AutoNation, Inc.

Adjusted EPS was $5.56 versus $5.46 a year ago. Total revenue was $6.93 billion compared with $6.97 billion last year, and gross profit was $1.23 billion versus $1.28 billion a year ago; gross margin was 17.8% of revenue. Adjusted SG&A was 68.2% of gross profit, improved from 69.8% in Q1, and adjusted operating income was $343 million versus $369 million a year ago. After sales revenue rose to $1.26 billion from $1.22 billion, with record aftersales gross profit of $607 million. CFS per vehicle profitability was $2,799, up about 3% year over year, and AutoNation Finance profit was $11 million versus $2 million a year ago. New vehicle unit sales were 63,240, down 4%, with new vehicle gross profit per unit of $2,381 versus $2,785 a year ago. Used vehicle gross profit per unit was $1,582 versus $1,622 a year ago. Adjusted free cash flow was more than $180 million in the quarter and $439 million for the first half, up 11% year over year, with year-to-date conversion at 125%. Management expects SG&A as a percentage of gross profit to reach the 66% to 67% target range on a run-rate basis by year-end and said adjusted EPS growth should continue in the second half.

Mike Manley framed the quarter as evidence that AutoNation’s model is working: consumer demand is resilient, aftersales is durable, CFS is strong, and the company is using its scale to generate cash and returns. He repeatedly emphasized customer lifetime value, saying the business is balancing volume, margin, inventory, and experience rather than chasing any one metric. His tone was confident and steady, with notable emphasis on long-term execution, share gains in wholesale parts, and a path to continued EPS growth.

Tom Szlosek focused on the financial mechanics: revenue was flat year over year at $6.93 billion, gross profit was $1.23 billion, and adjusted SG&A improved sequentially to 68.2% of gross profit with a target of 66% to 67% by year-end. He highlighted adjusted free cash flow of $439 million in the first half, conversion of 125%, and approximately $325 million of full-year CapEx. He also noted capital deployment of $900 million through June, including $457 million of share repurchases, $317 million for M&A, and $126 million of CapEx, while leverage remained comfortably within the 2x to 3x EBITDA range.

Analysts pressed on why aftersales profit growth lagged revenue growth, and management said the softness was temporary and mostly due to mix shifts, lower internal pay, and warranty mix, while customer pay and wholesale parts remained healthy. Questions also focused on SG&A improvement, variable gross profitability stability, used-car profitability, lease returns, and CPO penetration; management said CFS and total unit economics remain in a narrow and stable range, CPO mix rose to roughly 20% from about 15% last year, and lease returns should accelerate in the second half. On capital allocation, management reiterated that ROIC and returns drive M&A decisions, with residual cash going to buybacks, and said they can pursue larger deals if returns and leverage make sense.