AutoNation Inc. announced on Monday that disruptions caused by a recent cyberattack at dealership software company CDK Global are expected to reduce its June quarter per-share earnings by approximately $1.50. This adjustment excludes any potential recoveries related to the incident, which significantly disrupted dealership operations across the United States.
The cyberattack, disclosed by CDK Global in June, forced many dealerships to revert to manual processes for orders, sales, title work, and payroll. As a result, AutoNation (AN) has adjusted its earnings per share (EPS) forecast to a range of $3.15 to $3.30, compared to the FactSet consensus of $4.52. The company is scheduled to report its fiscal second-quarter earnings on July 31.
“While the full scope, nature, and impact of the incident are still being assessed, we do not expect it to have a material impact on AutoNation’s overall financial condition or ongoing operations,” the company stated in a regulatory filing.
The financial impact of the incident is attributed equally to lost income from June 19 to June 30 and one-time costs related to the incident. These costs primarily involve guaranteed compensation paid to retain commission-based associates during the disruption.
Upon learning about the attack, AutoNation took immediate measures to protect its systems and data. Despite these efforts, the cyberattack caused significant outages in the company’s dealer management system and core functions, including sales, service, inventory, customer relationship management, and accounting.
“We expect to complete the restoration of all affected systems and integrations by the end of July 2024,” AutoNation said.
CDK Global reported in late June that it had managed to bring a batch of U.S. car dealerships back online. Its parent company, Brookfield Business Partners LP, has seen its stock decline by 2.6% year to date.
Despite the challenges posed by the cyberattack, AutoNation’s stock has gained 14% year to date, while the S&P 500 (SPX) has gained 17.7%. The company’s ability to navigate through this disruption and its proactive measures to mitigate the impact underscore its resilience in the face of cybersecurity threats.
