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AutoNation Reports 2008 Second Quarter Results of Operations

FORT LAUDERDALE, Fla., July 24 /PRNewswire-FirstCall/ -- AutoNation, Inc. (NYSE: AN), America's largest automotive retailer, today reported 2008 second quarter net income from continuing operations of $53 million or $0.29 per share, compared to year-ago net income from continuing operations of $79 million or $0.38 per share. After adjusting for certain items disclosed in the attached financial tables, net income from continuing operations for the 2008 second quarter was $59 million or $0.33 per share, compared to $76 million or $0.36 per share in the prior year.

Second quarter 2008 revenue totaled $3.9 billion, compared to $4.5 billion in the year-ago period, driven primarily by lower new vehicle sales. In the second quarter, total U.S. industry retail sales declined 16%, based on CNW Research data. In comparison, in the second quarter AutoNation's new vehicle unit sales declined 12%.

Commenting on the second quarter, Mike Jackson, Chairman and Chief Executive Officer, said, "Despite the fact that this past quarter was the most challenging automotive sales environment any of us have encountered, AutoNation delivered solid profitability." Mr. Jackson also noted, "In the second quarter, the industry encountered $4.00 per gallon gasoline on top of the continued housing depression and credit crisis, resulting in a significant challenge as consumers are either postponing the purchase of vehicles or they are purchasing smaller vehicles that are more economical both at the time of purchase and at the pump. We now believe that, in 2008, U.S. new vehicle industry sales will decline to the low-14 million unit level."

Mr. Jackson added, "In continuing response to the ongoing macroeconomic and industry challenges, we are executing a cost reduction plan with a targeted annualized run rate pre-tax savings of $100 million. In the first half of the year, we achieved approximately $25 million of this benefit. In the second half of the year, we expect to achieve approximately $50 million of savings, for a full-year 2008 impact of $75 million on a pre-tax basis. Our targeted annualized cost savings include reductions in advertising spending, corporate overhead expense and store personnel expense."

For the six-month period ended June 30, 2008, the Company reported net income from continuing operations of $109 million or $0.60 per share compared to $162 million or $0.77 per share in the prior year. After adjusting for certain items as disclosed in the attached financial tables, net income from continuing operations for the six-month period ended June 30, 2008 was $115 million or $0.64 per share, compared to $153 million or $0.73 per share. The Company's revenue for the six-month period ended June 30, 2008 totaled $7.9 billion, down 10% compared to $8.8 billion in the prior year.

The second quarter conference call may be accessed at 10:00 a.m. Eastern Time today by phone at 888-769-8515 or via the Internet (audio webcast) at http://www.AutoNation.com by clicking on the "About Us" link then clicking on "Investors" and then "Webcasts." A playback of the conference call will be available after 12:00 (noon) p.m. Eastern Time August 1, 2008 through August 7, 2008 by calling 888-562-6304.

About AutoNation, Inc.

AutoNation, Inc., headquartered in Fort Lauderdale, Fla., is America's largest automotive retailer and has been named America's Most Admired Automotive Retailer by FORTUNE Magazine in five of the last seven years. A component of the Standard and Poor's 500 Index, AutoNation owns and operates 319 new vehicle franchises in 15 states. For additional information, please visit http://corp.AutoNation.com or www.AutoNation.com, where more than 80,000 vehicles are available for sale along with AutoNation's E-Vehicle program.

FORWARD LOOKING STATEMENTS

Certain statements and information included in this release constitute "forward-looking statements" within the meaning of the Federal Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied in such forward-looking statements. Additional discussion of factors that could cause actual results to differ materially from management's projections, estimates and expectations is contained in the Company's SEC filings. The Company undertakes no duty to update its forward-looking statements, including its long-term growth targets.

NON-GAAP FINANCIAL MEASURES

The attached financial tables contain certain non-GAAP financial measures as defined under SEC rules, such as net income and diluted earnings per share from continuing operations, adjusted in each case to exclude certain items disclosed in the attached financial tables. As required by SEC rules, the Company has provided reconciliations of these measures to the most directly comparable GAAP measures, which are set forth in the attachments to this release. The Company believes that each of the foregoing non-GAAP financial measures improves the transparency of the Company's disclosure, provides a meaningful presentation of the Company's results from its core business operations excluding the impact of items not related to the Company's ongoing core business operations, and improves the period-to-period comparability of the Company's results from its core business operations.



                               AUTONATION, INC.
              UNAUDITED CONDENSED CONSOLIDATED INCOME STATEMENTS
                  ($ in millions, except per share data)

                                       Three Months Ended   Six Months Ended
                                            June 30,            June 30,
                                         2008      2007      2008      2007

    Revenue:
       New vehicle                     $2,178.4  $2,587.4  $4,376.5  $5,010.4
       Used vehicle                       940.4   1,080.6   1,920.8   2,146.8
       Parts and service                  637.8     641.7   1,292.3   1,286.3
       Finance and insurance, net         136.0     150.1     280.9     296.3
       Other                               17.0      17.1      34.6      34.2
    Total revenue                       3,909.6   4,476.9   7,905.1   8,774.0

    Cost of sales:
       New vehicle                      2,034.6   2,408.5   4,086.7   4,654.8
       Used vehicle                       860.2     987.9   1,756.5   1,951.3
       Parts and service                  359.6     359.9     730.1     723.1
       Other                                7.7       6.5      15.2      13.2
    Total cost of sales                 3,262.1   3,762.8   6,588.5   7,342.4

    Gross profit                          647.5     714.1   1,316.6   1,431.6

    Selling, general and
     administrative expenses              488.8     507.4     986.7   1,018.3
    Depreciation and amortization          22.4      21.3      45.9      42.2
    Other expenses (income), net            5.2       1.5       5.5       1.5

    Operating income                      131.1     183.9     278.5     369.6

    Floorplan interest expense            (21.5)    (32.6)    (46.8)    (64.3)
    Other interest expense                (21.6)    (26.4)    (48.4)    (52.8)
    Interest income                         0.3       0.9       0.8       1.8
    Other gains (losses), net               0.9       0.7      (0.9)      0.9

    Income from continuing operations
     before income taxes                   89.2     126.5     183.2     255.2

    Provision for income taxes             36.6      47.2      74.7      93.3

    Net income from continuing
     operations                            52.6      79.3     108.5     161.9

    Loss from discontinued operations,
     net of income taxes                   (0.8)     (2.0)     (6.0)     (7.0)

    Net income                            $51.8     $77.3    $102.5    $154.9

    Diluted earnings (loss) per share:
       Continuing operations              $0.29     $0.38     $0.60     $0.77
       Discontinued operations           $(0.00)   $(0.01)   $(0.03)   $(0.03)

       Net income                         $0.29     $0.37     $0.57     $0.74

    Weighted average common shares
     outstanding                          178.7     208.6     179.6     209.7

    Common shares outstanding, net of
     treasury stock, at June 30           176.7     201.9     176.7     201.9



                                 AUTONATION, INC.
                           UNAUDITED SUPPLEMENTARY DATA
                      ($ in millions, except per vehicle data)

       Operating Highlights                 Three Months Ended June 30,

                                      2008       2007   $ Variance  % Variance
    Revenue:
       New vehicle                  $2,178.4   $2,587.4    $(409.0)    (15.8)
         Retail used vehicle           789.3      859.7      (70.4)     (8.2)
         Wholesale                     151.1      220.9      (69.8)    (31.6)
       Used vehicle                    940.4    1,080.6     (140.2)    (13.0)
       Parts and service               637.8      641.7       (3.9)     (0.6)
       Finance and insurance, net      136.0      150.1      (14.1)     (9.4)
       Other                            17.0       17.1       (0.1)
    Total revenue                   $3,909.6   $4,476.9    $(567.3)    (12.7)


    Gross profit:
       New vehicle                    $143.8     $178.9     $(35.1)    (19.6)
         Retail used vehicle            81.3       91.9      (10.6)    (11.5)
         Wholesale                      (1.1)       0.8       (1.9)
       Used vehicle                     80.2       92.7      (12.5)    (13.5)
       Parts and service               278.2      281.8       (3.6)     (1.3)
       Finance and insurance           136.0      150.1      (14.1)     (9.4)
       Other                             9.3       10.6       (1.3)
    Total gross profit                 647.5      714.1      (66.6)     (9.3)

    Selling, general and
     administrative expenses           488.8      507.4       18.6       3.7

    Depreciation and amortization       22.4       21.3       (1.1)
    Other expenses (income), net         5.2        1.5       (3.7)
       Operating income                131.1      183.9      (52.8)    (28.7)

    Floorplan interest expense         (21.5)     (32.6)      11.1
    Other interest expense             (21.6)     (26.4)       4.8
    Interest income                      0.3        0.9       (0.6)
    Other gains (losses), net            0.9        0.7        0.2
       Income from continuing
        operations before income
        taxes                          $89.2     $126.5     $(37.3)    (29.5)

    Retail vehicle unit sales:
       New                            73,811     84,295    (10,484)    (12.4)
       Used                           49,925     51,802     (1,877)     (3.6)
                                     123,736    136,097    (12,361)     (9.1)

    Revenue per vehicle retailed:
       New                           $29,513    $30,695    $(1,182)     (3.9)
       Used                          $15,810    $16,596      $(786)     (4.7)

    Gross profit per vehicle
     retailed:
       New                            $1,948     $2,122      $(174)     (8.2)
       Used                           $1,628     $1,774      $(146)     (8.2)
       Finance and insurance          $1,099     $1,103        $(4)     (0.4)



       Operating Highlights                  Six Months Ended June 30,
                                      2008       2007   $ Variance  % Variance


    Revenue:
       New vehicle                  $4,376.5   $5,010.4    $(633.9)    (12.7)
         Retail used vehicle         1,603.6    1,720.3     (116.7)     (6.8)
         Wholesale                     317.2      426.5     (109.3)    (25.6)
       Used vehicle                  1,920.8    2,146.8     (226.0)    (10.5)
       Parts and service             1,292.3    1,286.3        6.0       0.5
       Finance and insurance, net      280.9      296.3      (15.4)     (5.2)
       Other                            34.6       34.2        0.4
    Total revenue                   $7,905.1   $8,774.0    $(868.9)     (9.9)


    Gross profit:
       New vehicle                    $289.8     $355.6     $(65.8)    (18.5)
         Retail used vehicle           165.8      191.9      (26.1)    (13.6)
         Wholesale                      (1.5)       3.6       (5.1)
       Used vehicle                    164.3      195.5      (31.2)    (16.0)
       Parts and service               562.2      563.2       (1.0)     (0.2)
       Finance and insurance           280.9      296.3      (15.4)     (5.2)
       Other                            19.4       21.0       (1.6)
    Total gross profit               1,316.6    1,431.6     (115.0)     (8.0)

    Selling, general and
     administrative expenses           986.7    1,018.3       31.6       3.1

    Depreciation and amortization       45.9       42.2       (3.7)
    Other expenses (income), net         5.5        1.5       (4.0)
       Operating income                278.5      369.6      (91.1)    (24.6)

    Floorplan interest expense         (46.8)     (64.3)      17.5
    Other interest expense             (48.4)     (52.8)       4.4
    Interest income                      0.8        1.8       (1.0)
    Other gains (losses), net           (0.9)       0.9       (1.8)
       Income from continuing
        operations before income
        taxes                         $183.2     $255.2     $(72.0)    (28.2)

    Retail vehicle unit sales:
       New                           145,473    162,407    (16,934)    (10.4)
       Used                          100,704    104,652     (3,948)     (3.8)
                                     246,177    267,059    (20,882)     (7.8)

    Revenue per vehicle retailed:
       New                           $30,085    $30,851      $(766)     (2.5)
       Used                          $15,924    $16,438      $(514)     (3.1)

    Gross profit per vehicle
    retailed:
       New                            $1,992     $2,190      $(198)     (9.0)
       Used                           $1,646     $1,834      $(188)    (10.3)
       Finance and insurance          $1,141     $1,109        $32       2.9



                                        Three Months Ended   Six Months Ended
         Operating Percentages              June 30,              June 30,
                                       2008(%)    2007(%)    2008(%)   2007(%)

    Revenue mix percentages:
      New vehicle                       55.7       57.8       55.4      57.1
      Used vehicle                      24.1       24.1       24.3      24.5
      Parts and service                 16.3       14.3       16.3      14.7
      Finance and insurance, net         3.5        3.4        3.6       3.4
      Other                              0.4        0.4        0.4       0.3
                                       100.0      100.0      100.0     100.0

    Gross profit mix percentages:
      New vehicle                       22.2       25.1       22.0      24.8
      Used vehicle                      12.4       13.0       12.5      13.7
      Parts and service                 43.0       39.5       42.7      39.3
      Finance and insurance             21.0       21.0       21.3      20.7
      Other                              1.4        1.4        1.5       1.5
                                       100.0      100.0      100.0     100.0

    Operating items as a percentage
     of revenue:
       Gross profit:
          New vehicle                    6.6        6.9        6.6       7.1
          Used vehicle - retail         10.3       10.7       10.3      11.2
          Parts and service             43.6       43.9       43.5      43.8
          Total                         16.6       16.0       16.7      16.3
       Selling, general and
        administrative expenses         12.5       11.3       12.5      11.6
      Operating income                   3.4        4.1        3.5       4.2

    Operating items as a percentage
     of total gross profit:
       Selling, general and
        administrative expenses         75.5       71.1       74.9      71.1
       Operating income                 20.2       25.8       21.2      25.8



                                 AUTONATION, INC.
                      UNAUDITED SUPPLEMENTARY DATA, Continued
                       ($ in millions, except per share data)

       Capital Expenditures / Stock
        Repurchases                       Three Months Ended  Six Months Ended
                                               June 30,          June 30,
                                           2008     2007       2008    2007

    Capital expenditures                   $18.0    $36.6      $41.5    $78.9
    Acquisitions                              $-     $0.8      $29.4     $0.8
    Proceeds from exercises of stock
     options                                  $-    $12.5       $1.0    $88.6
    Stock repurchases:
       Aggregate purchase price            $26.3   $189.6      $54.1   $239.9
       Shares repurchased (in millions)      1.9      8.7        3.8     11.0



       Floorplan Assistance          Three Months Ended     Six Months Ended
        and Expense                       June 30,               June 30,
                                   2008   2007 Variance   2008   2007 Variance

    Floorplan assistance earned
     (included in cost of sales)  $19.6   $24.3  $(4.7)  $40.6   $48.4  $(7.8)
    Floorplan interest expense
     (new vehicles)              $(20.8) $(32.4)  11.6  $(45.9) $(64.0)  18.1

       Net inventory carrying
       cost                       $(1.2)  $(8.1)  $6.9   $(5.3) $(15.6) $10.3



      Balance Sheet and Other
       Highlights                           June 30,  December 31,  June 30,
                                               2008        2007        2007

    Cash and cash equivalents                  $42.1       $33.0       $31.7
    Inventory                               $2,295.4    $2,281.5    $2,289.2
    Total floorplan notes payable           $2,245.0    $2,142.7    $2,053.6
    Non-vehicle debt                        $1,518.1    $1,775.8    $1,528.6
    Equity                                  $3,535.1    $3,473.5    $3,738.1
    New days supply (industry standard
     of selling days, including fleet)       62 days     52 days     55 days
    Used days supply (trailing 30 days)      42 days     44 days     44 days



       Brand Mix - New Vehicle
        Revenue %                       Three Months Ended   Six Months Ended
                                             June 30,             June 30,
                                        2008(%)    2007(%)   2008(%)  2007(%)
    Detroit 3:
       Ford, Lincoln-Mercury             11.9       15.1      12.8     14.9
       Chevrolet, Pontiac, Buick,
       Cadillac, GMC                     12.2       13.0      12.6     13.4
       Chrysler, Jeep, Dodge              5.4        6.7       5.9      6.6
          Detroit 3 total                29.5       34.8      31.3     34.9

    Import Premium Luxury:
       Mercedes                          12.5       11.4      12.2     11.8
       BMW                                6.9        6.7       6.7      6.4
       Lexus                              3.9        3.9       4.0      3.9
       Other premium luxury (Land
        Rover, Porsche)                   2.7        3.1       2.7      3.1
          Premium Luxury total           26.0       25.1      25.6     25.2

    Volume Imports:
       Honda                             11.5        9.3      10.5      9.2
       Toyota                            17.4       16.0      16.8     15.4
       Nissan                             9.5        9.0       9.7      9.4
       Other imports                      6.1        5.8       6.1      5.9
          Import total                   44.5       40.1      43.1     39.9

                                        100.0      100.0     100.0    100.0



                                AUTONATION, INC.
                      UNAUDITED SUPPLEMENTARY DATA, Continued
                     ($ in millions, except per share data)
                        Comparable Basis Reconciliations*

                                             Three Months Ended June 30,
                                                            Diluted Earnings
                                           Net Income          Per Share
                                        2008       2007      2008     2007

    As reported                         $51.8      $77.3     $0.29    $0.37

       Discontinued operations, net
        of income taxes                   0.8        2.0     $0.00    $0.01
    From continuing operations, as
     reported                            52.6       79.3     $0.29    $0.38
        Income tax adjustments              -       (3.5)       $-   $(0.02)
        Stock compensation expense
         adjustment                       3.1          -     $0.02       $-
        Franchise impairments             3.0          -     $0.02       $-

    Adjusted                            $58.7      $75.8     $0.33    $0.36



                                              Six Months Ended June 30,
                                                            Diluted Earnings
                                           Net Income          Per Share
                                        2008       2007      2008     2007

    As reported                        $102.5     $154.9     $0.57    $0.74

       Discontinued operations, net
        of income taxes                   6.0        7.0     $0.03    $0.03
      From continuing operations, as
       reported                         108.5      161.9     $0.60    $0.77


       Income tax adjustments               -       (8.6)       $-   $(0.04)
       Stock compensation expense
        adjustment                        3.1          -     $0.02       $-
       Franchise impairments              3.0          -     $0.02       $-

    Adjusted                           $114.6      $153.3    $0.64    $0.73

    * Please refer to the "Non-GAAP Financial Measures" section of the Press
      Release.



    Business Assumptions Impacting Long-term Average EPS Growth Target of
     10% to 12% Per Year:

    U.S. light vehicle annual unit sales       assumes recovery in key markets

    Continued opportunistic redeployment       share repurchase, capital
     of cash flow                               expenditures and acquisitions

    Targeted return on incremental
     invested capital                          approximately 15% after-tax



                              AUTONATION, INC.
                         UNAUDITED SAME STORE DATA
                  ($ in millions, except per vehicle data)

           Operating Highlights          Three Months Ended June 30,
                                      2008       2007   $ Variance  % Variance
    Revenue:
       New vehicle                 $2,168.8   $2,587.4    $(418.6)     (16.2)
          Retail used vehicle         784.2      859.7      (75.5)      (8.8)
          Wholesale                   148.9      220.4      (71.5)     (32.4)
       Used vehicle                   933.1    1,080.1     (147.0)     (13.6)
       Parts and service              634.3      641.7       (7.4)      (1.2)
       Finance and insurance, net     135.4      150.1      (14.7)      (9.8)
       Other                            5.3        6.5       (1.2)     (18.5)
    Total revenue                  $3,876.9   $4,465.8    $(588.9)     (13.2)


    Gross profit:
       New vehicle                   $143.1     $178.9     $(35.8)     (20.0)
          Retail used vehicle          80.8       91.9      (11.1)     (12.1)
          Wholesale                    (1.7)       0.3       (2.0)
       Used vehicle                    79.1       92.2      (13.1)     (14.2)
       Parts and service              275.9      281.2       (5.3)      (1.9)
       Finance and insurance          135.4      150.1      (14.7)      (9.8)
       Other                            5.7        6.8       (1.1)
    Total gross profit               $639.2     $709.2     $(70.0)      (9.9)


    Retail vehicle unit sales:
       New                           73,545     84,295    (10,750)     (12.8)
       Used                          49,674     51,802     (2,128)      (4.1)
                                    123,219    136,097    (12,878)      (9.5)

    Revenue per vehicle retailed:
       New                          $29,489    $30,695    $(1,206)      (3.9)
       Used                         $15,787    $16,596      $(809)      (4.9)

    Gross profit per vehicle
     retailed:
       New                           $1,946     $2,122      $(176)      (8.3)
       Used                          $1,627     $1,774      $(147)      (8.3)
       Finance and insurance         $1,099     $1,103        $(4)      (0.4)



           Operating Highlights               Six Months Ended June 30,
                                      2008       2007   $ Variance  % Variance
    Revenue:
       New vehicle                 $4,356.3   $5,010.4    $(654.1)     (13.1)
          Retail used vehicle       1,593.5    1,720.3     (126.8)      (7.4)
          Wholesale                   313.4      425.5     (112.1)     (26.3)
       Used vehicle                 1,906.9    2,145.8     (238.9)     (11.1)
       Parts and service            1,284.1    1,286.3       (2.2)      (0.2)
       Finance and insurance, net     279.8      296.3      (16.5)      (5.6)
       Other                           11.8       13.5       (1.7)     (12.6)
    Total revenue                  $7,838.9   $8,752.3    $(913.4)     (10.4)


    Gross profit:
       New vehicle                   $288.2     $355.6     $(67.4)     (19.0)
          Retail used vehicle         164.6      191.9      (27.3)     (14.2)
          Wholesale                    (2.5)       2.6       (5.1)
       Used vehicle                   162.1      194.5      (32.4)     (16.7)
       Parts and service              557.3      562.0       (4.7)      (0.8)
       Finance and insurance          279.8      296.3      (16.5)      (5.6)
       Other                           12.2       13.5       (1.3)
    Total gross profit             $1,299.6   $1,421.9    $(122.3)      (8.6)


    Retail vehicle unit sales:
       New                          144,929    162,407    (17,478)     (10.8)
       Used                         100,206    104,652     (4,446)      (4.2)
                                    245,135    267,059    (21,924)      (8.2)

    Revenue per vehicle retailed:
       New                          $30,058    $30,851      $(793)      (2.6)
       Used                         $15,902    $16,438      $(536)      (3.3)

    Gross profit per vehicle
     retailed:
       New                           $1,989     $2,190      $(201)      (9.2)
       Used                          $1,643     $1,834      $(191)     (10.4)
       Finance and insurance         $1,141     $1,109        $32        2.9



                                       Three Months Ended    Six Months Ended
         Operating Percentages              June 30,              June 30,
                                       2008(%)    2007(%)    2008(%)   2007(%)

    Revenue mix percentages:
       New vehicle                      55.9       57.9       55.6      57.2
       Used vehicle                     24.1       24.2       24.3      24.5
       Parts and service                16.4       14.4       16.4      14.7
       Finance and insurance, net        3.5        3.4        3.6       3.4
       Other                             0.1        0.1        0.1       0.2
                                       100.0      100.0      100.0     100.0


    Gross profit mix percentages:
       New vehicle                      22.4       25.2       22.2      25.0
       Used vehicle                     12.4       13.0       12.5      13.7
       Parts and service                43.2       39.7       42.9      39.5
       Finance and insurance            21.2       21.2       21.5      20.8
       Other                             0.8        0.9        0.9       1.0
                                       100.0      100.0      100.0     100.0


    Operating items as a percentage
     of revenue:
       Gross Profit:
          New vehicle                    6.6        6.9        6.6       7.1
          Used vehicle - retail         10.3       10.7       10.3      11.2
          Parts and service             43.5       43.8       43.4      43.7
          Total                         16.5       15.9       16.6      16.2

SOURCE AutoNation, Inc.

CONTACT:
Marc Cannon of AutoNation, Inc.
+1-954-769-3146
Cannonm@autonation.com

Media Contact

Marc Cannon
Executive Vice President
Chief Marketing Officer, Communications and Public Policy
Phone: 954.769.3146
cannonm@autonation.com

Press inquiries, or interview requests can be sent to Marc via e-mail.

Please state the following with your request:

  • Your Name
  • Name of the organization you represent
  • Brief description of your request, or article
  • Deadline

For other inquiries or corporate information, call: 954.769.7000