AutoNation says CDK outage will hurt its second-quarter bottom line

AutoNation disclosed Monday its bottom line for the second quarter will show a negative impact from CDK Global’s recent widespread software outage.

The vehicle retailer forecasted that the June outage to the auto dealer software provider’s systems will drag on its earnings to the tune of about $1.50 per share in the second quarter, poising it to report an estimated earnings per share (EPS) of $3.15 to $3.30, according to a filing AutoNation submitted Monday to the Securities and Exchange Commission (SEC).

"The estimated impact of the incident is split approximately evenly between internal estimates for lost income during the period beginning on June 19, 2024, and ending June 30, 2024, and certain one-time costs relating to the incident, principally consisting of guaranteed compensation paid to retain commission-based associates in order to protect the Company’s business, which one-time costs we expect to adjust for in calculating non-GAAP earnings per share for the second quarter," AutoNation said.

AutoNation and many others in the auto industry had to navigate widespread CDK software outages late last month after CDK Global temporarily took systems offline in response to cyber incidents. The vehicle retailer specifically reported experiencing disruptions related to its dealer management system and certain other core functions during that time, per the SEC filing.

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"As of the date of this filing, access to our DMS and Core Functions has been restored," AutoNation said. "Certain ancillary systems and integrations, such as those that help automate ordering, scheduling, payment, and reporting processes, remain unavailable or limited, and efforts remain ongoing to restore these. We expect to complete the restoration of all such systems and integrations prior to the end of July 2024."

AutoNation’s "overall financial condition" will not see a "material impact" from either the current status of the ancillary systems or the CDK outage, the company predicted.

During the peak of the CDK software outages, AutoNation had used "manual and alternative means and processes" to provide services, a June 24 SEC filing from the company indicated. Many other auto dealers across the country also had to resort to such measures.

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The disclosure of AutoNation’s expected $1.50-per-share negative impact to its second-quarter EPS came over two weeks before the company’s results for that three-month period are slated to come out.

The vehicle retailer operates more than 300 locations around the country, according to its website.

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