103.1 $ 144.4 13.1
Used vehicle 745.8 916.1 (170.3) (18.6)
Parts and service 386.2 351.9 34.3 9.7
Finance and insurance, net 105.0 107.2 (2.2) (2.1)
Other 0.4 0.4 —
Total Revenue $ 2,484.9 $ 2,478.7 $ 6.2 0.3
Segment income $ 226.8 $ 229.5 $ (2.7) (1.2)
Retail new vehicle unit sales 16,118 15,541 577 3.7
Retail used vehicle unit sales 18,768 21,949 (3,181) (14.5)

~~First Quarter 2023 compared to First Quarter 2022~~

Premium Luxury revenue increased slightly during the three months ended March 31, 2023, as compared to the same period in 2022, primarily due to increases in new vehicle revenue PVR, new vehicle unit volume, and parts and service revenue associated with customer-pay service and warranty service. New vehicle revenue PVR benefited from increases in manufacturers’ suggested retail prices, and new vehicle unit volume benefited from increasing supply of new vehicle inventory. These increases were largely offset primarily by a decrease in used vehicle unit volume due in part to lower availability and levels of nearly new vehicle inventory.

Premium Luxury segment income decreased slightly during the three months ended March 31, 2023, as compared to the same period in 2022, primarily due to a decrease in new vehicle gross profit and increases in floorplan interest expense and SG&A expenses, partially offset by increases in used vehicle gross profit and parts and service gross profit associated with customer-pay service and warranty service. New vehicle gross profit was adversely impacted by increasing supply of new vehicle inventory. Used vehicle gross profit benefited from improvements in used vehicle gross profit PVR as we focused on efficient internal sourcing of our used vehicle inventory and balancing gross profit PVR and unit volume.

~~Table of Contents~~

Corporate and other

Corporate and other results included the following:




		Three Months Ended March 31,
($ in millions)	($ in millions)	2023		2022		Variance Favorable / (Unfavorable)		% Variance
($ in millions)
($ in millions)
Revenue:
Revenue:
Revenue:	Revenue:
Used vehicle	Used vehicle	$	132.4	$	125.6	$	6.8	5.4
Used vehicle
Used vehicle
Parts and service
Parts and service
Parts and service	Parts and service	147.6		127.8		19.8		15.5
Finance and insurance, net	Finance and insurance, net	12.7		11.1		1.6		14.4
Finance and insurance, net
Finance and insurance, net
Other
Other
Other	Other	0.7		1.1		(0.4)
Revenue	Revenue	$	293.4	$	265.6	$	27.8	10.5
Revenue
Revenue
Income (loss)	Income (loss)	$	(89.5)	$	(51.3)	$	(38.2)
Income (loss)
Income (loss)

“Corporate and other” is comprised of our ~~other~~non-franchised businesses, ~~including AutoNation USA used vehicle stores, collision centers, parts distribution centers, auction operations, and RepairSmith, our mobile automotive repair and maintenance business,~~ all of which ~~generate revenues but~~ do not meet the quantitative thresholds for reportable segments, as well as ~~the results of our auto finance company,~~ unallocated corporate overhead expenses and other income items.

As of March 31, ~~2023,~~2024, we had 5352 AutoNation-branded collision centers, 1523 AutoNation USA stores, 4 AutoNation-branded automotive auction operations, 3 parts distribution centers, a mobile automotive repair and maintenance business, referred to as AutoNation Mobile Service, and an auto finance company, referred to as AutoNation Finance.

Revenue from “Corporate and other” increased for the three months ended March 31, 2024, as compared to the same periods in 2023, primarily due to newly opened AutoNation USA stores and increases in revenue from parts distribution centers and automotive auction operations.

The loss from “Corporate and other” decreased for the three months ended March 31, 2024, as compared to the same period in 2023, primarily due to increases in gross profit from automotive auction operations and collision centers, improved operating results for our auto finance company, and a decrease in costs associated with our self-insurance programs due to favorable claims experience. The decreases in loss from “Corporate and other” were partially offset by expenditures associated with newly opened AutoNation USA stores and an increase in advertising expenses to support our new non-franchised businesses.

AutoNation USA Stores

During the three months ended March 31, ~~2023,~~2024, we opened ~~two~~4 AutoNation USA used vehicle stores and currently have over 20 stores under development. These stores play an integral part of both our long-term growth plans and the achievement of scale, scope, and density in markets to better serve and meet the needs of customers. ~~We are targeting to have over 130 stores throughout the country.~~ A number of variables may impact the implementation of our expansion plans, including customer adoption, market conditions, availability of used vehicle inventory, availability and cost of building supplies and materials, and our ability to identify, acquire, and build out suitable locations in a timely manner.

~~RepairSmith~~AutoNation Mobile Service

~~In the first quarter of 2023, we acquired RepairSmith, a~~AutoNation Mobile Service, our mobile solution for automotive repair and maintenance ~~services.~~services, provides customers the convenience of services and repairs at their home, workplace, or on-site for fleet vehicles. Revenue and gross profit from this business are included within “parts and service.”

AutoNation Finance

AutoNation Finance, our captive auto finance company, provides indirect financing to qualified retail customers on ~~certain~~ vehicles we ~~sell, as well as on installment contracts acquired through third-party independent dealers.~~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 revenues and create a low-volatility earnings stream, generate additional profits, cash flows, and sales, and increase customer retention. AutoNation Finance operating results include the interest and fee income generated by auto loans receivable less the interest expense associated with the debt issued to fund these receivables, a provision for estimated credit losses on the auto loans receivable originated or acquired, and direct expenses. Interest income on auto loans receivable is recognized over the contractual term of the related loans.

Table of Contents

In September 2023, we discontinued acquiring installment contracts from third-party independent dealers. We plan to continue to increase finance penetration rates for retail vehicle sales through our stores, which we expect will favorably impact the operating results of our auto finance business over time. AutoNation Finance results are included in Other ~~(Income)~~ Expense, Net in our Unaudited Condensed Consolidated Statements of Income. See Notes 5 and 8 of the Notes to Unaudited Condensed Consolidated Financial Statements for more information on auto loans receivable, the related allowance for credit losses, and the related debt of our auto finance company.

~~Table of Contents~~

Selling, General, and Administrative Expenses

Our Selling, General, and Administrative (“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, transportation-related costs for parts and service ~~loaner and rental inventory expenses,~~customers, legal, accounting, and professional services, and general corporate expenses. The following table presents the major components of our SG&A expenses.


		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
($ in millions)
($ in millions)
($ in millions)	($ in millions)	2023		2022		Variance Favorable / (Unfavorable)		% Variance
Reported:	Reported:
Reported:
Reported:
Compensation
Compensation
Compensation	Compensation	$	522.3	$	515.8	$	(6.5)	(1.3)
Advertising	Advertising	50.7		39.9		(10.8)		(27.1)
Advertising
Advertising
Store and corporate overhead	Store and corporate overhead	209.7		185.7		(24.0)		(12.9)
Store and corporate overhead
Store and corporate overhead
Total
Total
Total	Total	$	782.7	$	741.4	$	(41.3)	(5.6)

SG&A as a % of total gross profit:	SG&A as a % of total gross profit:

SG&A as a % of total gross profit:

SG&A as a % of total gross profit:
Compensation
Compensation
Compensation	Compensation	40.6		39.4		(120)		bps
Advertising	Advertising	3.9		3.0		(90)		bps
Advertising
Advertising
Store and corporate overhead
Store and corporate overhead
Store and corporate overhead	Store and corporate overhead	16.3		14.2		(210)		bps
Total	Total	60.8		56.6		(420)		bps
Total
Total

First Quarter ~~2023~~2024 compared to First Quarter ~~2022~~2023

SG&A expenses increased slightly during the three months ended March 31, ~~2023,~~2024, as compared to the same period in ~~2022,~~2023, primarily due to acquisitions and newly opened stores, an increase in advertising expenses to support our used vehicle internal sourcing strategy and ~~expenditures associated with investments~~growth in ~~technology~~our new non-franchised businesses, and ~~strategic initiatives, combined with modest inflationary pressures,~~an increase in transportation-related costs for parts and service customers. These increases in SG&A expenses were partially offset by a decrease in performance-driven compensation expense. ~~Additionally, gross advertising expenses increased $12.3 million, partially offset by an increase in advertising reimbursements from manufacturers of $1.5 million.~~ As a percentage of total gross profit, SG&A expenses increased to ~~60.8%~~66.2% during the three months ended March 31, ~~2023,~~2024, from ~~56.6%~~60.8% in the same period in ~~2022, primarily~~2023, due to the moderation of gross ~~margin pressure~~profit and ~~an increase~~increases in SG&A expenses ~~related to newly acquired and opened stores and investments in technology and strategic initiatives.~~as described above.

Other ~~(Income)~~ Expense, Net (Operating)

Other ~~(Income)~~ Expense, Net includes the gains ~~or losses~~ associated with ~~business/~~property divestitures ~~legal settlements,~~ and asset impairments, among other items and ~~for the first quarter of 2023,~~ the results of our ~~recently acquired~~captive auto finance company, including net interest margin, the provision for expected credit losses, and direct expenses. See “Segment Results - Corporate and other” above and Notes 5 and 8 of the Notes to Unaudited Condensed Consolidated Financial Statements for more information about our auto finance company.

Non-Operating Income (Expense)

Floorplan Interest Expense

~~First Quarter 2023 compared to First Quarter 2022~~

Floorplan interest expense was $27.1 million for the three months ended March 31, 2023, compared to $5.2 million for the same period in 2022. The increase in floorplan interest expense of $21.9 million was the result of higher average interest rates and higher average floorplan balances. Floorplan interest rates are variable and, therefore, increase and decrease with changes in the underlying benchmark interest rates.

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~~Interest Expense~~

First Quarter ~~2023~~2024 compared to First Quarter ~~2022~~2023

~~Other~~Floorplan interest expense was ~~$41.1~~$49.4 million for the three months ended March 31, ~~2023,~~2024, compared to ~~$29.6~~$27.1 million for the same period in ~~2022.~~2023. The increase in floorplan interest expense of $22.3 million was the result of higher average vehicle floorplan balances and higher average interest rates.

Interest Expense

First Quarter 2024 compared to First Quarter 2023

Interest expense includes the interest related to non-vehicle long-term debt and finance lease obligations. Other interest expense was $44.6 million for the three months ended March 31, 2024, compared to $41.1 million for the same period in 2023. The increase in interest expense of ~~$11.5~~$3.5 million was driven by higher average interest rates and higher average debt balances.

Other Income, ~~(Loss),~~ Net ~~(included in Non-Operating Income)~~

We recognized a net gain of ~~$4.7~~$7.3 million and ~~a net loss of $6.7~~$4.7 million for the three months ended March 31, ~~2023,~~2024 and ~~March 31, 2022,~~2023, 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~~We recorded unrealized losses of $0.4 million and $1.1 million for the ~~first quarter of~~three months ended March 31, 2024 and 2023, ~~we recorded an unrealized loss of $1.1 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 13 of the Notes to Unaudited Condensed 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 25.0% for the three months ended March 31, 2024, and 24.3% for the three months ended March 31, ~~2023, and 24.2%~~2023.

Discontinued Operations

Results from discontinued operations, net of income taxes, for the three months ended March 31, ~~2022.~~

~~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,~~2023, 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, and other adjustments related to disposed~~2014. Upon the sale of this real estate, we have no remaining discontinued operations.

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, and secured used vehicle floorplan facilities will be sufficient to fund our working capital requirements, 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.

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Available Liquidity Resources

We had the following sources of liquidity available:


(In millions)	(In millions)	March 31, 2023			December 31, 2022
(In millions)
(In millions)
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents	Cash and cash equivalents	$	58.3		$	72.6
Revolving credit facility	Revolving credit facility	$	1,799.3	(1)	$	1,799.6
Revolving credit facility
Revolving credit facility
Secured used vehicle floorplan facilities (2)	Secured used vehicle floorplan facilities (2)	$	0.4		$	0.3
Secured used vehicle floorplan facilities (2)
Secured used vehicle floorplan facilities (2)

(1) At March 31, ~~2023,~~2024, we had ~~$0.7~~$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 our commercial paper program. We had $285.0 million of commercial paper notes outstanding at March 31, ~~2023.~~2024. See Note 8 of the Notes to Unaudited Condensed Consolidated Financial Statements for more information.

(2) Based on the eligible used vehicle inventory that could have been pledged as collateral. See Note 6 of the Notes to Unaudited Condensed 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 primarily relating to insurance matters. At March 31, ~~2023,~~2024, surety bonds, letters of credit, and cash deposits totaled ~~$111.2~~$119.3 million, of which ~~$0.7~~$0.8 million were letters of credit. 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.

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 market and vehicle brand criteria and/or return on investment threshold, and limitations set forth in our debt agreements.

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 stock repurchase program authorized by our Board of Directors follows:

Three Months Ended

March 31,

(In millions, except per share data)

2023

2022

Shares repurchased

2.4

3.5

Shares repurchased

Aggregate purchase price (1)

305.0

380.9

Average purchase price per share

126.37

110.04

(1) Excludes excise tax accrual imposed under the Inflation Reduction Act of $2.5 million for the three months ended March 31, 2023.

Average purchase price per share

(1) Excludes excise taxes imposed under the Inflation Reduction Act of $0.1 million and $2.5 million for the three months ended March 31, 2024 and 2023, respectively.

In April 2024, our Board of Directors authorized the repurchase of up to an additional $1.0 billion of common stock. From April 1, 2024, through April 24, 2024, we repurchased 1.4 million shares of common stock for an aggregate purchase price of $211.3 million (average purchase price per share of $155.74). As of ~~March 31, 2023, $879.4 million~~April 24, 2024, $1.1 billion remained available for share repurchases under the program.

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The decision to repurchase shares at any given point in time is based on factors such 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 and other financial covenants in our debt agreements as well as our available liquidity), and the

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expected return on competing uses of capital such as acquisitions or investments, capital investments in our current businesses, or repurchases of our debt.

Capital Expenditures

The following table sets forth information regarding our capital expenditures:

Three Months Ended
March 31,
(In millions) 2023 2022
Purchases of property and equipment, including operating lease buy-outs (1)
$ 95.9 $ 50.8
(1) Includes accrued construction in progress and excludes property associated with leases entered into during the year.


	Three Months Ended
	March 31,
(In millions)	2024		2023
Purchases of property and equipment	$	93.7	$	95.3

At March 31, ~~2023,~~2024, we owned approximately ~~80%~~79% of our new vehicle franchise store locations with a net book value of $2.4 billion, as well as other properties associated with our collision centers, AutoNation USA used vehicle stores, parts distribution centers, auction operations, and other excess properties with a net book value of ~~$712.3~~$718.0 million. None of these properties are mortgaged or encumbered.

We continue to expand our AutoNation USA used vehicle ~~stores and are targeting to have over 130~~ stores. The planned expansion may be impacted by a number of variables, including customer adoption, market conditions, availability of used vehicle inventory, availability and cost of building supplies and materials, and our ability to identify, acquire, and build out suitable locations in a timely manner.

Acquisitions and Divestitures

We did not purchase or divest any stores during the three months ended March 31, 2024. During the three months ended March 31, 2023, we acquired RepairSmith, a mobile solution for automotive repair and maintenance, which we renamed AutoNation Mobile Service, and we also purchased one store. ~~We did not purchase any stores during the three months ended March 31, 2022.~~ We did not divest any stores during the three months ended March 31, ~~2023,~~2023.


	Three Months Ended
	March 31,
(In millions)	2024		2023
Cash used in business acquisitions, net	$	—	$	(191.0)

We regularly review our store portfolio and may acquire or ~~March 31, 2022.~~divest stores to optimize our operations and footprint. We typically utilize proceeds related to asset sales, including business and real estate divestitures, to fund our capital investments and strategic initiatives or for other general corporate purposes.

Three Months Ended
March 31,
(In millions) 2023 2022
Cash received from (used in) business acquisitions, net $ (191.0) $ —

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Debt

The following table sets forth our non-vehicle long-term debt, as of March 31, ~~2023,~~2024, and December 31, ~~2022.~~2023.

Debt Description

Maturity Date

Interest Payable

March 31,
2023

December 31,
2022

Maturity Date

Interest Payable

March 31,
2024

December 31,
2023

3.5% Senior Notes

November 15, 2024

May 15 and November 15

450.0

4.5% Senior Notes

October 1, 2025

April 1 and October 1

450.0

3.8% Senior Notes

November 15, 2027

May 15 and November 15

300.0

1.95% Senior Notes

August 1, 2028

February 1 and August 1

400.0

4.75% Senior Notes

June 1, 2030

June 1 and December 1

500.0

2.40% Senior Notes

August 1, 2031

February 1 and August 1

450.0

3.85% Senior Notes

March 1, 2032

March 1 and September 1

700.0

Revolving credit facility

March 26, 2025

Monthly

—

Finance leases and other debt

Various dates through 2041

372.4

375.5

3,622.4

3,625.5

3,609.7

Less: unamortized debt discounts and debt issuance costs

(25.0)

(26.0)

Less: current maturities

(12.7)

(12.6)

Long-term debt, net of current maturities

3,584.7

3,586.9

Our 3.5% Senior Notes due 2024 will mature on November 15, 2024, and were, therefore, reclassified to current during the fourth quarter of 2023.

We had commercial paper notes outstanding of $285.0 million at March 31, ~~2023,~~2024, and ~~$50.0~~$440.0 million at December 31, ~~2022.~~ 2023.

We ~~also~~ had non-recourse debt under our warehouse facilities of ~~$162.3~~$303.5 million at March 31, ~~2023,~~2024, and ~~$181.8~~$209.4 million at

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December 31, ~~2022,~~2023, and non-recourse debt under term securitizations of consolidated variable interest entities (“VIEs”) of ~~$125.3~~$42.8 million at March 31, ~~2023,~~2024, and ~~$146.9~~$50.5 million at December 31, ~~2022.~~2023.

A downgrade in our credit ratings could negatively impact the interest rate payable on our 3.5% Senior Notes, 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 8 of the Notes to Unaudited Condensed 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 ~~financial and operating~~ 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.

Under our credit agreement, we are required to remain in compliance with a maximum leverage ratio and maximum capitalization ratio. The leverage ratio is a contractually defined amount principally reflecting non-vehicle debt divided by a contractually defined measure of earnings with certain adjustments. The capitalization ratio is a contractually defined amount principally reflecting vehicle floorplan payable and non-vehicle debt divided by our total capitalization including vehicle floorplan payable. The specific terms of these covenants can be found in our credit agreement, which we filed with our Current Report on Form 8-K on ~~March 26, 2020.~~

~~The indentures for our senior unsecured notes contain certain limited covenants, including limitations on liens and sale and leaseback transactions.~~

~~In addition, our~~ 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.

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As of March 31, ~~2023,~~2024, we were in compliance with the ~~requirements of the financial~~ covenants under our credit agreement and the indentures for our senior unsecured notes. ~~Under the terms of our credit agreement, at~~At March 31, ~~2023,~~2024, our leverage ~~ratio~~ and ~~capitalization ratio~~interest coverage ratios were as follows:


	March 31, ~~2023~~2024
	Requirement	Actual
Leverage ratio	≤ 3.75x	~~1.82x~~2.25x
~~Capitalization~~Interest coverage ratio	~~≤ 70.0%~~≥ 3.00x	~~61.3%~~5.30x

Vehicle Floorplan Payable

The components of vehicle floorplan payable are as follows:

(In millions) March 31,
2023 December 31,
2022
Vehicle floorplan payable - trade $ 1,088.6 $ 946.6
Vehicle floorplan payable - non-trade 1,097.1 1,162.7
Vehicle floorplan payable $ 2,185.7 $ 2,109.3


(In millions)	March 31, 2024		December 31, 2023
Vehicle floorplan payable - trade	$	1,774.0	$	1,760.0
Vehicle floorplan payable - non-trade	1,496.9		1,622.4
Vehicle floorplan payable	$	3,270.9	$	3,382.4

Prior to October 2021, our vehicle floorplan facilities utilized LIBOR-based interest rates. In connection with global reference rate reform initiatives, particularly related to LIBOR, in October 2021, we began modifying our floorplan agreements to replace the reference rate from LIBOR to an alternative reference rate. The floorplan agreement modifications will be accounted for by prospectively adjusting the effective interest rate in accordance with accounting standards. We do not expect the change from LIBOR to an alternative reference rate to have a material impact on our annual floorplan interest expense. See Note 6 of the Notes to Unaudited Condensed Consolidated Financial Statements for more information on our vehicle floorplan payable.

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Cash Flows

The following table summarizes the changes in our cash provided by (used in) operating, investing, and financing activities:


		Three Months Ended
	Three Months Ended								Three Months Ended
		March 31,					March 31,
(In millions)	(In millions)	2023		2022		(In millions)	2024	2023
Net cash provided by operating activities	Net cash provided by operating activities	$	510.0	$	643.2
Net cash used in investing activities	Net cash used in investing activities	$	(305.9)	$	(59.0)
Net cash used in financing activities	Net cash used in financing activities	$	(216.1)	$	(36.5)

Cash Flows from Operating Activities

Our primary sources of operating cash flows result from the sale of vehicles, ~~and~~ finance and insurance products, ~~collections from customers for the sale of~~and parts and automotive repair and maintenance services, ~~and~~ proceeds from vehicle floorplan ~~payable-trade.~~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.

Net cash provided by operating activities decreased during the three months ended March 31, ~~2023,~~2024, as compared to the same period in ~~2022,~~2023, primarily due to an increase in originations of loans receivable for vehicles sold through our stores and a decrease in earnings, ~~and an increase~~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 of and collections ofon auto loans receivable acquired through ~~third party~~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.

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Net cash used in investing activities ~~increased~~decreased during the three months ended March 31, ~~2023,~~2024, as compared to the same period in ~~2022,~~2023, primarily due to ~~an increase~~a decrease in cash used in acquisitions ~~net~~and a decrease in originations of ~~cash~~loans receivable acquired ~~and purchases of property and equipment.~~through third-party dealers.

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.

Cash flows from financing activities include changes in commercial paper notes outstanding totaling net payments of $155.0 million and net proceeds of $235.0 million during the three months ended March 31, 2024 and 2023, respectively, and changes in vehicle floorplan payable-non-trade totaling net payments of $93.5 million and $67.3 million during the three months ended March 31, 2024 and 2023, respectively.

During the three months ended March 31, 2024, we repurchased 0.2 million shares of common stock for an aggregate purchase price of $38.7 million (average purchase price per share of $158.40), excluding the excise tax imposed under the Inflation Reduction Act. During the three months ended March 31, 2023, we repurchased 2.4 million shares of common stock for an aggregate purchase price of $305.0 million (average purchase price per share of $126.37), excluding the 1% excise tax imposed under the Inflation Reduction Act. During the three months ended March 31, 2022, we repurchased 3.5 million shares of common stock for an aggregate purchase price of $380.9 million (average purchase price per share of $110.04), including repurchases for which settlement occurred subsequent to March 31, 2022.

Cash flows from financing activities include changes in commercial paper notes outstanding totaling net proceeds of $235.0 million during the three months ended March 31, 2023, and net payments of $340.0 million during the three months ended March 31, 2022, and vehicle floorplan payable-non-trade totaling net repayments of $67.3 million and $15.1 million during the three months ended March 31, 2023 and 2022, respectively.

During the three months ended March 31, ~~2022,~~2024, we ~~issued $700.0~~borrowed $214.0 million ~~aggregate principal amount of 3.85% Senior Notes due 2032.~~and repaid $127.7 million under our non-recourse debt facilities. During the three months ended March 31, 2023, we borrowed $39.3 million and repaid $80.5 million under our non-recourse debt facilities.

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 Quarterly Report on Form 10-Q, including, without limitation, statements regarding our strategic acquisitions, initiatives, partnerships, or investments, including ~~the planned expansion of our~~ AutoNation USA, ~~used vehicle stores~~AutoNation Finance, and AutoNation Mobile Service; statements regarding our investments in digital and online capabilities and mobility solutions; our

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expectations for the future performance of our business and the automotive retail industry; 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,” “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.

•The COVID-19 pandemic disrupted, and may continue to disrupt, our business, results of operations, and financial condition going forward. Future epidemics, pandemics, and other outbreaks could also disrupt our business, results of operations, and financial condition.

•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.

•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.

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•We are investing significantly in various strategic initiatives, including the planned expansion of our AutoNation USA stores, our AutoNation Finance business, 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.

•A failure of our information systems or any security breach or unauthorized disclosure of confidential information could have a material adverse effect on our business.

•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.

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•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 value of our minority equity investment that does not have a readily determinable fair value is 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.

Please refer to our most recent Annual Report on Form 10-K for additional discussion of the foregoing risks. These forward-looking statements speak only as of the date of this report, and we undertake no obligation to update any forward-looking statements to reflect subsequent events or circumstances.

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 ~~Twitter~~X feed (~~www.twitter.com/~~www.x.com/autonation).

The information that we post on our websites 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

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website. The information on or accessible through our websites and social media channels is not incorporated by reference in this Quarterly Report on Form 10-Q.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

We have market risk exposure on various instruments that are based on variable interest rates. Interest rate derivatives may be used to hedge a portion of our variable rate debt, when appropriate, based on market conditions.

We had ~~$2.2~~$3.3 billion of variable rate vehicle floorplan payable at March 31, ~~2023,~~2024, and ~~$2.1~~$3.4 billion at December 31, ~~2022.~~2023. Based on these amounts, a 100 basis point change in interest rates would result in an approximate change to our annual floorplan interest expense of ~~$21.9~~$32.7 million at March 31, ~~2023,~~2024, and ~~$21.1~~$33.8 million at December 31, ~~2022.~~2023. Our exposure to changes in interest rates with respect to total vehicle floorplan payable is partially mitigated by manufacturers’ floorplan assistance, which in some cases is based on variable interest rates.

We had $285.0 million of commercial paper notes outstanding at March 31, ~~2023,~~2024, and ~~$50.0~~$440.0 million at December 31, ~~2022.~~2023. Based on the amount outstanding, a 100 basis point change in interest rates would result in an approximate change to our annual interest expense of $2.9 million at March 31, ~~2023,~~2024, and ~~$0.5~~$4.4 million at December 31, ~~2022.~~2023.

Our fixed rate senior unsecured notes totaled $3.2 billion and had a fair value of ~~$2.9~~$3.0 billion as of March 31, ~~2023,~~2024, and totaled $3.2 billion and had a fair value of ~~$2.8~~$3.0 billion as of December 31, ~~2022.~~2023.

As of March 31, ~~2023,~~2024, all auto loans receivable outstanding were fixed-rate installment contracts. Financing for these receivables was achieved primarily through both variable- and fixed-rate non-recourse debt. Non-recourse debt includes warehouse facilities and asset-backed term securitizations. Borrowings under the warehouse facilities are variable-rate debt and are secured by the related auto loans receivable. Certain auto loans receivable were funded through term securitizations, which issued notes payable that accrue interest at fixed rates, and are also secured by the related auto loans receivable.

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Equity Price Risk

We are subject to equity price risk with respect to minority equity investments. Certain of our equity investments have readily determinable fair values. During the period that we hold these equity investments, unrealized gains and losses will be recorded as the fair market value of the securities change over time. The fair value of these equity investments was ~~$14.3~~$22.8 million at March 31, 2024, and December 31, 2023. A hypothetical 10% change in the equity prices of these securities with readily determinable fair values would result in an approximate change to gain or loss of ~~$1.4 million.~~$2.3 million at March 31, 2024, and December 31, 2023. We also have a minority equity investment without a readily determinable fair value. This equity investment is measured using a measurement alternative as permitted by accounting standards and was initially recorded at cost, to be subsequently adjusted for observable price changes. During the period that we hold this investment, unrealized gains and losses may be recorded if we identify observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The carrying amount of our equity investment without a readily determinable fair value was $56.7 million at March 31, 2024, and December 31, 2023. A hypothetical 10% observable price change for this equity investment would result in an approximate change to gain or loss of $5.7 ~~million.~~million at March 31, 2024, and December 31, 2023. The selected 10% hypothetical change in equity prices is not intended to reflect a best or worst case scenario, as equity price changes could be smaller or larger due to the nature of equity markets.

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ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or 15d-15 under the Exchange Act that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1A. RISK FACTORS

In addition to the information set forth in this Form 10-Q, you should carefully consider the risk factors discussed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2022,~~2023, which could materially affect our business, financial condition, or future results.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The table below sets forth information with respect to shares of common stock repurchased by AutoNation, Inc. during the three months ended March 31, ~~2023.~~2024.

Period
Total Number of
Shares Purchased (1)
Avg. Price
Paid Per
Share Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs
Approximate Dollar
Value of Shares
That May Yet Be
Purchased Under
The Plans or
Programs (in millions)(1)
January 1, 2023 - January 31, 2023 835,555 $ 111.56 835,555 $ 1,091.2
February 1, 2023 - February 28, 2023 — $ — — $ 1,091.2
March 1, 2023 - March 31, 2023 1,577,918 $ 134.22 1,577,918 $ 879.4
Total 2,413,473 2,413,473


Period	Total Number of Shares Purchased (1)	Avg. Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares That May Yet Be Purchased Under The Plans or Programs (in millions)(1)
January 1, 2024 - January 31, 2024	—	$	—	—	$	320.8
February 1, 2024 - February 29, 2024	—	$	—	—	$	320.8
March 1, 2024 - March 31, 2024	244,177	$	158.40	244,177	$	282.1
Total	244,177			244,177

(1)Our Board of Directors from time to time authorizes the repurchase of shares of our common stock up to a certain monetary limit. ~~As of~~During the fiscal quarter ended March 31, ~~2023, $879.4 million remained available~~2024, all of the shares that we repurchased were repurchased under our stock repurchase ~~limit.~~program. In April 2024, our Board of Directors authorized the repurchase of up to an additional $1.0 billion of common stock under the share repurchase program. Our stock repurchase program does not have an expiration date.

ITEM 5. OTHER INFORMATION

During the fiscal quarter ended March 31, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement” (in each case, as defined in Item 408 of Regulation S-K).

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ITEM 6. EXHIBITS


Exhibit No.			Description

~~10.1~~3.1*			~~Second Amendment, dated as of March 2, 2023, to the Third~~Fourth Amended and Restated ~~Credit Agreement, dated as~~Certificate of ~~March 26, 2020, by and among~~Incorporation of AutoNation, Inc.~~, each lender party thereto, and JPMorgan Chase Bank, N.A., as administrative agent for the lenders.~~
10.1*			A utoNation, Inc. 2024 Non-Employee Director Equity Plan.
~~10.2~~			~~Form of AutoNation, Inc. Stock Unit Award Agreement for grants in 2023.~~
~~31.1~~31.1*			Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) of the Exchange Act.
~~31.2~~31.2*			Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) of the Exchange Act.
~~32.1~~32.1**			Certification of Chief Executive Officer Pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350.
~~32.2~~32.2**			Certification of Chief Financial Officer Pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350.
~~101.INS~~101*			~~XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the~~ Inline XBRL ~~document~~Document Set for the condensed consolidated financial statements and accompanying notes in Part I, Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q.
~~101.SCH~~104*			Inline XBRL ~~Taxonomy Extension Schema Document~~
~~101.CAL~~			~~XBRL Taxonomy Extension Calculation Linkbase Document~~
~~101.DEF~~			~~XBRL Taxonomy Extension Definition Linkbase Document~~
~~101.LAB~~			~~XBRL Taxonomy Extension Label Linkbase Document~~
~~101.PRE~~			~~XBRL Taxonomy Extension Presentation Linkbase Document~~
~~104~~			~~Cover Page Interactive Data File -~~for the cover page ~~XBRL tags are embedded within~~of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL ~~document.~~Document Set.

* Filed herewith.

** Furnished herewith.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		AUTONATION, INC.

Date:	April ~~20, 2023~~26, 2024	By:	/s/ Kimberly R. Dees
			Kimberly R. Dees Senior Vice President and Chief Accounting Officer

			(Duly Authorized Officer and Principal Accounting Officer)

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	Fiscal Year of Origination(1)
	2023		2022		2021		2020		2019		Prior to 2019		Total
Credit Program Tier:
Platinum	$	13.0	$	19.9	$	11.6	$	5.4	$	6.2	$	1.6	$	57.7
Gold	18.1		49.1		26.4		11.1		8.8		2.6		116.1
Silver	22.7		54.9		26.2		8.8		6.4		1.4		120.4
Bronze	14.6		36.3		14.7		6.3		3.0		0.7		75.6
Copper	6.3		16.4		6.6		2.1		1.5		0.5		33.4
Total auto loans receivable	$	74.7	$	176.6	$	85.5	$	33.7	$	25.9	$	6.8	$	403.2

Current-period gross write-offs	$	—	$	8.0	$	5.4	$	1.4	$	0.9	$	0.3	$	16.0


	March 31, 2023		December 31, 2022
Goodwill (1)	$	1,450.2	$	1,320.1

Franchise rights - indefinite-lived	$	821.0	$	816.2
Other intangibles	70.8		30.7
	891.8		846.9
Less: accumulated amortization	(11.5)		(9.9)
Other intangible assets, net	$	880.3	$	837.0