AutoNation's Q4 2024 Earnings: A Closer Look

AutoNation, Inc. (AN) reported its fourth-quarter and full-year 2024 results, showcasing an increase in revenue and earnings per share (EPS) on a same-store basis. The company's strong performance was driven by various factors, including new vehicle sales growth, used vehicle gross profit increase, and expansion of its AutoNation Finance business.

New Vehicle Sales Growth
AutoNation achieved double-digit new vehicle unit growth in Q4 2024, with a 12% increase in same-store unit sales. This growth was driven by sequential unit profitability growth and higher average new vehicle selling prices. The company's premium luxury segment reported an increase in segment income of 6% and a 10% increase in revenue, indicating higher demand for luxury vehicles.

Used Vehicle Gross Profit Increase
AutoNation's used vehicle gross profit grew by 14% in Q4 2024 compared to the previous year. The company improved sourcing and pricing effectiveness, resulting in a higher unit profitability of $1,549 compared to $1,462 in the previous year. The company's used vehicle revenue remained relatively flat, indicating that the growth in gross profit was not solely driven by an increase in sales volume.

AutoNation Finance Expansion
AutoNation Finance originated $1.1 billion of loans during 2024, selling most of the legacy subprime portfolio. The company also conducted share repurchases of $460 million in 2024, representing a 7% share reduction. These strategic moves contributed to the company's strong financial performance.



Strong Balance Sheet
AutoNation maintained a strong balance sheet, with leverage reduced sequentially to 2.4x in Q4 2024. The company's liquidity stood at $1.3 billion, including $60 million in cash and $1.3 billion of availability under its revolving credit facility, net of commercial paper borrowings. This solid financial position enables the company to continue investing in growth opportunities and returning capital to shareholders.

In conclusion, AutoNation's Q4 2024 earnings results demonstrate the company's ability to adapt to changing market conditions and deliver attractive shareholder returns. The company's focus on new vehicle sales growth, used vehicle gross profit increase, and expansion of its AutoNation Finance business has contributed to its strong financial performance. As the company continues to execute on its strategic initiatives, investors should monitor its progress and consider the potential for further growth in the coming quarters.