AutoNation Q2 Earnings Call Highlights

AutoNation delivered adjusted EPS of $5.56, up from $5.46 a year earlier, despite lower revenue, gross profit and new-vehicle volume. Management expects second-half EPS growth, supported by after-sales, customer financial services, AutoNation Finance and share repurchases. After-sales reached a record $607 million in gross profit, driven by growth in customer-pay repairs and wholesale parts. The company is expanding technician staffing and expects mid-single-digit after-sales gross-profit growth. AutoNation Finance profit rose to a record $11 million as its portfolio expanded 52% to $2.67 billion. Strong free cash flow enabled $900 million of capital deployment through June, including buybacks and acquisitions expected to add about $600 million in annual revenue.

AutoNation NYSE: AN reported second-quarter 2026 adjusted earnings per share of $5.56, up from $5.46 a year earlier, marking its sixth consecutive quarter of year-over-year adjusted EPS growth. The company said after-sales operations, customer financial services and capital allocation helped offset lower new-vehicle volume tied in part to battery-electric vehicle sales and prior-year tariff-related demand pull-forward. Total revenue was $6.93 billion, compared with $6.97 billion in the prior-year quarter, while gross profit totaled $1.23 billion, down from $1.28 billion. Adjusted operating income was $343 million, compared with $369 million a year earlier. AutoNation’s adjusted SG&A expense was 68.2% of gross profit, improving from 69.8% in the first quarter but above 66.2% a year earlier.

Chief Financial Officer Thomas Szlosek said the company expects SG&A as a percentage of gross profit to reach its 66% to 67% target range on a run-rate basis by year-end. He cited expected gross-profit improvement, productivity efforts including artificial intelligence applications, moderating advertising spending and portfolio actions as contributors.

After-sales remained AutoNation’s largest gross-profit contributor, producing a record $607 million in gross profit during the quarter. After-sales revenue rose to $1.26 billion from $1.22 billion a year earlier, with customer-pay revenue increasing 7% and wholesale parts revenue climbing 16%. Customer-pay repair orders increased 5%, while warranty repair orders rose 8%. The gains offset lower internal repair activity, which AutoNation tied to its used-vehicle stocking mix and volume. Same-store after-sales gross profit increased 4%, while total after-sales gross profit rose 7%, according to CEO Michael Manley. Szlosek said the after-sales gross margin was 48.1%, compared with 49% in the prior-year quarter, reflecting a greater mix of lower-margin wholesale parts sales. The company said recent commercial wins helped drive wholesale growth, as AutoNation moves toward managing products and brands through a more centralized supply-chain model. Manley said the company views lower internal repair activity and changes in warranty mix as temporary rather than structural. He emphasized AutoNation’s efforts to improve customer retention and gain business from older vehicles that may otherwise be serviced by independent repair shops. AutoNation increased same-store franchise technician headcount by more than 2% year over year. Management said technician hiring, retention, training and investments in service-facility layouts and tools are important to supporting mid-single-digit after-sales gross-profit growth.

New-vehicle unit sales totaled...