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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, 2024
or
| | | | | |
☐ | 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 | | AN | | 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 | þ | | 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 30, 2024, the registrant had 39,679,183 shares of common stock outstanding.
AUTONATION, INC.
FORM 10-Q
TABLE OF CONTENTS
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Item 1. | | |
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Item 2. | | |
Item 3. | | |
Item 4. | | |
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Item 1A. | | |
Item 2. | | |
Item 5. | | |
Item 6. | | |
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, 2024 | | December 31, 2023 |
ASSETS | | | |
CURRENT ASSETS: | | | |
Cash and cash equivalents | $ | 85.9 | | | $ | 60.8 | |
Receivables, net | 854.6 | | | 1,040.4 | |
Inventory | 3,553.9 | | | 3,033.4 | |
Other current assets | 357.0 | | | 172.3 | |
Total Current Assets | 4,851.4 | | | 4,306.9 | |
AUTO LOANS RECEIVABLE, net of allowance for credit losses of $48.2 million and $46.3 million, respectively | 709.4 | | | 402.4 | |
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $2.2 billion and $2.1 billion, respectively | 3,780.7 | | | 3,791.6 | |
OPERATING LEASE ASSETS | 404.9 | | | 392.1 | |
GOODWILL | 1,449.4 | | | 1,465.8 | |
OTHER INTANGIBLE ASSETS, NET | 924.3 | | | 927.8 | |
OTHER ASSETS | 708.5 | | | 693.4 | |
Total Assets | $ | 12,828.6 | | | $ | 11,980.0 | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | |
CURRENT LIABILITIES: | | | |
Vehicle floorplan payable - trade | $ | 2,272.9 | | | $ | 1,760.0 | |
Vehicle floorplan payable - non-trade | 1,686.9 | | | 1,622.4 | |
Accounts payable | 338.9 | | | 344.7 | |
Commercial paper | 425.0 | | | 440.0 | |
Current maturities of long-term debt | 463.1 | | | 462.4 | |
Current portion of non-recourse debt | 16.8 | | | 8.8 | |
| | | |
Other current liabilities | 1,013.5 | | | 944.2 | |
Total Current Liabilities | 6,217.1 | | | 5,582.5 | |
LONG-TERM DEBT, NET OF CURRENT MATURITIES | 3,123.5 | | | 3,127.9 | |
NON-RECOURSE DEBT, NET OF CURRENT PORTION | 471.5 | | | 249.6 | |
NONCURRENT OPERATING LEASE LIABILITIES | 373.3 | | | 363.2 | |
DEFERRED INCOME TAXES | 90.3 | | | 85.0 | |
OTHER LIABILITIES | 369.7 | | | 360.4 | |
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, 2024, and December 31, 2023, including shares held in treasury | 0.6 | | | 0.6 | |
Additional paid-in capital | 8.8 | | | 22.4 | |
Retained earnings | 4,959.9 | | | 4,643.0 | |
Treasury stock, at cost; 23,882,966 and 21,917,635 shares held, respectively | (2,786.1) | | | (2,454.6) | |
Total Shareholders’ Equity | 2,183.2 | | | 2,211.4 | |
Total Liabilities and Shareholders’ Equity | $ | 12,828.6 | | | $ | 11,980.0 | |
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
AUTONATION, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Six Months Ended |
| June 30, | | June 30, |
| 2024 | | 2023 | | 2024 | | 2023 |
Revenue: | | | | | | | |
New vehicle | $ | 3,122.5 | | | $ | 3,281.0 | | | $ | 6,101.8 | | | $ | 6,212.9 | |
Used vehicle | 1,911.1 | | | 2,088.0 | | | 3,907.2 | | | 4,120.6 | |
Parts and service | 1,117.1 | | | 1,145.3 | | | 2,289.5 | | | 2,235.1 | |
Finance and insurance, net | 324.0 | | | 369.5 | | | 658.7 | | | 701.9 | |
Other | 5.7 | | | 6.3 | | | 8.9 | | | 18.3 | |
TOTAL REVENUE | 6,480.4 | | | 6,890.1 | | | 12,966.1 | | | 13,288.8 | |
Cost of sales: | | | | | | | |
New vehicle | 2,932.1 | | | 2,993.3 | | | 5,715.5 | | | 5,638.3 | |
Used vehicle | 1,799.7 | | | 1,953.7 | | | 3,684.3 | | | 3,831.9 | |
Parts and service | 580.5 | | | 602.8 | | | 1,197.1 | | | 1,181.5 | |
Other | 5.0 | | | 5.0 | | | 8.2 | | | 15.4 | |
TOTAL COST OF SALES | 5,317.3 | | | 5,554.8 | | | 10,605.1 | | | 10,667.1 | |
Gross profit: | | | | | | | |
New vehicle | 190.4 | | | 287.7 | | | 386.3 | | | 574.6 | |
Used vehicle | 111.4 | | | 134.3 | | | 222.9 | | | 288.7 | |
Parts and service | 536.6 | | | 542.5 | | | 1,092.4 | | | 1,053.6 | |
Finance and insurance | 324.0 | | | 369.5 | | | 658.7 | | | 701.9 | |
Other | 0.7 | | | 1.3 | | | 0.7 | | | 2.9 | |
TOTAL GROSS PROFIT | 1,163.1 | | | 1,335.3 | | | 2,361.0 | | | 2,621.7 | |
Selling, general, and administrative expenses | 825.8 | | | 842.9 | | | 1,618.9 | | | 1,625.6 | |
Depreciation and amortization | 59.9 | | | 54.6 | | | 118.2 | | | 107.4 | |
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Other (income) expense, net | 2.4 | | | (1.4) | | | 8.6 | | | 6.2 | |
OPERATING INCOME | 275.0 | | | 439.2 | | | 615.3 | | | 882.5 | |
Non-operating income (expense) items: | | | | | | | |
Floorplan interest expense | (53.9) | | | (32.8) | | | (103.3) | | | (59.9) | |
Other interest expense | (46.8) | | | (46.0) | | | (91.4) | | | (87.1) | |
Other income (loss), net | (0.1) | | | 4.4 | | | 6.9 | | | 9.6 | |
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 174.2 | | | 364.8 | | | 427.5 | | | 745.1 | |
Income tax provision | 44.0 | | | 92.3 | | | 107.2 | | | 184.8 | |
NET INCOME FROM CONTINUING OPERATIONS | 130.2 | | | 272.5 | | | 320.3 | | | 560.3 | |
Income from discontinued operations, net of income taxes | — | | | — | | | — | | | 0.9 | |
NET INCOME | $ | 130.2 | | | $ | 272.5 | | | $ | 320.3 | | | $ | 561.2 | |
BASIC EARNINGS PER SHARE: | | | | | | | |
Continuing operations | $ | 3.22 | | | $ | 6.06 | | | $ | 7.77 | | | $ | 12.15 | |
Discontinued operations | $ | — | | | $ | — | | | $ | — | | | $ | 0.02 | |
Net income | $ | 3.22 | | | $ | 6.06 | | | $ | 7.77 | | | $ | 12.17 | |
Weighted average common shares outstanding | 40.4 | | | 45.0 | | | 41.2 | | | 46.1 | |
DILUTED EARNINGS PER SHARE: | | | | | | | |
Continuing operations | $ | 3.20 | | | $ | 6.02 | | | $ | 7.72 | | | $ | 12.08 | |
Discontinued operations | $ | — | | | $ | — | | | $ | — | | | $ | 0.02 | |
Net income | $ | 3.20 | | | $ | 6.02 | | | $ | 7.72 | | | $ | 12.09 | |
Weighted average common shares outstanding | 40.7 | | | 45.3 | | | 41.5 | | | 46.4 | |
COMMON SHARES OUTSTANDING, net of treasury stock, at period end | 39.7 | | | 44.0 | | | 39.7 | | | 44.0 | |
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
AUTONATION, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In millions, except share data)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, 2024 |
| Common Stock | | Additional Paid-In Capital | | Retained Earnings | | Treasury Stock | | Total |
| Shares | | Amount | | | | |
BALANCE AT DECEMBER 31, 2023 | 63,562,149 | | | $ | 0.6 | | | $ | 22.4 | | | $ | 4,643.0 | | | $ | (2,454.6) | | | $ | 2,211.4 | |
Net income | — | | | — | | | — | | | 190.1 | | | — | | | 190.1 | |
Repurchases of common stock, including excise tax | — | | | — | | | — | | | — | | | (38.8) | | | (38.8) | |
Stock-based compensation expense | — | | | — | | | 14.1 | | | — | | | — | | | 14.1 | |
Shares awarded under stock-based compensation plans, net of shares withheld for taxes | — | | | — | | | (34.5) | | | (3.4) | | | 20.9 | | | (17.0) | |
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BALANCE AT MARCH 31, 2024 | 63,562,149 | | | $ | 0.6 | | | $ | 2.0 | | | $ | 4,829.7 | | | $ | (2,472.5) | | | $ | 2,359.8 | |
Net income | — | | | — | | | — | | | 130.2 | | | — | | | 130.2 | |
Repurchases of common stock, including excise tax | — | | | — | | | — | | | — | | | (314.4) | | | (314.4) | |
Stock-based compensation expense | — | | | — | | | 7.6 | | | — | | | — | | | 7.6 | |
Shares awarded under stock-based compensation plans, net of shares withheld for taxes | — | | | — | | | (0.8) | | | — | | | 0.8 | | | — | |
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BALANCE AT JUNE 30, 2024 | 63,562,149 | | | $ | 0.6 | | | $ | 8.8 | | | $ | 4,959.9 | | | $ | (2,786.1) | | | $ | 2,183.2 | |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 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 | |
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See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
AUTONATION, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
| | | | | | | | | | | |
| Six Months Ended |
| June 30, |
| 2024 | | 2023 |
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES: | | | |
Net income | $ | 320.3 | | | $ | 561.2 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | |
Income from discontinued operations | — | | | (0.9) | |
Depreciation and amortization | 118.2 | | | 107.4 | |
Amortization of debt issuance costs and accretion of debt discounts | 4.6 | | | 4.8 | |
Stock-based compensation expense | 21.7 | | | 23.4 | |
Provision for credit losses on auto loans receivable | 17.9 | | | 22.7 | |
Deferred income tax provision | 5.3 | | | 2.8 | |
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Gain on corporate-owned life insurance asset | (7.7) | | | (9.1) | |
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Other | 3.7 | | | 2.4 | |
(Increase) decrease, net of effects from business acquisitions and divestitures: | | | |
Receivables | 185.8 | | | 20.7 | |
Auto loans receivable, net | (370.6) | | | (50.1) | |
Inventory | (611.3) | | | (485.8) | |
Other assets | 10.1 | | | (52.4) | |
Increase (decrease), net of effects from business acquisitions and divestitures: | | | |
Vehicle floorplan payable - trade | 559.3 | | | 265.2 | |
Accounts payable | (8.7) | | | 53.4 | |
Other liabilities | (13.7) | | | 41.6 | |
Net cash provided by continuing operations | 234.9 | | | 507.3 | |
Net cash used in discontinued operations | — | | | (0.3) | |
Net cash provided by operating activities | 234.9 | | | 507.0 | |
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES: | | | |
Purchases of property and equipment | (181.2) | | | (199.0) | |
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Cash paid for 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 | 45.6 | | | 76.7 | |
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Other | (0.8) | | | (4.5) | |
Net cash used in continuing operations | (136.4) | | | (487.5) | |
Net cash used in discontinued operations | — | | | — | |
Net cash used in investing activities | (136.4) | | | (487.5) | |
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
AUTONATION, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Continued)
| | | | | | | | | | | |
| Six Months Ended |
| June 30, |
| 2024 | | 2023 |
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES: | | | |
Repurchases of common stock | (350.0) | | | (523.2) | |
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Net proceeds from (payments of) commercial paper | (15.0) | | | 415.0 | |
Proceeds from non-recourse debt | 623.0 | | | 63.9 | |
Payments of non-recourse debt | (393.9) | | | (126.9) | |
Payment of debt issuance costs | (1.1) | | | — | |
Net proceeds from vehicle floorplan payable - non-trade | 94.8 | | | 171.4 | |
Payments of other debt obligations | (6.5) | | | (6.2) | |
Proceeds from the exercise of stock options | 0.3 | | | 1.5 | |
Payments of tax withholdings for stock-based awards | (17.3) | | | (25.1) | |
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Net cash used in continuing operations | (65.7) | | | (29.6) | |
Net cash used in discontinued operations | — | | | — | |
Net cash used in financing activities | (65.7) | | | (29.6) | |
INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH | 32.8 | | | (10.1) | |
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH at beginning of period | 77.0 | | | 95.4 | |
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH at end of period | $ | 109.8 | | | $ | 85.3 | |
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
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, 2024, we owned and operated 347 new vehicle franchises from 251 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 32 different new vehicle brands. The core brands of new vehicles that we sell, representing approximately 88% of the new vehicles that we sold during the six months ended June 30, 2024, are manufactured by Toyota (including Lexus), Honda, Ford, General Motors, BMW, Mercedes-Benz, Stellantis, and Volkswagen (including Audi and Porsche). As of June 30, 2024, we also owned and operated 52 AutoNation-branded collision centers, 23 AutoNation USA used vehicle stores, 4 AutoNation-branded automotive auction operations, 3 parts distribution centers, a mobile automotive repair and maintenance business, and an auto finance company.
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 through our captive finance company on vehicles we sell. 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 associated with 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.
Certain reclassifications of amounts previously reported have been made to the accompanying Unaudited Condensed Consolidated Financial Statements in order to maintain consistency and comparability between periods presented.
AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Recent Accounting Pronouncements
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, that requires presentation of specific categories of reconciling items, as well as reconciling items that meet a quantitative threshold, in the reconciliation between the income tax provision and the income tax provision using statutory tax rates. The standard also requires disclosure of income taxes paid disaggregated by jurisdiction with separate disclosure of income taxes paid to individual jurisdictions that meet a quantitative threshold. The amendments in this accounting standard are effective for fiscal years beginning after December 15, 2024, on a prospective basis. Early adoption and retrospective application are permitted. We do not expect the adoption of this accounting standard to have an impact on our consolidated financial statements, but will require certain additional disclosures.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, that requires disclosure of significant segment expenses that are regularly reviewed by the chief operating decision maker and included within each reported measure of segment profit or loss. The standard also requires disclosure of the composition of other segment items included in the measure of segment profit or loss that are not separately disclosed. The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. We do not expect the adoption of this accounting standard to have an impact on our consolidated financial statements, but will require certain additional disclosures.
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 and expenses. In the following tables, revenue is disaggregated by major lines of goods and services and timing of transfer of goods and services. The tables also include a reconciliation of the disaggregated revenue to reportable segment revenue.
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| | Three Months Ended June 30, 2024 |
| | Domestic | | Import | | Premium Luxury | | Corporate and other(1) | | Total |
Major Goods/Service Lines | | | | | | | | | | |
New vehicle | | $ | 841.9 | | | $ | 1,067.3 | | | $ | 1,213.3 | | | $ | — | | | $ | 3,122.5 | |
Used vehicle | | 516.2 | | | 544.6 | | | 687.7 | | | 162.6 | | | 1,911.1 | |
Parts and service | | 283.0 | | | 289.4 | | | 397.3 | | | 147.4 | | | 1,117.1 | |
Finance and insurance, net | | 96.8 | | | 115.2 | | | 99.9 | | | 12.1 | | | 324.0 | |
Other | | 1.5 | | | 2.3 | | | 0.2 | | | 1.7 | | | 5.7 | |
| | $ | 1,739.4 | | | $ | 2,018.8 | | | $ | 2,398.4 | | | $ | 323.8 | | | $ | 6,480.4 | |
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Timing of Revenue Recognition | | | | | | | | | | |
Goods and services transferred at a point in time | | $ | 1,529.9 | | | $ | 1,788.5 | | | $ | 2,055.1 | | | $ | 221.9 | | | $ | 5,595.4 | |
Goods and services transferred over time(2) | | 209.5 | | | 230.3 | | | 343.3 | | | 101.9 | | | 885.0 | |
| | $ | 1,739.4 | | | $ | 2,018.8 | | | $ | 2,398.4 | | | $ | 323.8 | | | $ | 6,480.4 | |
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| | 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 | |
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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 | |
AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
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| | Six Months Ended June 30, 2024 |
| | Domestic | | Import | | Premium Luxury | | Corporate and other(1) | | Total |
Major Goods/Service Lines | | | | | | | | | | |
New vehicle | | $ | 1,656.3 | | | $ | 2,074.1 | | | $ | 2,371.4 | | | $ | — | | | $ | 6,101.8 | |
Used vehicle | | 1,059.2 | | | 1,101.8 | | | 1,423.9 | | | 322.3 | | | 3,907.2 | |
Parts and service | | 585.1 | | | 584.1 | | | 814.5 | | | 305.8 | | | 2,289.5 | |
Finance and insurance, net | | 193.8 | | | 234.4 | | | 203.2 | | | 27.3 | | | 658.7 | |
Other | | 1.7 | | | 3.9 | | | 0.3 | | | 3.0 | | | 8.9 | |
| | $ | 3,496.1 | | | $ | 3,998.3 | | | $ | 4,813.3 | | | $ | 658.4 | | | $ | 12,966.1 | |
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Timing of Revenue Recognition | | | | | | | | | | |
Goods and services transferred at a point in time | | $ | 3,068.2 | | | $ | 3,536.8 | | | $ | 4,113.1 | | | $ | 451.0 | | | $ | 11,169.1 | |
Goods and services transferred over time(2) | | 427.9 | | | 461.5 | | | 700.2 | | | 207.4 | | | 1,797.0 | |
| | $ | 3,496.1 | | | $ | 3,998.3 | | | $ | 4,813.3 | | | $ | 658.4 | | | $ | 12,966.1 | |
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| | 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 | |
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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 | |
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(1) “Corporate and other” is comprised of our non-franchised businesses, including AutoNation USA used vehicle stores, collision centers, parts distribution centers, auction operations, and AutoNation Mobile Service. |
(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.
AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(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 | | $ | 110.5 | | | $ | 37.9 | | | $ | 54.0 | | | $ | 18.6 | |
As a practical expedient, since all other automotive repair and maintenance services are generally performed within one year or less, we do not disclose estimated revenue expected to be recognized in the future for all other 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, 2024 | | December 31, 2023 |
Receivables from contracts with customers, net | $ | 640.6 | | | $ | 762.0 | |
Contract Asset (Current) | $ | 18.8 | | | $ | 23.1 | |
Contract Asset (Long-Term) | $ | 2.1 | | | $ | 3.2 | |
Contract Liability (Current) | $ | 43.6 | | | $ | 42.5 | |
Contract Liability (Long-Term) | $ | 72.6 | | | $ | 70.6 | |
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, |
| 2024 | | 2023 | | 2024 | | 2023 |
Amounts included in contract liability at the beginning of the period | $ | 9.5 | | | $ | 9.0 | | | $ | 19.3 | | | $ | 18.4 | |
Performance obligations satisfied in previous periods | $ | (0.7) | | | $ | (0.3) | | | $ | (0.4) | | | $ | (2.6) | |
Other significant changes include contract assets reclassified to receivables of $23.8 million for the six months ended June 30, 2024, and $28.7 million for the six months ended June 30, 2023.
AUTONATION, INC.
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 calculated using the treasury stock method by dividing net income by the weighted average number of shares outstanding, noted above, including 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, |
| 2024 | | 2023 | | 2024 | | 2023 |
Net income from continuing operations | $ | 130.2 | | | $ | 272.5 | | | $ | 320.3 | | | $ | 560.3 | |
Income from discontinued operations, net of income taxes | — | | | — | | | — | | | 0.9 | |
Net income | $ | 130.2 | | | $ | 272.5 | | | $ | 320.3 | | | $ | 561.2 | |
| | | | | | | |
Basic weighted average common shares outstanding | 40.4 | | | 45.0 | | | 41.2 | | | 46.1 | |
Dilutive effect of unvested RSUs and stock options | 0.3 | | | 0.3 | | | 0.3 | | | 0.3 | |
Diluted weighted average common shares outstanding | 40.7 | | | 45.3 | | | 41.5 | | | 46.4 | |
| | | | | | | |
Basic EPS amounts(1): | | | | | | | |
Continuing operations | $ | 3.22 | | | $ | 6.06 | | | $ | 7.77 | | | $ | 12.15 | |
Discontinued operations | $ | — | | | $ | — | | | $ | — | | | $ | 0.02 | |
Net income | $ | 3.22 | | | $ | 6.06 | | | $ | 7.77 | | | $ | 12.17 | |
| | | | | | | |
Diluted EPS amounts(1): | | | | | | | |
Continuing operations | $ | 3.20 | | | $ | 6.02 | | | $ | 7.72 | | | $ | 12.08 | |
Discontinued operations | $ | — | | | $ | — | | | $ | — | | | $ | 0.02 | |
Net income | $ | 3.20 | | | $ | 6.02 | | | $ | 7.72 | | | $ | 12.09 | |
| | | | | | | |
(1) EPS amounts are calculated discretely and, therefore, may not add up to the total due to rounding. |
In June 2024, our business was impacted by an outage of our dealer management system provided by CDK Global, which is used to support our dealership operations, including our sales, service, inventory, customer relationship management, and accounting functions. As a result, our results of operations and earnings per share for the three and six months ended June 30, 2024, were negatively impacted by lost income from the disruption to our operations and one-time compensation costs paid to commission-based associates to ensure business continuity.
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, |
| 2024 | | 2023 | | 2024 | | 2023 |
Anti-dilutive equity instruments excluded from the computation of diluted EPS | — | | | — | | | 0.1 | | | — | |
AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
4.RECEIVABLES, NET
The components of receivables, net of allowances for expected credit losses, are as follows:
| | | | | | | | | | | |
| June 30, 2024 | | December 31, 2023 |
Contracts-in-transit and vehicle receivables | $ | 397.3 | | | $ | 553.8 | |
Trade receivables | 146.1 | | | 173.2 | |
Manufacturer receivables | 204.7 | | | 240.5 | |
Income taxes receivable (see Note 9) | 18.9 | | | 11.1 | |
Other | 89.8 | | | 63.9 | |
| 856.8 | | | 1,042.5 | |
Less: allowances for expected credit losses | (2.2) | | | (2.1) | |
Receivables, net | $ | 854.6 | | | $ | 1,040.4 | |
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 prior to October 2023. 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.
AutoNation Finance operating results include the interest and fee income generated by auto loans receivable less the interest expense associated with the debt issued to fund these receivables, a provision for estimated credit losses, and direct expenses. AutoNation Finance operating results are included as a component of Other 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, 2024, and December 31, 2023, are as follows:
| | | | | | | | | | | |
| June 30, 2024 | | December 31, 2023 |
| | | |
| | | |
| | | |
| | | |
Total auto loans receivable | $ | 755.5 | | | $ | 451.2 | |
Accrued interest and fees | 6.2 | | | 4.8 | |
Deferred loan origination costs | 2.7 | | | 1.6 | |
Less: unearned discounts | (6.8) | | | (8.9) | |
Less: allowances for expected credit losses | (48.2) | | | (46.3) | |
Auto loans receivable, net | $ | 709.4 | | | $ | 402.4 | |
| | | |
| | | |
| | |
| | |
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, including information such as income, collateral, and down
AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
payment. The scoring models yield credit program tiers that reflect our internal credit risk ratings and represent the relative likelihood of repayment. 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. 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.
Auto Loans Receivable by Major Credit Program
The following tables present auto loans receivable as of June 30, 2024, and December 31, 2023, disaggregated by major credit program tier, in descending order of highest likelihood of repayment:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | |
| | | | Fiscal Year of Origination | | |
As of June 30, 2024 | | Weighted Average FICO Score | | 2024 | | 2023 | | 2022 | | 2021 | | 2020 | | Prior to 2020 | | Total |
Credit Program Tier(1): | | | | | | | | | | | | | | | | |
Palladium | | 733 | | $ | 63.3 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 63.3 | |
Rhodium | | 699 | | 60.2 | | | 21.0 | | | 0.1 | | | — | | | — | | | — | | | 81.3 | |
Platinum | | 647 | | 246.4 | | | 108.5 | | | 11.6 | | | 6.4 | | | 2.3 | | | 1.7 | | | 376.9 | |
Gold | | 617 | | 36.6 | | | 52.4 | | | 27.9 | | | 14.0 | | | 4.6 | | | 2.8 | | | 138.3 | |
Silver | | 583 | | 0.2 | | | 40.6 | | | 25.0 | | | 11.5 | | | 3.3 | | | 1.4 | | | 82.0 | |
Bronze | | 554 | | 0.1 | | | 5.4 | | | 0.5 | | | 4.3 | | | 1.0 | | | — | | | 11.3 | |
Copper | | 559 | | — | | | 0.2 | | | 0.1 | | | 1.8 | | | 0.3 | | | — | | | 2.4 | |
Total auto loans receivable | | $ | 406.8 | | | $ | 228.1 | | | $ | 65.2 | | | $ | 38.0 | | | $ | 11.5 | | | $ | 5.9 | | | $ | 755.5 | |
| | | | | | | | | | | | | | | | |
Current-period gross write-offs | | $ | 0.7 | | | $ | 12.9 | | | $ | 7.9 | | | $ | 4.8 | | | $ | 1.4 | | | $ | 0.5 | | | $ | 28.2 | |
| | | | | | | | | | | | | | | | |
| | | | Fiscal Year of Origination | | |
As of December 31, 2023 | | Weighted Average FICO Score | | 2023 | | 2022 | | 2021 | | 2020 | | 2019 | | Prior to 2019 | | Total |
Credit Program Tier(1): | | | | | | | | | | | | | | | | |
Rhodium | | 701 | | $ | 27.6 | | | $ | 0.1 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 27.7 | |
Platinum | | 644 | | 136.3 | | | 14.7 | | | 8.2 | | | 3.3 | | | 3.1 | | | 0.5 | | | 166.1 | |
Gold | | 612 | | 64.3 | | | 35.9 | | | 18.5 | | | 6.8 | | | 4.5 | | | 0.8 | | | 130.8 | |
Silver | | 583 | | 50.2 | | | 33.0 | | | 16.2 | | | 5.2 | | | 2.8 | | | 0.3 | | | 107.7 | |
Bronze | | 556 | | 6.7 | | | 0.7 | | | 6.0 | | | 1.5 | | | 0.1 | | | — | | | 15.0 | |
Copper | | 558 | | 0.3 | | | 0.2 | | | 2.8 | | | 0.5 | | | 0.1 | | | — | | | 3.9 | |
Total auto loans receivable | | $ | 285.4 | | | $ | 84.6 | | | $ | 51.7 | | | $ | 17.3 | | | $ | 10.6 | | | $ | 1.6 | | | $ | 451.2 | |
| | | | | | | | | | | | | | | | |
(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.
AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
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, 2024 and 2023:
| | | | | | | | | | | | | | |
| | Six Months Ended June 30, |
| | 2024 | | 2023 |
Balance as of beginning of year | | $ | 46.3 | | | $ | 57.5 | |
Provision for credit losses | | 17.9 | | | 22.7 | |
| | | | |
Write-offs | | (28.2) | | | (30.6) | |
Recoveries(1) | | 12.2 | | | 13.5 | |
| | | | |
Balance as of end of period | | $ | 48.2 | | | $ | 63.1 | |
| | | | |
(1) Includes proceeds from the recovery of vehicle collateral, net of costs incurred. | | |
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, 2024, and December 31, 2023:
| | | | | | | | | | | |
| Age Analysis of Past-Due Auto Loans Receivable as of |
| June 30, 2024 | | December 31, 2023 |
31-60 Days | $ | 20.6 | | | $ | 20.7 | |
61-90 Days | 5.3 | | | 5.4 |
Greater than 90 Days | 2.6 | | | 3.1 |
Total Past Due | $ | 28.5 | | | $ | 29.2 | |
| | | |
Current | 727.0 | | | 422.0 |
Total | $ | 755.5 | | | $ | 451.2 | |
AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
6.INVENTORY AND VEHICLE FLOORPLAN PAYABLE
The components of inventory are as follows:
| | | | | | | | | | | |
| June 30, 2024 | | December 31, 2023 |
New vehicles | $ | 2,600.0 | | | $ | 1,948.6 | |
Used vehicles | 695.2 | | | 815.3 | |
Parts, accessories, and other | 258.7 | | | 269.5 | |
Inventory | $ | 3,553.9 | | | $ | 3,033.4 | |
The components of vehicle floorplan payable are as follows:
| | | | | | | | | | | |
| June 30, 2024 | | December 31, 2023 |
Vehicle floorplan payable - trade | $ | 2,272.9 | | | $ | 1,760.0 | |
Vehicle floorplan payable - non-trade | 1,686.9 | | | 1,622.4 | |
Vehicle floorplan payable | $ | 3,959.8 | | | $ | 3,382.4 | |
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 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, 2024, 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 7.1% at June 30, 2024, and 7.1% at December 31, 2023. As of June 30, 2024, the aggregate capacity under our new vehicle floorplan facilities to finance our new vehicle inventory was approximately $4.8 billion, of which $3.4 billion had been borrowed.
At June 30, 2024, 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 6.8% at June 30, 2024, and 6.9% at December 31, 2023. As of June 30, 2024, the aggregate capacity under our used vehicle floorplan facilities with various lenders to finance a portion of our used vehicle inventory was $810.0 million, of which $551.5 million had been borrowed. The remaining borrowing capacity of $258.5 million was limited to $0.3 million based on the eligible used vehicle inventory that could have been pledged as collateral.
AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
7.GOODWILL AND INTANGIBLE ASSETS, NET
Goodwill and intangible assets, net, consist of the following:
| | | | | | | | | | | |
| June 30, 2024 | | December 31, 2023 |
Goodwill | $ | 1,449.4 | |
| $ | 1,465.8 | |
| | | |
Franchise rights - indefinite-lived | $ | 876.2 | | | $ | 876.2 | |
Other intangibles | 68.0 | | | 68.0 | |
| 944.2 | | | 944.2 | |
Less: accumulated amortization | (19.9) | | | (16.4) | |
Other intangible assets, net | $ | 924.3 | | | $ | 927.8 | |
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 perform quantitative tests for our annual goodwill impairment testing as of April 30, 2024, and no impairment charges resulted from these quantitative tests. We elected to perform quantitative franchise rights impairment tests as of April 30, 2024, 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.
8.DEBT
Non-Vehicle Long-Term Debt
Non-vehicle long-term debt consisted of the following:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Debt Description | | Maturity Date | | Interest Payable | | June 30, 2024 | | December 31, 2023 |
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 | | July 18, 2028 | | Monthly | | — | | | — | |
Finance leases and other debt | | Various dates through 2041 | | | | 356.4 | | | 362.2 | |
| | | | | | 3,606.4 | | | |