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AUTONATION, INC. - Quarter Report: 2023 June (Form 10-Q)


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
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 classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $0.01 per shareANNew 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 filerþ  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
 
  Page
Item 1.
Item 2.
Item 3.
Item 4.
Item 1A.
Item 2.
Item 5.
Item 6.



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, net842.3 858.8 
Inventory2,572.5 2,048.3 
Other current assets161.3 158.3 
Total Current Assets3,639.8 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 ASSETS369.7 323.5 
GOODWILL1,460.7 1,320.1 
OTHER INTANGIBLE ASSETS, NET936.2 837.0 
OTHER ASSETS614.2 530.8 
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-trade1,369.8 1,162.7 
Accounts payable390.8 327.6 
Commercial paper465.0 50.0 
Current maturities of long-term debt12.8 12.6 
Current portion of non-recourse debt10.5 10.7 
Accrued payroll and benefits257.3 238.0 
Other current liabilities689.1 657.5 
Total Current Liabilities4,407.0 3,405.7 
LONG-TERM DEBT, NET OF CURRENT MATURITIES3,582.5 3,586.9 
NON-RECOURSE DEBT, NET OF CURRENT PORTION251.7 312.9 
NONCURRENT OPERATING LEASE LIABILITIES339.8 296.9 
DEFERRED INCOME TAXES58.1 76.5 
OTHER LIABILITIES348.6 333.0 
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 capital11.0 3.1 
Retained earnings4,183.1 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’ Equity2,091.8 2,047.8 
Total Liabilities and Shareholders’ Equity$11,079.5 $10,059.7 

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

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Table of Contents
AUTONATION, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data)
Three Months EndedSix Months Ended
 June 30,June 30,
 2023202220232022
Revenue:
New vehicle$3,281.0 $2,935.8 $6,212.9 $5,743.0 
Used vehicle2,088.0 2,520.4 4,120.6 5,092.8 
Parts and service1,145.3 1,036.3 2,235.1 2,040.2 
Finance and insurance, net369.5 367.6 701.9 731.5 
Other6.3 9.1 18.3 14.5 
TOTAL REVENUE6,890.1 6,869.2 13,288.8 13,622.0 
Cost of sales:
New vehicle2,993.3 2,582.3 5,638.3 5,044.5 
Used vehicle1,953.7 2,363.9 3,831.9 4,799.7 
Parts and service602.8 554.6 1,181.5 1,097.4 
Other5.0 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 vehicle287.7 353.5 574.6 698.5 
Used vehicle134.3 156.5 288.7 293.1 
Parts and service542.5 481.7 1,053.6 942.8 
Finance and insurance369.5 367.6 701.9 731.5 
Other1.3 2.4 2.9 4.7 
TOTAL GROSS PROFIT1,335.3 1,361.7 2,621.7 2,670.6 
Selling, general, and administrative expenses842.9 754.8 1,625.6 1,496.2 
Depreciation and amortization54.6 48.8 107.4 98.8 
Other (income) expense, net(1.4)— 6.2 (1.5)
OPERATING INCOME439.2 558.1 882.5 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), net4.4 (13.7)9.6 (20.1)
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES364.8 504.5 745.1 982.3 
Income tax provision92.3 128.0 184.8 243.7 
NET INCOME FROM CONTINUING OPERATIONS272.5 376.5 560.3 738.6 
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 outstanding45.0 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 outstanding45.3 58.1 46.4 60.3 
COMMON SHARES OUTSTANDING, net of treasury stock, at period end44.0 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 StockAdditional
Paid-In
Capital
Retained
Earnings
Treasury
Stock
Total
 SharesAmount
BALANCE AT DECEMBER 31, 202263,562,149 $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, 202363,562,149 $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, 202363,562,149 $0.6 $11.0 $4,183.1 $(2,102.9)$2,091.8 

Six Months Ended June 30, 2022
 Common StockAdditional
Paid-In
Capital
Retained
Earnings
Treasury
Stock
Total
 SharesAmount
BALANCE AT DECEMBER 31, 202186,562,149 $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, 202286,562,149 $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, 202286,562,149 $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,
 20232022
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 amortization107.4 98.8 
Amortization of debt issuance costs and accretion of debt discounts4.8 3.0 
Stock-based compensation expense23.4 21.2 
Provision for credit losses on auto loans receivable22.7 — 
Deferred income tax provision2.8 3.5 
Net gain related to business/property dispositions(1.1)(1.0)
Non-cash impairment charges2.2 1.0 
Loss on equity investments1.3 0.1 
Loss (gain) on corporate-owned life insurance asset(9.1)20.8 
(Increase) decrease, net of effects from business acquisitions and divestitures:
Receivables20.7 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 - trade265.2 71.8 
Accounts payable53.4 (20.8)
Other liabilities41.6 (1.7)
Net cash provided by continuing operations507.3 895.2 
Net cash used in discontinued operations(0.3)(0.2)
Net cash provided by operating activities507.0 895.0 
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Purchases of property and equipment(199.0)(160.3)
Proceeds from the sale of property and equipment1.8 — 
Proceeds from the disposal of assets held for sale2.5 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 dealers76.7 — 
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.

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AUTONATION, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Continued)
 
Six Months Ended
 June 30,
 20232022
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 paper415.0 (340.0)
Proceeds from non-recourse debt63.9 — 
Payments of non-recourse debt(126.9)— 
Payment of debt issuance costs— (6.6)
Net proceeds from (payments of) vehicle floorplan payable - non-trade171.4 (5.5)
Payments of other debt obligations(6.2)(5.9)
Proceeds from the exercise of stock options1.5 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 period95.4 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
DomesticImportPremium Luxury
Corporate and other(1)
Total
Major Goods/Service Lines
New vehicle$923.0 $1,011.2 $1,346.8 $— $3,281.0 
Used vehicle619.0 563.2 756.9 148.9 2,088.0 
Parts and service298.7 291.3 400.3 155.0 1,145.3 
Finance and insurance, net114.3 128.0 115.8 11.4 369.5 
Other0.5 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
DomesticImportPremium Luxury
Corporate and other(1)
Total
Major Goods/Service Lines
New vehicle$858.1 $852.4 $1,225.3 $— $2,935.8 
Used vehicle786.8 699.6 904.6 129.4 2,520.4 
Parts and service275.5 266.3 367.0 127.5 1,036.3 
Finance and insurance, net119.4 125.7 118.4 4.1 367.6 
Other1.1 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
DomesticImportPremium 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 vehicle1,231.3 1,105.3 1,502.7 281.3 4,120.6 
Parts and service586.3 559.7 786.5 302.6 2,235.1 
Finance and insurance, net216.6 240.4 220.8 24.1 701.9 
Other1.4 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
DomesticImportPremium 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 vehicle1,609.9 1,407.2 1,820.7 255.0 5,092.8 
Parts and service544.2 521.8 718.9 255.3 2,040.2 
Finance and insurance, net238.6 252.1 225.6 15.2 731.5 
Other2.0 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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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
TotalNext 12 Months13 - 36 Months37 - 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, 2023December 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,
2023202220232022
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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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 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 EndedSix Months Ended
June 30,June 30,
 2023202220232022
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 options0.3 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 EndedSix Months Ended
 June 30,June 30,
 2023202220232022
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 receivables170.6 156.6 
Manufacturer receivables197.9 174.4 
Income taxes receivable (see Note 9)
29.3 20.2 
Other74.9 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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AUTONATION, INC.
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 fees5.0 4.4 
Deferred loan origination costs1.0 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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AUTONATION, INC.
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)
20232022202120202019Prior to 2019Total
Credit Program Tier:
Platinum$32.1 $18.1 $10.3 $4.7 $5.0 $1.1 $71.3 
Gold34.7 44.0 23.6 9.5 7.2 1.8 120.8 
Silver40.1 49.0 23.1 7.5 5.1 0.9 125.7 
Bronze22.0 31.7 12.9 5.2 2.4 0.5 74.7 
Copper5.7 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 losses22.7 
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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AUTONATION, INC.
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 Days4.8 4.1
Greater than 90 Days2.6 2.6
Total Past Due$26.6 $19.7 
Current394.2 357.3
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 vehicles905.5 789.1 
Parts, accessories, and other262.9 249.5 
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-trade1,369.8 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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AUTONATION, INC.
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 intangibles70.8 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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AUTONATION, INC.
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 DescriptionMaturity DateInterest PayableJune 30,
2023
December 31,
2022
3.5% Senior Notes
November 15, 2024May 15 and November 15$450.0 $450.0 
4.5% Senior Notes
October 1, 2025April 1 and October 1450.0 450.0 
3.8% Senior Notes
November 15, 2027May 15 and November 15300.0 300.0 
1.95% Senior Notes
August 1, 2028February 1 and August 1400.0 400.0 
4.75% Senior Notes
June 1, 2030June 1 and December 1500.0 500.0 
2.4% Senior Notes
August 1, 2031February 1 and August 1450.0 450.0 
3.85% Senior Notes
March 1, 2032March 1 and September 1 700.0 700.0 
Revolving credit facilityMarch 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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AUTONATION, INC.
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 VIEs99.3 146.9 
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 EndedSix Months Ended
 June 30,June 30,
 2023202220232022
Shares repurchased1.6 3.7 4.0 7.2 
Aggregate purchase price (1)
$207.4 $403.9 $512.4 $784.9 
Average purchase price per share$132.44 $109.22 $128.76 $109.62 
(1) Excludes excise tax accrual imposed under the Inflation Reduction Act of $2.1 million and $4.6 million for the three and six months ended June 30, 2023, respectively.

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AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
As of June 30, 2023, $672.0 million remained available under our stock repurchase limit most recently authorized by our Board of Directors.
We have 5.0 million authorized shares of preferred stock, par value $0.01 per share, none of which are issued or outstanding. The Board of Directors has the authority to issue the preferred stock in one or more series and to establish the rights, preferences, and dividends of such preferred stock.
A summary of shares of common stock issued in connection with the exercise of stock options follows:
Three Months EndedSix Months Ended
 June 30,June 30,
2023202220232022
Shares issued (in actual number of shares)3,861 32,064 30,996 54,460 
Proceeds from the exercise of stock options $0.2 $1.8 $1.5 $2.6 
Average exercise price per share$57.44 $54.63 $48.80 $47.88 
The following table presents a summary of shares of common stock issued in connection with the settlement of RSUs, as well as shares surrendered to AutoNation to satisfy tax withholding obligations in connection with the settlement of RSUs:
Three Months EndedSix Months Ended
 June 30,June 30,
(In actual number of shares)2023202220232022
Shares issued1,111 10,973 531,007 774,085 
Shares surrendered to AutoNation to satisfy tax withholding obligations
296 — 182,249 262,951 

11. ACQUISITIONS
During the six months ended June 30, 2023, we acquired RepairSmith, a mobile solution for automotive repair and maintenance, and we also purchased six stores. Acquisitions are included in the Unaudited Condensed Consolidated Financial Statements from the date of acquisition. The purchase price allocations for these business combinations are preliminary and subject to final adjustments, primarily related to the valuation of working capital, deferred tax assets and liabilities, and residual goodwill. We did not purchase any stores during the six months ended June 30, 2022.
The acquisitions that occurred during the six months ended June 30, 2023, were not material to our financial condition or results of operations. Additionally, on a pro forma basis as if the results of these acquisitions had been included in our consolidated results for the entire six month periods ended June 30, 2023 and 2022, revenue and net income would not have been materially different from our reported revenue and net income for these periods.

12.CASH FLOW INFORMATION
Cash, Cash Equivalents, and Restricted Cash
The total amounts presented on our statements of cash flows include cash, cash equivalents, and restricted cash. Restricted cash includes additional collateral for non-recourse debt borrowings and collections on auto loans receivable that are due to be distributed to non-recourse debt holders in the following period. The following table provides a reconciliation of cash and cash equivalents reported on our Unaudited Condensed Consolidated Balance Sheets to the total amounts reported on our Unaudited Condensed Consolidated Statements of Cash Flows:
June 30,
2023
December 31,
2022
Cash and cash equivalents $63.7 $72.6 
Restricted cash included in Other Current Assets16.9 15.6 
Restricted cash included in Other Assets4.7 7.2 
Total cash, cash equivalents, and restricted cash$85.3 $95.4 

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AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Non-Cash Investing and Financing Activities
We had accrued purchases of property and equipment of $39.4 million at June 30, 2023, and $22.5 million at June 30, 2022.
Six Months Ended
June 30,
20232022
Supplemental noncash information on adjustments to right-of-use assets, including right-of-use assets obtained in exchange for new:
Operating lease liabilities$67.0 $23.1 
Finance lease liabilities$27.8 $12.5 
Interest and Income Taxes Paid
We made interest payments, net of amounts capitalized and including interest on vehicle inventory financing, of $140.0 million during the six months ended June 30, 2023, and $62.0 million during the six months ended June 30, 2022. We made income tax payments, net of income tax refunds, of $190.8 million during the six months ended June 30, 2023, and $252.0 million during the six months ended June 30, 2022.

13.FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
The fair value of a financial instrument represents the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. Fair value estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of judgment, and therefore cannot be determined with precision.
Accounting standards define fair value as the price that would be received from selling an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Accounting standards establish a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value and also establishes the following three levels of inputs that may be used to measure fair value:
Level 1Quoted prices (unadjusted) in active markets for identical assets or liabilities that a reporting entity can access at the measurement date
Level 2Inputs other than quoted prices in active markets for identical assets and liabilities that are observable either directly or indirectly
Level 3Unobservable inputs
The following methods and assumptions were used by us in estimating fair value disclosures for financial instruments:
Cash and cash equivalents, receivables, other current assets, vehicle floorplan payable, accounts payable, other current liabilities, commercial paper, warehouse credit facilities, and variable rate debt: The amounts reported in the accompanying Unaudited Condensed Consolidated Balance Sheets approximate fair value due to their short-term nature or the existence of variable interest rates that approximate prevailing market rates.
Auto loans receivable, net: Auto loans receivable are presented net of an allowance for expected credit losses, which we believe approximates fair value.
Investments in Equity Securities: Our equity investments with readily determinable fair values are measured at fair value using Level 1 inputs. The fair value of our equity investments with readily determinable fair values totaled $14.3 million at June 30, 2023, and $15.4 million at December 31, 2022.
Our equity investment that does not have a readily determinable fair value is measured using the measurement alternative as permitted by accounting standards and was recorded at cost, to be subsequently adjusted for observable price changes. The carrying amount of our equity investment without a readily determinable fair value was $56.7 million at June 30, 2023, and $56.7 million at December 31, 2022. This equity investment reflects a cumulative upward adjustment of $3.4 million based on an observable price change. We did not record any upward adjustments during the six months ended June 30, 2023. Additionally, we have not recorded any

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AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
impairments or downward adjustments to the carrying amount of this equity investment as of and for the six months ended June 30, 2023.
Investments in equity securities are reported in Other Current Assets and Other Assets in the accompanying Unaudited Condensed Consolidated Balance Sheets. Realized and unrealized gains and losses are reported in Other Income (Loss), Net (non-operating) in the Unaudited Condensed Consolidated Statements of Income and in the “Corporate and other” category of our segment information.
Six Months Ended
June 30,
20232022
Net losses recognized during the period on equity securities$(1.3)$(0.1)
Less: Net losses recognized during the period on equity securities sold during the period— — 
Unrealized losses recognized during the reporting period on equity securities still held at the reporting date$(1.3)$(0.1)
Fixed rate long-term debt: Our fixed rate long-term debt consists primarily of amounts outstanding under our senior unsecured notes. We estimate the fair value of our senior unsecured notes using quoted prices for the identical liability (Level 1). A summary of the aggregate carrying values and fair values of our senior unsecured notes is as follows:
June 30,
2023
December 31,
2022
Carrying value$3,226.0 $3,224.0 
Fair value$2,872.2 $2,803.6 
Nonfinancial assets such as goodwill, other intangible assets, and long-lived assets held and used, are measured at fair value when there is an indicator of impairment and recorded at fair value only when impairment is recognized or for a business combination. The fair values less costs to sell of long-lived assets or disposal groups held for sale are assessed each reporting period they remain classified as held for sale. Subsequent changes in the held for sale long-lived asset’s or disposal group's fair value less cost to sell (increase or decrease) are reported as an adjustment to its carrying amount, except that the adjusted carrying amount cannot exceed the carrying amount of the long-lived asset or disposal group at the time it was initially classified as held for sale.
The following table presents assets measured and recorded at fair value on a nonrecurring basis during the six months ended June 30, 2023 and 2022:
20232022
DescriptionFair Value
Measurements Using Significant
Unobservable Inputs
(Level 3)
Gain/(Loss)Fair Value
Measurements Using Significant
Unobservable Inputs
(Level 3)
Gain/(Loss)
Long-lived assets held and used$— $(2.2)$— $(1.0)
Goodwill and Other Intangible Assets
Goodwill for our reporting units and our indefinite-lived intangible assets are tested for impairment annually as of April 30 or more frequently when events or changes in circumstances indicate that impairment may exist. Our principal identifiable intangible assets are individual store rights under franchise agreements with vehicle manufacturers, which have indefinite lives.
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 2022, 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 2022, and no impairment charges resulted from these quantitative tests.

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AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
The quantitative impairment test for franchise rights requires the comparison of the franchise rights’ estimated fair value to carrying value by store. Fair values of rights under franchise agreements are estimated using Level 3 inputs by discounting expected future cash flows of the store. The forecasted cash flows contain inherent uncertainties, including significant estimates and assumptions related to growth rates, margins, working capital requirements, capital expenditures, and cost of capital, for which we utilize certain market participant-based assumptions, using third-party industry projections, economic projections, and other marketplace data we believe to be reasonable.
Long-Lived Assets and Right-of-Use Assets
Fair value measurements for our long-lived assets and right-of-use assets are based on Level 3 inputs. Changes in fair value measurements are reviewed and assessed each quarter for properties classified as held for sale, or when an indicator of impairment exists for properties classified as held and used or for right-of-use assets. The valuation process is generally based on a combination of the market and replacement cost approaches. In certain cases, fair value measurements are based on pending agreements to sell the related assets.
In a market approach, we use transaction prices for comparable properties that have recently been sold. These transaction prices are adjusted for factors related to a specific property. We evaluate changes in local real estate markets, and/or recent market interest or negotiations related to a specific property. In a replacement cost approach, the cost to replace a specific long-lived asset is considered, which is adjusted for depreciation from physical deterioration, as well as functional and economic obsolescence, if present and measurable.
To validate the fair values determined under the valuation process noted above, we also obtain independent third-party appraisals for our properties and/or third-party brokers’ opinions of value, which are generally developed using the same valuation approaches described above, and we evaluate any recent negotiations or discussions with third-party real estate brokers related to a specific long-lived asset or market. 
The non-cash impairment charges related to long-lived assets held and used are included in Other (Income) Expense, Net in our Unaudited Condensed Consolidated Statements of Income and in the “Corporate and other” category of our segment information.
We had assets held for sale in continuing operations of $5.7 million as of June 30, 2023, and $5.7 million as of December 31, 2022, related to property held for sale. We had no assets held for sale in discontinued operations as of June 30, 2023, and $1.1 million as of December 31, 2022, which was related to property held for sale. Assets held for sale are included in Other Current Assets in our Unaudited Condensed Consolidated Balance Sheets.
Repossessed assets
Repossessed assets consist of vehicles repossessed in the event of non-payment of the related auto loans receivable. Repossessed assets are recorded at their estimated fair values, based on Level 3 inputs, less estimated costs to sell. The fair value is determined based on comparable recent sales and adjusted for various factors, including the age of the vehicle and known changes in the market and in the collateral. We had repossessed assets of $4.2 million as of June 30, 2023, and $2.7 million as of December 31, 2022. Repossessed assets are included in Other Assets in our Consolidated Balance Sheets.

14.COMMITMENTS AND CONTINGENCIES
Legal Proceedings
We are involved, and will continue to be involved, in numerous legal proceedings arising out of the conduct of our business, including litigation with customers, third-party dealers, wage and hour and other employment-related lawsuits, and actions brought by governmental authorities. Some of these lawsuits purport or may be determined to be class or collective actions and seek substantial damages or injunctive relief, or both, and some may remain unresolved for several years. We establish accruals for specific legal proceedings when it is considered probable that a loss has been incurred and the amount of the loss can be reasonably estimated. Our accruals for loss contingencies are reviewed quarterly and adjusted as additional information becomes available. We disclose the amount accrued if material or if such disclosure is necessary for our financial statements to not be misleading. If a loss is not both probable and reasonably estimable, or if an exposure to loss exists in excess of the amount accrued, we assess whether there is at least a reasonable possibility that a loss, or additional loss, may have been incurred. If there is a reasonable possibility that a loss, or additional loss, may have been incurred, we disclose the estimate of the possible loss or range of loss if it is material or a statement that such an estimate cannot be made. Our evaluation

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AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
of whether a loss is reasonably possible or probable is based on our assessment and consultation with legal counsel regarding the ultimate outcome of the matter.
As of June 30, 2023 and 2022, we have accrued for the potential impact of loss contingencies that are probable and reasonably estimable, and there was no indication of a reasonable possibility that a material loss, or additional material loss, may have been incurred. We do not believe that the ultimate resolution of these matters will have a material adverse effect on our results of operations, financial condition, or cash flows. However, the results of these matters cannot be predicted with certainty, and an unfavorable resolution of one or more of these matters could have a material adverse effect on our results of operations, financial condition, or cash flows.
Other Matters
AutoNation, acting through its subsidiaries, is the lessee under many real estate leases that provide for the use by our subsidiaries of their respective store premises. Pursuant to these leases, our subsidiaries generally agree to indemnify the lessor and other related parties from certain liabilities arising as a result of the use of the leased premises, including environmental liabilities, or a breach of the lease by the lessee. Additionally, from time to time, we enter into agreements with third parties in connection with the sale of assets or businesses in which we agree to indemnify the purchaser or related parties from certain liabilities or costs arising in connection with the assets or business. Also, in the ordinary course of business in connection with purchases or sales of goods and services, we enter into agreements that may contain indemnification provisions. In the event that an indemnification claim is asserted, our liability would be limited by the terms of the applicable agreement.
From time to time, primarily in connection with dispositions of automotive stores, our subsidiaries assign or sublet to the store purchaser the subsidiaries’ interests in any real property leases associated with such stores. In general, our subsidiaries retain responsibility for the performance of certain obligations under such leases to the extent that the assignee or sublessee does not perform, whether such performance is required prior to or following the assignment or subletting of the lease. Additionally, AutoNation and its subsidiaries generally remain subject to the terms of any guarantees made by us and our subsidiaries in connection with such leases. We generally have indemnification rights against the assignee or sublessee in the event of non-performance under these leases, as well as certain defenses. We presently have no reason to believe that we or our subsidiaries will be called on to perform under any such remaining assigned leases or subleases. We estimate that lessee rental payment obligations during the remaining terms of these leases with expirations ranging from 2024 to 2034 are approximately $5 million at June 30, 2023. There can be no assurance that any performance of AutoNation or its subsidiaries required under these leases would not have a material adverse effect on our business, financial condition, and cash flows.
At June 30, 2023, surety bonds, letters of credit, and cash deposits totaled $111.9 million, of which $0.7 million were letters of credit. In the ordinary course of business, we are required to post performance and surety bonds, letters of credit, and/or cash deposits as financial guarantees of our performance. We do not currently provide cash collateral for outstanding letters of credit.
In the ordinary course of business, we are subject to numerous laws and regulations, including automotive, environmental, health and safety, and other laws and regulations. We do not anticipate that the costs of compliance with such laws will have a material adverse effect on our business, results of operations, cash flows, or financial condition, although such outcome is possible given the nature of our operations and the extensive legal and regulatory framework applicable to our business. We do not have any material known environmental commitments or contingencies.

15.BUSINESS AND CREDIT CONCENTRATIONS
We own and operate franchised automotive stores in the United States pursuant to franchise agreements with vehicle manufacturers. During the six months ended June 30, 2023, approximately 63% of our total retail new vehicle unit sales was generated by our stores in Florida, Texas, and California. We are subject to a concentration of risk in the event of financial distress of or other adverse event related to a major vehicle manufacturer or related lender or supplier. The core brands of 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). Our business could be materially adversely impacted by a bankruptcy of or other adverse event related to a major vehicle manufacturer or related lender or supplier.
We had receivables from manufacturers or distributors of $197.9 million at June 30, 2023, and $174.4 million at December 31, 2022. Additionally, a large portion of our contracts-in-transit included in Receivables, net, in the accompanying

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AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Unaudited Condensed Consolidated Balance Sheets, are due from automotive manufacturers’ captive finance subsidiaries, which provide financing directly to our new and used vehicle customers. Concentrations of credit risk with respect to non-manufacturer trade receivables are limited due to the wide variety of customers and markets in which our products are sold as well as their dispersion across many different geographic areas in the United States. Consequently, at June 30, 2023, we do not consider AutoNation to have any significant non-manufacturer concentrations of credit risk.

16.SEGMENT INFORMATION
At June 30, 2023 and 2022, we had three reportable segments: (1) Domestic, (2) Import, and (3) Premium Luxury. Our Domestic segment is comprised of retail automotive franchises that sell new vehicles manufactured by Ford, General Motors, and Stellantis. Our Import segment is comprised of retail automotive franchises that sell new vehicles manufactured primarily by Toyota, Honda, Hyundai, Subaru, and Nissan. Our Premium Luxury segment is comprised of retail automotive franchises that sell new vehicles manufactured primarily by Mercedes-Benz, BMW, Lexus, Audi, and Jaguar Land Rover. The franchises in each segment also sell used vehicles, parts and automotive repair and maintenance services, and automotive finance and insurance products.
“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, all of which generate revenues but do not meet the quantitative thresholds for reportable segments, as well as the results of our auto finance company, unallocated corporate overhead expenses, and other income items.
The reportable segments identified above are the business activities of the Company for which discrete financial information is available and for which operating results are regularly reviewed by our chief operating decision maker to allocate resources and assess performance. Our chief operating decision maker is our Chief Executive Officer.

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AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
The following table provides information on revenues from external customers and segment income of our reportable segments:
Three Months EndedSix Months Ended
 June 30, 2023June 30, 2023
 DomesticImportPremium LuxuryDomesticImportPremium Luxury
Revenues from external customers$1,955.5 $1,997.7 $2,620.5 $3,786.6 $3,787.0 $5,105.4 
Segment income (1)
$115.8 $173.0 $221.5 $234.3 $333.4 $448.3 
Three Months EndedSix Months Ended
 June 30, 2022June 30, 2022
 DomesticImportPremium LuxuryDomesticImportPremium Luxury
Revenues from external customers$2,040.9 $1,949.7 $2,616.6 $4,075.3 $3,923.8 $5,095.3 
Segment income (1)
$153.1 $192.5 $257.5 $302.5 $378.7 $487.0 
(1) Segment income represents income for each of our reportable segments and is defined as operating income less floorplan interest expense.
The following is a reconciliation of total segment income for reportable segments to our consolidated income from continuing operations before income taxes:
Three Months EndedSix Months Ended
 June 30,June 30,
 2023202220232022
Total segment income for reportable segments$510.3 $603.1 $1,016.0 $1,168.2 
Corporate and other(103.9)(50.8)(193.4)(102.1)
Other interest expense(46.0)(34.1)(87.1)(63.7)
Other income (loss), net4.4 (13.7)9.6 (20.1)
Income from continuing operations before income taxes$364.8 $504.5 $745.1 $982.3 

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements and notes thereto included under Part I, Item 1 of this Quarterly Report on Form 10-Q. In addition, reference should be made to our audited Consolidated Financial Statements and notes thereto and related “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our most recent Annual Report on Form 10-K.
Overview
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. We believe that the significant scale of our operations and the quality of our managerial talent allow us to achieve efficiencies in our key markets by, among other things, leveraging the AutoNation retail brand and advertising, implementing standardized processes, and increasing productivity across all of our stores.
At June 30, 2023, we had three reportable segments: (1) Domestic, (2) Import, and (3) Premium Luxury. Our Domestic segment is comprised of retail automotive franchises that sell new vehicles manufactured by Ford, General Motors, and Stellantis. Our Import segment is comprised of retail automotive franchises that sell new vehicles manufactured primarily by Toyota, Honda, Hyundai, Subaru, and Nissan. Our Premium Luxury segment is comprised of retail automotive franchises that sell new vehicles manufactured primarily by Mercedes-Benz, BMW, Lexus, Audi, and Jaguar Land Rover. The franchises in each segment also sell used vehicles, parts and automotive repair and maintenance services, and automotive finance and insurance products.
For the six months ended June 30, 2023, new vehicle sales accounted for 47% of our total revenue and 22% of our total gross profit. Used vehicle sales accounted for 31% of our total revenue and 11% of our total gross profit. Our parts and service operations, while comprising 17% of our total revenue, contributed 40% of our total gross profit. Our finance and insurance sales, while comprising 5% of our total revenue, contributed 27% of our total gross profit.
Market Conditions
In the second quarter of 2023, U.S. industry retail new vehicle unit sales increased approximately 10% as compared to the second quarter of 2022. Although new vehicle inventory levels for certain manufacturers and models improved during the second quarter of 2023, there continues to be a shortage of available new vehicles for sale as compared to historical inventory levels for certain manufacturers and models, driven largely by disruptions in the manufacturers’ supply chains. The decline in new vehicle unit volume in recent years has adversely impacted the availability of nearly new vehicle inventory, which has had an adverse impact on our used vehicle sales volume. Additionally, worsening economic conditions, including rising interest rates, could adversely impact consumer demand for vehicles.
Results of Operations
During the three months ended June 30, 2023, we had net income of $272.5 million and diluted earnings per share of $6.02, as compared to net income of $376.3 million and diluted earnings per share of $6.48 during the same period in 2022.
Our total gross profit decreased 1.9% during the second quarter of 2023 compared to the second quarter of 2022, driven by decreases in new vehicle gross profit of 18.6% and used vehicle gross profit of 14.2%, each as compared to the second

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quarter of 2022. New vehicle gross profit was adversely impacted by a decrease in gross profit per vehicle retailed (“PVR”) resulting from improving supply of new vehicle inventory. Used vehicle gross profit was adversely impacted primarily by a decrease in used vehicle unit volume due in part to lower availability and levels of nearly new vehicle inventory. The decreases in gross profit were partially offset by an increase in parts and service gross profit of 12.6%, as compared to the second quarter of 2022. Parts and service results benefited primarily from increases in gross profit from customer-pay service, warranty service, and the preparation of vehicles for sale.
SG&A expenses increased largely due to acquisitions and newly opened stores and expenditures associated with investments in technology and strategic initiatives. Floorplan interest expense increased due to higher average interest rates and higher average floorplan balances. Other interest expense increased due to higher average interest rates and higher average debt balances.
Net income during the three months ended June 30, 2023, was adversely impacted by an after-tax loss of $12.4 million from hailstorms and other natural catastrophes.
Inventory Management
Our new and used vehicle inventories are stated at the lower of cost or net realizable value in our consolidated balance sheets. We monitor our vehicle inventory levels based on current economic conditions and seasonal sales trends. Our new vehicle inventory units at June 30, 2023 and 2022, were 23,659 and 10,782, respectively. While our new vehicle inventory units have increased compared to the prior year, by historical standards, our inventory unit levels are significantly lower driven largely by disruptions in the manufacturers’ supply chains. Inadequate levels of new vehicle availability could adversely affect our financial results.
We have typically not experienced significant losses on the sale of new vehicle inventory, in part due to incentives provided by manufacturers to promote sales of new vehicles and our inventory management practices. We monitor our new vehicle inventory values as compared to net realizable values, and had no new vehicle inventory write-downs at June 30, 2023, or at December 31, 2022.
We recondition the majority of used vehicles acquired for retail sale in our parts and service departments and capitalize the related costs to the used vehicle inventory. We monitor our used vehicle inventory values as compared to net realizable values. Typically, used vehicles that are not sold on a retail basis are sold at wholesale auctions. Our used vehicle inventory balance was net of cumulative write-downs of $7.0 million at June 30, 2023, and $7.4 million at December 31, 2022.
Parts, accessories, and other inventory are carried at the lower of cost or net realizable value. We estimate the amount of potentially damaged and/or excess and obsolete inventory based upon historical experience, manufacturer return policies, and industry trends. Our parts, accessories, and other inventory balance was net of cumulative write-downs of $7.5 million at June 30, 2023, and $7.4 million at December 31, 2022.
Critical Accounting Estimates
We prepare our Unaudited Condensed Consolidated Financial Statements in conformity with U.S. generally accepted accounting principles (“GAAP”), which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. We evaluate our estimates on an ongoing basis, and we base our estimates on historical experience and various other assumptions we believe to be reasonable. Actual outcomes could differ materially from those estimates in a manner that could have a material effect on our Unaudited Condensed Consolidated Financial Statements. For additional discussion of our critical accounting estimates, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our most recent Annual Report on Form 10-K.
Goodwill
Goodwill for our reporting units is tested for impairment annually as of April 30 or more frequently when events or changes in circumstances indicate that the carrying value of a reporting unit more likely than not exceeds its fair value. We may first perform a qualitative assessment to determine whether it is more likely than not that a reporting unit is impaired. When assessing goodwill for impairment, our decision to perform a qualitative assessment for an individual reporting unit is influenced by a number of factors, including the carrying value of the reporting unit’s goodwill, the significance of the excess of the reporting unit’s estimated fair value over carrying value at the last quantitative assessment date, the amount of time in between quantitative fair value assessments, macroeconomic conditions, automotive industry and market conditions, and our operating performance.

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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.
As of June 30, 2023, we have $237.2 million of goodwill related to the Domestic reporting unit, $528.9 million related to the Import reporting unit, $482.1 million related to the Premium Luxury reporting unit, $129.5 million related to the Mobile Service reporting unit, $78.4 million related to the AutoNation Finance reporting unit, and $4.6 million related to the Collision Centers reporting unit.
Other Intangible Assets
Our principal identifiable intangible assets are individual store rights under franchise agreements with vehicle manufacturers, which have indefinite lives and are tested for impairment annually as of April 30 or more frequently when events or changes in circumstances indicate that impairment may have occurred. We may first perform a qualitative assessment to determine whether it is more likely than not that a franchise right asset is impaired. The quantitative impairment test for franchise rights requires the comparison of the franchise rights’ estimated fair value to carrying value by store. Fair values of rights under franchise agreements are estimated using unobservable (Level 3) inputs by discounting expected future cash flows of the store. The forecasted cash flows contain inherent uncertainties, including significant estimates and assumptions related to growth rates, margins, working capital requirements, capital expenditures, and cost of capital, for which we utilize certain market participant-based assumptions, using third-party industry projections, economic projections, and other marketplace data we believe to be reasonable.
We elected to perform quantitative tests for our annual franchise rights impairment testing as of April 30, 2023, and no impairment charges resulted from these quantitative tests.
If the fair value of each of our franchise rights had been determined to be a hypothetical 10% lower as of the valuation date of April 30, 2023, the resulting impairment charge would have been less than $0.5 million. The effect of a hypothetical 10% decrease in fair value estimates is not intended to provide a sensitivity analysis of every potential outcome.




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Reported Operating Data
Historical operating results include the results of acquired businesses from the date of acquisition.
($ in millions, except per vehicle data)Three Months Ended June 30,Six Months Ended June 30,
20232022Variance
Favorable /
(Unfavorable)
%
Variance
20232022Variance
Favorable /
(Unfavorable)
%
Variance
Revenue:
New vehicle$3,281.0 $2,935.8 $345.2 11.8 $6,212.9 $5,743.0 $469.9 8.2 
Retail used vehicle1,949.2 2,362.2 (413.0)(17.5)3,833.3 4,754.4 (921.1)(19.4)
Wholesale138.8 158.2 (19.4)(12.3)287.3 338.4 (51.1)(15.1)
Used vehicle2,088.0 2,520.4 (432.4)(17.2)4,120.6 5,092.8 (972.2)(19.1)
Finance and insurance, net369.5 367.6 1.9 0.5 701.9 731.5 (29.6)(4.0)
Total variable operations(1)
5,738.5 5,823.8 (85.3)(1.5)11,035.4 11,567.3 (531.9)(4.6)
Parts and service1,145.3 1,036.3 109.0 10.5 2,235.1 2,040.2 194.9 9.6 
Other6.3 9.1 (2.8)18.3 14.5 3.8 
Total revenue$6,890.1 $6,869.2 $20.9 0.3 $13,288.8 $13,622.0 $(333.2)(2.4)
Gross profit:
New vehicle$287.7 $353.5 $(65.8)(18.6)$574.6 $698.5 $(123.9)(17.7)
Retail used vehicle128.7 147.6 (18.9)(12.8)271.7 272.5 (0.8)(0.3)
Wholesale5.6 8.9 (3.3)17.0 20.6 (3.6)
Used vehicle134.3 156.5 (22.2)(14.2)288.7 293.1 (4.4)(1.5)
Finance and insurance369.5 367.6 1.9 0.5 701.9 731.5 (29.6)(4.0)
Total variable operations(1)
791.5 877.6 (86.1)(9.8)1,565.2 1,723.1 (157.9)(9.2)
Parts and service542.5 481.7 60.8 12.6 1,053.6 942.8 110.8 11.8 
Other1.3 2.4 (1.1)2.9 4.7 (1.8)
Total gross profit1,335.3 1,361.7 (26.4)(1.9)2,621.7 2,670.6 (48.9)(1.8)
Selling, general, and administrative expenses842.9 754.8 (88.1)(11.7)1,625.6 1,496.2 (129.4)(8.6)
Depreciation and amortization54.6 48.8 (5.8)107.4 98.8 (8.6)
Other (income) expense, net(1.4)— 1.4 6.2 (1.5)(7.7)
Operating income439.2 558.1 (118.9)(21.3)882.5 1,077.1 (194.6)(18.1)
Non-operating income (expense) items:
Floorplan interest expense(32.8)(5.8)(27.0)(59.9)(11.0)(48.9)
Other interest expense(46.0)(34.1)(11.9)(87.1)(63.7)(23.4)
Other income (loss), net4.4 (13.7)18.1 9.6 (20.1)29.7 
Income from continuing operations before income taxes$364.8 $504.5 $(139.7)(27.7)$745.1 $982.3 $(237.2)(24.1)
Retail vehicle unit sales:
New vehicle62,444 57,890 4,554 7.9 117,509 114,332 3,177 2.8 
Used vehicle68,812 77,080 (8,268)(10.7)136,351 156,843 (20,492)(13.1)
131,256 134,970 (3,714)(2.8)253,860 271,175 (17,315)(6.4)
Revenue per vehicle retailed:
New vehicle$52,543 $50,713 $1,830 3.6 $52,872 $50,231 $2,641 5.3 
Used vehicle$28,326 $30,646 $(2,320)(7.6)$28,113 $30,313 $(2,200)(7.3)
Gross profit per vehicle retailed:
New vehicle$4,607 $6,106 $(1,499)(24.5)$4,890 $6,109 $(1,219)(20.0)
Used vehicle$1,870 $1,915 $(45)(2.3)$1,993 $1,737 $256 14.7 
Finance and insurance$2,815 $2,724 $91 3.3 $2,765 $2,698 $67 2.5 
Total variable operations(2)
$5,988 $6,436 $(448)(7.0)$6,099 $6,278 $(179)(2.9)
(1) Total variable operations includes new vehicle, used vehicle (retail and wholesale), and finance and insurance results.
(2) Total variable operations gross profit per vehicle retailed is calculated by dividing the sum of new vehicle, retail used vehicle, and finance and insurance gross profit by total retail vehicle unit sales.

28

Three Months EndedSix Months Ended
 June 30,June 30,
 2023 (%)2022 (%)2023 (%)2022 (%)
Revenue mix percentages:
New vehicle47.6 42.7 46.8 42.2 
Used vehicle30.3 36.7 31.0 37.4 
Parts and service16.6 15.1 16.8 15.0 
Finance and insurance, net5.4 5.4 5.3 5.4 
Other0.1 0.1 0.1 — 
Total100.0 100.0 100.0 100.0 
Gross profit mix percentages:
New vehicle21.5 26.0 21.9 26.2 
Used vehicle10.1 11.5 11.0 11.0 
Parts and service40.6 35.4 40.2 35.3 
Finance and insurance27.7 27.0 26.8 27.4 
Other0.1 0.1 0.1 0.1 
Total100.0 100.0 100.0 100.0 
Operating items as a percentage of revenue:
Gross profit:
New vehicle8.8 12.0 9.2 12.2 
Used vehicle - retail6.6 6.2 7.1 5.7 
Parts and service47.4 46.5 47.1 46.2 
Total19.4 19.8 19.7 19.6 
Selling, general, and administrative expenses12.2 11.0 12.2 11.0 
Operating income6.4 8.1 6.6 7.9 
Other operating items as a percentage of total gross profit:
Selling, general, and administrative expenses63.1 55.4 62.0 56.0 
Operating income32.9 41.0 33.7 40.3 
June 30,
20232022
Inventory days supply:
New vehicle (industry standard of selling days)26 days11 days
Used vehicle (trailing calendar month days)35 days40 days


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Table of Contents
Same Store Operating Data
We have presented below our operating results on a same store basis to reflect our internal performance. The “Same Store” amounts presented below include the results of our stores for the identical months in each period presented in the comparison, commencing with the first full month in which the store was owned by us. Results from divested stores are excluded from both current and prior periods. Therefore, the amounts presented in the 2022 columns may differ from the same store amounts presented for 2022 in the prior year. We believe the presentation of this information provides a meaningful comparison of period-over-period results of our operations.
 Three Months Ended June 30,Six Months Ended June 30,
($ in millions, except per vehicle data)20232022Variance
Favorable /
(Unfavorable)
%
Variance
20232022Variance
Favorable /
(Unfavorable)
%
Variance
Revenue:
New vehicle$3,245.8 $2,923.1 $322.7 11.0 $6,155.6 $5,715.2 $440.4 7.7 
Retail used vehicle1,897.9 2,350.1 (452.2)(19.2)3,730.2 4,728.2 (998.0)(21.1)
Wholesale135.9 157.1 (21.2)(13.5)282.2 336.6 (54.4)(16.2)
Used vehicle2,033.8 2,507.2 (473.4)(18.9)4,012.4 5,064.8 (1,052.4)(20.8)
Finance and insurance, net362.8 366.2 (3.4)(0.9)689.2 728.4 (39.2)(5.4)
Total variable operations(1)
5,642.4 5,796.5 (154.1)(2.7)10,857.2 11,508.4 (651.2)(5.7)
Parts and service1,122.4 1,028.7 93.7 9.1 2,194.2 2,025.1 169.1 8.4 
Other6.4 9.1 (2.7)18.3 14.5 3.8 
Total revenue$6,771.2 $6,834.3 $(63.1)(0.9)$13,069.7 $13,548.0 $(478.3)(3.5)
Gross profit:
New vehicle$284.7 $352.0 $(67.3)(19.1)$569.5 $695.5 $(126.0)(18.1)
Retail used vehicle125.7 147.3 (21.6)(14.7)264.7 271.6 (6.9)(2.5)
Wholesale5.7 8.9 (3.2)17.2 20.7 (3.5)
Used vehicle131.4 156.2 (24.8)(15.9)281.9 292.3 (10.4)(3.6)
Finance and insurance362.8 366.2 (3.4)(0.9)689.2 728.4 (39.2)(5.4)
Total variable operations(1)
778.9 874.4 (95.5)(10.9)1,540.6 1,716.2 (175.6)(10.2)
Parts and service532.3 477.3 55.0 11.5 1,034.6 933.8 100.8 10.8 
Other1.6 2.3 (0.7)2.9 4.6 (1.7)
Total gross profit$1,312.8 $1,354.0 $(41.2)(3.0)$2,578.1 $2,654.6 $(76.5)(2.9)
Retail vehicle unit sales:
New vehicle61,750 57,703 4,047 7.0 116,404 113,927 2,477 2.2 
Used vehicle66,731 76,757 (10,026)(13.1)132,205 156,132 (23,927)(15.3)
128,481 134,460 (5,979)(4.4)248,609 270,059 (21,450)(7.9)
Revenue per vehicle retailed:
New vehicle$52,564 $50,658 $1,906 3.8 $52,881 $50,165 $2,716 5.4 
Used vehicle$28,441 $30,617 $(2,176)(7.1)$28,215 $30,283 $(2,068)(6.8)
Gross profit per vehicle retailed:
New vehicle$4,611 $6,100 $(1,489)(24.4)$4,892 $6,105 $(1,213)(19.9)
Used vehicle$1,884 $1,919 $(35)(1.8)$2,002 $1,740 $262 15.1 
Finance and insurance$2,824 $2,723 $101 3.7 $2,772 $2,697 $75 2.8 
Total variable operations(2)
$6,018 $6,437 $(419)(6.5)$6,128 $6,278 $(150)(2.4)
(1) Total variable operations includes new vehicle, used vehicle (retail and wholesale), and finance and insurance results.
(2) Total variable operations gross profit per vehicle retailed is calculated by dividing the sum of new vehicle, retail used vehicle, and finance and insurance gross profit by total retail vehicle unit sales.

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Table of Contents
Three Months EndedSix Months Ended
 June 30,June 30,
 2023 (%)2022 (%)2023 (%)2022 (%)
Revenue mix percentages:
New vehicle47.9 42.8 47.1 42.2 
Used vehicle30.0 36.7 30.7 37.4 
Parts and service16.6 15.1 16.8 14.9 
Finance and insurance, net5.4 5.4 5.3 5.4 
Other0.1 — 0.1 0.1 
Total100.0 100.0 100.0 100.0 
Gross profit mix percentages:
New vehicle21.7 26.0 22.1 26.2 
Used vehicle10.0 11.5 10.9 11.0 
Parts and service40.5 35.3 40.1 35.2 
Finance and insurance27.6 27.0 26.7 27.4 
Other0.2 0.2 0.2 0.2 
Total100.0 100.0 100.0 100.0 
Operating items as a percentage of revenue:
Gross profit:
New vehicle8.8 12.0 9.3 12.2 
Used vehicle - retail6.6 6.3 7.1 5.7 
Parts and service47.4 46.4 47.2 46.1 
Total19.4 19.8 19.7 19.6 


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New Vehicle
 Three Months Ended June 30,Six Months Ended June 30,
($ in millions, except per vehicle data)20232022Variance
Favorable /
(Unfavorable)
%
Variance
20232022Variance
Favorable /
(Unfavorable)
%
Variance
Reported:
Revenue$3,281.0 $2,935.8 $345.2 11.8 $6,212.9 $5,743.0 $469.9 8.2 
Gross profit$287.7 $353.5 $(65.8)(18.6)$574.6 $698.5 $(123.9)(17.7)
Retail vehicle unit sales62,444 57,890 4,554 7.9 117,509 114,332 3,177 2.8 
Revenue per vehicle retailed$52,543 $50,713 $1,830 3.6 $52,872 $50,231 $2,641 5.3 
Gross profit per vehicle retailed$4,607 $6,106 $(1,499)(24.5)$4,890 $6,109 $(1,219)(20.0)
Gross profit as a percentage of revenue8.8%12.0%9.2%12.2%
Inventory days supply (industry standard of selling days)26 days11 days
 Three Months Ended June 30,Six Months Ended June 30,
20232022Variance
Favorable /
(Unfavorable)
%
Variance
20232022Variance
Favorable /
(Unfavorable)
%
Variance
Same Store:
Revenue$3,245.8 $2,923.1 $322.7 11.0 $6,155.6 $5,715.2 $440.4 7.7 
Gross profit$284.7 $352.0 $(67.3)(19.1)$569.5 $695.5 $(126.0)(18.1)
Retail vehicle unit sales61,750 57,703 4,047 7.0 116,404 113,927 2,477 2.2 
Revenue per vehicle retailed$52,564 $50,658 $1,906 3.8 $52,881 $50,165 $2,716 5.4 
Gross profit per vehicle retailed$4,611 $6,100 $(1,489)(24.4)$4,892 $6,105 $(1,213)(19.9)
Gross profit as a percentage of revenue8.8%12.0%9.3%12.2%
The following discussion of new vehicle results is on a same store basis. The difference between reported amounts and same store amounts in the above tables of $35.2 million and $12.7 million in new vehicle revenue and $3.0 million and $1.5 million in new vehicle gross profit for the three months ended June 30, 2023 and 2022, respectively, and $57.3 million and $27.8 million in new vehicle revenue and $5.1 million and $3.0 million in new vehicle gross profit for the six months ended June 30, 2023 and 2022, respectively, is related to acquisition and divestiture activity.
Second Quarter 2023 compared to Second Quarter 2022
Same store new vehicle revenue increased during the three months ended June 30, 2023, as compared to the same period in 2022, due to an increase in same store unit volume and same store revenue PVR. Same store unit volume benefited from increasing supply of new vehicle inventory, particularly for Import manufacturers.
Same store revenue PVR increased during the three months ended June 30, 2023, as compared to the same period in 2022, primarily due to increases in manufacturers’ suggested retail prices, partially offset by a shift in mix to Import vehicles, which have relatively lower average selling prices.
Same store gross profit PVR decreased during the three months ended June 30, 2023, as compared to the same period in 2022, primarily due to increasing supply of new vehicle inventory.
First Six Months 2023 compared to First Six Months 2022
Same store new vehicle revenue increased during the six months ended June 30, 2023, as compared to the same period in 2022, due to an increase in same store revenue PVR and an increase in same store unit volume. Same store unit volume benefited from increasing supply of new vehicle inventory.
Same store revenue PVR increased during the six months ended June 30, 2023, as compared to the same period in 2022, primarily due to increases in manufacturers’ suggested retail prices.
Same store gross profit PVR decreased during the six months ended June 30, 2023, as compared to the same period in 2022, primarily due to increasing supply of new vehicle inventory.

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New Vehicle Inventory Carrying Benefit
The following table details net new vehicle inventory carrying benefit, consisting of new vehicle floorplan interest expense, net of floorplan assistance earned (amounts received from manufacturers specifically to support store financing of new vehicle inventory). Floorplan assistance is accounted for as a component of new vehicle gross profit in accordance with GAAP.
 Three Months Ended June 30,Six Months Ended June 30,
($ in millions)20232022Variance20232022Variance
Floorplan assistance$32.4 $27.3 $5.1 $60.7 $54.8 $5.9 
New vehicle floorplan interest expense(29.6)(5.1)(24.5)(54.0)(8.8)(45.2)
Net new vehicle inventory carrying benefit $2.8 $22.2 $(19.4)$6.7 $46.0 $(39.3)
Second Quarter 2023 compared to Second Quarter 2022
The net new vehicle inventory carrying benefit decreased during the three months ended June 30, 2023, as compared to the same period in 2022, primarily due to an increase in floorplan interest expense, partially offset by an increase in floorplan assistance. Floorplan interest expense increased due to higher average interest rates and higher average floorplan balances. Floorplan interest rates are variable and, therefore, increase and decrease with changes in the underlying benchmark interest rates. Floorplan assistance increased due to an increase in the average floorplan assistance rate per unit and an increase in unit volume.
First Six Months 2023 compared to First Six Months 2022
The net new vehicle inventory carrying benefit decreased during the six months ended June 30, 2023, as compared to the same period in 2022, primarily due to an increase in floorplan interest expense, partially offset by an increase in floorplan assistance. Floorplan interest expense increased due to higher average interest rates and higher average floorplan balances. Floorplan assistance increased due to an increase in the average floorplan assistance rate per unit and an increase in unit volume.

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Table of Contents
Used Vehicle
 Three Months Ended June 30,Six Months Ended June 30,
($ in millions, except per vehicle data)20232022Variance
Favorable /
(Unfavorable)
%
Variance
20232022Variance
Favorable /
(Unfavorable)
%
Variance
Reported:
Retail revenue$1,949.2 $2,362.2 $(413.0)(17.5)$3,833.3 $4,754.4 $(921.1)(19.4)
Wholesale revenue138.8 158.2 (19.4)(12.3)287.3 338.4 (51.1)(15.1)
Total revenue$2,088.0 $2,520.4 $(432.4)(17.2)$4,120.6 $5,092.8 $(972.2)(19.1)
Retail gross profit$128.7 $147.6 $(18.9)(12.8)$271.7 $272.5 $(0.8)(0.3)
Wholesale gross profit5.6 8.9 (3.3)17.0 20.6 (3.6)
Total gross profit$134.3 $156.5 $(22.2)(14.2)$288.7 $293.1 $(4.4)(1.5)
Retail vehicle unit sales68,812 77,080 (8,268)(10.7)136,351 156,843 (20,492)(13.1)
Revenue per vehicle retailed$28,326 $30,646 $(2,320)(7.6)$28,113 $30,313 $(2,200)(7.3)
Gross profit per vehicle retailed$1,870 $1,915 $(45)(2.3)$1,993 $1,737 $256 14.7 
Retail gross profit as a percentage of retail revenue6.6%6.2%7.1%5.7%
Inventory days supply (trailing calendar month days) 35 days40 days
 Three Months Ended June 30,Six Months Ended June 30,
20232022Variance
Favorable /
(Unfavorable)
%
Variance
20232022Variance
Favorable /
(Unfavorable)
%
Variance
Same Store:
Retail revenue$1,897.9 $2,350.1 $(452.2)(19.2)$3,730.2 $4,728.2 $(998.0)(21.1)
Wholesale revenue135.9 157.1 (21.2)(13.5)282.2 336.6 (54.4)(16.2)
Total revenue$2,033.8 $2,507.2 $(473.4)(18.9)$4,012.4 $5,064.8 $(1,052.4)(20.8)
Retail gross profit$125.7 $147.3 $(21.6)(14.7)$264.7 $271.6 $(6.9)(2.5)
Wholesale gross profit5.7 8.9 (3.2)17.2 20.7 (3.5)
Total gross profit$131.4 $156.2 $(24.8)(15.9)$281.9 $292.3 $(10.4)(3.6)
Retail vehicle unit sales66,731 76,757 (10,026)(13.1)132,205 156,132 (23,927)(15.3)
Revenue per vehicle retailed$28,441 $30,617 $(2,176)(7.1)$28,215 $30,283 $(2,068)(6.8)
Gross profit per vehicle retailed$1,884 $1,919 $(35)(1.8)$2,002 $1,740 $262 15.1 
Retail gross profit as a percentage of retail revenue6.6%6.3%7.1%5.7%
The following discussion of used vehicle results is on a same store basis. The difference between reported amounts and same store amounts in the above tables of $54.2 million and $13.2 million in total used vehicle revenue and $2.9 million and $0.3 million in total used vehicle gross profit for the three months ended June 30, 2023 and 2022, respectively, and $108.2 million and $28.0 million in total used vehicle revenue and $6.8 million and $0.8 million in total used vehicle gross profit for the six months ended June 30, 2023 and 2022, respectively, is related to acquisition and divestiture activity, as well as the opening of AutoNation USA stores.
Second Quarter 2023 compared to Second Quarter 2022
Same store retail used vehicle revenue decreased during the three months ended June 30, 2023, as compared to the same period in 2022, due to a decrease in same store unit volume and a decrease in same store revenue PVR. The decrease in same store unit volume, particularly for mid- to higher-priced used vehicles, is due in part to lower availability and levels of nearly new vehicle inventory.
Same store revenue PVR decreased during the three months ended June 30, 2023, as compared to the same period in 2022, primarily due to a shift in mix towards lower-priced entry-level vehicles.
Same store gross profit PVR for the three months ended June 30, 2023, was relatively flat as compared to the same period in 2022.

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Table of Contents
First Six Months 2023 compared to First Six Months 2022
Same store retail used vehicle revenue decreased during the six months ended June 30, 2023, as compared to the same period in 2022, due to a decrease in same store unit volume and a decrease in same store revenue PVR. The decrease in same store unit volume, particularly for mid- to higher-priced used vehicles, is due in part to lower availability and levels of nearly new vehicle inventory.
Same store revenue PVR decreased during the six months ended June 30, 2023, as compared to the same period in 2022, primarily due to a shift in mix towards lower-priced entry-level vehicles.
Same store gross profit PVR increased during the six months ended June 30, 2023, as compared to the same period in 2022, primarily due to a disciplined sourcing and pricing strategy as we focused on efficient internal sourcing of our used vehicle inventory and balancing gross profit PVR and unit volume.

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Table of Contents
Parts and Service
  Three Months Ended June 30,Six Months Ended June 30,
($ in millions)20232022Variance
Favorable /
(Unfavorable)
%
Variance
20232022Variance
Favorable /
(Unfavorable)
%
Variance
Reported:
Revenue$1,145.3 $1,036.3 $109.0 10.5 $2,235.1 $2,040.2 $194.9 9.6 
Gross Profit$542.5 $481.7 $60.8 12.6 $1,053.6 $942.8 $110.8 11.8 
Gross profit as a percentage of revenue47.4%46.5%47.1%46.2%
Same Store:
Revenue$1,122.4 $1,028.7 $93.7 9.1 $2,194.2 $2,025.1 $169.1 8.4 
Gross Profit$532.3 $477.3 $55.0 11.5 $1,034.6 $933.8 $100.8 10.8 
Gross profit as a percentage of revenue47.4%46.4%47.2%46.1%
Parts and service revenue is primarily derived from vehicle repairs paid directly by customers or via reimbursement from manufacturers and others under warranty programs, as well as from wholesale parts sales, collision services, and the preparation of vehicles for sale.
The following discussion of parts and service results is on a same store basis. The difference between reported amounts and same store amounts in the above tables of $22.9 million and $7.6 million in parts and service revenue and $10.2 million and $4.4 million in parts and service gross profit for the three months ended June 30, 2023 and 2022, respectively, and $40.9 million and $15.1 million in parts and service revenue and $19.0 million and $9.0 million in parts and service gross profit for the six months ended June 30, 2023 and 2022, respectively, is related to acquisition and divestiture activity, as well as the opening of AutoNation USA stores.
Second Quarter 2023 compared to Second Quarter 2022
During the three months ended June 30, 2023, same store parts and service gross profit increased compared to the same period in 2022, primarily due to increases in gross profit associated with customer-pay service of $23.6 million, warranty service of $13.0 million, and the preparation of vehicles for sale of $11.6 million. Gross profit associated with customer-pay service benefited from higher value repair orders. Warranty service gross profit benefited from higher value repair orders and improved parts and labor rates. Gross profit associated with the preparation of vehicles for sale benefited from higher value repair orders and an increase in repair order volume.
First Six Months 2023 compared to First Six Months 2022
During the six months ended June 30, 2023, same store parts and service gross profit increased compared to the same period in 2022, primarily due to increases in gross profit associated with customer-pay service of $50.8 million and warranty service of $24.7 million. Gross profit associated with customer-pay service benefited from higher value repair orders. Warranty service gross profit benefited from higher value repair orders and improved parts and labor rates.

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Table of Contents
Finance and Insurance
 Three Months Ended June 30,Six Months Ended June 30,
($ in millions, except per vehicle data)20232022Variance
Favorable /
(Unfavorable)
%
Variance
20232022Variance
Favorable /
(Unfavorable)
%
Variance
Reported:
Revenue and gross profit$369.5 $367.6 $1.9 0.5 $701.9 $731.5 $(29.6)(4.0)
Gross profit per vehicle retailed$2,815 $2,724 $91 3.3 $2,765 $2,698 $67 2.5 
Same Store:
Revenue and gross profit$362.8 $366.2 $(3.4)(0.9)$689.2 $728.4 $(39.2)(5.4)
Gross profit per vehicle retailed$2,824 $2,723 $101 3.7 $2,772 $2,697 $75 2.8 
Revenue on finance and insurance products represents commissions earned by us for the placement of: (i) loans and leases with financial institutions in connection with customer vehicle purchases financed, (ii) vehicle service contracts with third-party providers, and (iii) other vehicle protection products with third-party providers. We sell these products on a commission basis, and we also participate in the future underwriting profit on certain products pursuant to retrospective commission arrangements with the issuers of those products.
The following discussion of finance and insurance results is on a same store basis. The difference between reported amounts and same store amounts in finance and insurance revenue and gross profit in the above tables of $6.7 million and $1.4 million for the three months ended June 30, 2023 and 2022, respectively, and $12.7 million and $3.1 million for the six months ended June 30, 2023 and 2022, respectively, is related to acquisition and divestiture activity, as well as the opening of AutoNation USA stores.
Second Quarter 2023 compared to Second Quarter 2022
Same store finance and insurance revenue and gross profit was relatively flat during the three months ended June 30, 2023, as compared to the same period in 2022, due to a decrease in used vehicle unit volume, largely offset by increases in new vehicle unit volume and finance and insurance gross profit PVR. The increase in finance and insurance gross profit PVR was primarily due to an increase in product penetration, partially offset by a decrease in gross profit associated with arranging customer financing.
First Six Months 2023 compared to First Six Months 2022
Same store finance and insurance revenue and gross profit decreased during the six months ended June 30, 2023, as compared to the same period in 2022, due to a decrease in used vehicle unit volume, partially offset by increases in new vehicle unit volume and finance and insurance gross profit PVR. The increase in finance and insurance gross profit PVR was primarily due to higher realized margins on vehicle protection products and an increase in product penetration, partially offset by a decrease in gross profit associated with arranging customer financing.

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Table of Contents
Segment Results
In the following table of financial data, revenue and segment income of our reportable segments are reconciled to consolidated revenue and consolidated operating income, respectively. The following discussions of segment results are on a reported basis.
 Three Months Ended June 30,Six Months Ended June 30,
($ in millions)20232022Variance
Favorable /
(Unfavorable)
%
Variance
20232022Variance
Favorable /
(Unfavorable)
%
Variance
Revenue:
Domestic$1,955.5 $2,040.9 $(85.4)(4.2)$3,786.6 $4,075.3 $(288.7)(7.1)
Import1,997.7 1,949.7 48.0 2.5 3,787.0 3,923.8 (136.8)(3.5)
Premium Luxury2,620.5 2,616.6 3.9 0.1 5,105.4 5,095.3 10.1 0.2 
Total 6,573.7 6,607.2 (33.5)(0.5)12,679.0 13,094.4 (415.4)(3.2)
Corporate and other316.4 262.0 54.4 20.8 609.8 527.6 82.2 15.6 
Total consolidated revenue$6,890.1 $6,869.2 $20.9 0.3 $13,288.8 $13,622.0 $(333.2)(2.4)
Segment income(1):
Domestic$115.8 $153.1 $(37.3)(24.4)$234.3 $302.5 $(68.2)(22.5)
Import173.0 192.5 (19.5)(10.1)333.4 378.7 (45.3)(12.0)
Premium Luxury221.5 257.5 (36.0)(14.0)448.3 487.0 (38.7)(7.9)
Total 510.3 603.1 (92.8)(15.4)1,016.0 1,168.2 (152.2)(13.0)
Corporate and other(103.9)(50.8)(53.1)(193.4)(102.1)(91.3)
Floorplan interest expense32.8 5.8 (27.0)59.9 11.0 (48.9)
Operating income$439.2 $558.1 $(118.9)(21.3)$882.5 $1,077.1 $(194.6)(18.1)
Retail new vehicle unit sales:
Domestic17,495 16,760 735 4.4 33,344 33,125 219 0.7 
Import27,172 23,612 3,560 15.1 50,270 48,148 2,122 4.4 
Premium Luxury17,777 17,518 259 1.5 33,895 33,059 836 2.5 
62,444 57,890 4,554 7.9 117,509 114,332 3,177 2.8 
Retail used vehicle unit sales:
Domestic21,305 25,180 (3,875)(15.4)42,508 51,776 (9,268)(17.9)
Import22,630 25,786 (3,156)(12.2)44,693 52,315 (7,622)(14.6)
Premium Luxury18,931 21,381 (2,450)(11.5)37,699 43,330 (5,631)(13.0)
62,866 72,347 (9,481)(13.1)124,900 147,421 (22,521)(15.3)
(1) Segment income represents income for each of our reportable segments and is defined as operating income less floorplan interest expense.





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Domestic
The Domestic segment operating results included the following: 
 Three Months Ended June 30,Six Months Ended June 30,
($ in millions)20232022Variance
Favorable /
(Unfavorable)
%
Variance
20232022Variance
Favorable /
(Unfavorable)
%
Variance
Revenue:
New vehicle$923.0 $858.1 $64.9 7.6 $1,751.0 $1,680.6 $70.4 4.2 
Used vehicle619.0 786.8 (167.8)(21.3)1,231.3 1,609.9 (378.6)(23.5)
Parts and service298.7 275.5 23.2 8.4 586.3 544.2 42.1 7.7 
Finance and insurance, net114.3 119.4 (5.1)(4.3)216.6 238.6 (22.0)(9.2)
Other0.5 1.1 (0.6)1.4 2.0 (0.6)
Total Revenue$1,955.5 $2,040.9 $(85.4)(4.2)$3,786.6 $4,075.3 $(288.7)(7.1)
Segment income$115.8 $153.1 $(37.3)(24.4)$234.3 $302.5 $(68.2)(22.5)
Retail new vehicle unit sales17,495 16,760 735 4.4 33,344 33,125 219 0.7 
Retail used vehicle unit sales21,305 25,180 (3,875)(15.4)42,508 51,776 (9,268)(17.9)
Second Quarter 2023 compared to Second Quarter 2022
Domestic revenue decreased during the three months ended June 30, 2023, as compared to the same period in 2022, primarily due to decreases in used vehicle unit volume and used vehicle revenue PVR. The decrease in used vehicle unit volume is due in part to lower availability and levels of nearly new vehicle inventory. The decrease in used vehicle revenue PVR is primarily due to a shift in mix towards lower-priced entry-level vehicles. Decreases in Domestic revenue were partially offset by an increase in new vehicle unit volume due to increasing supply of new vehicle inventory and an increase in new vehicle revenue PVR due to increases in manufacturers’ suggested retail prices, as well as increases in parts and service revenue associated with customer-pay and warranty service. Domestic revenue also benefited from the acquisitions we completed in 2022 and 2023.
Domestic segment income decreased during the three months ended June 30, 2023, as compared to the same period in 2022, primarily due to a decrease in new vehicle gross profit, which was adversely impacted by increasing supply of new vehicle inventory, and an increase in floorplan interest expense.
First Six Months 2023 compared to First Six Months 2022
Domestic revenue decreased during the six months ended June 30, 2023, as compared to the same period in 2022, primarily due to decreases in used vehicle unit volume and used vehicle revenue PVR. The decrease in used vehicle unit volume is due in part to lower availability and levels of nearly new vehicle inventory. The decrease in used vehicle revenue PVR is primarily due to a shift in mix towards lower-priced entry-level vehicles. Decreases in Domestic revenue were partially offset by an increase in new vehicle revenue PVR due to increases in manufacturers’ suggested retail prices. Additionally, Domestic revenue benefited from the acquisitions we completed in 2022 and 2023.
Domestic segment income decreased during the six months ended June 30, 2023, as compared to the same period in 2022, primarily due to decreases in new vehicle gross profit and finance and insurance gross profit. New vehicle gross profit was adversely impacted by increasing supply of new vehicle inventory. Finance and insurance gross profit was adversely impacted by the decrease in vehicle unit volume. Domestic segment income was also adversely impacted by an increase in floorplan interest expense. Decreases in segment income were partially offset by increases in parts and service gross profit associated with customer-pay service and warranty service.

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Import
The Import segment operating results included the following: 
 Three Months Ended June 30,Six Months Ended June 30,
($ in millions)20232022Variance
Favorable /
(Unfavorable)
%
Variance
20232022Variance
Favorable /
(Unfavorable)
%
Variance
Revenue:
New vehicle$1,011.2 $852.4 $158.8 18.6 $1,867.6 $1,734.0 $133.6 7.7 
Used vehicle563.2 699.6 (136.4)(19.5)1,105.3 1,407.2 (301.9)(21.5)
Parts and service291.3 266.3 25.0 9.4 559.7 521.8 37.9 7.3 
Finance and insurance, net128.0 125.7 2.3 1.8 240.4 252.1 (11.7)(4.6)
Other4.0 5.7 (1.7)14.0 8.7 5.3 
Total Revenue$1,997.7 $1,949.7 $48.0 2.5 $3,787.0 $3,923.8 $(136.8)(3.5)
Segment income$173.0 $192.5 $(19.5)(10.1)$333.4 $378.7 $(45.3)(12.0)
Retail new vehicle unit sales27,172 23,612 3,560 15.1 50,270 48,148 2,122 4.4 
Retail used vehicle unit sales22,630 25,786 (3,156)(12.2)44,693 52,315 (7,622)(14.6)
Second Quarter 2023 compared to Second Quarter 2022
Import revenue increased during the three months ended June 30, 2023, as compared to the same period in 2022, primarily due to the acquisitions we completed in 2022 and 2023, as well as increases in new vehicle unit volume and new vehicle revenue PVR. New vehicle unit volume benefited from increasing supply of new vehicle inventory. New vehicle revenue PVR increased primarily due to increases in manufacturers’ suggested retail prices. Import revenue also benefited from increases in parts and service revenue associated with customer-pay service and the preparation of vehicles for sale. Increases in Import revenue were partially offset by a decrease in used vehicle unit volume, due in part to lower availability and levels of nearly new vehicle inventory, and a decrease in used vehicle revenue PVR, primarily due to a shift in mix towards lower-priced entry-level vehicles.
Import segment income decreased during the three months ended June 30, 2023, as compared to the same period in 2022, primarily due to decreases in new vehicle gross profit and used vehicle gross profit and an increase in SG&A expenses. New vehicle gross profit was adversely impacted by increasing supply of new vehicle inventory. Used vehicle gross profit decreased primarily due to lower availability and levels of nearly new vehicle inventory. Decreases in Import segment income were partially offset by increases in parts and service gross profit associated with customer-pay service and the preparation of vehicles for sale.
First Six Months 2023 compared to First Six Months 2022
Import revenue decreased during the six months ended June 30, 2023, as compared to the same period in 2022, primarily due to decreases in used vehicle unit volume, due in part to lower availability and levels of nearly new vehicle inventory, and used vehicle revenue PVR, primarily due to a shift in mix towards lower-priced entry-level vehicles. Decreases in Import revenue were partially offset by increases in new vehicle revenue PVR, new vehicle unit volume, and parts and service revenue associated with customer-pay service and the preparation of vehicles for sale. New vehicle revenue PVR increased primarily due to increases in manufacturers’ suggested retail prices. New vehicle unit volume benefited from increasing supply of new vehicle inventory. Import revenue also benefited from the acquisitions we completed in 2022 and 2023.
Import segment income decreased during the six months ended June 30, 2023, as compared to the same period in 2022, primarily due to decreases in new vehicle gross profit and finance and insurance gross profit. New vehicle gross profit was adversely impacted by increasing supply of new vehicle inventory. Finance and insurance gross profit was adversely impacted by the decrease in used vehicle unit volume. Import segment income was also adversely impacted by increases in SG&A and floorplan interest expenses. Decreases in segment income were partially offset by an increase in parts and service gross profit associated with customer-pay service and the preparation of vehicles for sale.

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Premium Luxury
The Premium Luxury segment operating results included the following: 
 Three Months Ended June 30,Six Months Ended June 30,
($ in millions)20232022Variance
Favorable /
(Unfavorable)
%
Variance
20232022Variance
Favorable /
(Unfavorable)
%
Variance
Revenue:
New vehicle$1,346.8 $1,225.3 $121.5 9.9 $2,594.3 $2,328.4 $265.9 11.4 
Used vehicle756.9 904.6 (147.7)(16.3)1,502.7 1,820.7 (318.0)(17.5)
Parts and service400.3 367.0 33.3 9.1 786.5 718.9 67.6 9.4 
Finance and insurance, net115.8 118.4 (2.6)(2.2)220.8 225.6 (4.8)(2.1)
Other0.7 1.3 (0.6)1.1 1.7 (0.6)
Total Revenue$2,620.5 $2,616.6 $3.9 0.1 $5,105.4 $5,095.3 $10.1 0.2 
Segment income$221.5 $257.5 $(36.0)(14.0)$448.3 $487.0 $(38.7)(7.9)
Retail new vehicle unit sales17,777 17,518 259 1.5 33,895 33,059 836 2.5 
Retail used vehicle unit sales18,931 21,381 (2,450)(11.5)37,699 43,330 (5,631)(13.0)
Second Quarter 2023 compared to Second Quarter 2022
Premium Luxury revenue increased slightly during the three months ended June 30, 2023, as compared to the same period in 2022, primarily due to increases in new vehicle revenue PVR, new vehicle unit volume, and parts and service revenue associated with customer-pay service and warranty service. New vehicle revenue PVR benefited from increases in manufacturers’ suggested retail prices, and new vehicle unit volume benefited from increasing supply of new vehicle inventory. Increases in Premium Luxury revenue were partially offset by a decrease in used vehicle unit volume, due in part to lower availability and levels of nearly new vehicle inventory, and a decrease in used vehicle revenue PVR, primarily due to a shift in mix towards lower-priced entry-level vehicles.
Premium Luxury segment income decreased during the three months ended June 30, 2023, as compared to the same period in 2022, primarily due to a decrease in new vehicle gross profit, which was adversely impacted by increasing supply of new vehicle inventory, as well as increases in floorplan interest and SG&A expenses. Decreases in Premium Luxury segment income were partially offset by increases in parts and service gross profit associated with customer-pay service and warranty service.
First Six Months 2023 compared to First Six Months 2022
Premium Luxury revenue increased slightly during the six months ended June 30, 2023, as compared to the same period in 2022, primarily due to increases in new vehicle revenue PVR, new vehicle unit volume, and parts and service revenue associated with customer-pay service and warranty service. New vehicle revenue PVR benefited from increases in manufacturers’ suggested retail prices, and new vehicle unit volume benefited from increasing supply of new vehicle inventory. Increases in Premium Luxury revenue were partially offset by a decrease in used vehicle unit volume, due in part to lower availability and levels of nearly new vehicle inventory, and a decrease in used vehicle revenue PVR, primarily due to a shift in mix towards lower-priced entry-level vehicles.
Premium Luxury segment income decreased during the six months ended June 30, 2023, as compared to the same period in 2022, primarily due to a decrease in new vehicle gross profit, which was adversely impacted by increasing supply of new vehicle inventory, as well as increases in floorplan interest and SG&A expenses. Decreases in Premium Luxury segment income were partially offset by increases in parts and service gross profit associated with customer-pay service and warranty service.

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Corporate and other
Corporate and other results included the following:
 Three Months Ended June 30,Six Months Ended June 30,
($ in millions)20232022Variance
Favorable /
(Unfavorable)
%
Variance
20232022Variance
Favorable /
(Unfavorable)
%
Variance
Revenue:
Used vehicle$148.9 $129.4 $19.5 15.1 $281.3 $255.0 $26.3 10.3 
Parts and service155.0 127.5 27.5 21.6 302.6 255.3 47.3 18.5 
Finance and insurance, net11.4 4.1 7.3 178.0 24.1 15.2 8.9 58.6 
Other1.1 1.0 0.1 1.8 2.1 (0.3)
Revenue$316.4 $262.0 $54.4 20.8 $609.8 $527.6 $82.2 15.6 
Income (loss)$(103.9)$(50.8)$(53.1)$(193.4)$(102.1)$(91.3)
“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, all of which generate revenues but do not meet the quantitative thresholds for reportable segments, as well as the results of our auto finance company, unallocated corporate overhead expenses, and other income items.
As of June 30, 2023, we had 53 AutoNation-branded collision centers, 16 AutoNation USA stores, 4 AutoNation-branded automotive auction operations, 3 parts distribution centers, a mobile automotive repair and maintenance business, and an auto finance company, referred to as AutoNation Finance.
AutoNation USA Stores
During the six months ended June 30, 2023, we opened one AutoNation USA used vehicle store and currently have over 20 stores under development. These stores play an integral part of both our long-term growth plans and the achievement of scale, scope, and density in markets to better serve and meet the needs of customers. We are targeting to have over 130 stores throughout the country. A number of variables may impact the implementation of our expansion plans, including customer adoption, market conditions, availability of used vehicle inventory, availability and cost of building supplies and materials, and our ability to identify, acquire, and build out suitable locations in a timely manner.
RepairSmith
In the first quarter of 2023, we acquired RepairSmith, a mobile solution for automotive repair and maintenance services. Revenue and gross profit from this business are included within “parts and service.”
AutoNation Finance
AutoNation Finance, our captive auto finance company, provides financing to qualified retail customers on certain vehicles we sell, as well as on installment contracts acquired through third-party independent dealers. 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 on the auto loans receivable originated or acquired, and direct expenses. AutoNation Finance results are included in Other (Income) Expense, Net in our Unaudited Condensed Consolidated Statements of Income. See Notes 5 and 8 of the Notes to Unaudited Condensed Consolidated Financial Statements for more information on auto loans receivable, the related allowance for credit losses, and the related debt of our auto finance company.



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Selling, General, and Administrative Expenses
Our Selling, General, and Administrative (“SG&A”) expenses consist primarily of compensation, including store and corporate salaries, commissions, and incentive-based compensation, as well as advertising (net of reimbursement-based manufacturer advertising rebates), and store and corporate overhead expenses, which include occupancy costs, outside service costs, information technology expenses, service loaner and rental inventory expenses, legal, accounting, and professional services, and general corporate expenses. The following table presents the major components of our SG&A expenses.
Three Months Ended June 30,Six Months Ended June 30,
($ in millions)20232022Variance
Favorable /
(Unfavorable)
%
Variance
20232022Variance
Favorable /
(Unfavorable)
%
Variance
Reported:
Compensation$548.7 $523.5 $(25.2)(4.8)$1,071.0 $1,039.3 $(31.7)(3.1)
Advertising63.4 44.5 (18.9)(42.5)114.1 84.4 (29.7)(35.2)
Store and corporate overhead230.8 186.8 (44.0)(23.6)440.5 372.5 (68.0)(18.3)
Total$842.9 $754.8 $(88.1)(11.7)$1,625.6 $1,496.2 $(129.4)(8.6)
SG&A as a % of total gross profit:
Compensation41.1 38.4 (270)bps40.9 38.9 (200)bps
Advertising4.7 3.3 (140)bps4.4 3.2 (120)bps
Store and corporate overhead17.3 13.7 (360)bps16.7 13.9 (280)bps
Total63.1 55.4 (770)bps62.0 56.0 (600)bps
Second Quarter 2023 compared to Second Quarter 2022
SG&A expenses increased during the three months ended June 30, 2023, as compared to the same period in 2022, primarily due to acquisitions and newly opened stores, expenditures associated with investments in technology and strategic initiatives, an increase in deferred compensation obligations of $18.6 million as a result of changes in market performance of the underlying investments, and self-insurance losses of $16.5 million related to hailstorms and other natural catastrophes, partially offset by a decrease in performance-driven compensation expense. As a percentage of total gross profit, SG&A expenses increased to 63.1% during the three months ended June 30, 2023, from 55.4% in the same period in 2022, primarily due to gross margin pressure and an increase in SG&A expenses related to newly acquired and opened stores, investments in technology and strategic initiatives, an increase in deferred compensation obligations, and hail-related losses.
First Six Months 2023 compared to First Six Months 2022
SG&A expenses increased during the six months ended June 30, 2023, as compared to the same period in 2022, primarily due to acquisitions and newly opened stores, expenditures associated with investments in technology and strategic initiatives, an increase in deferred compensation obligations of $30.0 million as a result of changes in market performance of the underlying investments, and self-insurance losses of $16.5 million related to hailstorms and other natural catastrophes. As a percentage of total gross profit, SG&A expenses increased to 62.0% during the six months ended June 30, 2023, from 56.0% in the same period in 2022, primarily due to gross margin pressure and an increase in SG&A expenses related to newly acquired and opened stores, investments in technology and strategic initiatives, an increase in deferred compensation obligations, and hail-related losses.
Other (Income) Expense, Net (Operating)
Other (Income) Expense, Net includes the gains or losses associated with business/property divestitures, legal settlements, and asset impairments, among other items, and for the three and six months ended June 30, 2023, the results of our recently acquired auto finance company, including net interest margin, the provision for expected credit losses, and direct expenses. See “Segment Results - Corporate and other” above and Notes 5 and 8 of the Notes to Unaudited Condensed Consolidated Financial Statements for more information about our auto finance company.


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Non-Operating Income (Expense)
Floorplan Interest Expense
Floorplan interest rates are variable and, therefore, increase and decrease with changes in the underlying benchmark interest rates.
Second Quarter 2023 compared to Second Quarter 2022
Floorplan interest expense was $32.8 million for the three months ended June 30, 2023, compared to $5.8 million for the same period in 2022. The increase in floorplan interest expense of $27.0 million was the result of higher average interest rates and higher average floorplan balances.
First Six Months 2023 compared to First Six Months 2022
Floorplan interest expense was $59.9 million for the six months ended June 30, 2023, compared to $11.0 million for the same period in 2022. The increase in floorplan interest expense of $48.9 million was the result of higher average interest rates and higher average floorplan balances.
Other Interest Expense
Second Quarter 2023 compared to Second Quarter 2022
Other interest expense was $46.0 million for the three months ended June 30, 2023, compared to $34.1 million for the same period in 2022. The increase in interest expense of $11.9 million was driven by higher average interest rates and higher average debt balances.
First Six Months 2023 compared to First Six Months 2022
Other interest expense was $87.1 million for the six months ended June 30, 2023, compared to $63.7 million for the same period in 2022. The increase in interest expense of $23.4 million was driven by higher average interest rates and higher average debt balances.
Other Income (Loss), Net
We recognized a net gain of $4.4 million and a net loss of $14.1 million for the three months ended June 30, 2023 and 2022, respectively, and a net gain of $9.1 million and a net loss of $20.8 million for the six months ended June 30, 2023 and 2022, respectively, related to changes in the cash surrender value of corporate-owned life insurance (“COLI”) for deferred compensation plan participants as a result of changes in market performance of the underlying investments. Gains and losses related to the COLI are substantially offset by corresponding increases and decreases, respectively, in the deferred compensation obligations, which are reflected in SG&A expenses.
We recorded an unrealized loss of $0.2 million for the three months ended June 30, 2023, and an unrealized loss of $1.3 million during the six months ended June 30, 2023, related to the change in fair value of the underlying securities of our minority equity investments. During the period that we hold our minority equity investments, unrealized gains and losses will be recorded as the fair market values of securities with readily determinable fair values change over time, or as observable price changes are identified for securities without readily determinable fair values. See Note 13 of the Notes to Unaudited Condensed Consolidated Financial Statements for more information.
Income Tax Provision
Income taxes are provided based upon our anticipated underlying annual blended federal and state income tax rates adjusted, as necessary, for any discrete tax matters occurring during the period. As we operate in various states, our effective tax rate is also dependent upon our geographic revenue mix.
Our effective income tax rate was 25.3% for the three months ended June 30, 2023, and 25.4% for the three months ended June 30, 2022. Our effective income tax rate was 24.8% for the six months ended June 30, 2023, and 24.8% for the six months ended June 30, 2022.

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Discontinued Operations
Discontinued operations are related to stores that were sold or terminated prior to January 1, 2014. Results from discontinued operations, net of income taxes, were primarily related to a gain on the sale of real estate in the first quarter of 2023 associated with a store that was closed prior to January 1, 2014.

Liquidity and Capital Resources
We manage our liquidity to ensure access to sufficient funding at acceptable costs to fund our ongoing operating requirements and future capital expenditures while continuing to meet our financial obligations. We believe that our cash and cash equivalents, funds generated through operations, and amounts available under our revolving credit facility, commercial paper program, and secured used vehicle floorplan facilities will be sufficient to fund our working capital requirements, service our debt, pay our tax obligations and commitments and contingencies, and meet any seasonal operating requirements for the foreseeable future. Depending on market conditions, we may from time to time issue debt, including in private or public offerings, to augment our liquidity, to reduce our cost of capital, or for general corporate purposes.
Available Liquidity Resources
We had the following sources of liquidity available:
(In millions)June 30,
2023
December 31,
2022
Cash and cash equivalents$63.7 $72.6 
Revolving credit facility$1,799.3 
(1)
$1,799.6 
Secured used vehicle floorplan facilities (2)
$0.2 $0.3 
 (1)    At June 30, 2023, we had $0.7 million of letters of credit outstanding. In addition, we use the revolving credit facility under our credit agreement as a liquidity backstop for borrowings under our commercial paper program. We had $465.0 million of commercial paper notes outstanding at June 30, 2023. See Note 8 of the Notes to Unaudited Condensed Consolidated Financial Statements for more information.
(2)    Based on the eligible used vehicle inventory that could have been pledged as collateral. See Note 6 of the Notes to Unaudited Condensed Consolidated Financial Statements for more information.
In the ordinary course of business, we are required to post performance and surety bonds, letters of credit, and/or cash deposits as financial guarantees of our performance primarily relating to insurance matters. At June 30, 2023, surety bonds, letters of credit, and cash deposits totaled $111.9 million, of which $0.7 million were letters of credit. We do not currently provide cash collateral for outstanding letters of credit.
In February 2022, we filed an automatic shelf registration statement with the SEC that enables us to offer for sale, from time to time and as the capital markets permit, an unspecified amount of common stock, preferred stock, debt securities, warrants, subscription rights, depositary shares, stock purchase contracts, and units.
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.
Capital Allocation
Our capital allocation strategy is focused on growing long-term value per share. We invest capital in our business to maintain and upgrade our existing facilities and to build new facilities for existing franchises and new AutoNation USA used vehicle stores, as well as for other strategic and technology initiatives. We also deploy capital opportunistically to complete acquisitions or investments, build facilities for newly awarded franchises, and/or repurchase our common stock and/or debt. Our capital allocation decisions are based on factors such as the expected rate of return on our investment, the market price of our common stock versus our view of its intrinsic value, the market price of our debt, the potential impact on our capital structure, our ability to complete acquisitions that meet our market and vehicle brand criteria and/or return on investment threshold, and limitations set forth in our debt agreements.

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Share Repurchases
Our Board of Directors from time to time authorizes the repurchase of shares of our common stock up to a certain monetary limit. A summary of shares repurchased under our stock repurchase program authorized by our Board of Directors follows:
 Three Months EndedSix Months Ended
June 30,June 30,
(In millions, except per share data)2023202220232022
Shares repurchased1.6 3.7 4.0 7.2 
Aggregate purchase price (1)
$207.4 $403.9 $512.4 $784.9 
Average purchase price per share$132.44 $109.22 $128.76 $109.62 
(1) Excludes excise tax accrual imposed under the Inflation Reduction Act of $2.1 million and $4.6 million for the three and six months ended June 30, 2023, respectively.
As of June 30, 2023, $672.0 million remained available for share repurchases under the program. The decision to repurchase shares at any given point in time is based on factors such as the market price of our common stock versus our view of its intrinsic value, the potential impact on our capital structure (including compliance with our maximum leverage ratio and other financial covenants in our debt agreements as well as our available liquidity), and the expected return on competing uses of capital such as acquisitions or investments, capital investments in our current businesses, or repurchases of our debt.
Capital Expenditures
The following table sets forth information regarding our capital expenditures:
Three Months EndedSix Months Ended
 June 30,June 30,
(In millions)2023202220232022
Purchases of property and equipment, including operating lease buy-outs (1)
$109.5 $106.1 $205.4 $156.9 
(1) Includes accrued construction in progress and excludes property associated with leases entered into during the year.
At June 30, 2023, we owned approximately 79% of our new vehicle franchise store locations with a net book value of $2.4 billion, as well as other properties associated with our collision centers, AutoNation USA used vehicle stores, parts distribution centers, auction operations, and other excess properties with a net book value of $746.1 million. None of these properties are mortgaged or encumbered.
We continue to expand our AutoNation USA used vehicle stores and are targeting to have over 130 stores. The planned expansion may be impacted by a number of variables, including customer adoption, market conditions, availability of used vehicle inventory, availability and cost of building supplies and materials, and our ability to identify, acquire, and build out suitable locations in a timely manner.
Acquisitions and Divestitures
During the six months ended June 30, 2023, we acquired RepairSmith, a mobile solution for automotive repair and maintenance, and we also purchased six stores. We did not purchase any stores during the six months ended June 30, 2022. We did not divest any stores during the six months ended June 30, 2023 or 2022.
Three Months EndedSix Months Ended
 June 30,June 30,
(In millions)2023202220232022
Cash used in business acquisitions, net$77.9 $— $268.9 $— 

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Debt
The following table sets forth our non-vehicle long-term debt, as of June 30, 2023, and December 31, 2022.
Debt DescriptionMaturity DateInterest PayableJune 30,
2023
December 31,
2022
3.5% Senior Notes
November 15, 2024May 15 and November 15$450.0 $450.0 
4.5% Senior Notes
October 1, 2025April 1 and October 1450.0 450.0 
3.8% Senior Notes
November 15, 2027May 15 and November 15300.0 300.0 
1.95% Senior Notes
August 1, 2028February 1 and August 1400.0 400.0 
4.75% Senior Notes
June 1, 2030June 1 and December 1500.0 500.0 
2.40% Senior Notes
August 1, 2031February 1 and August 1450.0 450.0 
3.85% Senior Notes
March 1, 2032March 1 and September 1 700.0 700.0 
Revolving credit facilityMarch 26, 2025*Monthly— — 
Finance leases and other debtVarious dates through 2041369.3 375.5 
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 above under “Available Liquidity Resources,” we amended and restated our credit agreement on July 18, 2023, and extended the maturity date to July 18, 2028.
We had commercial paper notes outstanding of $465.0 million at June 30, 2023, and $50.0 million at December 31, 2022. We also had non-recourse debt under our warehouse facilities of $166.4 million at June 30, 2023, and $181.8 million at December 31, 2022, and non-recourse debt under term securitizations of consolidated variable interest entities (“VIEs”) of $99.3 million at June 30, 2023, and $146.9 million at December 31, 2022.
A downgrade in our credit ratings could negatively impact the interest rate payable on our 3.5% Senior Notes, 4.5% Senior Notes, 3.8% Senior Notes, and 4.75% Senior Notes and could negatively impact our ability to issue, or the interest rates for, commercial paper notes. Additionally, an increase in our leverage ratio could negatively impact the interest rates charged for borrowings under our revolving credit facility.
See Note 8 of the Notes to Unaudited Condensed Consolidated Financial Statements for more information on our non-vehicle long-term debt, commercial paper, and non-recourse debt.
Restrictions and Covenants
Our amended and restated credit agreement and the indentures for our senior unsecured notes contain customary covenants that place restrictions on us, including our ability to incur additional or guarantee other indebtedness, to create liens or other encumbrances, to engage in sale and leaseback transactions, to sell (or otherwise dispose of) assets, and to merge or consolidate with other entities. Our failure to comply with the covenants contained in our amended and restated credit agreement and the indentures for our senior unsecured notes could result in the acceleration of other indebtedness of AutoNation.
Prior to the amendment and restatement of our credit agreement described above under “Available Liquidity Resources,” we were required to remain in compliance with a maximum leverage ratio and a maximum capitalization ratio. Our amended and restated credit agreement continues to provide for a maximum leverage ratio, but replaces the maximum capitalization ratio with a minimum interest coverage ratio.
The leverage ratio is a contractually defined amount principally reflecting non-vehicle debt divided by a measure of earnings. The interest coverage ratio is a contractually defined amount reflecting a measure of earnings divided by certain interest expense principally associated with vehicle floorplan payable and non-vehicle debt. The specific terms of the leverage and interest coverage ratios can be found in our amended and restated credit agreement, which is filed with this Quarterly Report on Form 10-Q. The capitalization ratio was a contractually defined amount principally reflecting vehicle floorplan payable and non-vehicle debt divided by our total capitalization including vehicle floorplan payable.

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As of June 30, 2023, we were in compliance with the leverage and capitalization ratios under our credit agreement and with the covenants under the indentures for our senior unsecured notes. In addition, we would have been in compliance with the interest coverage ratio as of June 30, 2023, if the amended and restated credit agreement had been in effect on such date.
At June 30, 2023, our leverage, capitalization, and interest coverage ratios were as follows:
 June 30, 2023
 RequirementActual
Leverage ratio≤ 3.75x1.95x
Capitalization ratio≤ 70.0%62.9%
Interest coverage ratio
≥ 3.00x
8.79x
Vehicle Floorplan Payable
The components of vehicle floorplan payable are as follows:
(In millions)June 30,
2023
December 31,
2022
Vehicle floorplan payable - trade$1,211.7 $946.6 
Vehicle floorplan payable - non-trade1,369.8 1,162.7 
Vehicle floorplan payable
$2,581.5 $2,109.3 
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.
Cash Flows
The following table summarizes the changes in our cash provided by (used in) operating, investing, and financing activities:
Six Months Ended
 June 30,
(In millions)20232022
Net cash provided by operating activities$507.0 $895.0 
Net cash used in investing activities $(487.5)$(148.5)
Net cash used in financing activities$(29.6)$(470.5)
Cash Flows from Operating Activities
Our primary sources of operating cash flows result from the sale of vehicles, finance and insurance products, and parts and automotive repair and maintenance services, and proceeds from vehicle floorplan payable-trade. Our primary uses of cash from operating activities are repayments of vehicle floorplan payable-trade, purchases of inventory, personnel-related expenditures, and payments related to taxes and leased properties.
Net cash provided by operating activities decreased during the six months ended June 30, 2023, as compared to the same period in 2022, primarily due to a decrease in earnings and an increase in working capital requirements.
Cash Flows from Investing Activities
Net cash flows from investing activities consist primarily of cash used in capital additions and activity from business acquisitions, business divestitures, property dispositions, originations and collections of auto loans receivable acquired through third-party dealers, and other transactions.
We will make facility and infrastructure upgrades and improvements from time to time as we identify projects that are required to maintain our current business or that we expect to provide us with acceptable rates of return.

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Net cash used in investing activities increased during the six months ended June 30, 2023, as compared to the same period in 2022, primarily due to an increase in cash used in acquisitions, net of cash acquired, and purchases of property and equipment.
Cash Flows from Financing Activities
Net cash flows from financing activities primarily include repurchases of common stock, debt activity, and changes in vehicle floorplan payable-non-trade.
During the six months ended June 30, 2023, we repurchased 4.0 million shares of common stock for an aggregate purchase price of $512.4 million (average purchase price per share of $128.76), excluding the 1% excise tax imposed under the Inflation Reduction Act. During the six months ended June 30, 2022, we repurchased 7.2 million shares of common stock for an aggregate purchase price of $784.9 million (average purchase price per share of $109.62), including repurchases for which settlement occurred subsequent to June 30, 2022.
Cash flows from financing activities include changes in commercial paper notes outstanding totaling net proceeds of $415.0 million and net payments of $340.0 million during the six months ended June 30, 2023 and 2022, respectively, and vehicle floorplan payable-non-trade totaling net proceeds of $171.4 million and net payments of $5.5 million during the six months ended June 30, 2023 and 2022, respectively.
During the six months ended June 30, 2023, we borrowed $63.9 million and repaid $126.9 million under our non-recourse debt facilities.
During the six months ended June 30, 2022, we issued $700.0 million aggregate principal amount of 3.85% Senior Notes due 2032.
Forward-Looking Statements
Our business, financial condition, results of operations, cash flows, and prospects, and the prevailing market price and performance of our common stock may be adversely affected by a number of factors, including the matters discussed below. Certain statements and information set forth in this Quarterly Report on Form 10-Q, including, without limitation, statements regarding our strategic acquisitions, initiatives, partnerships, or investments, including AutoNation USA, AutoNation Finance, and RepairSmith; our investments in digital and online capabilities and mobility solutions; our expectations for the future performance of our business and the automotive retail industry; as well as other written or oral statements made from time to time by us or by our authorized executive officers on our behalf that describe our objectives, goals, or plans constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact, including statements that describe our objectives, plans or goals are, or may be deemed to be, forward-looking statements. Words such as “anticipate,” “expect,” “intend,” “goal,” “target,” “project,” “plan,” “believe,” “continue,” “may,” “will,” “could,” and variations of such words and similar expressions are intended to identify such forward-looking statements. Our forward-looking statements reflect our current expectations concerning future results and events, and they involve known and unknown risks, uncertainties and other factors that are difficult to predict and may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by these statements. These forward-looking statements speak only as of the date of this report, and we undertake no obligation to revise or update these statements to reflect subsequent events or circumstances. The risks, uncertainties, and other factors that our stockholders and prospective investors should consider include, but are not limited to, the following:
The automotive retail industry is sensitive to changing economic conditions and various other factors, including, but not limited to, unemployment levels, consumer confidence, fuel prices, interest rates, and tariffs. Our business and results of operations are substantially dependent on new and used vehicle sales levels in the United States and in our particular geographic markets, as well as the gross profit margins that we can achieve on our sales of vehicles, all of which are very difficult to predict.
The COVID-19 pandemic disrupted, and may continue to disrupt, our business, results of operations, and financial condition going forward. Future epidemics, pandemics, and other outbreaks could also disrupt our business, results of operations, and financial condition.
Our new vehicle sales are impacted by the incentive, marketing, and other programs of vehicle manufacturers.
We are dependent upon the success and continued financial viability of the vehicle manufacturers and distributors with which we hold franchises.

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We are subject to restrictions imposed by, and significant influence from, vehicle manufacturers that may adversely impact our business, financial condition, results of operations, cash flows, and prospects, including our ability to acquire additional stores.
We are investing significantly in various strategic initiatives, including the planned expansion of our AutoNation USA stores, and if they are not successful, we will have incurred significant expenses without the benefit of improved financial results.
If we are not able to maintain and enhance our retail brands and reputation or to attract consumers to our own digital channels, or if events occur that damage our retail brands, reputation, or sales channels, our business and financial results may be harmed.
We are subject to various risks associated with originating and servicing auto finance loans through indirect lending to customers, any of which could have an adverse effect on our business.
New laws, regulations, or governmental policies in response to climate change, including fuel economy and greenhouse gas emission standards, or changes to existing standards, could adversely impact our business, results of operations, financial condition, cash flow, and prospects.
We are subject to numerous legal and administrative proceedings, which, if the outcomes are adverse to us, could materially adversely affect our business, results of operations, financial condition, cash flows, and prospects.
Our operations are subject to extensive governmental laws and regulations. If we are found to be in purported violation of or subject to liabilities under any of these laws or regulations, or if new laws or regulations are enacted that adversely affect our operations, our business, operating results, and prospects could suffer.
A failure of our information systems or any security breach or unauthorized disclosure of confidential information could have a material adverse effect on our business.
Our debt agreements contain certain financial ratios and other restrictions on our ability to conduct our business, and our substantial indebtedness could adversely affect our financial condition and operations and prevent us from fulfilling our debt service obligations.
We are subject to interest rate risk in connection with our vehicle floorplan payables, revolving credit facility, commercial paper program, and warehouse facilities that could have a material adverse effect on our profitability.
Goodwill and other intangible assets comprise a significant portion of our total assets. We must test our goodwill and other intangible assets for impairment at least annually, which could result in a material, non-cash write-down of goodwill or franchise rights and could have a material adverse impact on our results of operations and shareholders’ equity.
Our minority equity investments with readily determinable fair values are required to be measured at fair value each reporting period, which could adversely impact our results of operations and financial condition. The carrying value of our minority equity investment that does not have a readily determinable fair value is required to be adjusted for observable price changes or impairments, both of which could adversely impact our results of operations and financial condition.
Our largest stockholders, as a result of their ownership stakes in us, may have the ability to exert substantial influence over actions to be taken or approved by our stockholders. In addition, future share repurchases and fluctuations in the levels of ownership of our largest stockholders could impact the volume of trading, liquidity, and market price of our common stock.
Natural disasters and adverse weather events, including the effects of climate change, can disrupt our business.
Please refer to our most recent Annual Report on Form 10-K for additional discussion of the foregoing risks. These forward-looking statements speak only as of the date of this report, and we undertake no obligation to update any forward-looking statements to reflect subsequent events or circumstances.
Additional Information
Investors and others should note that we announce material financial information using our company website (www.autonation.com), our investor relations website (investors.autonation.com), SEC filings, press releases, public conference calls, and webcasts. Information about AutoNation, its business, and its results of operations may also be announced by posts on AutoNation’s Twitter feed, www.twitter.com/autonation.

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The information that we post on our websites and social media channels could be deemed to be material information. As a result, we encourage investors, the media, and others interested in AutoNation to review the information that we post on those websites and social media channels. Our social media channels may be updated from time to time on our investor relations website. The information on or accessible through our websites and social media channels is not incorporated by reference in this Quarterly Report on Form 10-Q.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk
We have market risk exposure on various instruments that are based on variable interest rates. Interest rate derivatives may be used to hedge a portion of our variable rate debt, when appropriate, based on market conditions.
We had $2.6 billion of variable rate vehicle floorplan payable at June 30, 2023, and $2.1 billion at December 31, 2022. Based on these amounts, a 100 basis point change in interest rates would result in an approximate change to our annual floorplan interest expense of $25.8 million at June 30, 2023, and $21.1 million at December 31, 2022. Our exposure to changes in interest rates with respect to total vehicle floorplan payable is partially mitigated by manufacturers’ floorplan assistance, which in some cases is based on variable interest rates.
We had $465.0 million of commercial paper notes outstanding at June 30, 2023, and $50.0 million at December 31, 2022. Based on the amount outstanding, a 100 basis point change in interest rates would result in an approximate change to our annual interest expense of $4.7 million at June 30, 2023, and $0.5 million at December 31, 2022.
Our fixed rate senior unsecured notes totaled $3.2 billion and had a fair value of $2.9 billion as of June 30, 2023, and totaled $3.2 billion and had a fair value of $2.8 billion as of December 31, 2022.
As of June 30, 2023, all auto loans receivable outstanding were fixed-rate installment contracts. Financing for these receivables was achieved through both variable- and fixed-rate non-recourse debt. Non-recourse debt includes warehouse facilities and asset-backed term securitizations. Borrowings under the warehouse facilities are variable-rate debt and are secured by the related auto loans receivable. Certain auto loans receivable were funded through term securitizations, which issued notes payable that accrue interest at fixed rates, and are also secured by the related auto loans receivable.
Equity Price Risk
We are subject to equity price risk with respect to minority equity investments. Certain of our equity investments have readily determinable fair values. During the period that we hold these equity investments, unrealized gains and losses will be recorded as the fair market value of the securities change over time. The fair value of these equity investments was $14.3 million at June 30, 2023. A hypothetical 10% change in the equity prices of these securities with readily determinable fair values would result in an approximate change to gain or loss of $1.4 million. We also have a minority equity investment without a readily determinable fair value. This equity investment is measured using a measurement alternative as permitted by accounting standards and was initially recorded at cost, to be subsequently adjusted for observable price changes. During the period that we hold this investment, unrealized gains and losses may be recorded if we identify observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The carrying amount of our equity investment without a readily determinable fair value was $56.7 million at June 30, 2023. A hypothetical 10% observable price change for this equity investment would result in an approximate change to gain or loss of $5.7 million. The selected 10% hypothetical change in equity prices is not intended to reflect a best or worst case scenario, as equity price changes could be smaller or larger due to the nature of equity markets.

ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q.

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Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or 15d-15 under the Exchange Act that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


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PART II. OTHER INFORMATION

ITEM 1A. RISK FACTORS
In addition to the information set forth in this Form 10-Q, you should carefully consider the risk factors discussed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022, which could materially affect our business, financial condition, or future results.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The table below sets forth information with respect to shares of common stock repurchased by AutoNation, Inc. during the three months ended June 30, 2023.
Period
Total Number of
Shares Purchased (1)
Avg. Price
Paid Per
Share
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs
Approximate Dollar 
Value of Shares 
That May Yet Be
Purchased Under 
The Plans or
Programs (in millions)(1)
April 1, 2023 - April 30, 2023584,914 $130.51 584,914 $803.0 
May 1, 2023 - May 31, 2023981,010 $133.58 981,010 $672.0 
June 1, 2023 - June 30, 2023238 $130.01 238 $672.0 
Total1,566,162 1,566,162 
 
(1)Our Board of Directors from time to time authorizes the repurchase of shares of our common stock up to a certain monetary limit. As of June 30, 2023, $672.0 million remained available under our stock repurchase limit. Our stock repurchase program does not have an expiration date.

ITEM 5. OTHER INFORMATION
(a)
Amended and Restated By-Laws
On July 20, 2023, our Board of Directors, in connection with its periodic review of corporate governance matters, adopted and approved an amendment and restatement of our amended and restated by-laws (as so amended and restated, the “Amended and Restated By-Laws”), effective immediately, in order to, among other things:
amend the disclosure and procedural requirements under the advance notice provisions of the Amended and Restated By-Laws in connection with stockholder director nominations to reflect the SEC’s universal proxy rules, including by:
requiring a nominating stockholder to comply with Rule 14a-19 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”);
requiring that a nominating stockholder’s notice to the Company of such a nomination include the information required by Rule 14a-19 under the Exchange Act and be accompanied by each proposed nominee’s consent to being named in any proxy statement relating to the applicable meeting of stockholders;
requiring a nominating stockholder to provide evidence to the Company, no later than five business days after the stockholder files a definitive proxy statement in connection with the applicable meeting of stockholders, that such stockholder has solicited proxies from holders representing at least 67% of the voting power of the shares entitled to vote in the election of directors; and
providing that a stockholder nomination may be disregarded if the chairman of the applicable meeting of stockholders determines that the solicitation in support of the nominee was not conducted in compliance with Rule 14a-19 under the Exchange Act;
provide that any stockholder providing a nomination notice under the advance notice provisions of the Amended and Restated By-Laws use a proxy card color other than white, which shall be reserved for the exclusive use by our Board of Directors;
add an exclusive forum provision, which provides that, unless the Company consents in writing to the selection of an alternative forum, a state court located within the State of Delaware (or, if no state court located within the State of Delaware has jurisdiction, the federal court for the District of Delaware) shall be the sole and exclusive forum for

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certain enumerated claims involving the Company, including any action asserting an “internal corporate claim” (as defined in Section 115 of the Delaware General Corporation Law);
designate the federal district courts of the United States as the sole and exclusive forum, unless the Company consents in writing to the selection of an alternative forum, for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended; and
make certain other updates, including ministerial, clarifying, and conforming changes.
The Amended and Restated By-Laws are attached to this report as Exhibit 3.1 and are incorporated herein by reference. The foregoing description of the Amended and Restated By-Laws is qualified in its entirety by reference to the full text of the Amended and Restated By-Laws.
Amended and Restated Credit Agreement
On July 18, 2023, we amended and restated our unsecured credit agreement (as amended and restated, the “Amended and Restated Credit Agreement”) with JPMorgan Chase Bank, N.A., as Administrative Agent, and certain other lenders named therein. The Amended and Restated Credit Agreement, among other things, (1) increases the revolving credit facility commitment from $1.8 billion to $1.9 billion, (2) extends the maturity date to July 18, 2028, (3) allows for the maximum leverage ratio covenant to increase from 3.75x to 4.25x for four fiscal quarters in the event that the Company completes a material acquisition, and (4) replaces the maximum capitalization ratio covenant with a minimum interest coverage ratio covenant. The interest coverage ratio is a contractually defined amount reflecting a measure of earnings divided by certain interest expense principally associated with vehicle floorplan payable and non-vehicle debt. The Amended and Restated Credit Agreement continues to contain an accordion feature that allows the Company, 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.
The Amended and Restated Credit Agreement is attached to this report as Exhibit 10.1 and is incorporated herein by reference. The foregoing description of the Amended and Restated Credit Agreement is qualified in its entirety by reference to such agreement.
(c)
During the fiscal quarter ended June 30, 2023, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement” (in each case, as defined in Item 408 of Regulation S-K).

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ITEM 6. EXHIBITS
Exhibit No.Description
3.1*
10.1*†
10.2*
10.3*
10.4
31.1*
31.2*
32.1**
32.2**
101*Inline XBRL Document Set for the condensed consolidated financial statements and accompanying notes in Part I, Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q.
104*Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set.
*    Filed herewith.
†    Certain schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company undertakes to furnish copies of any of the omitted schedules to the SEC or its staff upon request.
**    Furnished herewith.

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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
AUTONATION, INC.
Date:July 21, 2023By:/s/ Kimberly R. Dees
Kimberly R. Dees
Senior Vice President and Chief Accounting Officer
(Duly Authorized Officer and
Principal Accounting Officer)


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