Good morning, and welcome to the virtual webcast of the 2026 Annual Meeting of Stockholders of AutoNation, Inc. We do not expect any technical difficulties today. However, in the event we lose audio or webcast connection and we are unable to provide any updates, please wait 10 minutes for resolution. The polls are open. To vote, click on the Vote Here button at the bottom right corner of the webcast screen. The polls will remain open until the conclusion of the matters to be voted on portion of the meeting. During the webcast today, the company may make forward-looking statements about our expectations or predictions about the future. Because these statements are based on current assumptions and factors that involve risks and uncertainties, the company's actual performance and results may differ materially from what is said here today.
Please refer to AutoNation's 2025 Annual Report on Form 10-K, filed with the SEC on February 12th, 2026, and our subsequent SEC filings for detailed discussions of risks and uncertainties that could cause differences. I'll now turn the call over to AutoNation's Chairman of the Board, Rick Burdick.
Thank you, Coleman. I'd like to introduce the other members of AutoNation's Board of Directors. First, Michael Manley has served as AutoNation's Chief Executive Officer and a member of our board since 2021. He brings deep global automotive experience from his time as CEO of Fiat Chrysler and senior roles at Stellantis, with strong focus on execution, discipline, and long-term value creation. Next, Claire Bennett joined our board in 2024 and brings extensive experience leading customer-focused global organizations. Her background spans general management and large-scale transformation across consumer services business, providing valuable perspective as we continue to evolve our customer experience and adapt to a changing market and technology dynamics. Next is David Edelson, has served on our board since 2008 and is Chair of our Audit Committee.
As Managing Director at Bain Capital, he brings deep experience in financial oversight, capital allocation, governance, supporting strong risk management and consistent financial discipline across the company. Next is Bob Grusky, who has served as a Director since 2006 and is the Founder of Hope Capital Management. With decades of investment in capital markets experience, he brings valuable insight into shareholder priorities and long-term value creation. Norman Jenkins has served on our board since 2020 and is President and CEO of Capstone Development, a commercial multifamily real estate firm he founded. He brings deep real estate and operating experience supporting disciplined growth, capital deployment, and thoughtful oversight of our physical footprint. Lisa Lutoff-Perlo has served as a Director since 2020 and brings extensive leadership experience from global consumer and hospitality brands.
She previously served as President and CEO of Celebrity Cruises, contributing to her strong brand, operational, and governance experience. Mike Mikan has served on our board since 2013 and chairs our Compensation Committee. He is Vice Chairman, President and CEO of NeueHealth and brings broad experience in executive leadership, performance management, and governance, helping ensure alignment between strategy, leadership, incentives, and shareholder outcomes. Jacque Travisano has served on our board since 2018 and chairs our Corporate Governance and Nominating Committee. She is Executive Vice President and Chief Financial Officer of Wake Forest University and brings strong financial, institutional, and governance leadership to the board. As a board, we've remained focused on disciplined oversight and long-term value. That focus is reflected in our operating performance, and I now turn it over to our CEO, Mike Manley.
Thanks, Rick. Good morning, everybody. Thank you for taking the time to join us today. When we reflect back on 2025, I think it was certainly a year that tested the industry, I think as such, it was a year that demonstrated the strength and the resilience of AutoNation's business model. In that volatile environment, we delivered growth, we generated strong cash flow, I think when I reflect on the performance of the team, they executed with discipline. Most importantly, we created value for our shareholders whilst investing in long-term strength. Revenue for the year totaled $28 billion, which was up 3% from the prior year. Adjusted operating income of $1.4 billion also increased by 3%.
Adjusted net income of $770 million was up by 8%, and I was pleased to be able to comment on four consecutive quarters of year-over-year adjusted EPS growth, bringing our full year adjusted EPS to $20.22, which was up 16% year-over-year. Cash is obviously a key focus for us, and our cash conversions of earnings were strong, and we generated more than $1 billion of free cash flow. Across new vehicles, our unit sales increased 2%, which was largely in line with the overall marketplace, and unit profitability, while lower for the full year, stabilized in the fourth quarter. Now looking at our used vehicle performance.
Our used volume increased slightly year-over-year, but we maintained our unit profitability and improved our wholesale performance, which combined led to a 5% increase in used vehicles gross profit in what was and continues to be a very competitive market. Customer Financial Services had an excellent year. Full year gross profit per unit for CFS was the highest we have had in the history of AutoNation. Our customers purchased more than two products per vehicle, with extended service contracts continuing to be the top offering, which is of course fantastic for our future after-sales revenue and customer retention. Our finance penetration continues to grow, with around three-quarters of the units sold being sold with financing. In after-sales, we set new records.
This part of the business, which as you know, is typically much more stable than vehicle sales, remains nearly half of our gross profit and is a cornerstone of our long-term value creation. Gross profit for the year was a record of $2.4 billion, which was a 7% increase over the record we set in 2024. Our after-sales teams continue to do a phenomenal job and are very integral to our overall customer retention efforts. Now, the strong momentum that AutoNation Finance was maintained, including a $19 million year-over-year swing in profitability to $10 million. Originations for the year increased by $700 million from 2024, with the 2025 year-end portfolio exceeding $2.2 billion.
During the year, we completed our inaugural ABS financing and improved the advance rates on our warehouse facilities, which increased the debt funding of our portfolio from 75%- 88%. All of this business performance that I've just taken you through was underpinned by cost discipline, very tight control of SG&A, and as I mentioned earlier, strong cash flow generation, which enabled us to continue our balanced approach to capital allocation. We returned significant capital to shareholders as we repurchased more than 4 million shares, reducing our shares outstanding by 10%. We acquired five dealerships to add scale and density in existing markets and maintained our leverage within our targeted range. In closing, I would like to thank all of you, our shareholders, for your continued trust and confidence in AutoNation.
I would also like to thank our more than 25,000 AutoNation associates whose commitment and execution made the strong performance I have just discussed possible. With that, Coleman, I'll turn it back to you. Thank you.
Thank you, Mike. I'll call this annual meeting of stockholders to order. In addition to Rick and Mike, the other director nominees are attending today's meeting through this live webcast. KPMG, our independent auditors, are also attending today's meeting through this live webcast. The rules of conduct and procedures are shown at the bottom right corner of the webcast screen. The procedures we follow are simple and designed to ensure that we have fair and orderly meeting. As noted, the polls are open. If you have not already voted your shares or wish to change your vote, you may do so by clicking on the Vote Here button at the bottom right corner of the webcast screen. The polls will remain open until the conclusion of the Matters to be Voted On portion of the meeting.
Stockholders may submit questions electronically during the meeting by typing your question in the box located at the right or the bottom left corner of the webcast screen. These questions will not be visible to other participants. We intend to answer questions submitted during the meeting that are pertinent to the company and meeting matters as time permits. Please note that the meeting is being recorded. Participants are not permitted to use any recording device. The Board appointed American Election Services to act as the inspector of election to the meeting. We have informed our inspector that a quorum is present for purposes of conducting the business of the meeting. We will now review the matters to be voted on. The first item on the agenda is the election of directors. The director nominees are Rick L. Burdick, Michael Manley, Claire Bennett, David B. Edelson, Robert Grusky, Norman K. Jenkins, Lisa Lutoff-Perlo, G. Mike Mikan, and Jacqueline A. Travisano. Your Board recommends a vote for each of these nominees.
Agenda Item 2 concerns the ratification of the selection of KPMG as the company's independent registered public accounting firm for 2026. Your Board recommends a vote for Agenda Item 2. Agenda Item 3 is an advisory vote on executive compensation. Your Board recommends a vote for Item 3, Agenda Item 3. Agenda Item 4 is a vote to approve the AutoNation, Inc 2026 Employee Equity and Incentive Plan. Your Board recommends a vote for Agenda Item 4. Agenda Item 5 is a stockholder proposal regarding an Independent Board Chairman. The proposal was submitted by John Chevedden. [Glenn Bady] will be presenting the John Chevedden's proposal. I recognize Mr. [Bady] for a period of three minutes. Operator, please open Mr. [Bady's] line.
Thank you. Proposal 5, Independent Board Chairman, sponsored by John Chevedden. Shareholders request that the Board of Directors adopt an enduring policy and amend the governing documents in order that two separate people hold the office of the Chairman and the office of the CEO as soon as possible. The Chairman of the Board shall be an independent director. A lead director shall not be a substitute for an Independent Board Chairman. The board shall have the discretion to select an Interim Chairman of the Board who is not an Independent Director to serve while the board is required to seek an Independent Chairman of the Board on an accelerated basis. This policy could be phased in when there is a contract renewal for our current CEO or for the next CEO transition, although it is best to adopt it now.
AutoNation has a current policy where it can switch from having an Independent Board Chairman to not having an Independent Board Chairman anytime it wants to.
An Independent Board Chairman at all times improves corporate governance by bringing impartiality, objective oversight, and external expertise to board decisions, mitigating conflicts of interest, enhancing transparency, and boosting shareholder confidence. This detached perspective allows the chairman to focus on shareholder interests, strengthen management accountability, and provide critical checks and balances, ultimately contributing to long-term stability and credibility. Please vote yes. Independent Board Chairman, proposal 5.
Your board recommends a vote against item five for the reasons set forth in the company's proxy statement. Agenda Item 6 is a stockholder proposal regarding greenhouse gas report. The proposal was submitted by Green Century Capital Management. I recognize Giovanna Eichner for a period of three minutes. Operator, please open Ms. Eichner's line.
My name is Giovanna Eichner. On behalf of Green Century Capital Management, I am presenting proposal number 6, asking AutoNation to disclose its current emissions and any targets for measurably reducing them. A warming climate has direct financial consequences for the broader economy and individual automotive retailer companies. Climate change has already cut U.S. incomes by nearly 12% since 2000, and vehicle insurance premiums are rising in risk-prone areas due to severe climate disasters. For example, Florida's car insurance rates increased over 24% between 2023 and 2024 due to extreme weather. As emissions increase, so do these climate-related risks. As a result, 79% of listed companies have disclosed their Scope 1 and 2 emissions as of year-end 2024, and the number of global companies with both near-term climate goals and net zero targets grew 61% year-over-year in 2025.
Greater transparency regarding emissions is enabling companies to reduce associated physical and transition risks. Nevertheless, AutoNation has yet to disclose its emissions or set a target to reduce its climate impact, and its 2024 corporate responsibility report fails to address climate change at all. The company's lack of action leaves investors questioning its ability to adequately address climate-related risks and may expose it to competitive risks. AutoNation recognizes the physical impacts of climate change as a business risk in its 10-K. In 2025, 65% of the company's total revenue was generated in Florida, Texas, and California. These states are among the top 10 most financially threatened by severe weather. Florida, Texas, and Louisiana also comprise nearly half of major U.S. disaster costs from 1980 to 2023. AutoNation faces competitive risks by failing to keep pace with peers capitalizing on the financial benefits of decarbonization.
Lithia Motors announced savings of over $300,000 from energy reduction projects in 2024. Between 2022 and 2024, CarMax increased its total renewable energy consumption by 87%. Meanwhile, AutoNation reported 0% energy usage in 2024. Disclosing emissions and setting reduction targets would better position AutoNation to catch up to peers already capturing the financial benefits of decarbonization. Without reporting emissions and targets to reduce them, AutoNation lacks a strategy to understand and reduce its exposure to climate change. The steps necessary to reach climate goals will also help AutoNation mitigate climate-related risks and allow it to benefit from growing opportunities from the transition to the clean energy economy. In continuing to delay measuring and managing its emissions, AutoNation is heightening the enterprise and competitive risks climate change poses to its business. We therefore urge a for vote on proposal number 6.
Thank you for your time.
Thank you. Your Board recommends a vote against item 6 for the reasons set forth in the company's proxy statement. This concludes the review of the matters to be voted on. The polls are now closed. The Inspector of Election will collect and tabulate all the proxies and ballots. Subject to a final tabulation, we report the following preliminary results provided by the inspector. That all the Director nominees have been elected, that the appointment of KPMG has been ratified, that our stockholders have approved the advisory resolution on executive compensation, that our stockholders have approved the AutoNation, Inc 2026 Employee Equity and Incentive Plan, and that our stockholders have voted against each of the stockholder proposals.
The final vote, voting results will become part of the record of the meeting and will be reported in a Form 8-K to be filed in connection with the matters voted upon at this meeting. All items of business have now been completed. I will now turn the call back over to Rick Burdick.
Thank you, Coleman. We will now address stockholder questions that are pertinent to the company and meeting matters.
First question. AutoNation delivered strong free cash flow and EPS growth in 2025. How sustainable is that performance in 2026?
Thank you, Coleman. As I mentioned earlier, as part of my opening, there were a number of kind of unforeseen or unexpected impacts on the industry in 2025 as the year progressed. As I mentioned, I think it really did demonstrate the resilience and flexibility of our business model. In that year, we generated over $1 billion of adjusted free cash flow and grew our EPS while navigating all of those issues, which by the way, included affordability pressures, you'll remember, shift in powertrain demand and quite some uneven industry peaks and troughs throughout the year. If you think about our performance, that wasn't really driven by a single lever.
Really came from a number of contributions right across the business, which I think demonstrates the resilience that we've got. Although there's no doubt we think industry volumes this year on the new side are going to be lower, which frankly, we've seen in the first quarter, our business is demonstrated by the results that we have delivered benefits from a very strong and stable after-sales business now contributing approximately 50% of our total profit. I do think that that will grow throughout the year. It's also important to note that the priority that we have on sustaining strong cash flow conversion will continue in the business. It's something I think we demonstrated well last year.
It's something we'll continue to focus on this year, which will really give us the ability to continue to deploy the capital that we generate very thoughtfully. You know, finally, I think that when I think about 2026, that focus on SG&A cost efficiencies in the business is gonna remain very, very high. Given that, I think in summary, certainly our earnings profile and our cash generation, I think, will remain strong notwithstanding the fact that the industry will be lower year-over-year.
Thanks. The next question, you already partially touched on this topic, but with continued capital returns and selective M&A, how is management thinking about capital allocation priorities going forward?
Well, this is a topic we've talked about, you know, we've talked about a lot over the time that I've been in the business, and I think our approach has been very, very consistent. As we said, we think about it really in three categories. Obviously, maintenance CapEx, which is relatively contained and predictable. We plan that as far in advance as we can in conjunction with our operators in our business, but also our OEM partners. I think that's relatively sustained. Certainly sustainable there's no doubt about that in my mind, but I think it's relatively contained. The second one is around M&A, and I was very pleased with the businesses we added to AutoNation last year. I think they were of scale. I think they were in areas where we looked to grow density.
I think they were in brands that we were looking for. I think that after some of the market prices in prior years, they returned to what I believe represented good value for us, and that will continue to be looked at in that way. Then finally and very, very importantly is returning capital to our shareholders via our share repurchase. I think we've demonstrated these priorities over the last few years, and I can absolutely predict that those priorities for our shareholders are not gonna change.
Thanks, Mike. This concludes our Q&A session. Thank you for your continued support and your interest in AutoNation. This concludes today's webcast, and the meeting is now adjourned.
This now concludes the meeting. Thank you for joining, and have a pleasant day.