AutoNation issues profit warning after disruptions from CDK cyberattack

By Ciara Linnane

Disruption caused by cyberattack has led AutoNation to shave $1.50 off its quarterly per-share profit guidance

AutoNation Inc. said Monday that it expects the recent cyberattack at dealership software company CDK Global to shave about $1.50 off its June quarter per-share earnings.

That's excluding any potential recoveries related to the incident, which severely disrupted operations at dealerships across the U.S. CDK disclosed the attack in June and dealerships soon reported they had gone "old school," and were processing orders, sales, title work and payroll manually.

For more, see: Car dealerships go 'old school' as CDK Global cyberattack forces some services to go back to paper

AutoNation (AN) is now expecting EPS to range from $3.15 to $3.30, while the FactSet consensus was for $4.52. The retailer of new and used cars and other related products and services is due to report fiscal second-quarter earnings on July 31.

"While the full scope, nature, and impact of the incident is yet to be known, we do not expect the incident to have a material impact on AutoNation's overall financial condition or on its ongoing results of operations," the company said in a regulatory filing.

The impact is split roughly evenly between lost income starting June 19 and ending June 30, and one-time costs relating to the incident, mostly in the form of guaranteed compensation paid to retain commission-based associates.

AutoNation immediately took measures to protect its systems and data on learning about the attack. But it still caused outages of the company's dealer management system and core functions, meaning sales, service, inventory, customer relationship management and accounting functions.

"We expect to complete the restoration of all such systems and integrations prior to the end of July 2024," the company said.

CDK said in late June that it had managed to bring a batch of U.S. car dealerships back on to its system. Its parent, Brookfield Business Partners LP's stock (BBU) wasn't active premarket but is down 2.6% in the year to date.

AutoNation's stock has gained 14% in the year to date, while the S&P 500 has gained 17.7%.

-Ciara Linnane

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

07-15-24 0947ET

Copyright (c) 2024 Dow Jones & Company, Inc.