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, 2022March 31, 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 20, 2022,April 18, 2023, the registrant had 55,983,58645,608,396 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 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,
2022
December 31,
2021
March 31,
2023
December 31,
2022
ASSETSASSETSASSETS
CURRENT ASSETS:CURRENT ASSETS:CURRENT ASSETS:
Cash and cash equivalentsCash and cash equivalents$336.5 $60.4 Cash and cash equivalents$58.3 $72.6 
Receivables, netReceivables, net705.4 730.0 Receivables, net742.7 858.8 
InventoryInventory1,905.3 1,847.9 Inventory2,196.2 2,048.3 
Other current assetsOther current assets184.1 173.4 Other current assets155.8 158.3 
Total Current AssetsTotal Current Assets3,131.3 2,811.7 Total Current Assets3,153.0 3,138.0 
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $1.9 billion and $1.8 billion, respectively3,466.3 3,419.5 
AUTO LOANS RECEIVABLE, net of allowance for credit losses of $61.3 million and $57.5 million respectively.AUTO LOANS RECEIVABLE, net of allowance for credit losses of $61.3 million and $57.5 million respectively.326.9 303.1 
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $2.0 billion and $1.9 billion, respectivelyPROPERTY AND EQUIPMENT, net of accumulated depreciation of $2.0 billion and $1.9 billion, respectively3,656.0 3,607.2 
OPERATING LEASE ASSETSOPERATING LEASE ASSETS287.1 284.0 OPERATING LEASE ASSETS328.8 323.5 
GOODWILLGOODWILL1,233.3 1,235.3 GOODWILL1,450.2 1,320.1 
OTHER INTANGIBLE ASSETS, NETOTHER INTANGIBLE ASSETS, NET742.8 743.5 OTHER INTANGIBLE ASSETS, NET880.3 837.0 
OTHER ASSETSOTHER ASSETS446.7 449.6 OTHER ASSETS565.6 530.8 
Total AssetsTotal Assets$9,307.5 $8,943.6 Total Assets$10,360.8 $10,059.7 
LIABILITIES AND SHAREHOLDERS’ EQUITYLIABILITIES AND SHAREHOLDERS’ EQUITYLIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:CURRENT LIABILITIES:CURRENT LIABILITIES:
Vehicle floorplan payable - tradeVehicle floorplan payable - trade$556.5 $489.9 Vehicle floorplan payable - trade$1,088.6 $946.6 
Vehicle floorplan payable - non-tradeVehicle floorplan payable - non-trade960.9 967.7 Vehicle floorplan payable - non-trade1,097.1 1,162.7 
Accounts payableAccounts payable371.4 395.9 Accounts payable347.1 327.6 
Commercial paperCommercial paper— 340.0 Commercial paper285.0 50.0 
Current maturities of long-term debtCurrent maturities of long-term debt11.8 12.2 Current maturities of long-term debt12.7 12.6 
Current portion of non-recourse debtCurrent portion of non-recourse debt12.0 10.7 
Accrued payroll and benefitsAccrued payroll and benefits277.5 279.9 Accrued payroll and benefits228.0 238.0 
Other current liabilitiesOther current liabilities601.9 574.2 Other current liabilities710.3 657.5 
Total Current LiabilitiesTotal Current Liabilities2,780.0 3,059.8 Total Current Liabilities3,780.8 3,405.7 
LONG-TERM DEBT, NET OF CURRENT MATURITIESLONG-TERM DEBT, NET OF CURRENT MATURITIES3,534.7 2,846.2 LONG-TERM DEBT, NET OF CURRENT MATURITIES3,584.7 3,586.9 
NON-RECOURSE DEBT, NET OF CURRENT PORTIONNON-RECOURSE DEBT, NET OF CURRENT PORTION271.4 312.9 
NONCURRENT OPERATING LEASE LIABILITIESNONCURRENT OPERATING LEASE LIABILITIES262.8 260.1 NONCURRENT OPERATING LEASE LIABILITIES300.1 296.9 
DEFERRED INCOME TAXESDEFERRED INCOME TAXES81.6 78.2 DEFERRED INCOME TAXES58.1 76.5 
OTHER LIABILITIESOTHER LIABILITIES323.4 322.3 OTHER LIABILITIES345.4 333.0 
COMMITMENTS AND CONTINGENCIES (Note 13)00
COMMITMENTS AND CONTINGENCIES (Note 14)COMMITMENTS AND CONTINGENCIES (Note 14)
SHAREHOLDERS’ EQUITY:SHAREHOLDERS’ EQUITY:SHAREHOLDERS’ EQUITY:
Common stock, par value $0.01 per share; 1,500,000,000 shares authorized; 86,562,149 shares issued at June 30, 2022, and December 31, 2021, including shares held in treasury0.8 0.8 
Common stock, par value $0.01 per share; 1,500,000,000 shares authorized; 63,562,149 shares issued at March 31, 2023, and December 31, 2022, including shares held in treasuryCommon stock, par value $0.01 per share; 1,500,000,000 shares authorized; 63,562,149 shares issued at March 31, 2023, and December 31, 2022, including shares held in treasury0.6 0.6 
Additional paid-in capitalAdditional paid-in capital5.2 3.2 Additional paid-in capital3.0 3.1 
Retained earningsRetained earnings5,320.2 4,639.9 Retained earnings3,910.6 3,663.7 
Treasury stock, at cost; 30,545,724 and 23,951,543 shares held, respectively(3,001.2)(2,266.9)
Treasury stock, at cost; 17,953,753 and 15,915,358 shares held, respectivelyTreasury stock, at cost; 17,953,753 and 15,915,358 shares held, respectively(1,893.9)(1,619.6)
Total Shareholders’ EquityTotal Shareholders’ Equity2,325.0 2,377.0 Total Shareholders’ Equity2,020.3 2,047.8 
Total Liabilities and Shareholders’ EquityTotal Liabilities and Shareholders’ Equity$9,307.5 $8,943.6 Total Liabilities and Shareholders’ Equity$10,360.8 $10,059.7 

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

1

Table of Contents
AUTONATION, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSINCOME
(In millions, except per share data)
Three Months EndedSix Months EndedThree Months Ended
June 30,June 30, March 31,
2022202120222021 20232022
Revenue:Revenue:Revenue:
New vehicleNew vehicle$2,935.8 $3,428.3 $5,743.0 $6,410.6 New vehicle$2,931.9 $2,807.2 
Used vehicleUsed vehicle2,520.4 2,222.9 5,092.8 3,972.0 Used vehicle2,032.6 2,572.4 
Parts and serviceParts and service1,036.3 950.8 2,040.2 1,801.8 Parts and service1,089.8 1,003.9 
Finance and insurance, netFinance and insurance, net367.6 369.0 731.5 682.0 Finance and insurance, net332.4 363.9 
OtherOther9.1 7.4 14.5 15.8 Other12.0 5.4 
TOTAL REVENUETOTAL REVENUE6,869.2 6,978.4 13,622.0 12,882.2 TOTAL REVENUE6,398.7 6,752.8 
Cost of sales:Cost of sales:Cost of sales:
New vehicleNew vehicle2,582.3 3,107.8 5,044.5 5,900.1 New vehicle2,645.0 2,462.2 
Used vehicleUsed vehicle2,363.9 2,020.2 4,799.7 3,629.1 Used vehicle1,878.2 2,435.8 
Parts and serviceParts and service554.6 518.3 1,097.4 980.3 Parts and service578.7 542.8 
OtherOther6.7 5.8 9.8 13.6 Other10.4 3.1 
TOTAL COST OF SALES (excluding depreciation shown below)5,507.5 5,652.1 10,951.4 10,523.1 
TOTAL COST OF SALESTOTAL COST OF SALES5,112.3 5,443.9 
Gross profit:Gross profit:Gross profit:
New vehicleNew vehicle353.5 320.5 698.5 510.5 New vehicle286.9 345.0 
Used vehicleUsed vehicle156.5 202.7 293.1 342.9 Used vehicle154.4 136.6 
Parts and serviceParts and service481.7 432.5 942.8 821.5 Parts and service511.1 461.1 
Finance and insuranceFinance and insurance367.6 369.0 731.5 682.0 Finance and insurance332.4 363.9 
OtherOther2.4 1.6 4.7 2.2 Other1.6 2.3 
TOTAL GROSS PROFITTOTAL GROSS PROFIT1,361.7 1,326.3 2,670.6 2,359.1 TOTAL GROSS PROFIT1,286.4 1,308.9 
Selling, general, and administrative expensesSelling, general, and administrative expenses754.8 748.9 1,496.2 1,396.8 Selling, general, and administrative expenses782.7 741.4 
Depreciation and amortizationDepreciation and amortization48.8 47.9 98.8 95.8 Depreciation and amortization52.8 50.0 
Other income, net— (0.7)(1.5)(0.6)
Other (income) expense, netOther (income) expense, net7.6 (1.5)
OPERATING INCOMEOPERATING INCOME558.1 530.2 1,077.1 867.1 OPERATING INCOME443.3 519.0 
Non-operating income (expense) items:Non-operating income (expense) items:Non-operating income (expense) items:
Floorplan interest expenseFloorplan interest expense(5.8)(6.6)(11.0)(16.0)Floorplan interest expense(27.1)(5.2)
Other interest expenseOther interest expense(34.1)(20.9)(63.7)(42.1)Other interest expense(41.1)(29.6)
Other income (loss), netOther income (loss), net(13.7)8.9 (20.1)19.9 Other income (loss), net5.2 (6.4)
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXESINCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES504.5 511.6 982.3 828.9 INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES380.3 477.8 
Income tax provisionIncome tax provision128.0 126.7 243.7 204.5 Income tax provision92.5 115.7 
NET INCOME FROM CONTINUING OPERATIONSNET INCOME FROM CONTINUING OPERATIONS376.5 384.9 738.6 624.4 NET INCOME FROM CONTINUING OPERATIONS287.8 362.1 
Loss from discontinued operations, net of income taxes(0.2)(0.1)(0.2)(0.2)
Income from discontinued operations, net of income taxesIncome from discontinued operations, net of income taxes0.9 — 
NET INCOMENET INCOME$376.3 $384.8 $738.4 $624.2 NET INCOME$288.7 $362.1 
BASIC EARNINGS (LOSS) PER SHARE:
BASIC EARNINGS PER SHARE:BASIC EARNINGS PER SHARE:
Continuing operationsContinuing operations$6.51 $4.88 $12.33 $7.71 Continuing operations$6.10 $5.83 
Discontinued operationsDiscontinued operations$— $— $— $— Discontinued operations$0.02 $— 
Net incomeNet income$6.51 $4.88 $12.33 $7.71 Net income$6.12 $5.83 
Weighted average common shares outstandingWeighted average common shares outstanding57.8 78.9 59.9 81.0 Weighted average common shares outstanding47.2 62.1 
DILUTED EARNINGS (LOSS) PER SHARE:
DILUTED EARNINGS PER SHARE:DILUTED EARNINGS PER SHARE:
Continuing operationsContinuing operations$6.48 $4.83 $12.25 $7.63 Continuing operations$6.05 $5.78 
Discontinued operationsDiscontinued operations$— $— $— $— Discontinued operations$0.02 $— 
Net incomeNet income$6.48 $4.83 $12.25 $7.63 Net income$6.07 $5.78 
Weighted average common shares outstandingWeighted average common shares outstanding58.1 79.7 60.3 81.8 Weighted average common shares outstanding47.6 62.6 
COMMON SHARES OUTSTANDING, net of treasury stock, at period endCOMMON SHARES OUTSTANDING, net of treasury stock, at period end56.0 73.1 56.0 73.1 COMMON SHARES OUTSTANDING, net of treasury stock, at period end45.6 59.7 
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

2

Table of Contents
AUTONATION, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In millions, except share data)
 
Six Months Ended June 30, 2022Three Months Ended March 31, 2023
Common StockAdditional
Paid-In
Capital
Retained
Earnings
Treasury
Stock
Total Common StockAdditional
Paid-In
Capital
Retained
Earnings
Treasury
Stock
Total
SharesAmount SharesAmount
BALANCE AT DECEMBER 31, 202186,562,149 $0.8 $3.2 $4,639.9 $(2,266.9)$2,377.0 
BALANCE AT DECEMBER 31, 2022BALANCE AT DECEMBER 31, 202263,562,149 $0.6 $3.1 $3,663.7 $(1,619.6)$2,047.8 
Net incomeNet income— — — 362.1 — 362.1 Net income— — — 288.7 — 288.7 
Repurchases of common stock— — — — (380.9)(380.9)
Repurchases of common stock, including excise taxRepurchases of common stock, including excise tax— — — — (307.5)(307.5)
Stock-based compensation expenseStock-based compensation expense— — 15.9 — — 15.9 Stock-based compensation expense— — 15.1 — — 15.1 
Shares awarded under stock-based compensation plans, net of shares withheld for taxesShares awarded under stock-based compensation plans, net of shares withheld for taxes— — (16.7)(58.1)46.3 (28.5)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, 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 
BALANCE AT MARCH 31, 2023BALANCE AT MARCH 31, 202363,562,149 $0.6 $3.0 $3,910.6 $(1,893.9)$2,020.3 

Six Months Ended June 30, 2021Three Months Ended March 31, 2022
Common StockAdditional
Paid-In
Capital
Retained
Earnings
Treasury
Stock
Total Common StockAdditional
Paid-In
Capital
Retained
Earnings
Treasury
Stock
Total
SharesAmount SharesAmount
BALANCE AT DECEMBER 31, 2020102,562,149 $1.0 $53.1 $4,069.4 $(887.8)$3,235.7 
BALANCE AT DECEMBER 31, 2021BALANCE AT DECEMBER 31, 202186,562,149 $0.8 $3.2 $4,639.9 $(2,266.9)$2,377.0 
Net incomeNet income— — — 239.4 — 239.4 Net income— — — 362.1 — 362.1 
Repurchases of common stockRepurchases of common stock— — — — (306.1)(306.1)Repurchases of common stock— — — — (380.9)(380.9)
Stock-based compensation expenseStock-based compensation expense— — 20.8 — — 20.8 Stock-based compensation expense— — 15.9 — — 15.9 
Shares awarded under stock-based compensation plans, net of shares withheld for taxesShares awarded under stock-based compensation plans, net of shares withheld for taxes— — (32.9)— 37.0 4.1 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, 2021102,562,149 $1.0 $41.0 $4,308.8 $(1,156.9)$3,193.9 
Net income— — — 384.8 — 384.8 
Repurchases of common stock— — — — (736.1)(736.1)
Treasury stock cancellation(16,000,000)(0.2)(40.6)(797.2)838.0 — 
Stock-based compensation expense— — 6.5 — — 6.5 
Shares awarded under stock-based compensation plans, net of shares withheld for taxes— — (1.2)— 8.9 7.7 
BALANCE AT JUNE 30, 202186,562,149 $0.8 $5.7 $3,896.4 $(1,046.1)$2,856.8 
BALANCE AT MARCH 31, 2022BALANCE AT MARCH 31, 202286,562,149 $0.8 $2.4 $4,943.9 $(2,601.5)$2,345.6 


See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.


3

Table of Contents
AUTONATION, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
 
Six Months EndedThree Months Ended
June 30, March 31,
20222021 20232022
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net incomeNet income$738.4 $624.2 Net income$288.7 $362.1 
Adjustments to reconcile net income to net cash provided by operating activities:Adjustments to reconcile net income to net cash provided by operating activities:Adjustments to reconcile net income to net cash provided by operating activities:
Loss from discontinued operations0.2 0.2 
Income from discontinued operationsIncome from discontinued operations(0.9)— 
Depreciation and amortizationDepreciation and amortization98.8 95.8 Depreciation and amortization52.8 50.0 
Amortization of debt issuance costs and accretion of debt discountsAmortization of debt issuance costs and accretion of debt discounts3.0 2.2 Amortization of debt issuance costs and accretion of debt discounts2.5 1.4 
Stock-based compensation expenseStock-based compensation expense21.2 27.3 Stock-based compensation expense15.1 15.9 
Deferred income tax provision (benefit)3.5 (20.5)
Provision for credit losses on auto loans receivableProvision for credit losses on auto loans receivable12.8 — 
Deferred income tax provisionDeferred income tax provision2.8 3.2 
Net gain related to business/property dispositionsNet gain related to business/property dispositions(1.0)(2.4)Net gain related to business/property dispositions(1.0)(0.3)
Non-cash impairment chargesNon-cash impairment charges1.0 1.7 Non-cash impairment charges1.4 0.4 
Loss (gain) on equity investments0.1 (10.9)
Loss on equity investmentsLoss on equity investments1.1 0.1 
Loss (gain) on corporate-owned life insurance assetLoss (gain) on corporate-owned life insurance asset20.8 (8.8)Loss (gain) on corporate-owned life insurance asset(4.7)6.7 
Other— 0.1 
(Increase) decrease, net of effects from business acquisitions and divestitures:(Increase) decrease, net of effects from business acquisitions and divestitures:(Increase) decrease, net of effects from business acquisitions and divestitures:
ReceivablesReceivables24.3 71.7 Receivables119.5 (18.2)
InventoryInventory(63.5)849.9 Inventory(147.5)142.6 
Other assetsOther assets(0.9)18.6 Other assets(28.6)14.6 
Increase (decrease), net of effects from business acquisitions and divestitures:Increase (decrease), net of effects from business acquisitions and divestitures:Increase (decrease), net of effects from business acquisitions and divestitures:
Vehicle floorplan payable - tradeVehicle floorplan payable - trade71.8 (880.6)Vehicle floorplan payable - trade142.0 (43.3)
Accounts payableAccounts payable(20.8)60.2 Accounts payable12.6 (6.6)
Other liabilitiesOther liabilities(1.7)101.8 Other liabilities41.7 114.6 
Net cash provided by continuing operationsNet cash provided by continuing operations895.2 930.5 Net cash provided by continuing operations510.3 643.2 
Net cash used in discontinued operationsNet cash used in discontinued operations(0.2)(0.2)Net cash used in discontinued operations(0.3)— 
Net cash provided by operating activitiesNet cash provided by operating activities895.0 930.3 Net cash provided by operating activities510.0 643.2 
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES:CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES:CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Purchases of property and equipmentPurchases of property and equipment(160.3)(116.2)Purchases of property and equipment(95.3)(56.6)
Proceeds from the sale of property and equipmentProceeds from the sale of property and equipment1.8 — 
Proceeds from the disposal of assets held for saleProceeds from the disposal of assets held for sale2.5 — 
Insurance recoveries on property and equipmentInsurance recoveries on property and equipment— 0.3 
Proceeds from assets held for sale18.0 — 
Cash used in business acquisitions, net of cash acquiredCash used in business acquisitions, net of cash acquired(191.0)— 
Originations of auto loans receivable acquired through third-party dealersOriginations of auto loans receivable acquired through third-party dealers(55.3)— 
Collections on auto loans receivable acquired through third-party dealersCollections on auto loans receivable acquired through third-party dealers39.3 — 
Cash received from business divestitures, net of cash relinquished— 4.3 
Proceeds from the sale of equity securities— 109.4 
Investment in equity securities— (3.3)
OtherOther(6.2)(2.7)Other(7.9)(2.7)
Net cash used in continuing operationsNet cash used in continuing operations(148.5)(8.5)Net cash used in continuing operations(305.9)(59.0)
Net cash used in discontinued operationsNet cash used in discontinued operations— — Net cash used in discontinued operations— — 
Net cash used in investing activitiesNet cash used in investing activities(148.5)(8.5)Net cash used in investing activities(305.9)(59.0)

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

4

Table of Contents
AUTONATION, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Continued)
 
Six Months EndedThree Months Ended
June 30, March 31,
20222021 20232022
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES:CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES:CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Repurchases of common stockRepurchases of common stock(784.5)(1,021.1)Repurchases of common stock(315.7)(342.3)
Proceeds from 3.85% Senior Notes due 2032Proceeds from 3.85% Senior Notes due 2032698.8 — Proceeds from 3.85% Senior Notes due 2032— 698.8 
Payment of 3.35% Senior Notes due 2021— (300.0)
Net proceeds from (payments of) commercial paperNet proceeds from (payments of) commercial paper(340.0)200.0 Net proceeds from (payments of) commercial paper235.0 (340.0)
Proceeds from non-recourse debtProceeds from non-recourse debt39.3 — 
Payments of non-recourse debtPayments of non-recourse debt(80.5)— 
Payment of debt issuance costsPayment of debt issuance costs(6.6)— Payment of debt issuance costs— (6.4)
Net payments of vehicle floorplan payable - non-tradeNet payments of vehicle floorplan payable - non-trade(5.5)(316.9)Net payments of vehicle floorplan payable - non-trade(67.3)(15.1)
Payments of other debt obligationsPayments of other debt obligations(5.9)(5.6)Payments of other debt obligations(3.1)(3.0)
Proceeds from the exercise of stock optionsProceeds from the exercise of stock options2.6 28.9 Proceeds from the exercise of stock options1.3 0.9 
Payments of tax withholdings for stock-based awardsPayments of tax withholdings for stock-based awards(29.4)(17.1)Payments of tax withholdings for stock-based awards(25.1)(29.4)
Net cash used in continuing operationsNet cash used in continuing operations(470.5)(1,431.8)Net cash used in continuing operations(216.1)(36.5)
Net cash used in discontinued operationsNet cash used in discontinued operations— — Net cash used in discontinued operations— — 
Net cash used in financing activitiesNet cash used in financing activities(470.5)(1,431.8)Net cash used in financing activities(216.1)(36.5)
INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASHINCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH276.0 (510.0)INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH(12.0)547.7 
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH at beginning of periodCASH, CASH EQUIVALENTS, AND RESTRICTED CASH at beginning of period60.6 569.7 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH at beginning of period95.4 60.6 
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH at end of periodCASH, CASH EQUIVALENTS, AND RESTRICTED CASH at end of period$336.6 $59.7 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH at end of period$83.4 $608.3 

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.


























5

TableTable of Contents
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, 2022,March 31, 2023, we owned and operated 339344 new vehicle franchises from 247248 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 sixthree months ended June 30, 2022,March 31, 2023, are manufactured by Toyota (including Lexus), Honda, Ford, Mercedes-Benz, BMW, General Motors, Mercedes-Benz, Stellantis, and Volkswagen (including Audi and Porsche). As of June 30, 2022,March 31, 2023, we also owned and operated 5653 AutoNation-branded collision centers, 1115 AutoNation USA used vehicle stores, 4 AutoNation-branded automotive auction operations, and 3 parts distribution centers.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 dealershipstore 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.






6

Table of Contents
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 March 31, 2023
DomesticImportPremium Luxury
Corporate and other(1)
Total
Major Goods/Service Lines
New vehicle$828.0 $856.4 $1,247.5 $— $2,931.9 
Used vehicle612.3 542.1 745.8 132.4 2,032.6 
Parts and service287.6 268.4 386.2 147.6 1,089.8 
Finance and insurance, net102.3 112.4 105.0 12.7 332.4 
Other0.9 10.0 0.4 0.7 12.0 
$1,831.1 $1,789.3 $2,484.9 $293.4 $6,398.7 
Timing of Revenue Recognition
Goods and services transferred at a point in time$1,629.3 $1,586.9 $2,159.3 $194.8 $5,570.3 
Goods and services transferred over time(2)
201.8 202.4 325.6 98.6 828.4 
$1,831.1 $1,789.3 $2,484.9 $293.4 $6,398.7 
Three Months Ended March 31, 2022
DomesticImportPremium Luxury
Corporate and other(1)
Total
Major Goods/Service Lines
New vehicle$822.5 $881.6 $1,103.1 $— $2,807.2 
Used vehicle823.1 707.6 916.1 125.6 2,572.4 
Parts and service268.7 255.5 351.9 127.8 1,003.9 
Finance and insurance, net119.2 126.4 107.2 11.1 363.9 
Other0.9 3.0 0.4 1.1 5.4 
$2,034.4 $1,974.1 $2,478.7 $265.6 $6,752.8 
Timing of Revenue Recognition
Goods and services transferred at a point in time$1,850.7 $1,783.8 $2,186.4 $186.5 $6,007.4 
Goods and services transferred over time(2)
183.7 190.3 292.3 79.1 745.4 
$2,034.4 $1,974.1 $2,478.7 $265.6 $6,752.8 
(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.




67

TableTable of Contents
AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
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 
Three Months Ended June 30, 2021
DomesticImportPremium Luxury
Corporate and other(1)
Total
Major Goods/Service Lines
New vehicle$991.3 $1,184.2 $1,252.8 $— $3,428.3 
Used vehicle749.1 604.5 788.8 80.5 2,222.9 
Parts and service257.9 248.5 317.6 126.8 950.8 
Finance and insurance, net125.8 133.2 108.0 2.0 369.0 
Other0.7 4.6 1.3 0.8 7.4 
$2,124.8 $2,175.0 $2,468.5 $210.1 $6,978.4 
Timing of Revenue Recognition
Goods and services transferred at a point in time$1,944.2 $1,984.7 $2,204.5 $129.0 $6,262.4 
Goods and services transferred over time(2)
180.6 190.3 264.0 81.1 716.0 
$2,124.8 $2,175.0 $2,468.5 $210.1 $6,978.4 


7

Table of Contents
AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
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 
Six Months Ended June 30, 2021
DomesticImportPremium Luxury
Corporate and other(1)
Total
Major Goods/Service Lines
New vehicle$1,926.7 $2,142.2 $2,341.7 $— $6,410.6 
Used vehicle1,312.8 1,089.2 1,431.1 138.9 3,972.0 
Parts and service492.0 462.6 602.8 244.4 1,801.8 
Finance and insurance, net235.1 242.3 194.8 9.8 682.0 
Other4.9 8.3 1.6 1.0 15.8 
$3,971.5 $3,944.6 $4,572.0 $394.1 $12,882.2 
Timing of Revenue Recognition
Goods and services transferred at a point in time$3,625.7 $3,588.8 $4,068.1 $236.3 $11,518.9 
Goods and services transferred over time(2)
345.8 355.8 503.9 157.8 1,363.3 
$3,971.5 $3,944.6 $4,572.0 $394.1 $12,882.2 
(1) “Corporate and other” is comprised of our other businesses, including collision centers, AutoNation USA used vehicle stores, auction operations, and parts distribution centers.
(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.


8

Table of Contents
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$97.4 $33.9 $46.3 $17.2 
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$102.2 $35.1 $49.3 $17.8 

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, 2022December 31, 2021March 31, 2023December 31, 2022
Receivables from contracts with customers, netReceivables from contracts with customers, net$516.6 $539.9 Receivables from contracts with customers, net$541.8 $634.5 
Contract Asset (Current)Contract Asset (Current)$31.1 $30.4 Contract Asset (Current)$21.0 $27.7 
Contract Asset (Long-Term)Contract Asset (Long-Term)$8.7 $14.2 Contract Asset (Long-Term)$4.4 $8.6 
Contract Liability (Current)Contract Liability (Current)$34.2 $33.6 Contract Liability (Current)$41.2 $41.8 
Contract Liability (Long-Term)Contract Liability (Long-Term)$63.5 $60.5 Contract Liability (Long-Term)$67.1 $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 that was constrained for performance obligations satisfied in previous periods. The following table presents revenue recognized during

8

Table of Contents
AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
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,
Three Months Ended
March 31,
202220212022202120232022
Amounts included in contract liability at the beginning of the periodAmounts included in contract liability at the beginning of the period$8.8 $8.2 $17.8 $16.9 Amounts included in contract liability at the beginning of the period$9.4 $9.0 
Performance obligations satisfied in previous periodsPerformance obligations satisfied in previous periods$0.9 $5.7 $4.7 $11.1 Performance obligations satisfied in previous periods$(2.3)$3.8 
Other significant changes include contract assets reclassified to receivables of $30.5$25.7 million for the sixthree months ended June 30, 2022,March 31, 2023, and $24.6$28.0 million for the sixthree months ended June 30, 2021.March 31, 2022.


9

Table of Contents
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 stock options and unvested RSU awards.awards and stock options.
The following table presents the calculation of basic and diluted EPS:
Three Months EndedSix Months EndedThree Months Ended
June 30,June 30,March 31,
2022202120222021 20232022
Net income from continuing operationsNet income from continuing operations$376.5 $384.9 $738.6 $624.4 Net income from continuing operations$287.8 $362.1 
Loss from discontinued operations, net of income taxes(0.2)(0.1)(0.2)(0.2)
Income from discontinued operations, net of income taxesIncome from discontinued operations, net of income taxes0.9 — 
Net incomeNet income$376.3 $384.8 $738.4 $624.2 Net income$288.7 $362.1 
Basic weighted average common shares outstandingBasic weighted average common shares outstanding57.8 78.9 59.9 81.0 Basic weighted average common shares outstanding47.2 62.1 
Dilutive effect of stock options and unvested RSUs0.3 0.8 0.4 0.8 
Dilutive effect of unvested RSUs and stock optionsDilutive effect of unvested RSUs and stock options0.4 0.5 
Diluted weighted average common shares outstandingDiluted weighted average common shares outstanding58.1 79.7 60.3 81.8 Diluted weighted average common shares outstanding47.6 62.6 
Basic EPS amounts(1):
Basic EPS amounts(1):
Basic EPS amounts(1):
Continuing operationsContinuing operations$6.51 $4.88 $12.33 $7.71 Continuing operations$6.10 $5.83 
Discontinued operationsDiscontinued operations$— $— $— $— Discontinued operations$0.02 $— 
Net incomeNet income$6.51 $4.88 $12.33 $7.71 Net income$6.12 $5.83 
Diluted EPS amounts(1):
Diluted EPS amounts(1):
Diluted EPS amounts(1):
Continuing operationsContinuing operations$6.48 $4.83 $12.25 $7.63 Continuing operations$6.05 $5.78 
Discontinued operationsDiscontinued operations$— $— $— $— Discontinued operations$0.02 $— 
Net incomeNet income$6.48 $4.83 $12.25 $7.63 Net income$6.07 $5.78 
(1) EPS amounts are calculated discretely and, therefore, may not add up to the total due to rounding.
(1) EPS amounts are calculated discretely and, therefore, may not add up to the total due to rounding.
(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,
 2022202120222021
Anti-dilutive equity instruments excluded from the computation of diluted EPS0.1 — 0.1 — 
Three Months Ended
 March 31,
 20232022
Anti-dilutive equity instruments excluded from the computation of diluted EPS0.1 0.1 


109

TableTable of Contents
AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
4.RECEIVABLES, NET
The components of receivables, net of allowances for expected credit losses, are as follows:
June 30,
2022
December 31,
2021
March 31,
2023
December 31,
2022
Contracts-in-transit and vehicle receivablesContracts-in-transit and vehicle receivables$328.0 $347.4 Contracts-in-transit and vehicle receivables$334.7 $441.1 
Trade receivablesTrade receivables157.7 162.6 Trade receivables167.3 156.6 
Manufacturer receivablesManufacturer receivables148.4 148.4 Manufacturer receivables179.6 174.4 
Income taxes receivable (see Note 8)5.5 — 
Income taxes receivable (see Note 9)Income taxes receivable (see Note 9)— 20.2 
OtherOther69.4 77.0 Other62.8 68.2 
709.0 735.4 744.4 860.5 
Less: allowances for expected credit lossesLess: allowances for expected credit losses(3.6)(5.4)Less: allowances for expected credit losses(1.7)(1.7)
Receivables, netReceivables, net$705.4 $730.0 Receivables, net$742.7 $858.8 
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 March 31, 2023, and December 31, 2022, are as follows:
March 31,
2023
December 31,
2022
Total auto loans receivable$403.2 $377.0 
Accrued interest and fees4.4 4.4 
Deferred loan origination costs0.7 0.5 
Less: unearned discounts(20.1)(21.3)
Less: allowances for expected credit losses(61.3)(57.5)
Auto loans receivable, net$326.9 $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.

10

Table of Contents
AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
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.
Auto Loans Receivable by Major Credit Program
The following table presents auto loans receivable as of March 31, 2023, disaggregated by major credit program tier:

Fiscal Year of Origination(1)
20232022202120202019Prior to 2019Total
Credit Program Tier:
Platinum$13.0 $19.9 $11.6 $5.4 $6.2 $1.6 $57.7 
Gold18.1 49.1 26.4 11.1 8.8 2.6 116.1 
Silver22.7 54.9 26.2 8.8 6.4 1.4 120.4 
Bronze14.6 36.3 14.7 6.3 3.0 0.7 75.6 
Copper6.3 16.4 6.6 2.1 1.5 0.5 33.4 
Total auto loans receivable$74.7 $176.6 $85.5 $33.7 $25.9 $6.8 $403.2 
Current-period gross write-offs$— $8.0 $5.4 $1.4 $0.9 $0.3 $16.0 
(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.

11

Table of Contents
AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Rollforward of Allowance for Credit Losses
The following is a rollforward of our allowance for expected credit losses for auto loans receivable for the three months ended March 31, 2023:
Three Months Ended
March 31, 2023
Balance as of beginning of year$57.5 
Provision for credit losses12.8 
Write-offs(16.0)
Recoveries(1)
7.0 
Balance as of March 31, 2023$61.3 
(1) Net of costs incurred to recover vehicle collateral.
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 tables present past due auto loans receivable, as of March 31, 2023, and December 31, 2022:
Age Analysis of Past-Due Auto Loans Receivable as of
March 31,
2023
December 31,
2022
31-60 Days$13.8 $13.0 
61-90 Days4.0 4.1
Greater than 90 Days2.2 2.6
Total Past Due$20.0 $19.7 
Current383.2 357.3
Total$403.2 $377.0 

6.INVENTORY AND VEHICLE FLOORPLAN PAYABLE
The components of inventory are as follows:
June 30,
2022
December 31,
2021
March 31,
2023
December 31,
2022
New vehiclesNew vehicles$579.5 $515.1 New vehicles$1,248.3 $1,009.7 
Used vehiclesUsed vehicles1,088.5 1,109.3 Used vehicles693.3 789.1 
Parts, accessories, and otherParts, accessories, and other237.3 223.5 Parts, accessories, and other254.6 249.5 
InventoryInventory$1,905.3 $1,847.9 Inventory$2,196.2 $2,048.3 


12

Table of Contents
AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
The components of vehicle floorplan payable are as follows:
June 30,
2022
December 31,
2021
March 31,
2023
December 31,
2022
Vehicle floorplan payable - tradeVehicle floorplan payable - trade$556.5 $489.9 Vehicle floorplan payable - trade$1,088.6 $946.6 
Vehicle floorplan payable - non-tradeVehicle floorplan payable - non-trade960.9 967.7 Vehicle floorplan payable - non-trade1,097.1 1,162.7 
Vehicle floorplan payableVehicle floorplan payable$1,517.4 $1,457.6 Vehicle floorplan payable$2,185.7 $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 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.

11

Table of Contents
AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
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, 2022, most ofMarch 31, 2023, our new vehicle floorplan facilities utilized LIBOR-based, interest ratesPrime-based, and a smaller portion utilized Prime-based or SOFR-based interest rates. Our new vehicle floorplan outstanding had a weighted-average interest rate of 3.2%6.5% at June 30, 2022,March 31, 2023, and 1.6%5.9% at December 31, 2021.2022. As of June 30, 2022,March 31, 2023, the aggregate capacity under our new vehicle floorplan facilities to finance our new vehicle inventory was approximately $4.8$4.6 billion, of which $0.9$1.7 billion had been borrowed.
At June 30, 2022, most ofMarch 31, 2023, our used vehicle floorplan facilities utilized LIBOR-based, interest ratesPrime-based, and a smaller portion utilized Prime-basedSOFR-based interest rates. Our used vehicle floorplan outstanding had a weighted-average annual interest rate of 3.4%6.5% at June 30, 2022,March 31, 2023, and 1.8%5.9% at December 31, 2021.2022. As of June 30, 2022,March 31, 2023, the aggregate capacity under our used vehicle floorplan facilities with various lenders to finance a portion of our used vehicle inventory was $592.0$683.6 million, of which $580.8$443.7 million had been borrowed. The remaining borrowing capacity of $11.2$239.9 million was limited to $0.1$0.4 million based on the eligible used vehicle inventory that could have been pledged as collateral.

6.7.GOODWILL AND INTANGIBLE ASSETS, NET
Goodwill and intangible assets, net, consist of the following:
June 30,
2022
December 31,
2021
March 31,
2023
December 31,
2022
Goodwill(1)Goodwill(1)$1,233.3 $1,235.3 Goodwill(1)$1,450.2 

$1,320.1 
Franchise rights - indefinite-livedFranchise rights - indefinite-lived$727.5 $727.5 Franchise rights - indefinite-lived$821.0 $816.2 
Other intangiblesOther intangibles24.0 24.0 Other intangibles70.8 30.7 
751.5 751.5 891.8 846.9 
Less: accumulated amortizationLess: accumulated amortization(8.7)(8.0)Less: accumulated amortization(11.5)(9.9)
Other intangible assets, netOther intangible assets, net$742.8 $743.5 Other intangible assets, net$880.3 $837.0 
(1) The change in goodwill from the prior period is 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.
GoodwillSee Note 13 of the Notes to Unaudited Condensed Consolidated Financial Statements 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 evaluationinformation about the likelihood of goodwill impairment for our annual impairment testing astests of April 30, 2022,goodwill 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, 2022, and no impairment charges resulted from these quantitative tests.

rights.

1213

TableTable of Contents
AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
7.8.LONG-TERM DEBT AND COMMERCIAL PAPER
Long-termNon-vehicle long-term debt consistsconsisted of the following:
Debt DescriptionDebt DescriptionMaturity DateInterest PayableJune 30,
2022
December 31,
2021
Debt DescriptionMaturity DateInterest PayableMarch 31,
2023
December 31,
2022
3.5% Senior Notes3.5% Senior NotesNovember 15, 2024May 15 and November 15$450.0 $450.0 3.5% Senior NotesNovember 15, 2024May 15 and November 15$450.0 $450.0 
4.5% Senior Notes4.5% Senior NotesOctober 1, 2025April 1 and October 1450.0 450.0 4.5% Senior NotesOctober 1, 2025April 1 and October 1450.0 450.0 
3.8% Senior Notes3.8% Senior NotesNovember 15, 2027May 15 and November 15300.0 300.0 3.8% Senior NotesNovember 15, 2027May 15 and November 15300.0 300.0 
1.95% Senior Notes1.95% Senior NotesAugust 1, 2028February 1 and August 1400.0 400.0 1.95% Senior NotesAugust 1, 2028February 1 and August 1400.0 400.0 
4.75% Senior Notes4.75% Senior NotesJune 1, 2030June 1 and December 1500.0 500.0 4.75% Senior NotesJune 1, 2030June 1 and December 1500.0 500.0 
2.4% Senior Notes2.4% Senior NotesAugust 1, 2031February 1 and August 1450.0 450.0 2.4% Senior NotesAugust 1, 2031February 1 and August 1450.0 450.0 
3.85% Senior Notes3.85% Senior NotesMarch 1, 2032March 1 and September 1700.0 — 3.85% Senior NotesMarch 1, 2032March 1 and September 1700.0 700.0 
Revolving credit facilityRevolving credit facilityMarch 26, 2025Monthly— — Revolving credit facilityMarch 26, 2025Monthly— — 
Finance leases and other debtFinance leases and other debtVarious dates through 2041324.4 330.6 Finance leases and other debtVarious dates through 2041372.4 375.5 
3,574.4 2,880.6 3,622.4 3,625.5 
Less: unamortized debt discounts and debt issuance costsLess: unamortized debt discounts and debt issuance costs(27.9)(22.2)Less: unamortized debt discounts and debt issuance costs(25.0)(26.0)
Less: current maturitiesLess: current maturities(11.8)(12.2)Less: current maturities(12.7)(12.6)
Long-term debt, net of current maturitiesLong-term debt, net of current maturities$3,534.7 $2,846.2 Long-term debt, net of current maturities$3,584.7 $3,586.9 
Senior Unsecured Notes and Credit Agreement
On February 28, 2022, we issued $700 million aggregate principal amount of 3.85% Senior Notes due 2032, which were sold at 99.835% of the aggregate principal amount.
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.
Under our amended and restated credit agreement, we have a $1.8 billion revolving credit facility that matures on March 26, 2025. The credit agreement also contains 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, 2022,March 31, 2023, we had no borrowings outstanding under our revolving credit facility. We have a $200.0 million letter of credit sublimit as part of our revolving credit facility. 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 $39.8$0.7 million at June 30, 2022,March 31, 2023, leaving a borrowing capacity under the revolving credit facility of $1.8 billion at June 30, 2022.March 31, 2023.
Our revolving credit facility under the amended credit agreement provides for a commitment fee on undrawn amounts ranging from 0.125% to 0.20% and interest on borrowings at LIBORSOFR 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 LIBORSOFR 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. For instance, an increase in our leverage ratio from greater than or equal to 2.0x but less than 3.25x to greater than or equal to 3.25x would result in a 12.5 basis point increase in the applicable margin.
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, 2022,March 31, 2023, we had finance leases and other debt obligations of $324.4$372.4 million, which are due at various dates through 2041.

13

Table of Contents
AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
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 up to a maximum aggregate amount outstanding at any time of $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

14

Table of Contents
AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
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.
We had no commercial paper notes outstanding at June 30, 2022. At DecemberMarch 31, 2021,2023, we had $340.0$285.0 million of commercial paper notes outstanding with a weighted-average annual interest rate of 0.47%5.55% and a weighted-average remaining term of 103 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.
Non-recourse debt outstanding at March 31, 2023, and December 31, 2022, consisted of the following:
March 31,
2023
December 31, 2022
Warehouse facilities$162.3 $181.8 
Term securitization debt of consolidated VIEs125.3 146.9 
287.6 328.7 
Less: unamortized debt discounts and debt issuance costs(4.2)(5.1)
Less: current maturities(12.0)(10.7)
Non-recourse debt, net of current maturities$271.4 $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.

15

Table of Contents
AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
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 4.85% and maturity dates ranging from August 2024 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 $15.5 million as of March 31, 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 $127.9 million as of March 31, 2023, and $151.4 million as of December 31, 2022.

8.9.INCOME TAXES
Income taxes receivable included in Receivables, net totaled $5.5 million at June 30, 2022, and income taxes payable included in Other Current Liabilities totaled $6.9$68.8 million at March 31, 2023, and income taxes receivable included in Receivables, net totaled $20.2 million at December 31, 2021.2022.
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 20142019 to 20192021 are under examination by certain U.S. state jurisdictions. These audits may result in proposed assessments where the ultimate resolution may result inWe believe that our owing additional taxes.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 Operations.Income.

9.10.SHAREHOLDERS’ EQUITY
A summary of shares repurchased under our stock repurchase program authorized by our Board of Directors follows:
Three Months EndedSix Months EndedThree Months Ended
June 30,June 30, March 31,
2022202120222021 20232022
Shares repurchasedShares repurchased3.7 7.5 7.2 11.3 Shares repurchased2.4 3.5 
Aggregate purchase price(1)Aggregate purchase price(1)$403.9 $736.1 $784.9 $1,042.2 Aggregate purchase price(1)$305.0 $380.9 
Average purchase price per shareAverage purchase price per share$109.22 $98.17 $109.62 $91.94 Average purchase price per share$126.37 $110.04 
(1) Excludes excise tax accrual imposed under the Inflation Reduction Act of $2.5 million for the three months ended March 31, 2023.
(1) Excludes excise tax accrual imposed under the Inflation Reduction Act of $2.5 million for the three months ended March 31, 2023.

As of June 30, 2022, $109.7March 31, 2023, $879.4 million remained available under our stock repurchase limit most recently authorized by our Board of Directors. In July 2022, our Board of Directors increased the share repurchase authorization by $1.0 billion.
Our Board of Directors authorized the retirement of 16.0 million shares of our treasury stock in April 2021, which assumed the status of authorized but unissued shares. Upon the retirement of treasury stock, it is our policy to charge the excess of the cost of the treasury stock over its par value entirely to additional paid-in capital. Any amounts exceeding additional paid-in capital are charged to retained earnings. This retirement had the effect of reducing treasury stock and issued common stock, which includes treasury stock. Our common stock, additional paid-in capital, retained earnings, and treasury stock accounts were adjusted accordingly. There was no impact to shareholders’ equity or outstanding common stock.
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.

14

Table of Contents
AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
A summary of shares of common stock issued in connection with the exercise of stock options follows:
Three Months EndedSix Months EndedThree Months Ended
June 30,June 30, March 31,
202220212022202120232022
Shares issued (in actual number of shares)Shares issued (in actual number of shares)32,064 151,601 54,460 570,670 Shares issued (in actual number of shares)27,135 22,396 
Proceeds from the exercise of stock optionsProceeds from the exercise of stock options$1.8 $7.7 $2.6 $28.9 Proceeds from the exercise of stock options$1.3 $0.9 
Average exercise price per shareAverage exercise price per share$54.63 $51.10 $47.88 $50.71 Average exercise price per share$47.57 $38.21 

16

Table of Contents
AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
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 EndedThree Months Ended
June 30,June 30, March 31,
(In actual number of shares)2022202120222021
20232022
Shares issuedShares issued10,973 7,341 774,085 639,192 Shares issued0.5 0.8 
Shares surrendered to AutoNation to satisfy tax withholding obligationsShares surrendered to AutoNation to satisfy tax withholding obligations— 1,616 262,951 224,133 Shares surrendered to AutoNation to satisfy tax withholding obligations0.2 0.3 

10.11. ACQUISITIONS
During the three months ended March 31, 2023, we acquired RepairSmith, a mobile solution for automotive repair and maintenance, and we also purchased one store. 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 sixthree months ended June 30, 2022 and 2021. During the second half of 2021, we purchased 20 stores and 4 collision centers operating in South Carolina, Georgia, and Maryland.March 31, 2022.
The amounts of revenue and earnings of the stores and collision centers acquiredacquisitions that occurred during 2021 included in our Unaudited Condensed Consolidated Statement of Operations were $261.7 million and $12.6 million, respectively, for the three months ended June 30, 2022, and $499.5 million and $20.8 million, respectively,March 31, 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 six monthsentire three month periods ended June 30, 2022. Our supplemental pro formaMarch 31, 2023 and 2022, revenue and net income would not have been materially different from continuing operationsour reported revenue and net income for the three and six months ended June 30, 2021, had the acquisition dates been January 1, 2021, are as follows:
Unaudited supplemental pro forma:Three Months Ended June 30, 2021Six Months Ended June 30, 2021
Revenue$7,209.1 $13,306.2 
Net income from continuing operations$396.5 $641.9 
We entered into an agreement in July 2022 to acquire CIG Financial, an auto finance company headquartered in Irvine, California.these periods.

11.12.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 which include cash, cash equivalents, and restricted cash, reported on our Unaudited Condensed Consolidated Statements of Cash Flows:
June 30,
2022
December 31,
2021
Cash and cash equivalents$336.5 $60.4 
Restricted cash included in Other Current Assets0.1 0.2 
Total cash, cash equivalents, and restricted cash$336.6 $60.6 

15

Table of Contents
AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
March 31,
2023
December 31,
2022
Cash and cash equivalents$58.3 $72.6 
Restricted cash included in Other Current Assets17.8 15.6 
Restricted cash included in Other Assets7.3 7.2 
Total cash, cash equivalents, and restricted cash$83.4 $95.4 
Non-Cash Investing and Financing Activities
We had accrued purchases of property and equipment of $22.5$33.7 million at June 30, 2022,March 31, 2023, and $12.1$20.1 million at June 30, 2021.March 31, 2022.
Three Months Ended
Six Months Ended June 30,March 31,
2022202120232022
Supplemental noncash information on adjustments to right-of-use assets, including right-of-use assets obtained in exchange for new:Supplemental noncash information on adjustments to right-of-use assets, including right-of-use assets obtained in exchange for new:Supplemental noncash information on adjustments to right-of-use assets, including right-of-use assets obtained in exchange for new:
Operating lease liabilitiesOperating lease liabilities$23.1 $13.0 Operating lease liabilities$15.8 $9.6 
Finance lease liabilitiesFinance lease liabilities$12.5 $17.3 Finance lease liabilities$13.5 $4.7 

17

Table of Contents
AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Interest and Income Taxes Paid
We made interest payments, net of amounts capitalized and including interest on vehicle inventory financing, of $62.0$58.1 million during the sixthree months ended June 30, 2022,March 31, 2023, and $63.7$18.4 million during the sixthree months ended June 30, 2021.March 31, 2022. We made income tax payments, net of income tax refunds, of $252.0$0.7 million during the sixthree months ended June 30, 2022,March 31, 2023, and $190.5$0.5 million during the sixthree months ended June 30, 2021.March 31, 2022.

12.13.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. In the first quarter of 2021, we sold one of our minority equity investments with a readily determinable fair value for total proceeds of $109.4 million. The fair value of our equity investments with readily determinable fair values totaled $2.1$14.3 million at June 30, 2022March 31, 2023, and $2.2$15.4 million at December 31, 2021.2022.
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, 2022,March 31, 2023, and $56.7 million at December 31, 2021.2022. 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 sixthree months ended June 30, 2022.March 31, 2023. Additionally, we have not recorded any impairments or downward adjustments to the carrying amount of ourthis equity investment as of and for the sixthree months ended June 30, 2022.

16

Table of Contents
AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
March 31, 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 OperationsIncome and in the “Corporate and other” category of our segment information.
Six Months Ended June 30,
20222021
Net gains (losses) recognized during the period on equity securities$(0.1)$10.9 
Less: Net gains recognized during the period on equity securities sold during the period— 7.5 
Unrealized gains (losses) recognized during the reporting period on equity securities still held at the reporting date$(0.1)$3.4 

18

Table of Contents
AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Three Months Ended March 31,
20232022
Net losses recognized during the period on equity securities$(1.1)$(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$(1.1)$(0.1)
Fixed rate long-term debt: Our fixed rate long-term debt consists primarily consists 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 fixed rate long-term debtsenior unsecured notes is as follows:
June 30,
2022
December 31,
2021
March 31,
2023
December 31,
2022
Carrying valueCarrying value$3,546.5 $2,858.4 Carrying value$3,225.0 $3,224.0 
Fair valueFair value$3,256.5 $3,017.8 Fair value$2,907.2 $2,803.6 

Nonfinancial assets such as goodwill, other intangible assets, and long-lived assets held and used, and right-of-use assets 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) isare 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 sixthree months ended June 30, 2022March 31, 2023 and 2021:2022:
20222021
DescriptionFair Value
Measurements Using Significant
Unobservable Inputs
(Level 3)
Gain/(Loss)Fair Value
Measurements Using Significant
Unobservable Inputs
(Level 3)
Gain/(Loss)
Equity investment$— $— $53.4 $3.4 
Right-of-use assets$— $— $— $(0.1)
Long-lived assets held and used$— $(1.0)$10.4 $(1.6)
Goodwill and Other Intangible Assets
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, 2022 and 2021, 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.
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 elected to perform quantitative franchise rights impairment tests as of April 30, 2022 and 2021, and no impairment charges resulted from these quantitative tests.

17

Table of Contents
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.
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$— $(1.4)$— $(0.4)
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 long-lived assetsproperties classified as held for sale, or when an indicator of impairment exists for long-lived assetsproperties 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. 

19

Table of Contents
AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
The non-cash impairment charges related to right-of-use assets and long-lived assets held and used are included in Other Income,(Income) Expense, Net in our Unaudited Condensed Consolidated Statements of OperationsIncome and in the “Corporate and other” category of our segment information.
We had assets held for sale in continuing operations of $59.1$5.7 million as of June 30, 2022,March 31, 2023, and $53.3$5.7 million as of December 31, 2021, primarily2022, related to property held for sale, as well as inventory, goodwill, and property of disposal groups held for sale. We had no assets held for sale in discontinued operations of $1.1 million as of June 30, 2022,March 31, 2023, and $1.1 million as of December 31, 2021,2022, 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 consists 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 $3.2 million as of March 31, 2023, and $2.7 million as of December 31, 2022. Repossessed assets are included in Other Assets in our Consolidated Balance Sheets.

13.14.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 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,March 31, 2023 and 2022, and 2021, 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

18

Table of Contents
AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
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

20

Table of Contents
AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
subsidiaries in connection with such leases. Although weWe generally have indemnification rights against the assignee or sublessee in the event of non-performance under these leases, as well as certain defenses,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 20222024 to 2034 are approximately $7$6 million at June 30, 2022. We do not have any material known commitments that we or our subsidiaries will be called on to perform under any such assigned leases or subleases at June 30, 2022.March 31, 2023. There can be no assurance that any performance byof 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, 2022,March 31, 2023, surety bonds, letters of credit, and cash deposits totaled $106.5$111.2 million, of which $39.8$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.

14.15.BUSINESS AND CREDIT CONCENTRATIONS
We own and operate franchised automotive stores in the United States pursuant to franchise agreements with vehicle manufacturers. During the sixthree months ended June 30, 2022,March 31, 2023, approximately 62%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 sixthree months ended June 30, 2022,March 31, 2023, are manufactured by Toyota (including Lexus), Honda, Ford, Mercedes-Benz, BMW, General Motors, 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 $148.4$179.6 million at June 30, 2022,March 31, 2023, and $148.4$174.4 million at December 31, 2021.2022. Additionally, a large portion of our contracts-in-transit included in Receivables, net, in the accompanying 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, 2022,March 31, 2023, we do not consider AutoNation to have any significant non-manufacturer concentrations of credit risk.


19

Table of Contents
AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
15.16.SEGMENT INFORMATION
At June 30,March 31, 2023 and 2022, and 2021, we had 3three 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 collision centers, AutoNation USA used vehicle stores, collision centers, parts distribution centers, auction operations, and parts distribution centers,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.

21

Table of Contents
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, 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 
Three Months EndedSix Months Ended
 June 30, 2021June 30, 2021
 DomesticImportPremium LuxuryDomesticImportPremium Luxury
Revenues from external customers$2,124.8 $2,175.0 $2,468.5 $3,971.5 $3,944.6 $4,572.0 
Segment income (1)
$169.0 $203.7 $225.7 $287.5 $329.6 $384.2 
(1) Segment income represents income for each of our reportable segments and is defined as operating income less floorplan interest expense.
Three Months Ended
 March 31, 2023
 DomesticImportPremium Luxury
Revenues from external customers$1,831.1 $1,789.3 $2,484.9 
Segment income (1)
$118.5 $160.4 $226.8 
Three Months Ended
 March 31, 2022
 DomesticImportPremium Luxury
Revenues from external customers$2,034.4 $1,974.1 $2,478.7 
Segment income (1)
$149.4 $186.2 $229.5 
(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 EndedThree Months Ended
June 30,June 30, March 31,
2022202120222021 20232022
Total segment income for reportable segmentsTotal segment income for reportable segments$603.1 $598.4 $1,168.2 $1,001.3 Total segment income for reportable segments$505.7 $565.1 
Corporate and otherCorporate and other(50.8)(74.8)(102.1)(150.2)Corporate and other(89.5)(51.3)
Other interest expenseOther interest expense(34.1)(20.9)(63.7)(42.1)Other interest expense(41.1)(29.6)
Other income (loss), netOther income (loss), net(13.7)8.9 (20.1)19.9 Other income (loss), net5.2 (6.4)
Income from continuing operations before income taxesIncome from continuing operations before income taxes$504.5 $511.6 $982.3 $828.9 Income from continuing operations before income taxes$380.3 $477.8 


2022

Table of Contents
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, 2022,March 31, 2023, we owned and operated 339344 new vehicle franchises from 247248 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 sixthree months ended June 30, 2022,March 31, 2023, are manufactured by Toyota (including Lexus), Honda, Ford, Mercedes-Benz, BMW, General Motors, Mercedes-Benz, Stellantis, and Volkswagen (including Audi and Porsche). As of June 30, 2022,March 31, 2023, we also owned and operated 5653 AutoNation-branded collision centers, 1115 AutoNation USA used vehicle stores, 4 AutoNation-branded automotive auction operations, and 3 parts distribution centers.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, 2022,March 31, 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 sixthree months ended June 30, 2022,March 31, 2023, new vehicle sales accounted for 42%46% of our total revenue and 26%22% of our total gross profit. Used vehicle sales accounted for 37%32% of our total revenue and 11%12% of our total gross profit. Our parts and service operations, while comprising 15%17% of our total revenue, contributed 35%40% of our total gross profit. Our finance and insurance sales, while comprising 5% of our total revenue, contributed 27%26% of our total gross profit.

Market Conditions
In the secondfirst quarter of 2022,2023, U.S. industry retail new vehicle unit sales decreased 15%increased 2% as compared to the secondfirst quarter of 2021,2022, primarily as a result of the limitedincreasing supply of new vehicles to sell. Duringvehicle inventory. Although new vehicle inventory levels for certain manufacturers and models improved slightly during the secondfirst quarter of 2022, the demand for vehicles continued to exceed supply. While market demand for vehicles remains high,2023, there continues to be a shortage of available new vehicles for sale as compared to historical inventory levels, particularly for certain models, driven largely by disruptions in the manufacturers’ supply chains. This demand and supply imbalance continues to resultThe decline in higher levels of profitability for available new vehicles. The reduced levels of new vehicle unit volume in recent periods has adversely impacted the availability is currently expected to continue throughout 2022; however, there is still significant uncertainty as to whenof nearly new vehicle availability will improve, as well as the duration and/or degree of the higher levels of profitability being realized during this time.inventory, which has had an adverse impact on our used vehicle sales volume. Additionally, worsening economic conditions, including rising interest rates, and high levels of inflation could adversely impact consumer demand for vehicles.
Results of Operations
During the three months ended June 30, 2022,March 31, 2023, we had net income from continuing operations of $376.5$288.7 million and diluted earnings per share of $6.48,$6.07, as compared to net income from continuing operations of $384.9$362.1 million and diluted earnings per share of $4.83$5.78 during the same period in 2021.2022.
Our total gross profit increased 2.7%decreased 1.7% during the secondfirst quarter of 2023 compared to the first quarter of 2022, compared to the second quarter of 2021, driven by increasesdecreases in new vehicle gross profit of 10.3%16.8% and finance and insurance gross profit of 8.7%, each as compared to the first quarter of 2022. New vehicle gross profit was adversely impacted by a decrease in gross profit per vehicle retailed (“PVR”)

23

Table of Contents
resulting from improving supply of new vehicle inventory. Finance and insurance gross profit was adversely impacted by a decrease in new and used vehicle unit volume. The decreases in gross profit were partially offset by increases in used vehicle gross profit of 13.0% and parts and service gross profit of 11.4%.10.8%, each as compared to the secondfirst quarter of 2021. New2022. Used vehicle gross profit benefited fromincreased due to an increase in gross profit perPVR, partially offset by a decrease in used vehicle retailed (“PVR”) resultingunit volume. Used vehicle gross profit PVR benefited from strong demanda disciplined sourcing and historically low newpricing strategy as we focused on efficient internal sourcing of our used vehicle inventory levels due to disruptions in the manufacturers’ supply chains.and balancing gross profit PVR and unit volume. Parts

21

Table of Contents
and service results benefited primarily from increases in gross profit from customer-pay service and the preparation of vehicles for sale. The increases in gross profit were partially offset by a decrease in used vehicle gross profit of 22.8% due to margin pressure as a result of a decline in used vehicle values.warranty service.
SG&A expenses increased largely due to acquisitions and newly acquiredopened stores and opened stores. With improvementsexpenditures associated with investments in gross profittechnology and our continued focus on cost control, SG&A expenses as a percentage of gross profit decreasedstrategic initiatives. Floorplan interest expense increased due to 55.4% during the three months ended June 30, 2022, from 56.5% in the same period in 2021.higher average interest rates and higher average floorplan balances. Other interest expense increased due to higher average interest rates and higher average debt balances, partially offset by lower average interest rates.
Net income from continuing operations during the three months ended June 30, 2021, benefited from an after-tax gain of $2.6 million related to changes in the fair value of the underlying securities of our minority equity investment.balances.
Strategic Initiatives
We entered into an agreement in July 2022 to acquire CIG Financial, an auto finance company headquartered in Irvine, California, for $85 million as well asTo better service the assumptionpersonal transportation needs of certain liabilities as of the acquisition date. The acquisition of CIG Financial aligns with our strategic business model and singular focus on personalized finance and mobility solutions that are easy, transparent, and customer-centric. This acquisition will further extend our relationship with our customers, beyondwe continue to expand our footprint through dealership acquisitions and the buying experienceexpansion of our AutoNation USA stores. We also continue to invest in various strategic partnerships and throughoutinitiatives to expand the vehicle ownership life cycle. The transaction remains subjectscope and scale of our business, broaden our product offerings, expand our reach to customary closing conditionscustomers, and regulatory approvalscontinue to provide a peerless customer experience.
On January 26, 2023, we acquired RepairSmith, a mobile solution for automotive repair and is expectedmaintenance. RepairSmith expands AutoNation’s ability to close withinpenetrate the next 90 days.extensive After-Sales service market and conveniently responds to our customers’ needs by broadening the reach of our existing After-Sales network.
Inventory Management
Our new and used vehicle inventories are stated at the lower of cost or net realizable value onin 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,March 31, 2023 and 2022, were 21,176 and 2021, were 10,782 and 14,338,9,055, respectively. ByWhile 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 strong demand and 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, 2022,March 31, 2023, or at December 31, 2021.2022.
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 $4.3$5.1 million at June 30, 2022,March 31, 2023, and $3.6$7.4 million at December 31, 2021.2022.
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 $6.3$7.2 million at June 30, 2022,March 31, 2023, and $5.8$7.4 million at December 31, 2021.2022.
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.

24

Table of Contents
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 are scheduled to complete our annual goodwill impairment test as of April 30, 2023.
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

22

Table of Contents
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.
Under accounting standards,If we chose to makedo not perform a qualitative evaluation about the likelihood of goodwill impairment for our annual impairment testing as of April 30, 2022, andassessment, or if we determineddetermine that it wasis not more likely than not that the fair value of the reporting unit exceeds its carrying amount, we calculate the estimated fair value of the reporting unit using an “income” valuation approach, which discounts projected free cash flows of the reporting unit at a computed weighted average cost of capital as the discount rate. The income valuation approach requires the use of significant estimates and assumptions, which include revenue growth rates and future operating margins used to calculate projected future cash flows, weighted average cost of capital, and future economic and market conditions. In connection with this process, we also reconcile the estimated aggregate fair values of our reporting units were less than theirto our market capitalization, including consideration of a control premium based upon our stock price and/or average stock price over a reasonable period as of the measurement date. We base our cash flow forecasts on our knowledge of the automotive industry, our recent performance, our expectations of our future performance, and other assumptions we believe to be reasonable but that are unpredictable and inherently uncertain. Actual future results may differ from those estimates. We also make certain judgments and assumptions in allocating shared assets and liabilities to determine the carrying amounts.values for each of our reporting units.
As of June 30, 2022,March 31, 2023, we have $228.7$236.3 million of goodwill related to the Domestic reporting unit, $517.9$518.7 million related to the Import reporting unit, $482.1 million related to the Premium Luxury reporting unit, $130.1 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 are scheduled to complete our annual impairment test of our franchise rights as of April 30, 2023.
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, 2022, 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, 2022, no impairment would have resulted. The effect of a hypothetical 10% decrease in fair value estimates is not intended to provide a sensitivity analysis of every potential outcome.



2325

Table of Contents
Reported Operating Data
Historical operating results include the results of acquired businesses from the date of acquisition.
($ in millions, except per vehicle data)($ in millions, except per vehicle data)Three Months Ended June 30,Six Months Ended June 30,($ in millions, except per vehicle data)Three Months Ended March 31,
20222021Variance
Favorable /
(Unfavorable)
%
Variance
20222021Variance
Favorable /
(Unfavorable)
%
Variance
20232022Variance
Favorable /
(Unfavorable)
%
Variance
Revenue:Revenue:Revenue:
New vehicleNew vehicle$2,935.8 $3,428.3 $(492.5)(14.4)$5,743.0 $6,410.6 $(667.6)(10.4)New vehicle$2,931.9 $2,807.2 $124.7 4.4 
Retail used vehicleRetail used vehicle2,362.2 2,085.8 276.4 13.3 4,754.4 3,729.9 1,024.5 27.5 Retail used vehicle1,884.1 2,392.2 (508.1)(21.2)
WholesaleWholesale158.2 137.1 21.1 15.4 338.4 242.1 96.3 39.8 Wholesale148.5 180.2 (31.7)(17.6)
Used vehicleUsed vehicle2,520.4 2,222.9 297.5 13.4 5,092.8 3,972.0 1,120.8 28.2 Used vehicle2,032.6 2,572.4 (539.8)(21.0)
Finance and insurance, netFinance and insurance, net367.6 369.0 (1.4)(0.4)731.5 682.0 49.5 7.3 Finance and insurance, net332.4 363.9 (31.5)(8.7)
Total variable operations(1)
Total variable operations(1)
5,823.8 6,020.2 (196.4)(3.3)11,567.3 11,064.6 502.7 4.5 
Total variable operations(1)
5,296.9 5,743.5 (446.6)(7.8)
Parts and serviceParts and service1,036.3 950.8 85.5 9.0 2,040.2 1,801.8 238.4 13.2 Parts and service1,089.8 1,003.9 85.9 8.6 
OtherOther9.1 7.4 1.7 14.5 15.8 (1.3)Other12.0 5.4 6.6 
Total revenueTotal revenue$6,869.2 $6,978.4 $(109.2)(1.6)$13,622.0 $12,882.2 $739.8 5.7 Total revenue$6,398.7 $6,752.8 $(354.1)(5.2)
Gross profit:Gross profit:Gross profit:
New vehicleNew vehicle$353.5 $320.5 $33.0 10.3 $698.5 $510.5 $188.0 36.8 New vehicle$286.9 $345.0 $(58.1)(16.8)
Retail used vehicleRetail used vehicle147.6 180.4 (32.8)(18.2)272.5 305.6 (33.1)(10.8)Retail used vehicle143.0 124.9 18.1 14.5 
WholesaleWholesale8.9 22.3 (13.4)20.6 37.3 (16.7)Wholesale11.4 11.7 (0.3)
Used vehicleUsed vehicle156.5 202.7 (46.2)(22.8)293.1 342.9 (49.8)(14.5)Used vehicle154.4 136.6 17.8 13.0 
Finance and insuranceFinance and insurance367.6 369.0 (1.4)(0.4)731.5 682.0 49.5 7.3 Finance and insurance332.4 363.9 (31.5)(8.7)
Total variable operations(1)
Total variable operations(1)
877.6 892.2 (14.6)(1.6)1,723.1 1,535.4 187.7 12.2 
Total variable operations(1)
773.7 845.5 (71.8)(8.5)
Parts and serviceParts and service481.7 432.5 49.2 11.4 942.8 821.5 121.3 14.8 Parts and service511.1 461.1 50.0 10.8 
OtherOther2.4 1.6 0.8 4.7 2.2 2.5 Other1.6 2.3 (0.7)
Total gross profitTotal gross profit1,361.7 1,326.3 35.4 2.7 2,670.6 2,359.1 311.5 13.2 Total gross profit1,286.4 1,308.9 (22.5)(1.7)
Selling, general, and administrative expensesSelling, general, and administrative expenses754.8 748.9 (5.9)(0.8)1,496.2 1,396.8 (99.4)(7.1)Selling, general, and administrative expenses782.7 741.4 (41.3)(5.6)
Depreciation and amortizationDepreciation and amortization48.8 47.9 (0.9)98.8 95.8 (3.0)Depreciation and amortization52.8 50.0 (2.8)
Other income, net— (0.7)(0.7)(1.5)(0.6)0.9 
Other (income) expense, netOther (income) expense, net7.6 (1.5)(9.1)
Operating incomeOperating income558.1 530.2 27.9 5.3 1,077.1 867.1 210.0 24.2 Operating income443.3 519.0 (75.7)(14.6)
Non-operating income (expense) items:Non-operating income (expense) items:Non-operating income (expense) items:
Floorplan interest expenseFloorplan interest expense(5.8)(6.6)0.8 (11.0)(16.0)5.0 Floorplan interest expense(27.1)(5.2)(21.9)
Other interest expenseOther interest expense(34.1)(20.9)(13.2)(63.7)(42.1)(21.6)Other interest expense(41.1)(29.6)(11.5)
Other income (loss), netOther income (loss), net(13.7)8.9 (22.6)(20.1)19.9 (40.0)Other income (loss), net5.2 (6.4)11.6 
Income from continuing operations before income taxesIncome from continuing operations before income taxes$504.5 $511.6 $(7.1)(1.4)$982.3 $828.9 $153.4 18.5 Income from continuing operations before income taxes$380.3 $477.8 $(97.5)(20.4)
Retail vehicle unit sales:Retail vehicle unit sales:Retail vehicle unit sales:
New vehicleNew vehicle57,890 77,164 (19,274)(25.0)114,332 146,525 (32,193)(22.0)New vehicle55,065 56,442 (1,377)(2.4)
Used vehicleUsed vehicle77,080 80,589 (3,509)(4.4)156,843 152,369 4,474 2.9 Used vehicle67,539 79,763 (12,224)(15.3)
134,970 157,753 (22,783)(14.4)271,175 298,894 (27,719)(9.3)122,604 136,205 (13,601)(10.0)
Revenue per vehicle retailed:Revenue per vehicle retailed:Revenue per vehicle retailed:
New vehicleNew vehicle$50,713 $44,429 $6,284 14.1 $50,231 $43,751 $6,480 14.8 New vehicle$53,244 $49,736 $3,508 7.1 
Used vehicleUsed vehicle$30,646 $25,882 $4,764 18.4 $30,313 $24,479 $5,834 23.8 Used vehicle$27,896 $29,991 $(2,095)(7.0)
Gross profit per vehicle retailed:Gross profit per vehicle retailed:Gross profit per vehicle retailed:
New vehicleNew vehicle$6,106 $4,153 $1,953 47.0 $6,109 $3,484 $2,625 75.3 New vehicle$5,210 $6,112 $(902)(14.8)
Used vehicleUsed vehicle$1,915 $2,239 $(324)(14.5)$1,737 $2,006 $(269)(13.4)Used vehicle$2,117 $1,566 $551 35.2 
Finance and insuranceFinance and insurance$2,724 $2,339 $385 16.5 $2,698 $2,282 $416 18.2 Finance and insurance$2,711 $2,672 $39 1.5 
Total variable operations(2)
Total variable operations(2)
$6,436 $5,514 $922 16.7 $6,278 $5,012 $1,266 25.3 
Total variable operations(2)
$6,218 $6,122 $96 1.6 
(1) Total variable operations includes new vehicle, used vehicle (retail and wholesale), and finance and insurance results.
(1) Total variable operations includes new vehicle, used vehicle (retail and wholesale), and finance and insurance results.
(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.
(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.
(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.

2426

Table of Contents
Three Months EndedSix Months EndedThree Months Ended
June 30,June 30, March 31,
2022 (%)2021 (%)2022 (%)2021 (%) 2023 (%)2022 (%)
Revenue mix percentages:Revenue mix percentages:Revenue mix percentages:
New vehicleNew vehicle42.7 49.1 42.2 49.8 New vehicle45.8 41.6 
Used vehicleUsed vehicle36.7 31.9 37.4 30.8 Used vehicle31.8 38.1 
Parts and serviceParts and service15.1 13.6 15.0 14.0 Parts and service17.0 14.9 
Finance and insurance, netFinance and insurance, net5.4 5.3 5.4 5.3 Finance and insurance, net5.2 5.4 
OtherOther0.1 0.1 — 0.1 Other0.2 — 
TotalTotal100.0 100.0 100.0 100.0 Total100.0 100.0 
Gross profit mix percentages:Gross profit mix percentages:Gross profit mix percentages:
New vehicleNew vehicle26.0 24.2 26.2 21.6 New vehicle22.3 26.4 
Used vehicleUsed vehicle11.5 15.3 11.0 14.5 Used vehicle12.0 10.4 
Parts and serviceParts and service35.4 32.6 35.3 34.8 Parts and service39.7 35.2 
Finance and insuranceFinance and insurance27.0 27.8 27.4 28.9 Finance and insurance25.8 27.8 
OtherOther0.1 0.1 0.1 0.2 Other0.2 0.2 
TotalTotal100.0 100.0 100.0 100.0 Total100.0 100.0 
Operating items as a percentage of revenue:Operating items as a percentage of revenue:Operating items as a percentage of revenue:
Gross profit:Gross profit:Gross profit:
New vehicleNew vehicle12.0 9.3 12.2 8.0 New vehicle9.8 12.3 
Used vehicle - retailUsed vehicle - retail6.2 8.6 5.7 8.2 Used vehicle - retail7.6 5.2 
Parts and serviceParts and service46.5 45.5 46.2 45.6 Parts and service46.9 45.9 
TotalTotal19.8 19.0 19.6 18.3 Total20.1 19.4 
Selling, general, and administrative expensesSelling, general, and administrative expenses11.0 10.7 11.0 10.8 Selling, general, and administrative expenses12.2 11.0 
Operating incomeOperating income8.1 7.6 7.9 6.7 Operating income6.9 7.7 
Other operating items as a percentage of total gross profit:Other operating items as a percentage of total gross profit:Other operating items as a percentage of total gross profit:
Selling, general, and administrative expensesSelling, general, and administrative expenses55.4 56.5 56.0 59.2 Selling, general, and administrative expenses60.8 56.6 
Operating incomeOperating income41.0 40.0 40.3 36.8 Operating income34.5 39.7 
June 30,March 31,
2022202120232022
Inventory days supply:Inventory days supply:Inventory days supply:
New vehicle (industry standard of selling days)New vehicle (industry standard of selling days)11 days14 daysNew vehicle (industry standard of selling days)25 days8 days
Used vehicle (trailing calendar month days)Used vehicle (trailing calendar month days)40 days34 daysUsed vehicle (trailing calendar month days)29 days30 days


2527

Table of Contents
Same Store Operating Data
We have presented below our operating results on a same store basis whichto 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 20212022 columns may differ from the same store amounts presented for 20212022 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, Three Months Ended March 31,
($ in millions, except per vehicle data)($ in millions, except per vehicle data)20222021Variance
Favorable /
(Unfavorable)
%
Variance
20222021Variance
Favorable /
(Unfavorable)
%
Variance
($ in millions, except per vehicle data)20232022Variance
Favorable /
(Unfavorable)
%
Variance
Revenue:Revenue:Revenue:
New vehicleNew vehicle$2,829.5 $3,425.7 $(596.2)(17.4)$5,536.9 $6,403.0 $(866.1)(13.5)New vehicle$2,909.8 $2,792.1 $117.7 4.2 
Retail used vehicleRetail used vehicle2,245.2 2,083.4 161.8 7.8 4,526.3 3,724.2 802.1 21.5 Retail used vehicle1,832.3 2,378.1 (545.8)(23.0)
WholesaleWholesale151.8 136.9 14.9 10.9 323.8 241.8 82.0 33.9 Wholesale146.3 179.5 (33.2)(18.5)
Used vehicleUsed vehicle2,397.0 2,220.3 176.7 8.0 4,850.1 3,966.0 884.1 22.3 Used vehicle1,978.6 2,557.6 (579.0)(22.6)
Finance and insurance, netFinance and insurance, net351.2 368.7 (17.5)(4.7)702.2 681.2 21.0 3.1 Finance and insurance, net326.4 362.5 (36.1)(10.0)
Total variable operations(1)
Total variable operations(1)
5,577.7 6,014.7 (437.0)(7.3)11,089.2 11,050.2 39.0 0.4 
Total variable operations(1)
5,214.8 5,712.2 (497.4)(8.7)
Parts and serviceParts and service995.9 937.0 58.9 6.3 1,962.2 1,773.8 188.4 10.6 Parts and service1,072.9 997.4 75.5 7.6 
OtherOther8.9 7.1 1.8 14.5 15.7 (1.2)Other11.9 5.3 6.6 
Total revenueTotal revenue$6,582.5 $6,958.8 $(376.3)(5.4)$13,065.9 $12,839.7 $226.2 1.8 Total revenue$6,299.6 $6,714.9 $(415.3)(6.2)
Gross profit:Gross profit:Gross profit:
New vehicleNew vehicle$341.4 $320.4 $21.0 6.6 $674.8 $510.0 $164.8 32.3 New vehicle$284.8 $343.5 $(58.7)(17.1)
Retail used vehicleRetail used vehicle140.3 180.2 (39.9)(22.1)259.3 305.0 (45.7)(15.0)Retail used vehicle139.0 124.3 14.7 11.8 
WholesaleWholesale9.4 22.3 (12.9)21.4 37.3 (15.9)Wholesale11.5 11.8 (0.3)
Used vehicleUsed vehicle149.7 202.5 (52.8)(26.1)280.7 342.3 (61.6)(18.0)Used vehicle150.5 136.1 14.4 10.6 
Finance and insuranceFinance and insurance351.2 368.7 (17.5)(4.7)702.2 681.2 21.0 3.1 Finance and insurance326.4 362.5 (36.1)(10.0)
Total variable operations(1)
Total variable operations(1)
842.3 891.6 (49.3)(5.5)1,657.7 1,533.5 124.2 8.1 
Total variable operations(1)
761.7 842.1 (80.4)(9.5)
Parts and serviceParts and service461.0 426.7 34.3 8.0 902.9 809.9 93.0 11.5 Parts and service503.1 457.9 45.2 9.9 
OtherOther2.3 1.4 0.9 4.5 2.2 2.3 Other1.3 2.2 (0.9)
Total gross profitTotal gross profit$1,305.6 $1,319.7 $(14.1)(1.1)$2,565.1 $2,345.6 $219.5 9.4 Total gross profit$1,266.1 $1,302.2 $(36.1)(2.8)
Retail vehicle unit sales:Retail vehicle unit sales:Retail vehicle unit sales:
New vehicleNew vehicle55,889 77,081 (21,192)(27.5)110,428 146,293 (35,865)(24.5)New vehicle54,654 56,224 (1,570)(2.8)
Used vehicleUsed vehicle73,211 80,452 (7,241)(9.0)149,152 152,018 (2,866)(1.9)Used vehicle65,474 79,375 (13,901)(17.5)
129,100 157,533 (28,433)(18.0)259,580 298,311 (38,731)(13.0)120,128 135,599 (15,471)(11.4)
Revenue per vehicle retailed:Revenue per vehicle retailed:Revenue per vehicle retailed:
New vehicleNew vehicle$50,627 $44,443 $6,184 13.9 $50,140 $43,768 $6,372 14.6 New vehicle$53,240 $49,660 $3,580 7.2 
Used vehicleUsed vehicle$30,668 $25,896 $4,772 18.4 $30,347 $24,498 $5,849 23.9 Used vehicle$27,985 $29,960 $(1,975)(6.6)
Gross profit per vehicle retailed:Gross profit per vehicle retailed:Gross profit per vehicle retailed:
New vehicleNew vehicle$6,109 $4,157 $1,952 47.0 $6,111 $3,486 $2,625 75.3 New vehicle$5,211 $6,109 $(898)(14.7)
Used vehicleUsed vehicle$1,916 $2,240 $(324)(14.5)$1,738 $2,006 $(268)(13.4)Used vehicle$2,123 $1,566 $557 35.6 
Finance and insuranceFinance and insurance$2,720 $2,340 $380 16.2 $2,705 $2,284 $421 18.4 Finance and insurance$2,717 $2,673 $44 1.6 
Total variable operations(2)
Total variable operations(2)
$6,452 $5,518 $934 16.9 $6,304 $5,016 $1,288 25.7 
Total variable operations(2)
$6,245 $6,123 $122 2.0 
(1) Total variable operations includes new vehicle, used vehicle (retail and wholesale), and finance and insurance results.
(1) Total variable operations includes new vehicle, used vehicle (retail and wholesale), and finance and insurance results.
(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.
(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.
(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.

2628

Table of Contents
Three Months EndedSix Months EndedThree Months Ended
June 30,June 30, March 31,
2022 (%)2021 (%)2022 (%)2021 (%) 2023 (%)2022 (%)
Revenue mix percentages:Revenue mix percentages:Revenue mix percentages:
New vehicleNew vehicle43.0 49.2 42.4 49.9 New vehicle46.2 41.6 
Used vehicleUsed vehicle36.4 31.9 37.1 30.9 Used vehicle31.4 38.1 
Parts and serviceParts and service15.1 13.5 15.0 13.8 Parts and service17.0 14.9 
Finance and insurance, netFinance and insurance, net5.3 5.3 5.4 5.3 Finance and insurance, net5.2 5.4 
OtherOther0.2 0.1 0.1 0.1 Other0.2 — 
TotalTotal100.0 100.0 100.0 100.0 Total100.0 100.0 
Gross profit mix percentages:Gross profit mix percentages:Gross profit mix percentages:
New vehicleNew vehicle26.1 24.3 26.3 21.7 New vehicle22.5 26.4 
Used vehicleUsed vehicle11.5 15.3 10.9 14.6 Used vehicle11.9 10.5 
Parts and serviceParts and service35.3 32.3 35.2 34.5 Parts and service39.7 35.2 
Finance and insuranceFinance and insurance26.9 27.9 27.4 29.0 Finance and insurance25.8 27.8 
OtherOther0.2 0.2 0.2 0.2 Other0.1 0.1 
TotalTotal100.0 100.0 100.0 100.0 Total100.0 100.0 
Operating items as a percentage of revenue:Operating items as a percentage of revenue:Operating items as a percentage of revenue:
Gross profit:Gross profit:Gross profit:
New vehicleNew vehicle12.1 9.4 12.2 8.0 New vehicle9.8 12.3 
Used vehicle - retailUsed vehicle - retail6.2 8.6 5.7 8.2 Used vehicle - retail7.6 5.2 
Parts and serviceParts and service46.3 45.5 46.0 45.7 Parts and service46.9 45.9 
TotalTotal19.8 19.0 19.6 18.3 Total20.1 19.4 


2729

Table of Contents
New Vehicle
Three Months Ended June 30,Six Months Ended June 30, Three Months Ended March 31,
($ in millions, except per vehicle data)($ in millions, except per vehicle data)20222021Variance
Favorable /
(Unfavorable)
%
Variance
20222021Variance
Favorable /
(Unfavorable)
%
Variance
($ in millions, except per vehicle data)20232022Variance
Favorable /
(Unfavorable)
%
Variance
Reported:Reported:Reported:
RevenueRevenue$2,935.8 $3,428.3 $(492.5)(14.4)$5,743.0 $6,410.6 $(667.6)(10.4)Revenue$2,931.9 $2,807.2 $124.7 4.4 
Gross profitGross profit$353.5 $320.5 $33.0 10.3 $698.5 $510.5 $188.0 36.8 Gross profit$286.9 $345.0 $(58.1)(16.8)
Retail vehicle unit salesRetail vehicle unit sales57,890 77,164 (19,274)(25.0)114,332 146,525 (32,193)(22.0)Retail vehicle unit sales55,065 56,442 (1,377)(2.4)
Revenue per vehicle retailedRevenue per vehicle retailed$50,713 $44,429 $6,284 14.1 $50,231 $43,751 $6,480 14.8 Revenue per vehicle retailed$53,244 $49,736 $3,508 7.1 
Gross profit per vehicle retailedGross profit per vehicle retailed$6,106 $4,153 $1,953 47.0 $6,109 $3,484 $2,625 75.3 Gross profit per vehicle retailed$5,210 $6,112 $(902)(14.8)
Gross profit as a percentage of revenueGross profit as a percentage of revenue12.0%9.3%12.2%8.0%Gross profit as a percentage of revenue9.8%12.3%
Inventory days supply (industry standard of selling days)Inventory days supply (industry standard of selling days)11 days14 daysInventory days supply (industry standard of selling days)25 days8 days
Three Months Ended June 30,Six Months Ended June 30, Three Months Ended March 31,
20222021Variance
Favorable /
(Unfavorable)
%
Variance
20222021Variance
Favorable /
(Unfavorable)
%
Variance
20232022Variance
Favorable /
(Unfavorable)
%
Variance
Same Store:Same Store:Same Store:
RevenueRevenue$2,829.5 $3,425.7 $(596.2)(17.4)$5,536.9 $6,403.0 $(866.1)(13.5)Revenue$2,909.8 $2,792.1 $117.7 4.2 
Gross profitGross profit$341.4 $320.4 $21.0 6.6 $674.8 $510.0 $164.8 32.3 Gross profit$284.8 $343.5 $(58.7)(17.1)
Retail vehicle unit salesRetail vehicle unit sales55,889 77,081 (21,192)(27.5)110,428 146,293 (35,865)(24.5)Retail vehicle unit sales54,654 56,224 (1,570)(2.8)
Revenue per vehicle retailedRevenue per vehicle retailed$50,627 $44,443 $6,184 13.9 $50,140 $43,768 $6,372 14.6 Revenue per vehicle retailed$53,240 $49,660 $3,580 7.2 
Gross profit per vehicle retailedGross profit per vehicle retailed$6,109 $4,157 $1,952 47.0 $6,111 $3,486 $2,625 75.3 Gross profit per vehicle retailed$5,211 $6,109 $(898)(14.7)
Gross profit as a percentage of revenueGross profit as a percentage of revenue12.1%9.4%12.2%8.0%Gross profit as a percentage of revenue9.8%12.3%
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 $106.3$22.1 million and $2.6$15.1 million in new vehicle revenue and $12.1$2.1 million and $0.1$1.5 million in new vehicle gross profit for the three months ended June 30,March 31, 2023 and 2022, and 2021, respectively, and $206.1 million and $7.6 million in new vehicle revenue and $23.7 million and $0.5 million in new vehicle gross profit for the six months ended June 30, 2022 and 2021, respectively, is related to acquisition and divestiture activity.
SecondFirst Quarter 20222023 compared to SecondFirst Quarter 20212022
Same store new vehicle revenue decreasedincreased during the three months ended June 30, 2022,March 31, 2023, as compared to the same period in 2021,2022, due to an increase in same store revenue PVR, partially offset by a decrease in same store unit volume partially offset by an increase in same store revenue PVR.our Domestic and Import segments. Same store unit volume in the current year was adversely impacted by historically low inventory levels due to manufacturer supply shortages.shortages for certain vehicle models, particularly for Import manufacturers.
Same store revenue PVR and gross profit PVR both increased during the three months ended June 30, 2022,March 31, 2023, as compared to the same period in 2021,2022, primarily due to strong demandincreases in the manufacturers’ suggested retail prices for Domestic and reduced availability of new vehicle inventory.
First Six Months 2022 comparedPremium Luxury vehicles and a shift in mix to First Six Months 2021Premium Luxury vehicles, which have relatively higher average selling prices.
Same store new vehicle revenuegross profit PVR decreased during the sixthree months ended June 30, 2022,March 31, 2023, as compared to the same period in 2021,2022, primarily due to aincreasing supply of new vehicle inventory. The decrease in same store unit volume,gross profit PVR was partially offset by an increasea shift in same store revenue PVR. Same store unit volume in the current year was adversely impacted by historically low inventory levels duemix to manufacturer supply shortages.
Same store revenue PVR andPremium Luxury vehicles, which have relatively higher average gross profit PVR both increased during the six months ended June 30, 2022, as compared to the same period in 2021, primarily due to strong demand and reduced availability of new vehicle inventory.


28

Table of Contents
PVR.
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, Three Months Ended March 31,
($ in millions)($ in millions)20222021Variance20222021Variance($ in millions)20232022Variance
Floorplan assistanceFloorplan assistance$27.3 $34.7 $(7.4)$54.8 $66.7 $(11.9)Floorplan assistance$28.3 $27.6 $0.7 
New vehicle floorplan interest expenseNew vehicle floorplan interest expense(5.1)(6.0)0.9 (8.8)(14.9)6.1 New vehicle floorplan interest expense(24.4)(3.7)(20.7)
Net new vehicle inventory carrying benefitNet new vehicle inventory carrying benefit$22.2 $28.7 $(6.5)$46.0 $51.8 $(5.8)Net new vehicle inventory carrying benefit$3.9 $23.9 $(20.0)
Second

30

Table of Contents
First Quarter 2023 compared to First Quarter 2022 compared to Second Quarter 2021
The net new vehicle inventory carrying benefit decreased during the three months ended June 30, 2022,March 31, 2023, as compared to the same period in 2021,2022, primarily due to a decrease in floorplan assistance as a result of a decrease in unit volume, partially offset by an increase in the average floorplan assistance rate per unit.
First Six Months 2022 compared to First Six Months 2021
The net new vehicle inventory carrying benefit decreased during the six months ended June 30, 2022, as compared to the same period in 2021, due to a decrease in floorplan assistance, partially offset by a decrease in floorplan interest expense. Floorplan assistance decreased due to a decrease in unit volume, partially offset by an increase in the average floorplan assistance rate per unit. Floorplan interest expense decreased due to lower average floorplan balances, partially offset byresulting from higher average interest rates.rates and higher average floorplan balances. Floorplan interest rates are variable and, therefore, increase and decrease with changes in the underlying benchmark interest rates.

2931

Table of Contents
Used Vehicle
Three Months Ended June 30,Six Months Ended June 30, Three Months Ended March 31,
($ in millions, except per vehicle data)($ in millions, except per vehicle data)20222021Variance
Favorable /
(Unfavorable)
%
Variance
20222021Variance
Favorable /
(Unfavorable)
%
Variance
($ in millions, except per vehicle data)20232022Variance
Favorable /
(Unfavorable)
%
Variance
Reported:Reported:Reported:
Retail revenueRetail revenue$2,362.2 $2,085.8 $276.4 13.3 $4,754.4 $3,729.9 $1,024.5 27.5 Retail revenue$1,884.1 $2,392.2 $(508.1)(21.2)
Wholesale revenueWholesale revenue158.2 137.1 21.1 15.4 338.4 242.1 96.3 39.8 Wholesale revenue148.5 180.2 (31.7)(17.6)
Total revenueTotal revenue$2,520.4 $2,222.9 $297.5 13.4 $5,092.8 $3,972.0 $1,120.8 28.2 Total revenue$2,032.6 $2,572.4 $(539.8)(21.0)
Retail gross profitRetail gross profit$147.6 $180.4 $(32.8)(18.2)$272.5 $305.6 $(33.1)(10.8)Retail gross profit$143.0 $124.9 $18.1 14.5 
Wholesale gross profitWholesale gross profit8.9 22.3 (13.4)20.6 37.3 (16.7)Wholesale gross profit11.4 11.7 (0.3)
Total gross profitTotal gross profit$156.5 $202.7 $(46.2)(22.8)$293.1 $342.9 $(49.8)(14.5)Total gross profit$154.4 $136.6 $17.8 13.0 
Retail vehicle unit salesRetail vehicle unit sales77,080 80,589 (3,509)(4.4)156,843 152,369 4,474 2.9 Retail vehicle unit sales67,539 79,763 (12,224)(15.3)
Revenue per vehicle retailedRevenue per vehicle retailed$30,646 $25,882 $4,764 18.4 $30,313 $24,479 $5,834 23.8 Revenue per vehicle retailed$27,896 $29,991 $(2,095)(7.0)
Gross profit per vehicle retailedGross profit per vehicle retailed$1,915 $2,239 $(324)(14.5)$1,737 $2,006 $(269)(13.4)Gross profit per vehicle retailed$2,117 $1,566 $551 35.2 
Retail gross profit as a percentage of retail revenueRetail gross profit as a percentage of retail revenue6.2%8.6%5.7%8.2%Retail gross profit as a percentage of retail revenue7.6%5.2%
Inventory days supply (trailing calendar month days)Inventory days supply (trailing calendar month days)40 days34 daysInventory days supply (trailing calendar month days)29 days30 days
Three Months Ended June 30,Six Months Ended June 30, Three Months Ended March 31,
20222021Variance
Favorable /
(Unfavorable)
%
Variance
20222021Variance
Favorable /
(Unfavorable)
%
Variance
20232022Variance
Favorable /
(Unfavorable)
%
Variance
Same Store:Same Store:Same Store:
Retail revenueRetail revenue$2,245.2 $2,083.4 $161.8 7.8 $4,526.3 $3,724.2 $802.1 21.5 Retail revenue$1,832.3 $2,378.1 $(545.8)(23.0)
Wholesale revenueWholesale revenue151.8 136.9 14.9 10.9 323.8 241.8 82.0 33.9 Wholesale revenue146.3 179.5 (33.2)(18.5)
Total revenueTotal revenue$2,397.0 $2,220.3 $176.7 8.0 $4,850.1 $3,966.0 $884.1 22.3 Total revenue$1,978.6 $2,557.6 $(579.0)(22.6)
Retail gross profitRetail gross profit$140.3 $180.2 $(39.9)(22.1)$259.3 $305.0 $(45.7)(15.0)Retail gross profit$139.0 $124.3 $14.7 11.8 
Wholesale gross profitWholesale gross profit9.4 22.3 (12.9)21.4 37.3 (15.9)Wholesale gross profit11.5 11.8 (0.3)
Total gross profitTotal gross profit$149.7 $202.5 $(52.8)(26.1)$280.7 $342.3 $(61.6)(18.0)Total gross profit$150.5 $136.1 $14.4 10.6 
Retail vehicle unit salesRetail vehicle unit sales73,211 80,452 (7,241)(9.0)149,152 152,018 (2,866)(1.9)Retail vehicle unit sales65,474 79,375 (13,901)(17.5)
Revenue per vehicle retailedRevenue per vehicle retailed$30,668 $25,896 $4,772 18.4 $30,347 $24,498 $5,849 23.9 Revenue per vehicle retailed$27,985 $29,960 $(1,975)(6.6)
Gross profit per vehicle retailedGross profit per vehicle retailed$1,916 $2,240 $(324)(14.5)$1,738 $2,006 $(268)(13.4)Gross profit per vehicle retailed$2,123 $1,566 $557 35.6 
Retail gross profit as a percentage of retail revenueRetail gross profit as a percentage of retail revenue6.2%8.6%5.7%8.2%Retail gross profit as a percentage of retail revenue7.6%5.2%
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 $123.4$54.0 million and $2.6$14.8 million in total used vehicle revenue and $6.8$3.9 million and $0.2$0.5 million in total used vehicle gross profit for the three months ended June 30,March 31, 2023 and 2022, and 2021, respectively, and $242.7 million and $6.0 million in total used vehicle revenue and $12.4 million and $0.6 million in total used vehicle gross profit for the six months ended June 30, 2022 and 2021, respectively, is related to acquisition and divestiture activity, as well as the opening of AutoNation USA stores.
SecondFirst Quarter 20222023 compared to SecondFirst Quarter 20212022
Same store retail used vehicle revenue increaseddecreased during the three months ended June 30, 2022,March 31, 2023, as compared to the same period in 2021,2022, due to an increase in same store revenue PVR, partially offset by 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 March 31, 2023, as compared to the same period in 2022, primarily due to a shift in mix towards lower-priced entry-level vehicles.
Same store revenuegross profit PVR increased during the three months ended June 30, 2022,March 31, 2023, as compared to the same period in 2021,2022, primarily due to reduced availabilitya disciplined sourcing and pricing strategy as we focused on efficient internal sourcing of newour used vehicle inventory.
Same storeinventory and balancing gross profit PVR decreased during the three months ended June 30, 2022, as compared to the same period in 2021, primarily due to margin pressure as a result of a decline in used vehicle values.and unit volume.

30

Table of Contents
First Six Months 2022 compared to First Six Months 2021
Same store retail used vehicle revenue increased during the six months ended June 30, 2022, as compared to the same period in 2021, due to an increase in same store revenue PVR, partially offset by a decrease in same store unit volume of lower-priced entry-level vehicles.
Same store revenue PVR increased during the six months ended June 30, 2022, as compared to the same period in 2021, primarily due to reduced availability of new vehicle inventory.
Same store gross profit PVR decreased during the six months ended June 30, 2022, as compared to the same period in 2021, primarily due to margin pressure as a result of a decline in used vehicle values.

3132

Table of Contents
Parts and Service
Three Months Ended June 30,Six Months Ended June 30, Three Months Ended March 31,
($ in millions)($ in millions)20222021Variance
Favorable /
(Unfavorable)
%
Variance
20222021Variance
Favorable /
(Unfavorable)
%
Variance
($ in millions)20232022Variance
Favorable /
(Unfavorable)
%
Variance
Reported:Reported:Reported:
RevenueRevenue$1,036.3 $950.8 $85.5 9.0 $2,040.2 $1,801.8 $238.4 13.2 Revenue$1,089.8 $1,003.9 $85.9 8.6 
Gross ProfitGross Profit$481.7 $432.5 $49.2 11.4 $942.8 $821.5 $121.3 14.8 Gross Profit$511.1 $461.1 $50.0 10.8 
Gross profit as a percentage of revenueGross profit as a percentage of revenue46.5%45.5%46.2%45.6%Gross profit as a percentage of revenue46.9%45.9%
Same Store:Same Store:Same Store:
RevenueRevenue$995.9 $937.0 $58.9 6.3 $1,962.2 $1,773.8 $188.4 10.6 Revenue$1,072.9 $997.4 $75.5 7.6 
Gross ProfitGross Profit$461.0 $426.7 $34.3 8.0 $902.9 $809.9 $93.0 11.5 Gross Profit$503.1 $457.9 $45.2 9.9 
Gross profit as a percentage of revenueGross profit as a percentage of revenue46.3%45.5%46.0%45.7%Gross profit as a percentage of revenue46.9%45.9%
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 $40.4$16.9 million and $13.8$6.5 million in parts and service revenue and $20.7$8.0 million and $5.8$3.2 million in parts and service gross profit for the three months ended June 30,March 31, 2023 and 2022, and 2021, respectively, and $78.0 million and $28.0 million in parts and service revenue and $39.9 million and $11.6 million in parts and service gross profit for the six months ended June 30, 2022 and 2021, respectively, is related to acquisition and divestiture activity, as well as the opening of AutoNation USA stores.
SecondFirst Quarter 20222023 compared to SecondFirst Quarter 20212022
During the three months ended June 30, 2022,March 31, 2023, same store parts and service gross profit increased compared to the same period in 2021,2022, primarily due to increases in gross profit associated with customer-pay service of $17.3$27.2 million and the preparationwarranty service of vehicles for sale of $9.1$11.7 million.
Gross profit associated with customer-pay service benefited from higher value repair orders, partially offset by a decrease in repair order volume. Grossorders. Warranty service gross profit associated with the preparation of vehicles for sale benefited from higher value repair orders and improved margin performance partially offset by a decrease in repair order volume.
First Six Months 2022 comparedlargely due to First Six Months 2021
During the six months ended June 30, 2022, same storeimproved parts and service gross profit increased compared to the same period in 2021, primarily due to increases in gross profit associatedlabor rates negotiated with customer-pay service of $38.4 million and the preparation of vehicles for sale of $25.3 million.certain manufacturers.
Gross profit associated with customer-pay service benefited from higher value repair orders, partially offset by decreases in repair order volume and margin performance. Gross profit associated with the preparation of vehicles for sale benefited from higher value repair orders and improved margin performance, partially offset by a decrease in repair order volume.

3233

Table of Contents
Finance and Insurance
 Three Months Ended June 30,Six Months Ended June 30,
($ in millions, except per vehicle data)20222021Variance
Favorable /
(Unfavorable)
%
Variance
20222021Variance
Favorable /
(Unfavorable)
%
Variance
Reported:
Revenue and gross profit$367.6 $369.0 $(1.4)(0.4)$731.5 $682.0 $49.5 7.3 
Gross profit per vehicle retailed$2,724 $2,339 $385 16.5 $2,698 $2,282 $416 18.2 
Same Store:
Revenue and gross profit$351.2 $368.7 $(17.5)(4.7)$702.2 $681.2 $21.0 3.1 
Gross profit per vehicle retailed$2,720 $2,340 $380 16.2 $2,705 $2,284 $421 18.4 
 Three Months Ended March 31,
($ in millions, except per vehicle data)20232022Variance
Favorable /
(Unfavorable)
%
Variance
Reported:
Revenue and gross profit$332.4 $363.9 $(31.5)(8.7)
Gross profit per vehicle retailed$2,711 $2,672 $39 1.5 
Same Store:
Revenue and gross profit$326.4 $362.5 $(36.1)(10.0)
Gross profit per vehicle retailed$2,717 $2,673 $44 1.6 
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 $16.4$6.0 million and $0.3$1.4 million for the three months ended June 30,March 31, 2023 and 2022, and 2021, respectively, and $29.3 million and $0.8 million for the six months ended June 30, 2022 and 2021, respectively, is related to acquisition and divestiture activity, as well as the opening of AutoNation USA stores.
SecondFirst Quarter 20222023 compared to SecondFirst Quarter 20212022
Same store finance and insurance revenue and gross profit decreased during the three months ended June 30, 2022,March 31, 2023, as compared to the same period in 2021,2022, due to a decrease in new and used vehicle unit volume, partially offset by an increase in finance and insurance gross profit PVR. The increase in finance and insurance gross profit PVR was primarily due to higher realized margins on vehicle service contracts and an increaseprotection products, partially offset by a decrease in product penetration. Finance and insurance gross profit PVR also benefited from increases in amounts financed per transaction and gross profit per transaction associated with arranging customer financing.
First Six Months 2022 compared to First Six Months 2021
Same store financefinancing and insurance revenue and gross profit increased during the six months ended June 30, 2022, as compared to the same period in 2021, due to an increasedecreases in finance and insurance gross profit PVR, partially offset by a decrease in vehicle unit volume. The increase in finance and insurance gross profit PVR was primarily due to higher realized margins on vehicle service contracts and an increase in product penetration. Finance and insurance gross profit PVR also benefited from increases in amounts financed per transaction and gross profit per transaction associated with arranging customer financing.

3334

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, Three Months Ended March 31,
($ in millions)($ in millions)20222021Variance
Favorable /
(Unfavorable)
%
Variance
20222021Variance
Favorable /
(Unfavorable)
%
Variance
($ in millions)20232022Variance
Favorable /
(Unfavorable)
%
Variance
Revenue:Revenue:Revenue:
DomesticDomestic$2,040.9 $2,124.8 $(83.9)(3.9)$4,075.3 $3,971.5 $103.8 2.6 Domestic$1,831.1 $2,034.4 $(203.3)(10.0)
ImportImport1,949.7 2,175.0 (225.3)(10.4)3,923.8 3,944.6 (20.8)(0.5)Import1,789.3 1,974.1 (184.8)(9.4)
Premium LuxuryPremium Luxury2,616.6 2,468.5 148.1 6.0 5,095.3 4,572.0 523.3 11.4 Premium Luxury2,484.9 2,478.7 6.2 0.3 
TotalTotal6,607.2 6,768.3 (161.1)(2.4)13,094.4 12,488.1 606.3 4.9 Total6,105.3 6,487.2 (381.9)(5.9)
Corporate and otherCorporate and other262.0 210.1 51.9 24.7 527.6 394.1 133.5 33.9 Corporate and other293.4 265.6 27.8 10.5 
Total consolidated revenueTotal consolidated revenue$6,869.2 $6,978.4 $(109.2)(1.6)$13,622.0 $12,882.2 $739.8 5.7 Total consolidated revenue$6,398.7 $6,752.8 $(354.1)(5.2)
Segment income(1):
Segment income(1):
Segment income(1):
DomesticDomestic$153.1 $169.0 $(15.9)(9.4)$302.5 $287.5 $15.0 5.2 Domestic$118.5 $149.4 $(30.9)(20.7)
ImportImport192.5 203.7 (11.2)(5.5)378.7 329.6 49.1 14.9 Import160.4 186.2 (25.8)(13.9)
Premium LuxuryPremium Luxury257.5 225.7 31.8 14.1 487.0 384.2 102.8 26.8 Premium Luxury226.8 229.5 (2.7)(1.2)
TotalTotal603.1 598.4 4.7 0.8 1,168.2 1,001.3 166.9 16.7 Total505.7 565.1 (59.4)(10.5)
Corporate and otherCorporate and other(50.8)(74.8)24.0 (102.1)(150.2)48.1 Corporate and other(89.5)(51.3)(38.2)
Floorplan interest expenseFloorplan interest expense5.8 6.6 0.8 11.0 16.0 5.0 Floorplan interest expense27.1 5.2 (21.9)
Operating incomeOperating income$558.1 $530.2 $27.9 5.3 $1,077.1 $867.1 $210.0 24.2 Operating income$443.3 $519.0 $(75.7)(14.6)
Retail new vehicle unit sales:Retail new vehicle unit sales:Retail new vehicle unit sales:
DomesticDomestic16,760 21,459 (4,699)(21.9)33,125 43,128 (10,003)(23.2)Domestic15,849 16,365 (516)(3.2)
ImportImport23,612 36,136 (12,524)(34.7)48,148 66,979 (18,831)(28.1)Import23,098 24,536 (1,438)(5.9)
Premium LuxuryPremium Luxury17,518 19,569 (2,051)(10.5)33,059 36,418 (3,359)(9.2)Premium Luxury16,118 15,541 577 3.7 
57,890 77,164 (19,274)(25.0)114,332 146,525 (32,193)(22.0)55,065 56,442 (1,377)(2.4)
Retail used vehicle unit sales:Retail used vehicle unit sales:Retail used vehicle unit sales:
DomesticDomestic25,180 28,056 (2,876)(10.3)51,776 52,535 (759)(1.4)Domestic21,203 26,596 (5,393)(20.3)
ImportImport25,786 27,128 (1,342)(4.9)52,315 52,229 86 0.2 Import22,063 26,529 (4,466)(16.8)
Premium LuxuryPremium Luxury21,381 22,370 (989)(4.4)43,330 41,904 1,426 3.4 Premium Luxury18,768 21,949 (3,181)(14.5)
72,347 77,554 (5,207)(6.7)147,421 146,668 753 0.5 62,034 75,074 (13,040)(17.4)
(1) Segment income represents income for each of our reportable segments and is defined as operating income less floorplan interest expense.
(1) Segment income represents income for each of our reportable segments and is defined as operating income less floorplan interest expense.
(1) Segment income represents income for each of our reportable segments and is defined as operating income less floorplan interest expense.





3435

Table of Contents
Domestic
The Domestic segment operating results included the following:
 
Three Months Ended June 30,Six Months Ended June 30, Three Months Ended March 31,
($ in millions)($ in millions)20222021Variance
Favorable /
(Unfavorable)
%
Variance
20222021Variance
Favorable /
(Unfavorable)
%
Variance
($ in millions)20232022Variance
Favorable /
(Unfavorable)
%
Variance
Revenue:Revenue:Revenue:
New vehicleNew vehicle$858.1 $991.3 $(133.2)(13.4)$1,680.6 $1,926.7 $(246.1)(12.8)New vehicle$828.0 $822.5 $5.5 0.7 
Used vehicleUsed vehicle786.8 749.1 37.7 5.0 1,609.9 1,312.8 297.1 22.6 Used vehicle612.3 823.1 (210.8)(25.6)
Parts and serviceParts and service275.5 257.9 17.6 6.8 544.2 492.0 52.2 10.6 Parts and service287.6 268.7 18.9 7.0 
Finance and insurance, netFinance and insurance, net119.4 125.8 (6.4)(5.1)238.6 235.1 3.5 1.5 Finance and insurance, net102.3 119.2 (16.9)(14.2)
OtherOther1.1 0.7 0.4 2.0 4.9 (2.9)Other0.9 0.9 — 
Total RevenueTotal Revenue$2,040.9 $2,124.8 $(83.9)(3.9)$4,075.3 $3,971.5 $103.8 2.6 Total Revenue$1,831.1 $2,034.4 $(203.3)(10.0)
Segment incomeSegment income$153.1 $169.0 $(15.9)(9.4)$302.5 $287.5 $15.0 5.2 Segment income$118.5 $149.4 $(30.9)(20.7)
Retail new vehicle unit salesRetail new vehicle unit sales16,760 21,459 (4,699)(21.9)33,125 43,128 (10,003)(23.2)Retail new vehicle unit sales15,849 16,365 (516)(3.2)
Retail used vehicle unit salesRetail used vehicle unit sales25,180 28,056 (2,876)(10.3)51,776 52,535 (759)(1.4)Retail used vehicle unit sales21,203 26,596 (5,393)(20.3)
SecondFirst Quarter 2023 compared to First Quarter 2022 compared to Second Quarter 2021
Domestic revenue decreased during the three months ended June 30, 2022,March 31, 2023, as compared to the same period in 2021,2022, primarily due to decreases in new and used vehicle unit volume partially offset by increases in new and used vehicle revenue PVR. NewThe decrease in used vehicle unit volume was adversely impacted by historically lowis due in part to lower availability and levels of nearly new vehicle inventory levels due to manufacturer supply shortages, which also favorably impacted new andinventory. The decrease in used vehicle revenue PVR. Domestic revenue also benefited from increasesPVR is primarily due to a shift in parts and service revenue associated with wholesale parts sales, the preparation of vehicles for sale, and customer-pay service.mix towards lower-priced entry-level vehicles.
Domestic segment income decreased during the three months ended June 30, 2022,March 31, 2023, as compared to the same period in 2021,2022, primarily due to a decreasedecreases in usednew vehicle gross profit due to margin pressure as a resultand finance and insurance gross profit. New vehicle gross profit was adversely impacted by increasing supply of a decline in usednew vehicle valuesinventory. Finance and ainsurance gross profit was adversely impacted by the decrease in used vehicle unit volume. Domestic segment income was also adversely impacted by a decreasean increase in finance and insurance gross profit due to the decrease in vehicle unit volume.floorplan interest expense. Decreases in segment income were partially offset by increases in parts and service gross profit associated with the preparation of vehicles for sale, wholesale parts sales, and customer-pay service.
First Six Months 2022 compared to First Six Months 2021
Domestic revenue increased during the six months ended June 30, 2022, as compared to the same period in 2021, primarily due to increases in used vehicle revenue and parts and service revenue. Used vehicle revenue increased due to an increase in used vehicle revenue PVR primarily due to reduced availability of new vehicle inventory. Parts and service revenue benefited from increases in revenue associated with wholesale parts sales, the preparation of vehicles for sale, and customer-pay service. Increases in Domestic revenue were partially offset by a decrease in new vehicle revenue, which was adversely impacted by historically low new vehicle inventory levels due to manufacturer supply shortages.
Domestic segment income increased during the six months ended June 30, 2022, as compared to the same period in 2021, primarily due to increases in new vehicle gross profit, parts and service gross profit, and finance and insurance gross profit. New vehicle gross profit benefited from reduced availability of new vehicle inventory. Parts and service results benefited from increases in gross profit associated with the preparation of vehicles for sale, customer-pay service and wholesale parts sales. Financewarranty service and insurance gross profit benefited from an increase in finance and insurance gross profit PVR, partially offset by a decrease in vehicle unit volume. Increases to Domestic segment income were partially offset by a decrease in used vehicle gross profit due to margin pressure as a result of a declineimprovements in used vehicle values,gross profit PVR as well as an increase in performance-driven SG&A expenses.we focused on efficient internal sourcing of our used vehicle inventory and balancing gross profit PVR and unit volume.

3536

Table of Contents
Import
The Import segment operating results included the following:
 
Three Months Ended June 30,Six Months Ended June 30, Three Months Ended March 31,
($ in millions)($ in millions)20222021Variance
Favorable /
(Unfavorable)
%
Variance
20222021Variance
Favorable /
(Unfavorable)
%
Variance
($ in millions)20232022Variance
Favorable /
(Unfavorable)
%
Variance
Revenue:Revenue:Revenue:
New vehicleNew vehicle$852.4 $1,184.2 $(331.8)(28.0)$1,734.0 $2,142.2 $(408.2)(19.1)New vehicle$856.4 $881.6 $(25.2)(2.9)
Used vehicleUsed vehicle699.6 604.5 95.1 15.7 1,407.2 1,089.2 318.0 29.2 Used vehicle542.1 707.6 (165.5)(23.4)
Parts and serviceParts and service266.3 248.5 17.8 7.2 521.8 462.6 59.2 12.8 Parts and service268.4 255.5 12.9 5.0 
Finance and insurance, netFinance and insurance, net125.7 133.2 (7.5)(5.6)252.1 242.3 9.8 4.0 Finance and insurance, net112.4 126.4 (14.0)(11.1)
OtherOther5.7 4.6 1.1 8.7 8.3 0.4 Other10.0 3.0 7.0 
Total RevenueTotal Revenue$1,949.7 $2,175.0 $(225.3)(10.4)$3,923.8 $3,944.6 $(20.8)(0.5)Total Revenue$1,789.3 $1,974.1 $(184.8)(9.4)
Segment incomeSegment income$192.5 $203.7 $(11.2)(5.5)$378.7 $329.6 $49.1 14.9 Segment income$160.4 $186.2 $(25.8)(13.9)
Retail new vehicle unit salesRetail new vehicle unit sales23,612 36,136 (12,524)(34.7)48,148 66,979 (18,831)(28.1)Retail new vehicle unit sales23,098 24,536 (1,438)(5.9)
Retail used vehicle unit salesRetail used vehicle unit sales25,786 27,128 (1,342)(4.9)52,315 52,229 86 0.2 Retail used vehicle unit sales22,063 26,529 (4,466)(16.8)
SecondFirst Quarter 2023 compared to First Quarter 2022 compared to Second Quarter 2021
Import revenue decreased during the three months ended June 30, 2022,March 31, 2023, as compared to the same period in 2021,2022, primarily due to decreases in new and used vehicle unit volume partially offset by increases in new and used vehicle revenue PVR. NewThe decrease in used vehicle unit volume was adversely impacted by historically lowis due in part to lower availability and levels of nearly new vehicle inventory levels due to manufacturer supply shortages, which also favorably impacted new andinventory. The decrease in used vehicle revenue PVR. Import revenue also benefited from an increasePVR is primarily due to a shift in parts and service revenue associated with customer-pay service. Additionally, Import revenue benefited from the acquisitions we completed in 2021.mix towards lower-priced entry-level vehicles.
Import segment income decreased during the three months ended June 30, 2022,March 31, 2023, as compared to the same period in 2021,2022, primarily due to decreases in used vehicle gross profit and finance and insurance gross profit. Used vehicle gross profit was adversely impacted by margin pressure as a result of a decline in used vehicle values. Finance and insurance gross profit was adversely impacted by a decrease in vehicle unit volume. Decreases to Import segment income were partially offset by an increase in parts and service gross profit associated with customer-pay service. Additionally, Import segment income benefited from the acquisitions we completed in 2021.
First Six Months 2022 compared to First Six Months 2021
Import revenue decreased during the six months ended June 30, 2022, as compared to the same period in 2021, primarily due to a decrease in new vehicle unit volume, partially offset by increases in new and used vehicle revenue PVR. New vehicle unit volume was adversely impacted by historically low new vehicle inventory levels due to manufacturer supply shortages, which also favorably impacted new and used vehicle revenue PVR. Import revenue also benefited from increases in parts and service revenue associated with wholesale parts sales and customer-pay service. Additionally, Import revenue benefited from the acquisitions we completed in 2021.
Import segment income increased during the six months ended June 30, 2022, as compared to the same period in 2021, primarily due to increases in new vehicle gross profit, parts and service gross profit and finance and insurance gross profit. New vehicle gross profit benefited from reduced availabilitywas adversely impacted by increasing supply of new vehicle inventory. PartsFinance and service results benefited frominsurance gross profit was adversely impacted by the decrease in vehicle unit volume. Import 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 the preparation of vehicles for sale. Finance and insuranceused vehicle gross profit benefited from an increasedue to improvements in finance and insuranceused vehicle gross profit PVR partially offset by a decrease in newas we focused on efficient internal sourcing of our used vehicle inventory and balancing gross profit PVR and unit volume. Increases to Import segment income were partially offset by an increase in performance-driven SG&A expenses.

3637

Table of Contents
Premium Luxury
The Premium Luxury segment operating results included the following:
 
Three Months Ended June 30,Six Months Ended June 30, Three Months Ended March 31,
($ in millions)($ in millions)20222021Variance
Favorable /
(Unfavorable)
%
Variance
20222021Variance
Favorable /
(Unfavorable)
%
Variance
($ in millions)20232022Variance
Favorable /
(Unfavorable)
%
Variance
Revenue:Revenue:Revenue:
New vehicleNew vehicle$1,225.3 $1,252.8 $(27.5)(2.2)$2,328.4 $2,341.7 $(13.3)(0.6)New vehicle$1,247.5 $1,103.1 $144.4 13.1 
Used vehicleUsed vehicle904.6 788.8 115.8 14.7 1,820.7 1,431.1 389.6 27.2 Used vehicle745.8 916.1 (170.3)(18.6)
Parts and serviceParts and service367.0 317.6 49.4 15.6 718.9 602.8 116.1 19.3 Parts and service386.2 351.9 34.3 9.7 
Finance and insurance, netFinance and insurance, net118.4 108.0 10.4 9.6 225.6 194.8 30.8 15.8 Finance and insurance, net105.0 107.2 (2.2)(2.1)
OtherOther1.3 1.3 — 1.7 1.6 0.1 Other0.4 0.4 — 
Total RevenueTotal Revenue$2,616.6 $2,468.5 $148.1 6.0 $5,095.3 $4,572.0 $523.3 11.4 Total Revenue$2,484.9 $2,478.7 $6.2 0.3 
Segment incomeSegment income$257.5 $225.7 $31.8 14.1 $487.0 $384.2 $102.8 26.8 Segment income$226.8 $229.5 $(2.7)(1.2)
Retail new vehicle unit salesRetail new vehicle unit sales17,518 19,569 (2,051)(10.5)33,059 36,418 (3,359)(9.2)Retail new vehicle unit sales16,118 15,541 577 3.7 
Retail used vehicle unit salesRetail used vehicle unit sales21,381 22,370 (989)(4.4)43,330 41,904 1,426 3.4 Retail used vehicle unit sales18,768 21,949 (3,181)(14.5)
SecondFirst Quarter 2023 compared to First Quarter 2022 compared to Second Quarter 2021
Premium Luxury revenue increased slightly during the three months ended June 30, 2022,March 31, 2023, as compared to the same period in 2021, primarily due to the acquisitions we completed in 2021. Premium Luxury revenue also benefited from increases in new and used vehicle revenue PVR, partially offset by decreases in new and used vehicle unit volume. New and used vehicle revenue PVR benefited from historically low new vehicle inventory levels due to manufacturer supply shortages, which also negatively impacted new vehicle unit volume. Additionally, Premium Luxury revenue benefited from an increase in parts and service revenue associated with customer-pay service.
Premium Luxury segment income increased during the three months ended June 30, 2022, as compared to the same period in 2021, primarily due to increases in new vehicle gross profit, parts and service gross profit, and finance and insurance gross profit. New vehicle gross profit benefited from reduced availability of new vehicle inventory. Parts and service results benefited from an increase in gross profit associated with customer-pay service. Finance and insurance gross profit benefited from an increase in finance and insurance gross profit PVR, partially offset by a decrease in vehicle unit volume. Additionally, Premium Luxury segment income benefited from the acquisitions we completed in 2021. Increases to Premium Luxury segment income were partially offset by an increase in performance-driven SG&A expenses.
First Six Months 2022 compared to First Six Months 2021
Premium Luxury revenue increased during the six months ended June 30, 2022, as compared to the same period in 2021, primarily due to the acquisitions we completed in 2021. Premium Luxury revenue also benefited from increases in new and used vehicle revenue PVR, and usednew vehicle unit volume, partially offset by a decrease in new vehicle unit volume. New and used vehicle revenue PVR and used vehicle unit volume benefited from historically low new vehicle inventory levels due to manufacturer supply shortages, which also negatively impacted new vehicle unit volume. Premium Luxury revenue also benefited from increases in parts and service revenue associated with customer-pay service wholesale parts sales, and the preparationwarranty service. New vehicle revenue PVR benefited from increases in manufacturers’ suggested retail prices, and new vehicle unit volume benefited from increasing supply of vehicles for sale.new vehicle inventory. These increases were largely offset primarily by a decrease in used vehicle unit volume due in part to lower availability and levels of nearly new vehicle inventory.
Premium Luxury segment income increaseddecreased slightly during the sixthree months ended June 30, 2022,March 31, 2023, as compared to the same period in 2021,2022, primarily due to increasesa decrease in new vehicle gross profit parts and serviceincreases in floorplan interest expense and SG&A expenses, partially offset by increases in used vehicle gross profit and financeparts and insurance gross profit. New vehicle gross profit benefited from reduced availability of new vehicle inventory. Parts and service results benefited from increases in gross profit associated with customer-pay service and the preparationwarranty service. New vehicle gross profit was adversely impacted by increasing supply of vehicles for sale. Finance and insurancenew vehicle inventory. Used vehicle gross profit benefited from an increaseimprovements in finance and insuranceused vehicle gross profit PVR partially offset by a decrease inas we focused on efficient internal sourcing of our used vehicle inventory and balancing gross profit PVR and unit volume. Increases to Premium Luxury segment income were partially offset by an increase in performance-driven SG&A expenses.

3738

Table of Contents
Corporate and other
Corporate and other results included the following:

Three Months Ended June 30,Six Months Ended June 30, Three Months Ended March 31,
($ in millions)($ in millions)20222021Variance
Favorable /
(Unfavorable)
%
Variance
20222021Variance
Favorable /
(Unfavorable)
%
Variance
($ in millions)20232022Variance
Favorable /
(Unfavorable)
%
Variance
Revenue:Revenue:Revenue:
Used vehicleUsed vehicle$129.4 $80.5 $48.9 60.7 $255.0 $138.9 $116.1 83.6 Used vehicle$132.4 $125.6 $6.8 5.4 
Parts and serviceParts and service127.5 126.8 0.7 0.6 $255.3 $244.4 $10.9 4.5 Parts and service147.6 127.8 19.8 15.5 
Finance and insurance, netFinance and insurance, net4.1 2.0 2.1 105.0 15.2 9.8 5.4 55.1 Finance and insurance, net12.7 11.1 1.6 14.4 
OtherOther1.0 0.8 0.2 2.1 1.0 1.1 Other0.7 1.1 (0.4)
RevenueRevenue$262.0 $210.1 $51.9 24.7 $527.6 $394.1 $133.5 33.9 Revenue$293.4 $265.6 $27.8 10.5 
Income (loss)Income (loss)$(50.8)$(74.8)$24.0 $(102.1)$(150.2)$48.1 Income (loss)$(89.5)$(51.3)$(38.2)
“Corporate and other” is comprised of our other businesses, including collision centers, AutoNation USA used vehicle stores, collision centers, parts distribution centers, auction operations, and parts distribution centers,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, 2022,March 31, 2023, we had 5653 AutoNation-branded collision centers, 1115 AutoNation USA used vehicle stores, 4 AutoNation-branded automotive auction operations, and 3 parts distribution centers. We plancenters, a mobile automotive repair and maintenance business, and an auto finance company, referred to expand ouras AutoNation Finance.
AutoNation USA Stores
During the three months ended March 31, 2023, we opened two AutoNation USA used vehicle stores 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 bythroughout the end of 2026. The planned expansion may be impacted by acountry. 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.



3839

Table of Contents
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,Three Months Ended March 31,
($ in millions)($ in millions)20222021Variance
Favorable /
(Unfavorable)
%
Variance
20222021Variance
Favorable /
(Unfavorable)
%
Variance
($ in millions)20232022Variance
Favorable /
(Unfavorable)
%
Variance
Reported:Reported:Reported:
CompensationCompensation$523.5 $534.0 $10.5 2.0 $1,039.3 $975.6 $(63.7)(6.5)Compensation$522.3 $515.8 $(6.5)(1.3)
AdvertisingAdvertising44.5 42.8 (1.7)(4.0)84.4 79.5 (4.9)(6.2)Advertising50.7 39.9 (10.8)(27.1)
Store and corporate overheadStore and corporate overhead186.8 172.1 (14.7)(8.5)372.5 341.7 (30.8)(9.0)Store and corporate overhead209.7 185.7 (24.0)(12.9)
TotalTotal$754.8 $748.9 $(5.9)(0.8)$1,496.2 $1,396.8 $(99.4)(7.1)Total$782.7 $741.4 $(41.3)(5.6)
SG&A as a % of total gross profit:SG&A as a % of total gross profit:SG&A as a % of total gross profit:
CompensationCompensation38.4 40.3 190 bps38.9 41.4 250 bpsCompensation40.6 39.4 (120)bps
AdvertisingAdvertising3.3 3.2 (10)bps3.2 3.4 20 bpsAdvertising3.9 3.0 (90)bps
Store and corporate overheadStore and corporate overhead13.7 13.0 (70)bps13.9 14.4 50 bpsStore and corporate overhead16.3 14.2 (210)bps
TotalTotal55.4 56.5 110 bps56.0 59.2 320 bpsTotal60.8 56.6 (420)bps
SecondFirst Quarter 2023 compared to First Quarter 2022 compared to Second Quarter 2021
SG&A expenses increased during the three months ended June 30, 2022,March 31, 2023, as compared to the same period in 2021,2022, primarily due to acquisitions and newly acquired and opened stores and expenditures associated with investments in technology and strategic initiatives, combined with modest inflationary pressures, partially offset by divested stores as well as a decrease in deferredperformance-driven compensation obligationsexpense. Additionally, gross advertising expenses increased $12.3 million, partially offset by an increase in advertising reimbursements from manufacturers of $19.4 million as a result of changes in market performance of the underlying investments.$1.5 million. As a percentage of total gross profit, SG&A expenses decreasedincreased to 55.4%60.8% during the three months ended June 30, 2022,March 31, 2023, from 56.5%56.6% in the same period in 2021,2022, primarily due to improvementsgross margin pressure and an increase in gross profit PVR and effective cost management.
First Six Months 2022 compared to First Six Months 2021
SG&A expenses increased during the six months ended June 30, 2022, as comparedrelated to the same period in 2021, primarily due to a performance-driven increase in compensation expense, as well as newly acquired and opened stores. Increases were partially offset by divested stores as well as a decreaseand investments in deferred compensation obligationstechnology and strategic initiatives.
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 first quarter of $28.9 million as a result2023, the results of changes in market performanceour 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 underlying investments. As a percentage of total gross profit, SG&A expenses decreasedNotes to 56.0% during the six months ended June 30, 2022, from 59.2% in the same period in 2021, primarily due to improvements in gross profit PVR and effective cost management.Unaudited Condensed Consolidated Financial Statements for more information about our auto finance company.
Non-Operating Income (Expense)
Floorplan Interest Expense
First Quarter 2023 compared to First Quarter 2022
Floorplan interest expense was $27.1 million for the three months ended March 31, 2023, compared to $5.2 million for the same period in 2022. The increase in floorplan interest expense of $21.9 million was the result of 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.
Second Quarter 2022 compared to Second Quarter 2021
Floorplan interest expense was $5.8 million for the three months ended June 30, 2022, compared to $6.6 million for the same period in 2021. The decrease in floorplan interest expense of $0.8 million was the result of lower average vehicle floorplan balances, partially offset by higher average interest rates.
First Six Months 2022 compared to First Six Months 2021
Floorplan interest expense was $11.0 million for the six months ended June 30, 2022, compared to $16.0 million for the same period in 2021. The decrease in floorplan interest expense of $5.0 million was the result of lower average vehicle floorplan balances, partially offset by higher average interest rates.

3940

Table of Contents
Interest Expense
SecondFirst Quarter 20222023 compared to SecondFirst Quarter 20212022
Other interest expense was $34.1$41.1 million for the three months ended June 30, 2022,March 31, 2023, compared to $20.9$29.6 million for the same period in 2021.2022. The increase in interest expense of $13.2$11.5 million was driven by higher average debt balances, partially offset by lower average interest rates.
First Six Months 2022 compared to First Six Months 2021
Other interest expense was $63.7 million for the six months ended June 30, 2022, compared to $42.1 million for the same period in 2021. The increase of $21.6 million was driven byrates and higher average debt balances, partially offset by lower average interest rates.balances.
Other Income (Loss), Net (included in Non-Operating Income)
We recognized a net lossgain of $14.1$4.7 million and a net gainloss of $5.3$6.7 million for the three months ended June 30,March 31, 2023, and March 31, 2022, and 2021, respectively, and a net loss of $20.8 million and a net gain of $8.8 million for the six months ended June 30, 2022 and 2021, 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.
InDuring the first quarter of 2021, we sold the remaining shares of one of our minority equity investments and recorded a realized gain of $7.5 million. Additionally,2023, we recorded an unrealized gainloss of $3.4$1.1 million during the second quarter of 2021 related to the change in fair value of the underlying securities of our minority equity investment.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 25.4%24.3% for the three months ended June 30, 2022,March 31, 2023, and 24.8%24.2% for the three months ended June 30, 2021. Our effective income tax rate was 24.8% for the six months ended June 30, 2022, and 24.7% for the six months ended June 30, 2021.March 31, 2022.
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 carrying costs fora gain on the sale of real estate we have not yet soldin the first quarter of 2023 associated with storesa store that werewas closed prior to January 1, 2014, and other adjustments related to disposed operations.

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.

4041

Table of Contents
Available Liquidity Resources
We had the following sources of liquidity available:
(In millions)(In millions)June 30,
2022
December 31,
2021
(In millions)March 31,
2023
December 31,
2022
Cash and cash equivalentsCash and cash equivalents$336.5 $60.4 Cash and cash equivalents$58.3 $72.6 
Revolving credit facilityRevolving credit facility$1,760.2 (1)$1,760.3 Revolving credit facility$1,799.3 (1)$1,799.6 
Secured used vehicle floorplan facilities (2)
Secured used vehicle floorplan facilities (2)
$0.1 $0.1 
Secured used vehicle floorplan facilities (2)
$0.4 $0.3 
 (1)    At June 30, 2022,March 31, 2023, we had $39.8$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 no$285.0 million of commercial paper notes outstanding at June 30, 2022.March 31, 2023. See Note 78 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 56 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, 2022,March 31, 2023, surety bonds, letters of credit, and cash deposits totaled $106.5$111.2 million, of which $39.8$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, units, and guarantees of debt securities.units.
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 will beare 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 andand/or return on investment threshold, and limitations set forth in our debt agreements.
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 Three Months Ended
June 30,June 30,March 31,
(In millions, except per share data)(In millions, except per share data)2022202120222021(In millions, except per share data)20232022
Shares repurchasedShares repurchased3.7 7.5 7.2 11.3 Shares repurchased2.4 3.5 
Aggregate purchase price(1)Aggregate purchase price(1)$403.9 $736.1 $784.9 $1,042.2 Aggregate purchase price(1)$305.0 $380.9 
Average purchase price per shareAverage purchase price per share$109.22 $98.17 $109.62 $91.94 Average purchase price per share$126.37 $110.04 
(1) Excludes excise tax accrual imposed under the Inflation Reduction Act of $2.5 million for the three months ended March 31, 2023.
(1) Excludes excise tax accrual imposed under the Inflation Reduction Act of $2.5 million for the three months ended March 31, 2023.
In July 2022, our Board of Directors increased the share repurchase authorization by $1.0 billion. As of July 20, 2022, $1.1 billionMarch 31, 2023, $879.4 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

42

Table of Contents
expected return on competing uses of capital such as acquisitions or investments, capital investments in our current businesses, or repurchases of our debt.

41

Table of Contents
Capital Expenditures
The following table sets forth information regarding our capital expenditures:
Three Months EndedSix Months Ended
 June 30,June 30,
(In millions)2022202120222021
Purchases of property and equipment, including operating lease buy-outs (1)
$106.1 $74.3 $156.9 $118.7 
(1)Includes accrued construction in progress and excludes property associated with leases entered into during the year.
Three Months Ended
 March 31,
(In millions)20232022
Purchases of property and equipment, including operating lease buy-outs (1)
$95.9 $50.8 
(1) Includes accrued construction in progress and excludes property associated with leases entered into during the year.
At June 30, 2022,March 31, 2023, we owned approximately 82%80% of our new vehicle franchise store locations with a net book value of $2.3$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 $663.5$712.3 million. None of these properties are mortgaged or encumbered.
We plancontinue to expand our AutoNation USA used vehicle stores and are targeting to have over 130 stores by the end of 2026. We anticipate that the initial capital investment will be approximately $10 million to $12 million for each new store on average.stores. The planned expansion may be impacted by a number of variables, including customer adoption, market conditions, availability of used vehicle inventory, availability and cost of building supplies and materials, and our ability to identify, acquire, and build out suitable locations in a timely manner.
Acquisitions and Divestitures
The following table sets forth information regarding cash used in business acquisitions, net of cashDuring the three months ended March 31, 2023, we acquired RepairSmith, a mobile solution for automotive repair and cash received from business divestitures, net of cash relinquished:
Three Months EndedSix Months Ended
 June 30,June 30,
(In millions)2022202120222021
Cash received from (used in) business acquisitions, net$— $— $— $— 
Cash received from (used in) business divestitures, net$— $2.4 $— $4.3 
maintenance, and we also purchased one store. We did not purchase or divestany stores during the sixthree months ended June 30,March 31, 2022. We divested twodid not divest any stores and two collision centers during the sixthree months ended June 30, 2021.March 31, 2023, or March 31, 2022.
We entered into an agreement in July 2022 to acquire CIG Financial, an auto finance company headquartered in Irvine, California.
Three Months Ended
 March 31,
(In millions)20232022
Cash received from (used in) business acquisitions, net$(191.0)$— 

42

Table of Contents
Long-Term Debt and Commercial Paper
The following table sets forth our non-vehicle long-term debt, net of debt issuance costs, as of June 30, 2022,March 31, 2023, and December 31, 2021.2022.
Debt DescriptionMaturity DateInterest PayableJune 30,
2022
December 31,
2021
3.5% Senior NotesNovember 15, 2024May 15 and November 15$450.0 $450.0 
4.5% Senior NotesOctober 1, 2025April 1 and October 1450.0 450.0 
3.8% Senior NotesNovember 15, 2027May 15 and November 15300.0 300.0 
1.95% Senior NotesAugust 1, 2028February 1 and August 1400.0 400.0 
4.75% Senior NotesJune 1, 2030June 1 and December 1500.0 500.0 
2.40% Senior NotesAugust 1, 2031February 1 and August 1450.0 450.0 
3.85% Senior NotesMarch 1, 2032March 1 and September 1700.0 — 
Revolving credit facilityMarch 26, 2025Monthly— — 
Finance leases and other debtVarious dates through 2041324.4 330.6 
3,574.4 2,880.6 
Less: unamortized debt discounts and debt issuance costs(27.9)(22.2)
Less: current maturities(11.8)(12.2)
Long-term debt, net of current maturities$3,534.7 $2,846.2 

On February 28, 2022, we issued $700 million aggregate principal amount of 3.85% Senior Notes due 2032, which were sold at 99.835% of the aggregate principal amount.
Debt DescriptionMaturity DateInterest PayableMarch 31,
2023
December 31,
2022
3.5% Senior NotesNovember 15, 2024May 15 and November 15$450.0 $450.0 
4.5% Senior NotesOctober 1, 2025April 1 and October 1450.0 450.0 
3.8% Senior NotesNovember 15, 2027May 15 and November 15300.0 300.0 
1.95% Senior NotesAugust 1, 2028February 1 and August 1400.0 400.0 
4.75% Senior NotesJune 1, 2030June 1 and December 1500.0 500.0 
2.40% Senior NotesAugust 1, 2031February 1 and August 1450.0 450.0 
3.85% Senior NotesMarch 1, 2032March 1 and September 1700.0 700.0 
Revolving credit facilityMarch 26, 2025Monthly— — 
Finance leases and other debtVarious dates through 2041372.4 375.5 
3,622.4 3,625.5 
Less: unamortized debt discounts and debt issuance costs(25.0)(26.0)
Less: current maturities(12.7)(12.6)
Long-term debt, net of current maturities$3,584.7 $3,586.9 
We had no commercial paper notes outstanding of $285.0 million at June 30, 2022,March 31, 2023, and $340.0$50.0 million commercial paper notes outstanding at December 31, 2021.2022. We also had non-recourse debt under our warehouse facilities of $162.3 million at March 31, 2023, and $181.8 million at

43

Table of Contents
December 31, 2022, and non-recourse debt under term securitizations of consolidated variable interest entities (“VIEs”) of $125.3 million at March 31, 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 78 of the Notes to Unaudited Condensed Consolidated Financial Statements for more information on our non-vehicle long-term debt, commercial paper, and commercial paper.non-recourse debt.
Restrictions and Covenants
Our credit agreement and the indentures for our senior unsecured notes and our vehicle floorplan facilities contain numerous customary financial and operating covenants that place significant restrictions on us, including our ability to incur additional indebtedness or prepay existing indebtedness to create liens or other encumbrances, to sell (or otherwise dispose of) assets, and to merge or consolidate with other entities.
Under our credit agreement, we are required to remain in compliance with a maximum leverage ratio and maximum capitalization ratio. The leverage ratio is a contractually defined amount principally reflecting non-vehicle debt divided by a contractually defined measure of earnings with certain adjustments. The capitalization ratio is a contractually defined amount principally reflecting vehicle floorplan payable and non-vehicle debt divided by our total capitalization including vehicle floorplan payable. The specific terms of these covenants can be found in our credit agreement, which we filed with our Current Report on Form 8-K on March 26, 2020.
The indentures for our senior unsecured notes contain certain limited covenants, including limitations on liens and sale and leaseback transactions.
OurIn addition, our failure to comply with the covenants contained in our debt agreementscredit agreement and the indentures for our senior unsecured notes could result in the acceleration of all of our indebtedness. Our debt agreements have cross-default provisions that trigger a default in the event of an uncured default under other material indebtedness of AutoNation.

43

Table of Contents
As of June 30, 2022,March 31, 2023, we were in compliance with the requirements of the financial covenants under our debt agreements.credit agreement and the indentures for our senior unsecured notes. Under the terms of our credit agreement, at June 30, 2022,March 31, 2023, our leverage ratio and capitalization ratio were as follows:
 June 30, 2022March 31, 2023
 RequirementActual
Leverage ratio≤ 3.75x1.53x1.82x
Capitalization ratio≤ 70.0%55.1%61.3%
Vehicle Floorplan Payable
The components of vehicle floorplan payable are as follows:
(In millions)(In millions)June 30,
2022
December 31,
2021
(In millions)March 31,
2023
December 31,
2022
Vehicle floorplan payable - tradeVehicle floorplan payable - trade$556.5 $489.9 Vehicle floorplan payable - trade$1,088.6 $946.6 
Vehicle floorplan payable - non-tradeVehicle floorplan payable - non-trade960.9 967.7 Vehicle floorplan payable - non-trade1,097.1 1,162.7 
Vehicle floorplan payableVehicle floorplan payable$1,517.4 $1,457.6 Vehicle floorplan payable$2,185.7 $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.
OurPrior to October 2021, our vehicle floorplan facilities currently primarily utilizeutilized LIBOR-based interest rates. In connection with global reference rate reform initiatives, particularly related to LIBOR, in October 2021, we began modifying our floorplan agreements to replace the reference rate from LIBOR to an alternative reference rate. The floorplan agreement modifications will be accounted for by prospectively adjusting the effective interest rate in accordance with accounting standards. We do not expect the change from LIBOR to an alternative reference rate to have a material impact on our annual floorplan interest expense. See Note 56 of the Notes to Unaudited Condensed Consolidated Financial Statements for more information on our vehicle floorplan payable.

44

Table of Contents
Cash Flows
The following table summarizes the changes in our cash provided by (used in) operating, investing, and financing activities:
Six Months EndedThree Months Ended
June 30, March 31,
(In millions)(In millions)20222021(In millions)20232022
Net cash provided by operating activitiesNet cash provided by operating activities$895.0 $930.3 Net cash provided by operating activities$510.0 $643.2 
Net cash used in investing activitiesNet cash used in investing activities$(148.5)$(8.5)Net cash used in investing activities$(305.9)$(59.0)
Net cash used in financing activitiesNet cash used in financing activities$(470.5)$(1,431.8)Net cash used in financing activities$(216.1)$(36.5)
Cash Flows from Operating Activities
Our primary sources of operating cash flows result from the sale of vehicles and finance and insurance products, collections from customers for the sale of parts and 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 sixthree months ended June 30, 2022,March 31, 2023, as compared to the same period in 2021,2022, primarily due to a decrease in earnings and an increase in working capital requirements, partially offset by an increase in earnings.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.
Net cash used in investing activities increased during the sixthree months ended June 30, 2022,March 31, 2023, as compared to the same period in 2021,2022, primarily due to a decrease in proceeds from the sale of equity securities and an increase in cash used in acquisitions, net of cash acquired, and purchases of property and equipment, partially offset by an increase in proceeds from assets held for sale.

44

Table of Contents
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 sixthree months ended June 30,March 31, 2023, we repurchased 2.4 million shares of common stock for an aggregate purchase price of $305.0 million (average purchase price per share of $126.37), excluding the 1% excise tax imposed under the Inflation Reduction Act. During the three months ended March 31, 2022, we issued $700.0repurchased 3.5 million shares of common stock for an aggregate principal amountpurchase price of 3.85% Senior Notes due 2032. Cash flows from financing activities during the six months ended June 30, 2022, reflect cash payments$380.9 million (average purchase price per share of $6.6 million$110.04), including repurchases for debt issuance costs associated with the senior note issuance that are being amortizedwhich settlement occurred subsequent to interest expense over the term of the senior notes. During the six months ended June 30, 2021, we repaid the outstanding $300.0 million of 3.35% Senior Notes due 2021.March 31, 2022.
Cash flows from financing activities include changes in commercial paper notes outstanding totaling net proceeds of $235.0 million during the three months ended March 31, 2023, and net payments of $340.0 million during the sixthree months ended June 30,March 31, 2022, and net proceeds of $200.0 million during the six months ended June 30, 2021, and vehicle floorplan payable-non-trade totaling net paymentsrepayments of $5.5$67.3 million and $316.9$15.1 million during the sixthree months ended June 30,March 31, 2023 and 2022, and 2021, respectively.
During the sixthree months ended June 30,March 31, 2022, we repurchased 7.2issued $700.0 million sharesaggregate principal amount 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. During the six months ended June 30, 2021, we repurchased 11.3 million shares of common stock for an aggregate purchase price of $1.0 billion (average purchase price per share of $91.94), including repurchases for which settlement occurred subsequent to June 30, 2021.3.85% 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 the planned expansion of our AutoNation USA used vehicle stores and our anticipated investments in connection therewith;digital and online capabilities and mobility solutions; our

45

Table of Contents
expectations for the future performance of our business and the automotive retail industry; our investments in digital and online capabilities; pending acquisitions; 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 has 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.

45

Table of Contents
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 the planned acquisition of an auto finance company, 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.
The carrying value of our minority equity investment that does not have a readily determinable fair value is requiredWe are subject to be adjusted for observable price changes or impairments, bothvarious risks associated with originating and servicing auto finance loans through indirect lending to customers, any of which could adversely impacthave an adverse effect on our results of operations and financial condition.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, and commercial paper program, and warehouse facilities that could have a material adverse effect on our profitability.

46

Table of Contents
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.
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

46

Table of Contents
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.

47

Table of Contents
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 $1.5$2.2 billion of variable rate vehicle floorplan payable at June 30, 2022,March 31, 2023, and $1.5$2.1 billion at December 31, 2021.2022. 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 $15.2$21.9 million at June 30, 2022,March 31, 2023, and $14.6$21.1 million at December 31, 2021.2022. 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 no$285.0 million of commercial paper notes outstanding at June 30, 2022,March 31, 2023, and $340.0$50.0 million at December 31, 2021.2022. 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 $3.4$2.9 million at March 31, 2023, and $0.5 million at December 31, 2021.2022.
Our fixed rate long-term debt, consisting of amounts outstanding under our senior unsecured notes and finance lease and other debt obligations, totaled $3.5$3.2 billion and had a fair value of $3.3$2.9 billion as of June 30, 2022,March 31, 2023, and totaled $2.9$3.2 billion and had a fair value of $3.0$2.8 billion as of December 31, 2021.2022.
As of March 31, 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.

47

Table of Contents
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 March 31, 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 March 31, 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.
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.




48

Table of Contents
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, 2021,2022, 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, 2022.March 31, 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, 2022 - April 30, 20221,858,043 $104.45 1,858,043 $319.6 
May 1, 2022 - May 31, 20221,658,948 $114.89 1,658,948 $129.0 
June 1, 2022 - June 30, 2022181,348 $106.29 181,348 $109.7 
Total3,698,339 3,698,339 
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)
January 1, 2023 - January 31, 2023835,555 $111.56 835,555 $1,091.2 
February 1, 2023 - February 28, 2023— $— — $1,091.2 
March 1, 2023 - March 31, 20231,577,918 $134.22 1,577,918 $879.4 
Total2,413,473 2,413,473 
 
(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, 2022, $109.7March 31, 2023, $879.4 million remained available under our stock repurchase limit. In July 2022, our Board of Directors increased the share repurchase authorization by $1.0 billion. Our stock repurchase program does not have an expiration date.

ITEM 6. EXHIBITS
Exhibit No.Description
10.1
10.2
31.1
31.2
32.1
32.2
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
101.LABXBRL Taxonomy Extension Label Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.


49

Table of Contents
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, 2022April 20, 2023By:/s/ Christopher CadeKimberly R. Dees
Christopher CadeKimberly R. Dees
Senior Vice President and Chief Accounting Officer
(Duly Authorized Officer and
Principal Accounting Officer)


50