AutoNation — Third Quarter 2026 Earnings Summary

Financial Performance:

• Q3 2026 revenue was $7.01 billion, relatively flat (0% change) compared to $7.04 billion in Q3 2025.
• Q3 2026 GAAP net income was $162.3 million, down 25% from $215.1 million in Q3 2025.
• Q3 2026 diluted EPS was $4.87, down 14% from $5.65 in Q3 2025.
• Q3 2026 Adjusted EPS was $5.11, up 2% from $5.01 in Q3 2025.
• Q3 2026 Gross profit was $1.21 billion, down 2% from $1.24 billion in Q3 2025.
• Q3 2026 Operating income was $314.6 million, down 16% from $372.4 million in Q3 2025.
• Year-to-date (YTD) 2026 revenue was $20.49 billion, down 1% from $20.70 billion in YTD 2025.
• YTD 2026 GAAP net income was $549.8 million, up 15% from $477.0 million in YTD 2025.
• YTD 2026 diluted EPS was $16.12, up 30% from $12.36 in YTD 2025.
• YTD 2026 Adjusted EPS was $15.33, up 1% from $15.14 in YTD 2025.
• YTD 2026 Adjusted Free Cash Flow was $739.0 million, representing 141% of Adjusted Net Income.
• YTD 2026 AutoNation Finance income was $35.5 million, up 10X from $3.6 million in YTD 2025.
• YTD 2026 AutoNation Finance portfolio grew more than 40% year-over-year.
• Customer Pay revenue grew 6% year-over-year.
• Parts and service revenue was $1.29 billion in Q3 2026, up 5% from $1.23 billion in Q3 2025.
• Parts and service gross profit was $616.6 million in Q3 2026, up 3% from $597.0 million in Q3 2025.
• Finance and insurance revenue was $349.0 million in Q3 2026, down 7% from $374.8 million in Q3 2025.
• New vehicle revenue was $3.33 billion in Q3 2026, down 3% from $3.42 billion in Q3 2025.
• Used vehicle revenue was $2.04 billion in Q3 2026, up 1% from $2.02 billion in Q3 2025.
• YTD 2026 Same-store revenue was $19.98 billion, down 3% from $20.49 billion in YTD 2025.
• YTD 2026 Same-store gross profit was $3.55 billion, down 4% from $3.70 billion in YTD 2025.

Guidance and Future Outlook:

• Management stated the current environment strongly favors allocating capital toward share repurchases.
• The company highlighted strong growth in AutoNation Finance and record After-Sales performance as drivers of recurring earnings and cash flow.

Business Segments and Product Lines:

• AutoNation Finance: Income increased to $15.4 million in Q3 2026 from $1.5 million in Q3 2025. Interest margin was $43.9 million in Q3 2026 versus $34.0 million in Q3 2025.
• Franchised Dealerships:
  • Domestic segment revenue was $1.81 billion in Q3 2026, down 7% from $1.95 billion in Q3 2025.
  • Import segment revenue was $2.25 billion in Q3 2026, up 4% from $2.17 billion in Q3 2025.
  • Premium luxury segment revenue was $2.63 billion in Q3 2026, up 3% from $2.56 billion in Q3 2025.
  • Total Franchised Dealerships revenue was $6.69 billion in Q3 2026, up 0% from $6.68 billion in Q3 2025.
• Retail Unit Sales (Q3 2026 vs Q3 2025):
  • New vehicle units: 63,929 (down 3%).
  • Used vehicle units: 65,410 (down 5%).
  • Total retail units: 129,339 (down 4%).
• Brand Mix (New Vehicle Units Sold Q3 2026):
  • Toyota: 23.3% (up from 21.9%).
  • Honda: 12.3% (up from 11.9%).
  • Ford, Lincoln: 12.1% (down from 13.0%).
  • Chevrolet, Buick, Cadillac, GMC: 9.7% (down from 11.1%).
  • Mercedes-Benz: 8.9% (up from 8.2%).
  • BMW: 8.6% (flat from 8.6%).
• After-Sales: Record After-Sales gross profit reported.

Market and Competitive Landscape:

• Same-store revenue decreased 2% in Q3 2026 compared to Q3 2025.
• Same-store new vehicle retail unit sales decreased 5% in Q3 2026.
• Same-store used vehicle retail unit sales decreased 6% in Q3 2026.
• New vehicle days supply was 52 days at September 30, 2026, compared to 47 days at September 30, 2025.
• Used vehicle days supply was 43 days at September 30, 2026, compared to 37 days at September 30, 2025.

Risks and Challenges:

• Forward-looking statements identify risks including economic conditions, changes in tariffs, unemployment, interest/inflation rates, consumer demand, and fuel prices.
• Risks include the ability to maintain or improve gross profit margins and maintain or gain market share.
• Potential impacts from safety recalls, legal, reputational, and financial risks resulting from cyber incidents.
• Risks related to natural disasters and adverse weather events (specifically noted self-insurance losses associated with weather-related events of $6.6 million after tax in Q3 2026).
• Restrictions imposed by vehicle manufacturers and the ability to obtain franchise approvals.
• Factors affecting goodwill and intangible asset impairment testing.

Management Commentary and Tone:

• Mike Manley, CEO, described the quarter as "solid" with "exceptional cash generation and disciplined capital allocation."
• Management noted the seventh consecutive quarter of year-over-year Adjusted EPS growth.
• Management highlighted the contribution of recurring earnings from After-Sales and AutoNation Finance.

Other Key Points:

• Share Repurchases: $620 million repurchased year-to-date through October 28, 2026 ($668 million total including Q3), representing a 9% reduction in shares outstanding.
• New Authorization: Board authorized an additional $1.0 billion in share repurchases. $1.4 billion remained available as of October 28, 2026.
• Liquidity: $1.5 billion liquidity as of September 30, 2026, including $51 million cash and $1.4 billion availability under the revolving credit facility.
• Debt: Covenant leverage ratio was 2.7X at quarter-end. Non-vehicle debt outstanding was $4.3 billion.
• Credit Agreement: Amended in September 2026 to increase revolving borrowing capacity to $2.0 billion and extend maturity to September 14, 2031. Commercial paper program capacity increased to $2.0 billion in October 2026.
• Divestitures/Acquisitions: No cash paid for acquisitions in Q3 2026. Cash received from divestitures was $0 in Q3 2026.
• Capital Expenditures: $201.7 million for the nine months ended September 30, 2026.
• Self-Insurance: Q3 2026 Adjusted EPS excluded self-insurance losses of $6.6 million after tax related to weather events.
• CDK Outage: Q3 2025 included $40.0 million in insurance recoveries associated with the CDK outage.