an-20230630

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 June 30, 2023


☐			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 July 19, 2023, the registrant had 44,047,628 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 June 30 , 2023 and December 31, 2022	1
	Unaudited Condensed Consolidated Statements of Income for the Three and Six Months Ended June 30, 2023 and 2022	2
	Unaudited Condensed Consolidated Statements of Shareholders’ Equity for the Three and Six Months Ended June 30 , 2023 and 2022	3
	Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2023 and 2022	4
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	51
Item 4.	Controls and Procedures	51
PART II. OTHER INFORMATION
Item 1A.	Risk Factors	53
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	53
Item 5.	Other Information	53
Item 6.	Exhibits	55

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)


	June 30, 2023		December 31, 2022
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	63.7	$	72.6
Receivables, net	842.3		858.8
Inventory	2,572.5		2,048.3
Other current assets	161.3		158.3
Total Current Assets	3,639.8		3,138.0
AUTO LOANS RECEIVABLE, net of allowance for credit losses of $63.1 million and $57.5 million, respectively	345.5		303.1
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $2.0 billion and $1.9 billion, respectively	3,713.4		3,607.2
OPERATING LEASE ASSETS	369.7		323.5
GOODWILL	1,460.7		1,320.1
OTHER INTANGIBLE ASSETS, NET	936.2		837.0
OTHER ASSETS	614.2		530.8
Total Assets	$	11,079.5	$	10,059.7
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Vehicle floorplan payable - trade	$	1,211.7	$	946.6
Vehicle floorplan payable - non-trade	1,369.8		1,162.7
Accounts payable	390.8		327.6
Commercial paper	465.0		50.0
Current maturities of long-term debt	12.8		12.6
Current portion of non-recourse debt	10.5		10.7
Accrued payroll and benefits	257.3		238.0
Other current liabilities	689.1		657.5
Total Current Liabilities	4,407.0		3,405.7
LONG-TERM DEBT, NET OF CURRENT MATURITIES	3,582.5		3,586.9
NON-RECOURSE DEBT, NET OF CURRENT PORTION	251.7		312.9
NONCURRENT OPERATING LEASE LIABILITIES	339.8		296.9
DEFERRED INCOME TAXES	58.1		76.5
OTHER LIABILITIES	348.6		333.0
COMMITMENTS AND CONTINGENCIES (Note 14)
SHAREHOLDERS’ EQUITY:

Common stock, par value $0.01 per share; 1,500,000,000 shares authorized; 63,562,149 shares issued at June 30, 2023, and December 31, 2022, including shares held in treasury	0.6		0.6
Additional paid-in capital	11.0		3.1
Retained earnings	4,183.1		3,663.7
Treasury stock, at cost; 19,515,239 and 15,915,358 shares held, respectively	(2,102.9)		(1,619.6)
Total Shareholders’ Equity	2,091.8		2,047.8
Total Liabilities and Shareholders’ Equity	$	11,079.5	$	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				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Revenue:
New vehicle	$	3,281.0	$	2,935.8	$	6,212.9	$	5,743.0
Used vehicle	2,088.0		2,520.4		4,120.6		5,092.8
Parts and service	1,145.3		1,036.3		2,235.1		2,040.2
Finance and insurance, net	369.5		367.6		701.9		731.5
Other	6.3		9.1		18.3		14.5
TOTAL REVENUE	6,890.1		6,869.2		13,288.8		13,622.0
Cost of sales:
New vehicle	2,993.3		2,582.3		5,638.3		5,044.5
Used vehicle	1,953.7		2,363.9		3,831.9		4,799.7
Parts and service	602.8		554.6		1,181.5		1,097.4
Other	5.0		6.7		15.4		9.8
TOTAL COST OF SALES	5,554.8		5,507.5		10,667.1		10,951.4
Gross profit:
New vehicle	287.7		353.5		574.6		698.5
Used vehicle	134.3		156.5		288.7		293.1
Parts and service	542.5		481.7		1,053.6		942.8
Finance and insurance	369.5		367.6		701.9		731.5
Other	1.3		2.4		2.9		4.7
TOTAL GROSS PROFIT	1,335.3		1,361.7		2,621.7		2,670.6
Selling, general, and administrative expenses	842.9		754.8		1,625.6		1,496.2
Depreciation and amortization	54.6		48.8		107.4		98.8


Other (income) expense, net	(1.4)		—		6.2		(1.5)
OPERATING INCOME	439.2		558.1		882.5		1,077.1
Non-operating income (expense) items:
Floorplan interest expense	(32.8)		(5.8)		(59.9)		(11.0)
Other interest expense	(46.0)		(34.1)		(87.1)		(63.7)
Other income (loss), net	4.4		(13.7)		9.6		(20.1)
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	364.8		504.5		745.1		982.3
Income tax provision	92.3		128.0		184.8		243.7
NET INCOME FROM CONTINUING OPERATIONS	272.5		376.5		560.3		738.6
Income (loss) from discontinued operations, net of income taxes	—		(0.2)		0.9		(0.2)
NET INCOME	$	272.5	$	376.3	$	561.2	$	738.4
BASIC EARNINGS (LOSS) PER SHARE:
Continuing operations	$	6.06	$	6.51	$	12.15	$	12.33
Discontinued operations	$	—	$	—	$	0.02	$	—
Net income	$	6.06	$	6.51	$	12.17	$	12.33
Weighted average common shares outstanding	45.0		57.8		46.1		59.9
DILUTED EARNINGS (LOSS) PER SHARE:
Continuing operations	$	6.02	$	6.48	$	12.08	$	12.25
Discontinued operations	$	—	$	—	$	0.02	$	—
Net income	$	6.02	$	6.48	$	12.09	$	12.25
Weighted average common shares outstanding	45.3		58.1		46.4		60.3
COMMON SHARES OUTSTANDING, net of treasury stock, at period end	44.0		56.0		44.0		56.0

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

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AUTONATION, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In millions, except share data)


	Six Months Ended June 30, 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
Net income	—	—		—		288.7		—		288.7
Repurchases of common stock, including excise tax	—	—		—		—		(307.5)		(307.5)
Stock-based compensation expense	—	—		15.1		—		—		15.1
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
Net income	—	—		—		272.5		—		272.5
Repurchases of common stock, including excise tax	—	—		—		—		(209.5)		(209.5)
Stock-based compensation expense	—	—		8.3		—		—		8.3
Shares awarded under stock-based compensation plans, net of shares withheld for taxes	—	—		(0.3)		—		0.5		0.2
BALANCE AT JUNE 30, 2023	63,562,149	$	0.6	$	11.0	$	4,183.1	$	(2,102.9)	$	2,091.8


	Six Months Ended June 30, 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
Net income	—	—		—		362.1		—		362.1
Repurchases of common stock	—	—		—		—		(380.9)		(380.9)
Stock-based compensation expense	—	—		15.9		—		—		15.9
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
Net income	—	—		—		376.3		—		376.3
Repurchases of common stock	—	—		—		—		(403.9)		(403.9)

Stock-based compensation expense	—	—		5.3		—		—		5.3
Shares awarded under stock-based compensation plans, net of shares withheld for taxes	—	—		(2.5)		—		4.2		1.7
BALANCE AT JUNE 30, 2022	86,562,149	$	0.8	$	5.2	$	5,320.2	$	(3,001.2)	$	2,325.0

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

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AUTONATION, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)


	Six Months Ended
	June 30,
	2023		2022
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net income	$	561.2	$	738.4
Adjustments to reconcile net income to net cash provided by operating activities:
(Income) loss from discontinued operations	(0.9)		0.2
Depreciation and amortization	107.4		98.8
Amortization of debt issuance costs and accretion of debt discounts	4.8		3.0
Stock-based compensation expense	23.4		21.2
Provision for credit losses on auto loans receivable	22.7		—
Deferred income tax provision	2.8		3.5
Net gain related to business/property dispositions	(1.1)		(1.0)


Non-cash impairment charges	2.2		1.0
Loss on equity investments	1.3		0.1
Loss (gain) on corporate-owned life insurance asset	(9.1)		20.8

(Increase) decrease, net of effects from business acquisitions and divestitures:
Receivables	20.7		24.3
Inventory	(485.8)		(63.5)
Other assets	(102.5)		(0.9)
Increase (decrease), net of effects from business acquisitions and divestitures:
Vehicle floorplan payable - trade	265.2		71.8
Accounts payable	53.4		(20.8)
Other liabilities	41.6		(1.7)
Net cash provided by continuing operations	507.3		895.2
Net cash used in discontinued operations	(0.3)		(0.2)
Net cash provided by operating activities	507.0		895.0
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Purchases of property and equipment	(199.0)		(160.3)

Proceeds from the sale of property and equipment	1.8		—
Proceeds from the disposal of assets held for sale	2.5		18.0


Cash used in business acquisitions, net of cash acquired	(268.9)		—
Originations of auto loans receivable acquired through third-party dealers	(91.8)		—
Collections on auto loans receivable acquired through third-party dealers	76.7		—



Other	(8.8)		(6.2)
Net cash used in continuing operations	(487.5)		(148.5)
Net cash used in discontinued operations	—		—
Net cash used in investing activities	(487.5)		(148.5)

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

Table of Contents

AUTONATION, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Continued)


	Six Months Ended
	June 30,
	2023		2022
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Repurchases of common stock	(523.2)		(784.5)



Proceeds from 3.85% Senior Notes due 2032	—		698.8


Net proceeds from (payments of) commercial paper	415.0		(340.0)
Proceeds from non-recourse debt	63.9		—
Payments of non-recourse debt	(126.9)		—
Payment of debt issuance costs	—		(6.6)
Net proceeds from (payments of) vehicle floorplan payable - non-trade	171.4		(5.5)
Payments of other debt obligations	(6.2)		(5.9)
Proceeds from the exercise of stock options	1.5		2.6
Payments of tax withholdings for stock-based awards	(25.1)		(29.4)

Net cash used in continuing operations	(29.6)		(470.5)
Net cash used in discontinued operations	—		—
Net cash used in financing activities	(29.6)		(470.5)
INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	(10.1)		276.0
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH at beginning of period	95.4		60.6
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH at end of period	$	85.3	$	336.6

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

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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 June 30, 2023, we owned and operated 353 new vehicle franchises from 253 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 33 different new vehicle brands. The core brands of new vehicles that we sell, representing approximately 89% of the new vehicles that we sold during the six months ended June 30, 2023, are manufactured by Toyota (including Lexus), Honda, Ford, General Motors, BMW, Mercedes-Benz, Stellantis, and Volkswagen (including Audi and Porsche). As of June 30, 2023, we also owned and operated 53 AutoNation-branded collision centers, 16 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.

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 our captive finance company through third-party independent dealers. 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 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.

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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. 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 June 30, 2023
	Domestic		Import		Premium Luxury		Corporate and other(1)		Total
Major Goods/Service Lines
New vehicle	$	923.0	$	1,011.2	$	1,346.8	$	—	$	3,281.0
Used vehicle	619.0		563.2		756.9		148.9		2,088.0
Parts and service	298.7		291.3		400.3		155.0		1,145.3
Finance and insurance, net	114.3		128.0		115.8		11.4		369.5
Other	0.5		4.0		0.7		1.1		6.3
	$	1,955.5	$	1,997.7	$	2,620.5	$	316.4	$	6,890.1

Timing of Revenue Recognition
Goods and services transferred at a point in time	$	1,740.1	$	1,771.5	$	2,278.3	$	210.6	$	6,000.5
Goods and services transferred over time(2)	215.4		226.2		342.2		105.8		889.6
	$	1,955.5	$	1,997.7	$	2,620.5	$	316.4	$	6,890.1


	Three Months Ended June 30, 2022
	Domestic		Import		Premium Luxury		Corporate and other(1)		Total
Major Goods/Service Lines
New vehicle	$	858.1	$	852.4	$	1,225.3	$	—	$	2,935.8
Used vehicle	786.8		699.6		904.6		129.4		2,520.4
Parts and service	275.5		266.3		367.0		127.5		1,036.3
Finance and insurance, net	119.4		125.7		118.4		4.1		367.6
Other	1.1		5.7		1.3		1.0		9.1
	$	2,040.9	$	1,949.7	$	2,616.6	$	262.0	$	6,869.2

Timing of Revenue Recognition
Goods and services transferred at a point in time	$	1,848.7	$	1,748.9	$	2,311.4	$	179.5	$	6,088.5
Goods and services transferred over time(2)	192.2		200.8		305.2		82.5		780.7
	$	2,040.9	$	1,949.7	$	2,616.6	$	262.0	$	6,869.2

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AUTONATION, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)


	Six Months Ended June 30, 2023
	Domestic		Import		Premium Luxury		Corporate and other(1)		Total
Major Goods/Service Lines
New vehicle	$	1,751.0	$	1,867.6	$	2,594.3	$	—	$	6,212.9
Used vehicle	1,231.3		1,105.3		1,502.7		281.3		4,120.6
Parts and service	586.3		559.7		786.5		302.6		2,235.1
Finance and insurance, net	216.6		240.4		220.8		24.1		701.9
Other	1.4		14.0		1.1		1.8		18.3
	$	3,786.6	$	3,787.0	$	5,105.4	$	609.8	$	13,288.8

Timing of Revenue Recognition
Goods and services transferred at a point in time	$	3,369.4	$	3,358.4	$	4,437.7	$	405.3	$	11,570.8
Goods and services transferred over time(2)	417.2		428.6		667.7		204.5		1,718.0
	$	3,786.6	$	3,787.0	$	5,105.4	$	609.8	$	13,288.8


	Six Months Ended June 30, 2022
	Domestic		Import		Premium Luxury		Corporate and other(1)		Total
Major Goods/Service Lines
New vehicle	$	1,680.6	$	1,734.0	$	2,328.4	$	—	$	5,743.0
Used vehicle	1,609.9		1,407.2		1,820.7		255.0		5,092.8
Parts and service	544.2		521.8		718.9		255.3		2,040.2
Finance and insurance, net	238.6		252.1		225.6		15.2		731.5
Other	2.0		8.7		1.7		2.1		14.5
	$	4,075.3	$	3,923.8	$	5,095.3	$	527.6	$	13,622.0

Timing of Revenue Recognition
Goods and services transferred at a point in time	$	3,699.3	$	3,532.8	$	4,497.7	$	366.1	$	12,095.9
Goods and services transferred over time(2)	376.0		391.0		597.6		161.5		1,526.1
	$	4,075.3	$	3,923.8	$	5,095.3	$	527.6	$	13,622.0

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

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

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 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.

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(Continued)

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	$	102.8	$	35.4	$	49.9	$	17.5

As a practical expedient, since automotive repair and maintenance services are performed within one year or less, we do not disclose estimated revenue expected to be recognized in the future for 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:


	June 30, 2023		December 31, 2022
Receivables from contracts with customers, net	$	593.4	$	634.5
Contract Asset (Current)	$	17.9	$	27.7
Contract Asset (Long-Term)	$	3.2	$	8.6
Contract Liability (Current)	$	41.4	$	41.8
Contract Liability (Long-Term)	$	67.5	$	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 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 June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Amounts included in contract liability at the beginning of the period	$	9.0	$	8.8	$	18.4	$	17.8
Performance obligations satisfied in previous periods	$	(0.3)	$	0.9	$	(2.6)	$	4.7

Other significant changes include contract assets reclassified to receivables of $28.7 million for the six months ended June 30, 2023, and $30.5 million for the six months ended June 30, 2022.

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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 by dividing net income by the weighted average number of shares outstanding, noted above, adjusted for the dilutive effect of unvested RSU awards and stock options.

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


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Net income from continuing operations	$	272.5	$	376.5	$	560.3	$	738.6
Income (loss) from discontinued operations, net of income taxes	—		(0.2)		0.9		(0.2)
Net income	$	272.5	$	376.3	$	561.2	$	738.4

Basic weighted average common shares outstanding	45.0		57.8		46.1		59.9
Dilutive effect of unvested RSUs and stock options	0.3		0.3		0.3		0.4
Diluted weighted average common shares outstanding	45.3		58.1		46.4		60.3

Basic EPS amounts(1):
Continuing operations	$	6.06	$	6.51	$	12.15	$	12.33
Discontinued operations	$	—	$	—	$	0.02	$	—
Net income	$	6.06	$	6.51	$	12.17	$	12.33

Diluted EPS amounts(1):
Continuing operations	$	6.02	$	6.48	$	12.08	$	12.25
Discontinued operations	$	—	$	—	$	0.02	$	—
Net income	$	6.02	$	6.48	$	12.09	$	12.25

(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		Six Months Ended
	June 30,		June 30,
	2023	2022	2023	2022
Anti-dilutive equity instruments excluded from the computation of diluted EPS	—	0.1	—	0.1

4.RECEIVABLES, NET

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


	June 30, 2023		December 31, 2022
Contracts-in-transit and vehicle receivables	$	371.6	$	441.1
Trade receivables	170.6		156.6
Manufacturer receivables	197.9		174.4
Income taxes receivable (see Note 9)	29.3		20.2
Other	74.9		68.2
	844.3		860.5
Less: allowances for expected credit losses	(2.0)		(1.7)
Receivables, net	$	842.3	$	858.8

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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. 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 income and expenses related to auto loans represent AutoNation Finance income (loss), which is 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 June 30, 2023, and December 31, 2022, are as follows:


	June 30, 2023		December 31, 2022




Total auto loans receivable	$	420.8	$	377.0
Accrued interest and fees	5.0		4.4
Deferred loan origination costs	1.0		0.5
Less: unearned discounts	(18.2)		(21.3)
Less: allowances for expected credit losses	(63.1)		(57.5)
Auto loans receivable, net	$	345.5	$	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 information such as income, collateral, and down payment. The scoring models yield credit program tiers that 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, the 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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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

Auto Loans Receivable by Major Credit Program

The following table presents auto loans receivable as of June 30, 2023, disaggregated by major credit program tier:



	Fiscal Year of Origination(1)
	2023		2022		2021		2020		2019		Prior to 2019		Total
Credit Program Tier:
Platinum	$	32.1	$	18.1	$	10.3	$	4.7	$	5.0	$	1.1	$	71.3
Gold	34.7		44.0		23.6		9.5		7.2		1.8		120.8
Silver	40.1		49.0		23.1		7.5		5.1		0.9		125.7
Bronze	22.0		31.7		12.9		5.2		2.4		0.5		74.7
Copper	5.7		13.7		5.7		1.8		1.1		0.3		28.3
Total auto loans receivable	$	134.6	$	156.5	$	75.6	$	28.7	$	20.8	$	4.6	$	420.8

Current-period gross write-offs	$	0.6	$	17.0	$	8.5	$	2.5	$	1.5	$	0.5	$	30.6

(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.

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.

Rollforward of Allowance for Credit Losses

The following is a rollforward of our allowance for expected credit losses for auto loans receivable for the six months ended June 30, 2023:


	Six Months Ended
	June 30, 2023
Balance as of beginning of year	$	57.5
Provision for credit losses	22.7

Write-offs	(30.6)
Recoveries(1)	13.5
Balance as of June 30, 2023	$	63.1

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

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

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 table presents past due auto loans receivable, as of June 30, 2023, and December 31, 2022:


	Age Analysis of Past-Due Auto Loans Receivable as of
	June 30, 2023		December 31, 2022
31-60 Days	$	19.2	$	13.0
61-90 Days	4.8		4.1
Greater than 90 Days	2.6		2.6
Total Past Due	$	26.6	$	19.7

Current	394.2		357.3
Total	$	420.8	$	377.0

6.INVENTORY AND VEHICLE FLOORPLAN PAYABLE

The components of inventory are as follows:


	June 30, 2023		December 31, 2022
New vehicles	$	1,404.1	$	1,009.7
Used vehicles	905.5		789.1
Parts, accessories, and other	262.9		249.5
Inventory	$	2,572.5	$	2,048.3

The components of vehicle floorplan payable are as follows:


	June 30, 2023		December 31, 2022
Vehicle floorplan payable - trade	$	1,211.7	$	946.6
Vehicle floorplan payable - non-trade	1,369.8		1,162.7
Vehicle floorplan payable	$	2,581.5	$	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

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

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 June 30, 2023, our new vehicle floorplan facilities utilized Prime-based and SOFR-based interest rates. Our new vehicle floorplan outstanding had a weighted-average interest rate of 6.8% at June 30, 2023, and 5.9% at December 31, 2022. As of June 30, 2023, the aggregate capacity under our new vehicle floorplan facilities to finance our new vehicle inventory was approximately $4.6 billion, of which $2.0 billion had been borrowed.

At June 30, 2023, our used vehicle floorplan facilities utilized Prime-based and SOFR-based interest rates. Our used vehicle floorplan outstanding had a weighted-average interest rate of 6.7% at June 30, 2023, and 5.9% at December 31, 2022. As of June 30, 2023, the aggregate capacity under our used vehicle floorplan facilities with various lenders to finance a portion of our used vehicle inventory was $683.6 million, of which $614.6 million had been borrowed. The remaining borrowing capacity of $69.0 million was limited to $0.2 million based on the eligible used vehicle inventory that could have been pledged as collateral.

7.GOODWILL AND INTANGIBLE ASSETS, NET

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


	June 30, 2023		December 31, 2022
Goodwill (1)	$	1,460.7	$	1,320.1

Franchise rights - indefinite-lived	$	878.8	$	816.2
Other intangibles	70.8		30.7
	949.6		846.9
Less: accumulated amortization	(13.4)		(9.9)
Other intangible assets, net	$	936.2	$	837.0

(1) The change in goodwill from the prior period is primarily 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.

Goodwill for our reporting units and our franchise rights assets are tested for impairment annually as of April 30 or more frequently when events or changes in circumstances indicate that impairment may exist.

Under accounting standards, we chose to make a qualitative evaluation about the likelihood of goodwill impairment for our annual impairment testing as of April 30, 2023, and we determined that it was not more likely than not that the fair values of our reporting units were less than their carrying amounts. We elected to perform quantitative franchise rights impairment tests as of April 30, 2023, and no impairment charges resulted from these quantitative tests.

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	June 30, 2023		December 31, 2022
3.5% Senior Notes	November 15, 2024	May 15 and November 15	$	450.0	$	450.0
4.5% Senior Notes	October 1, 2025	April 1 and October 1	450.0		450.0
3.8% Senior Notes	November 15, 2027	May 15 and November 15	300.0		300.0
1.95% Senior Notes	August 1, 2028	February 1 and August 1	400.0		400.0
4.75% Senior Notes	June 1, 2030	June 1 and December 1	500.0		500.0
2.4% Senior Notes	August 1, 2031	February 1 and August 1	450.0		450.0
3.85% Senior Notes	March 1, 2032	March 1 and September 1	700.0		700.0
Revolving credit facility	March 26, 2025*	Monthly	—		—
Finance leases and other debt	Various dates through 2041		369.3		375.5
			3,619.3		3,625.5
Less: unamortized debt discounts and debt issuance costs			(24.0)		(26.0)
Less: current maturities			(12.8)		(12.6)
Long-term debt, net of current maturities			$	3,582.5	$	3,586.9

* As described below under “Debt Refinancing Transaction,” we amended and restated our credit agreement on July 18, 2023, and extended the maturity date to July 18, 2028.

Debt Refinancing Transaction

On July 18, 2023, we amended and restated our unsecured credit agreement to, among other things, (1) increase the revolving credit facility commitment from $1.8 billion to $1.9 billion, (2) extend the maturity date to July 18, 2028, (3) allow for the maximum leverage ratio covenant to increase from 3.75x to 4.25x for four fiscal quarters in the event that we complete a material acquisition, and (4) replace the maximum capitalization ratio covenant with a minimum interest coverage ratio covenant.

Senior Unsecured Notes and Credit Agreement

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.

Prior to its amendment and restatement as described above under “Debt Refinancing Transaction,” our credit agreement provided for a $1.8 billion revolving credit facility that was scheduled to mature on March 26, 2025. The amended and restated credit agreement provides for a $1.9 billion revolving credit facility that matures on July 18, 2028. Our amended and restated credit agreement continues to contain 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 June 30, 2023, we had no borrowings outstanding under our revolving credit facility. We continue to have a $200.0 million letter of credit sublimit as part of the revolving credit facility under our amended and restated credit agreement. 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, which was $0.7 million at June 30, 2023. At June 30, 2023, our borrowing capacity under our credit agreement was $1.8 billion.

Our revolving credit facility under 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. These pricing terms remain unchanged from the credit agreement that was in place at June 30, 2023.

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AUTONATION, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

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 June 30, 2023, we had finance leases and other debt obligations of $369.3 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. At June 30, 2023, the maximum aggregate amount that could be outstanding at any time was $1.0 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 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 June 30, 2023, we had $465.0 million of commercial paper notes outstanding with a weighted-average annual interest rate of 5.73% and a weighted-average remaining term of 5 days. At December 31, 2022, we had $50.0 million of commercial paper notes outstanding with a weighted-average annual interest rate of 4.30% and a weighted-average remaining term of 1 day.

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 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.

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.

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

Non-recourse debt outstanding at June 30, 2023, and December 31, 2022, consisted of the following:


	June 30, 2023		December 31, 2022
Warehouse facilities	$	166.4	$	181.8
Term securitization debt of consolidated VIEs	99.3		146.9
	265.7		328.7
Less: unamortized debt discounts and debt issuance costs	(3.5)		(5.1)
Less: current maturities	(10.5)		(10.7)
Non-recourse debt, net of current maturities	$	251.7	$	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.

One of the warehouse facilities matures on October 1, 2023, and the other matures on December 17, 2023. Aggregate commitments under the warehouse facilities total $350.0 million.

The term securitization debt of consolidated VIEs consists of various notes with interest rates ranging from 0.69% to 4.45% and maturity dates ranging from April 2025 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 $10.5 million as of June 30, 2023, and $14.9 million as of December 31, 2022, 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 $101.7 million as of June 30, 2023, and $151.4 million as of December 31, 2022.

9.INCOME TAXES

Income taxes receivable included in Receivables, net totaled totaled $29.3 million at June 30, 2023 and $20.2 million at December 31, 2022.

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. 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.

10.SHAREHOLDERS’ EQUITY

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


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023	2022
Shares repurchased	1.6		3.7		4.0	7.2
Aggregate purchase price (1)	$	207.4	$	403.9