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New and used car retailer AutoNation defended its weaker-than-expected earnings on Wednesday, telling investors that the back-to-back cyberattacks against dealership software firm CDK Global was behind its results.
AutoNation said the incident reduced its second-quarter earnings per share by about $1.55, including 79 cents of one-time costs, slightly above what the firm had forecast earlier this month. The Fort Lauderdale, Florida-based company reported adjusted earnings per share of $3.99, below Wall Street’s expected $4.32 per share.
Net income hit $130.2 million for the April to June quarter, below analysts’ consensus of $174.7 million and down from $272.5 million a year earlier, according to FactSet. Revenue dropped 6% year-over-year to $6.4 billion.
“An otherwise strong quarter for AutoNation was masked by the CDK outage,” CEO Mike Manley said in a statement, adding that trends in vehicle margins and after-sales services were encouraging. “We are encouraged by the health of the markets we serve and look forward to delivering a strong second half.”
On June 19, CDK Global was hit with multiple cyberattacks, taking down dealership management software for most of the almost 15,000 car dealerships it works with across the U.S. and Canada. CDK also works with more than 1,000 heavy truck locations.
The incident forced CDK’s software down for about two weeks, leaving dealerships scrambling for alternative ways of doing business. Many firms were left unable to access important customer documents, forcing them to scale back business and find alternative methods of conducting their work.
Sales of new vehicles in June took a 7.2% hit compared to a year earlier, according to a J.D. Power and GlobalData study, which pinned some of the blame on the cyberattacks. Sales were expected to bounce back in July, thanks to much of those sales being pushed into the early weeks of the month.
CDK is facing a series of potential class-action lawsuits in federal court in Illinois, where it is based, and Florida from consumers and customers. Most of the lawsuits come from people who contend their personally identifiable information was exposed by the incident.