AutoNation NYSE: AN reported first-quarter 2026 results highlighted by its fifth consecutive quarter of year-over-year growth in adjusted earnings per share, as management pointed to strong execution in higher-margin parts of the business and continued cash generation despite industry headwinds.
Chief Executive Officer Mike Manley said the quarter represented “a solid 1st quarter for AutoNation,” citing operating performance and “excellent consistent cash conversion,” which the company has used to deploy capital in a “disciplined way.” Adjusted EPS was $4.69, and the company generated $256 million of adjusted free cash flow.
After-Sales delivers record first-quarter gross profit
Management said the quarter was led by After-Sales, which produced a first-quarter record gross profit of $593 million. Manley said the segment delivered “solid mid-single-digit growth” despite some impact from adverse weather. Same-store gross profit increased 3% while total store gross profit rose 5%.
Manley and Chief Financial Officer Thomas Szlosek described a mix shift inside After-Sales results. Manley said internal pay gross profit declined 6% due to lower industry volumes, but that was more than offset by customer pay gross profit growth of 8% and warranty-related gross profit growth of 7%.
Szlosek added that After-Sales results reflected higher repair order counts, higher value per repair order, and improved labor productivity. He also noted same-store revenue increased 4% and same-store gross profit increased 3%, while “wholesale and retail parts increased 10%.” After-Sales gross margin was 48.6%, “roughly in line” with the prior year’s first quarter.
Technician hiring and retention remained a key theme. Szlosek said same-store franchise technician headcount increased by more than 3% year-over-year, which he attributed to improved retention. Manley said the company would remain focused on “technician recruitment, retention, and development,” and later added that an aging vehicle fleet and deferred vehicle purchases can support After-Sales demand, describing the business as “anti-cyclical” and “much, much more predictable.”
Customer Financial Services strength continues; AutoNation Finance scales
Customer Financial Services (CFS) delivered another quarter of per-unit profitability growth. Manley said the team produced a first-quarter record per-unit profit, up 6% year-over-year, and noted customers purchased “on average more than 2 products per vehicle,” with extended service contracts leading the mix. He also said finance penetration continues to grow, with “roughly three quarters of units sold with a finance contract.”
Szlosek said the 6% increase in CFS per-unit profitability was driven by improved vehicle service contract margins, consistent product attachment, and higher finance penetration, and that it offset the year-over-year decline in unit volumes. He also noted that the growth of AutoNation Finance diluted CFS per-unit results by about $160 per unit, or “a little over 5%.”
AutoNation Finance (ANF) posted profit of $9 million in the quarter, which Manley said “nearly equaled the entire profit for 2025.” He added ANF generated more than $20 million of cash and ended the quarter with a $2.4 billion portfolio, up $1 billion year-over-year. Szlosek reported the portfolio ended at $2.45 billion and said the company originated approximately $460 million in loans and received about $213 million in customer repayments.
Szlosek said ANF originations represented about 17% of all financed deals in the first quarter, up from 14% in the fourth quarter of 2025. Credit performance metrics improved, he said, with average FICO scores of 700 on originations and 30-day delinquencies at 2.1% at quarter end. He said the company expects delinquencies to “normalize” toward a 3% range over time as the portfolio matures, and that reserving incorporates that expectation.
On funding, Szlosek said the company benefited from its second asset-backed securities issuance of approximately $750 million completed in January. Debt funding was 90% of the portfolio at quarter end, up from 74% a year earlier.
Vehicle sales trends: new units down; used mix shifts toward higher-priced vehicles
In new vehicles, management said unit sales declines were broadly in line with the industry. Szlosek said same-store new vehicle unit sales fell 9% and total store unit sales fell 8% year-over-year. Manley attributed part of the year-over-year comparison to “a significant acceleration demand” in the prior-year period tied to tariff-related announcements, which created a difficult comp.
Both Manley and Szlosek discussed a sharp decline in battery electric vehicle (BEV) volumes. Manley said BEV sales fell more than 50% year-over-year, with the largest reduction in premium luxury. Szlosek said premium luxury unit sales decreased 16% from a year ago, driven by the combination of BEV weakness and tariff-related pull-forward volumes in the prior-year quarter.
Despite lower new vehicle volumes, profitability improved sequentially. Szlosek said new vehicle profitability averaged more than $2,500 per unit, up more than $100, or about 5%, from the fourth quarter, driven by higher per-unit profits in import and premium luxury. New vehicle inventory stood at 46 days of supply.
Used vehicle supply remained constrained, management said, but AutoNation improved its used-to-new ratio. Manley said the company achieved its highest used-to-new ratio in two years, and Szlosek said the ratio rose to 1.15x in the first quarter. Used retail unit sales fell 5% on a same-store basis and 3% on a total store basis.
Mix shifted toward higher-priced used vehicles. Szlosek said unit sales in vehicles priced under $20,000 declined 9%, while vehicles priced above $40,000 increased 7%, contributing to a 5% increase in average selling prices year-over-year. Used vehicle unit profitability increased more than $150 sequentially to “just under 1,600 per unit,” which he attributed to more optimal acquisition and reconditioning, inventory velocity, and enhanced technologies.
In response to a question, Manley said the company’s internal goal is to move used per-unit gross profit toward $2,000, emphasizing improved sourcing, cycle times, reconditioning focus, and holding periods as levers to raise volumes without necessarily compressing margins.
Cash flow, SG&A investments, and capital deployment
Total revenue was $6.6 billion, down from $6.7 billion a year ago, while gross profit of $1.2 billion was “essentially flat,” Szlosek said. Gross margin improved 30 basis points to 18.5% of revenue, driven by After-Sales growth and CFS performance.
Adjusted SG&A as a percentage of gross profit was 69.8%, above the company’s targeted 66% to 67% range. Szlosek attributed the increase to investments in marketing—particularly “upper funnel spending” aimed at brand awareness—structural investments to improve customer experience, and unfavorable self-insurance experience including weather-related damage. He said the company expects SG&A to moderate in subsequent quarters but remain above the target range due to continued strategic investment.
On weather impacts, Szlosek told analysts that self-insurance claims activity, “more than half of which was weather-related,” totaled roughly $5 million year-over-year. Manley said he generally views weather impacts as something that “tends to happen relatively frequently” and does not focus on it as an excuse for performance.
Adjusted operating income was $312 million, down 7% year-over-year, and represented 4.8% of revenue, which Szlosek said remains nearly 100 basis points above pre-pandemic levels. Floorplan interest expense decreased $5 million year-over-year, while non-vehicle interest expense increased $6 million due to higher average balances and a slightly higher blended borrowing rate. Szlosek also noted that excluded from adjusted results was a net after-tax gain of about $40 million tied to equity investments in Waymo and TrueCar.
AutoNation’s adjusted free cash flow of $256 million represented 155% of adjusted net income, Szlosek said, citing working capital discipline and capital expenditure prioritization. The company expects full-year capex of $300 million to $325 million.
Capital deployment remained centered on repurchases. Management said AutoNation deployed about $350 million in the quarter, including $300 million of share repurchases, and Szlosek said repurchases since quarter-end brought year-to-date deployment to about $400 million. Weighted average shares outstanding declined 11% year-over-year, reflecting $1.1 billion of repurchases since the end of 2024. Leverage was 2.57x EBITDA at quarter end, within the company’s stated 2x to 3x target range.
Outlook: macro uncertainty, affordability pressures, and demand deferrals
During the Q&A, analysts asked why the company removed its prior 2026 outlook slide. Manley said AutoNation entered 2026 expecting structural demand in new and used, but that affordability headwinds and additional macro pressures—including inflation and fuel price movements—have compounded that outlook. He said AutoNation originally forecast up to a 5% impact on the new vehicle industry, but now believes the industry will be “below that 5% forecast” until certain pressures dissipate.
Manley said deferred demand could support After-Sales performance as consumers postpone purchases or shift between new and used. On margins, he said investors “may see some margin compression,” and added he would be comfortable with that if it results in improved volumes through lower average transaction prices.
In response to questions on consumer conditions, Manley said rising insurance and maintenance costs are also affecting total cost of ownership. He added that wage inflation has not been evenly distributed and that a “middle cohort” of consumers has seen less benefit, which he said could weigh on industry demand in the near term. Still, Manley said he remains optimistic that “when we look back on this year, the industry is still going to be a healthy one.”
Management also provided an update on its mobile repair operations. Manley said the company integrated mobile repair into its large markets by moving bases into existing ANUSA businesses to create hubs, which improved productivity. He said AutoNation reduced the number of technicians in that area due to previously low productivity and is continuing to learn about “dynamic booking” as it builds the service in a way that maintains utilization and cost coverage.
About AutoNation NYSE: AN
AutoNation, Inc is the largest automotive retailer in the United States, operating a network of franchised new vehicle dealerships, pre-owned vehicle superstores and collision-repair centers. The company offers a comprehensive range of automotive products and services, including the sale of new cars and light trucks from leading manufacturers, certified pre-owned vehicles and a wide selection of used models. In addition to retail vehicle sales, AutoNation provides financing, insurance and extended service contracts through its in-house financial services division, as well as genuine and aftermarket parts, factory-recommended maintenance and collision-repair services.
Headquartered in Fort Lauderdale, Florida, AutoNation was founded in 1996 by entrepreneur H.
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