Autonation, Inc. · NYSE:AN
Autonation — Q3 2023 Earnings Presentation
17 slides from Autonation's earnings presentation, Oct 27, 2023
Slide 1: Third Quarter Earnings Release
Third Quarter Earnings Release October 27, 2023 1
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains 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 are, or may be dee
Slide 3: 3Q 2023 Overview
3Q 2023 Overview PERFORMANCE OTHER HIGHLIGHTS • Expanding offerings and reach for our 11+ million New Vehicles units increasing 12% customers and adding new customers Used Vehicles sequential unit growth 5% • AN Finance, AN Mobility, autonationparts.com • Opened AN USA Hilton Head, our 17th AN USA s
Slide 4: Highlights
3Q 2023 Highlights New Vehicle revenue up 11% YoY to $3.2 billion Used Vehicle revenue up 4% QoQ to $2.2 billion Customer Financial Services up 2% YoY to $370 million After-Sales Revenue up 12% YoY to $1.2 billion Q3 ’23 EPS of $5.54, Prior Year Adj. EPS of $6.00 Operating Cash Flow of $763 million
Slide 5: Financial Summary
3Q 2023 Financial Summary ($ in millions, except per share data) Q3 2022 Q3 2023 YoY COMMENTS Total Revenue $6,666 $6,893 3% Attractive top-line growth Gross Profit $1,313 $1,295 -1% 19% Gross Profit margin, down ~90 bps Adj. SG&A Expense $768 $823 7% Stable core SG&A, plus growth initiative spendin
Slide 6: New Vehicles
3Q 2023 New Vehicles RETAIL UNITS GROSS PROFIT PVR NOTES • Volume up 12% maintaining share 62,289 • Imports volume up >25% 55,565 • Inventory value up >2.2x from prior year (units up 14k to 27.5k) $5,934 • Moderating Gross Profit PVR reflects aggressive focus on unit $4,025 volume to drive CFS, futu
Slide 7: Used Vehicles
3Q 2023 Used Vehicles RETAIL UNITS GROSS PROFIT PVR NOTES 75,355 72,517 • Modest volume decline YoY (-4%), improvement sequentially (+5%) $1,870 $1,746 • Most pronounced volume decline on Domestic (-10%), Import and Premium Luxury less affected • Self-sourced 96% of vehicles in Q3 ‘23 • Gross Profit
Slide 8: Customer Financial Services
3Q 2023 Customer Financial Services GROSS PROFIT GROSS PROFIT PVR NOTES $361 $370 • Industry leading CFS performance continues $2,755 $2,741 • Modest increase in gross profit with stable PVRs • Improving unit sales volume and penetration — more than 2 products per vehicle • Lower financing fees 3Q 2
Slide 9: After-Sales
3Q 2023 After-Sales REVENUE ($M) GROSS PROFIT ($M) NOTES • Revenue growth 12%, gross profit growth 14% $1,157 $1,032 • Value per repair order $546 improving $479 • Number of repair orders improving • Increases in all major categories — Customer Pay, Internal, Warranty, and Collision • Gross Profit m
Slide 10: Operating Income
3Q 2023 Operating Income ADJ OPERATING INCOME MARGIN (%) NOTES • Despite decline, well above pre-pandemic levels by 200+ bps • Reflects moderation in New Vehicle gross 7.4% profit and higher SG&A 6.0% • SG&A growth reflects: • Higher unit volumes • Investments for growth • Advertising to support use
Slide 11: Free Cash Flow
3Q 2023 Free Cash Flow FREE CASH FLOW ($M) NOTES $1,253 • FCF remains significantly above pre-pandemic levels $524M • Strong operating cash flow conversion from net income $737 $258M 3Q • Third quarter: ~105% $729M • YTD: ~95% $479M 1H • CapEx up 10%+ 3Q (20%+ YTD), principally growth investments in
Slide 12: Capital Allocation
3Q 2023 Capital Allocation CAPITAL ALLOCATION (YTD) NOTES • Focus has been on re-investing in the business and shareholder returns $1.5B $82M • Principal CapEx to support growth $236M $1.3B initiatives: • AN USA $271M M&A • Capacity Growth $286M CapEx • IT and Electrification • Since the start of 20
Slide 13: AutoNation
3Q 2023 AutoNation Solid operating results in an evolving environment Strong cash conversion and attractive capital deployment Continuing to invest for growth including processes and technology as well as CapEx Continued confidence in AutoNation team to deliver attractive returns to shareholders 13
Slide 14: Appendix
Appendix This presentation contains certain non-GAAP financial measures for which we have set forth below reconciliations to the most comparable GAAP measures. The Company believes that these measures improve the transparency of the Company’s disclosure, provide a meaningful presentation of the Comp
Slide 15: Global Financial Crisis to 2022
SELECT HISTORICAL DATA Global Financial Crisis to 2022 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Avg. SAAR (mm) 13.1 10.3 11.5 12.6 14.3 15.4 16.4 17.4 17.5 17.1 17.2 17.0 14.5 14.9 13.7 14.9 New Retail SAAR (mm) 10.6 8.6 9.2 10.3 11.7 12.8 13.6 14.2 14.2 14.1 13.9 1
Slide 16: Comparable Basis Reconciliations
NON-GAAP RECONCILIATIONS Comparable Basis Reconciliations Three Months Ended September 30, 2023 Income from Continuing Diluted Earnings Per Operating Income Operations Before Income Tax Provision(1) Effective Tax Rate Net Income Share(2) Income Taxes 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023
Slide 17: Free Cash Flow
NON-GAAP RECONCILIATIONS Free Cash Flow Third Quarter First Nine Months 2022 2023 2022 2023 Net cash provided by operating activities $548.3 $255.6 $1,443,3 $762.6 Change in Vehicle Floorplan - non Trade 52.9 89.0 46,4 260.4 Adjusted Cash from Operations 600.2 344.6 1,489.7 1,023.0 Less: Purchases o