AutoNation Net Income Falls 25% To $162.3 Million, But Adjusted EPS Rises And Board Adds $1 Billion To Buyback
Adjusted earnings per share rose for a seventh straight quarter as shares outstanding fell 9% year to date and car sales volumes dropped.
AutoNation, which sells new and used vehicles through franchised dealerships across the U.S., said third-quarter net income fell 25% to $162.3 million, even as adjusted earnings per share edged up to $5.11 from $5.01. The board also approved another $1 billion for share repurchases, the company said Friday.
Fewer cars, fewer dollars, more per share
Diluted earnings per share were $4.87, down from $5.65 a year earlier. Adjusted net income fell 11% to $170.3 million, so the per-share gain, the company's seventh consecutive quarter of year-over-year growth, came from a smaller share count: diluted weighted average shares were 33.3 million against 38.1 million.
Revenue of $7,010.3 million was about flat against $7,037.4 million. Operating income dropped 16% to $314.6 million. Same-store new vehicle retail unit sales fell 5% to 62,356, and used vehicle retail units fell 6% to 63,703.
Parts and service moved the other way. Revenue in that line rose 5.2% to $1,290.0 million, and the company called it record After-Sales gross profit. AutoNation Finance, its auto lending arm, earned $15.4 million, up from $1.5 million, and its loan portfolio grew more than 40%.
Buybacks absorb most of the cash
AutoNation bought back 3.1 million shares for $620 million in the first nine months, an average of $198.68 a share. Through October 28 the total reached 3.4 million shares for $668 million. CEO Mike Manley said the company used nearly 85% of adjusted free cash flow on repurchases, cutting shares outstanding 9% year to date.
Adjusted free cash flow for the nine months was $739.0 million, or 141% of adjusted net income, up from 128% a year earlier. Manley said the current environment "strongly favors allocating capital toward share repurchases."
The additional $1.0 billion authorization came in October. As of October 28, $1.4 billion remained available.
Debt and liquidity after the borrowing
At September 30, AutoNation had $1.5 billion of liquidity, including $51 million in cash. Non-vehicle debt stood at $4.3 billion, and the covenant leverage ratio was 2.7 times.
In September the company expanded its revolving credit facility to $2.0 billion and extended its maturity to September 14, 2031. In October it raised its commercial paper program to the same size.
Management holds its third-quarter conference call at 9:00 a.m. Eastern on Friday.
Sources
- 8-K Filing — AUTONATION, INC. (AN) — SEC EDGAR
- Exhibit anearningsrelease93026ex991.htm — AUTONATION, INC. 8-K exhibit — SEC EDGAR
- AutoNation Reports Third Quarter 2026 Results — businesswire.com
