Ryan Payne, President of Payne Capital Management, appeared on “Mornings with Maria” to explain the latest data on the auto industry.
AutoNation said Monday that CDK Global’s recent widespread software outage will have a negative impact on its second-quarter bottom line.
The car dealership said the June outage at its auto dealer software provider will drag down second-quarter profit by about $1.50 per share, leading to earnings per share (EPS) of $3.15 to $3.30, according to a filing AutoNation made with the U.S. Securities and Exchange Commission on Monday.
“The impact of this incident is split approximately evenly between our internal estimate of lost revenue for the period from June 19, 2024 to June 30, 2024 and certain one-time charges related to the incident, consisting primarily of guaranteed compensation paid to retain commission-based employees to protect our business, which we expect to adjust for in calculating second quarter non-GAAP earnings per share,” AutoNation said.
An AutoNation Honda dealership in Fremont, California, June 24, 2024. The hack that disrupted operations at thousands of auto dealerships across North America is now being resolved, said CDK Global, the software provider that was targeted. (David Paul Morris/Bloomberg/via Getty Images)
AutoNation and many other companies in the auto industry had to deal with a widespread outage of CDK software late last month when CDK Global temporarily took its systems offline in response to a cyber incident. According to an SEC filing, the auto retailer specifically reported experiencing outages related to its dealer management system and certain other core functions during that time.
The CDK Global logo will be displayed on your smartphone. (Photo illustration: Igor Golovniov/SOPA Images/LightRocket via / Getty Images)
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“As of the date of this filing, access to our DMS and core functionality 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 to restore them are ongoing. We expect to complete the restoration of all such systems and integrations by the end of July 2024.”
AutoNation’s “overall financial condition” is not expected to be “materially affected” by either the current status of the auxiliary system or the CDK outage, the company said.
July 18, 2023 at an AutoNation dealership in Las Vegas. (Bridget Bennett/Via Bloomberg/Getty Images)
According to an SEC filing on June 24, AutoNation was using “manual and alternative methods and processes” to provide service at the peak of the CDK software outage, forcing many other car dealerships across the country to turn to similar measures.
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The forecast of a $1.50 per share negative impact to AutoNation’s second-quarter EPS was released more than two weeks before the company is scheduled to release its results for that three-month period.
The car dealership has more than 300 stores across the country, according to its website.
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