AutoNation Lowers Quarterly Earnings Guidance After Cyberattack on CDK Global

AutoNation has recently announced a reduction in its quarterly earnings guidance following a cyberattack on software provider CDK Global. The attack, which occurred last month, has had a significant impact on both companies and the automotive industry as a whole.

Key Takeaways

• AutoNation lowered its second-quarter EPS guidance by about $1.50 per share.
• CDK Global, a software provider for car dealerships, was hit by a cyberattack in June.
• AutoNation has restored access to its dealer management system and core functions, but some ancillary systems remain offline.

The Impact of the Cyberattack

CDK Global is a key provider of software solutions to approximately 15,000 car dealerships, including AutoNation locations. The cyberattack on CDK Global disrupted operations for both companies, leading AutoNation to revise its second-quarter earnings per share (EPS) guidance downward by approximately $1.50. The new guidance range is now between $3.15 and $3.30 per share, excluding any potential recoveries related to the incident.

While AutoNation has managed to restore access to its dealer management system and core functions, certain ancillary systems are still offline. The company anticipates that all systems will be fully operational again by the end of July. Despite the challenges posed by the cyberattack, AutoNation remains confident that the incident will not have a material impact on its financial condition or ongoing results of operations.

Market Response

Following the announcement of the revised earnings guidance, shares of AutoNation experienced a more than 3% increase, reaching $176.16 as of midday on Monday. This positive market response indicates investor confidence in the company’s ability to navigate through the challenges posed by the cyberattack. Year-to-date, AutoNation shares have risen by approximately 17%, reflecting overall market optimism about the company’s performance.

Conclusion

The cyberattack on CDK Global and its subsequent impact on AutoNation highlight the growing threat of cybersecurity breaches in the automotive industry. As technology plays an increasingly vital role in dealership operations, companies must remain vigilant and proactive in safeguarding their systems against potential threats. While the incident has caused some disruptions, AutoNation’s swift response and ongoing efforts to restore full functionality demonstrate its resilience in the face of adversity.

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