Press Release

AutoNation Reports All-Time Record Quarterly EPS
- EPS from continuing operations was an all-time record $1.64, up 44% compared to fourth quarter 2016 EPS from continuing operations of $1.14
- Total revenue of $5.7 billion increased by 4% compared to the year-ago period. Same store revenue of $5.6 billion increased by 4% compared to the year-ago period
- Same store gross profit of $851 million increased by 7% compared to the year-ago period, driven by an all-time record same store Customer Financial Services gross profit per vehicle retailed of $1,732, an increase of 11%, and strong same store Customer Care gross profit growth of 6%
- The recent tax reform bill positively impacted fourth quarter 2017 net income from continuing operations by $41 million, or $0.45 per share

FORT LAUDERDALE, Fla., Feb. 1, 2018 /PRNewswire/ -- AutoNation, Inc. (NYSE: AN), America's largest automotive retailer, today reported fourth quarter 2017 net income from continuing operations of $152 million, or $1.64 per share, up 44% compared to the fourth quarter 2016 net income from continuing operations of $116 million, or $1.14 per share. Fourth quarter 2017 EPS from continuing operations included a benefit of $0.45 per share from the recent tax reform bill and a net gain of $0.17 per share related to business/property divestitures. Fourth quarter 2016 EPS from continuing operations included gains of $0.19 per share related to a business divestiture and $0.09 per share related to a legal settlement.

Fourth quarter 2017 revenue totaled $5.7 billion compared to $5.5 billion in the year-ago period. Same store fourth quarter 2017 revenue totaled $5.6 billion compared to $5.4 billion in the year-ago period, an increase of 4%. Same store fourth quarter 2017 gross profit of $851 million increased by 7% compared to $794 million in the year-ago period, driven by increases in used vehicle gross profit of 16%, Customer Financial Services gross profit of 14%, and Customer Care gross profit of 6%. Same store Customer Financial Services gross profit per vehicle retailed was an all-time record $1,732.

Share Repurchase
During 2017, AutoNation repurchased 10.1 million shares of common stock for an aggregate purchase price of $435 million. As of January 31, 2018, AutoNation has approximately $114 million remaining Board authorization for share repurchase and 92 million shares outstanding.

Segment Results
Segment results(1) for the fourth quarter 2017 were as follows:

  • Domestic - Domestic segment income(2) was $67 million compared to year-ago segment income of $64 million, an increase of 4%.

  • Import - Import segment income(2) was $75 million compared to year-ago segment income of
    $67 million, an increase of 13%.

  • Premium Luxury - Premium Luxury segment income(2) was $106 million compared to year-ago segment income of $93 million, an increase of 13%.

For the full year ended December 31, 2017, AutoNation reported net income from continuing operations of $435 million, or $4.43 per share, compared to net income from continuing operations of $432 million, or $4.16 per share, for the same period in the prior year, an increase of 6% on a per-share basis. AutoNation's revenue for full year 2017 totaled $21.5 billion, which was down slightly compared to $21.6 billion for the same period in the prior year.

The fourth quarter conference call may be accessed by telephone at (888) 769-8515 (password: AutoNation) at 11:00 a.m. Eastern Time today or on AutoNation's investor relations website at http://investors.autonation.com.

The webcast will also be available on AutoNation's website under "Events & Presentations" following the call. A playback of the conference call will be available after 1:00 p.m. Eastern Time on February 1, 2018, through February 22, 2018, by calling (888) 437-4641 (passcode: 2871).

(1)       AutoNation has three operating segments: Domestic, Import, and Premium Luxury. The Domestic segment is comprised of stores that sell vehicles manufactured by General Motors, Ford, and FCA US; the Import segment is comprised of stores that sell vehicles manufactured primarily by Toyota, Honda, Nissan, and Hyundai; and the Premium Luxury segment is comprised of stores that sell vehicles manufactured primarily by Mercedes-Benz, BMW, Lexus, and Audi.

(2)       Segment income represents income for each of our reportable segments and is defined as operating income less floorplan interest expense.

About AutoNation, Inc.
AutoNation, America's largest automotive retailer, through its bold leadership, innovation and its comprehensive brand extensions, is transforming the automotive industry. As of December 31, 2017, AutoNation owned and operated 360 new vehicle franchises from coast to coast. AutoNation has sold over 11 million vehicles, the first automotive retailer to reach this milestone. AutoNation's success is driven by a commitment to delivering a peerless experience through customer-focused sales and service processes. Through its Drive Pink initiative, AutoNation is committed to drive out cancer, create awareness and support critical research. AutoNation continues to be a proud supporter of the Breast Cancer Research Foundation and other cancer-related charities.

Please visit investors.autonation.com, www.autonation.com, www.autonationdrive.com, www.twitter.com/autonation, www.twitter.com/CEOMikeJackson, www.facebook.com/autonation, and www.facebook.com/CEOMikeJackson, where AutoNation discloses additional information about the Company, its business, and its results of operations.

FORWARD-LOOKING STATEMENTS
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Words such as "anticipates," "expects," "intends," "goals," "plans," "believes," "continues," "may," "will," "could," and variations of such words and similar expressions are intended to identify such forward-looking statements. Statements regarding our strategic initiatives, including our brand extension strategies, open safety recalls, and expectations for future results and the future performance of our franchises (including with respect to sales of used vehicles and parts and accessories) and the automotive retail industry, as well as other statements that describe our objectives, goals, or plans are forward-looking statements. Our forward-looking statements reflect our current expectations concerning future results and events, and they involve known and unknown risks, uncertainties and other factors that are difficult to predict and may cause our actual results, performance or achievements to be materially different from any future results, performance and achievements expressed or implied by these statements. These risks, uncertainties and other factors include, among others: economic conditions, including conditions in the credit markets and changes in interest rates; new and used vehicle margins; the success and financial viability and the incentive and marketing programs of vehicle manufacturers and distributors with which we hold franchises; our ability to successfully implement, and customer adoption of, our brand extension strategies; our ability to identify, acquire, and build out suitable locations in a timely manner; our ability to maintain and enhance our retail brands and reputation and to attract consumers to our own digital channels; our ability to integrate successfully acquired and awarded franchises and to attain planned sales volumes within our expected time frames; restrictions imposed by vehicle manufacturers and our ability to obtain manufacturer approval for acquisitions; natural disasters and other adverse weather events; the resolution of legal and administrative proceedings; regulatory factors affecting our business, including fuel economy requirements; the announcement of safety recalls; factors affecting our goodwill and other intangible asset impairment testing; and other factors described in our news releases and filings made under the securities laws, including, among others, our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K. Forward-looking statements contained in this news release speak only as of the date of this news release, and we undertake no obligation to update these forward-looking statements to reflect subsequent events or circumstances.

AUTONATION, INC. 

UNAUDITED CONDENSED CONSOLIDATED INCOME STATEMENTS

(In millions, except per share data)














Three Months Ended December 31,


Twelve Months Ended December 31,




2017


2016


2017


2016











Revenue:










New vehicle

$

3,345.3

$

3,187.8

$

12,180.8

$

12,255.8


Used vehicle


1,208.1


1,217.5


4,878.4


4,995.3


Parts and service


854.1


822.5


3,398.3


3,321.4


Finance and insurance, net


247.2


216.5


939.2


894.6


Other


28.8


36.2


137.9


141.9

Total revenue


5,683.5


5,480.5


21,534.6


21,609.0











Cost of sales:










New vehicle


3,184.2


3,022.2


11,592.4


11,620.0


Used vehicle


1,130.1


1,152.1


4,563.2


4,677.7


Parts and service


479.4


467.9


1,907.6


1,886.7


Other


22.6


29.2


112.4


111.4

Total cost of sales


4,816.3


4,671.4


18,175.6


18,295.8











Gross profit


867.2


809.1


3,359.0


3,313.2











Selling, general, and administrative expenses


622.1


584.2


2,436.2


2,349.4

Depreciation and amortization


40.6


36.4


158.6


143.4

Other income, net


(24.8)


(48.1)


(79.2)


(69.1)











Operating income


229.3


236.6


843.4


889.5











Non-operating income (expense) items:










Floorplan interest expense


(26.3)


(20.1)


(97.0)


(76.5)


Other interest expense


(32.2)


(29.6)


(120.2)


(115.5)


Interest income


0.2


0.3


1.0


1.1


Other income, net


2.9


0.3


9.3


3.7











Income from continuing operations before income taxes


173.9


187.5


636.5


702.3











Income tax provision


22.4


71.9


201.5


270.6











Net income from continuing operations


151.5


115.6


435.0


431.7











Loss from discontinued operations, net of income taxes


(0.2)


(0.3)


(0.4)


(1.2)





















Net income

$

151.3

$

115.3

$

434.6

$

430.5





















Diluted earnings (loss) per share*:










Continuing operations

$

1.64

$

1.14

$

4.43

$

4.16


Discontinued operations

$

-

$

-

$

-

$

(0.01)












Net income

$

1.64

$

1.14

$

4.43

$

4.15





















Weighted average common shares outstanding


92.3


101.5


98.2


103.8











Common shares outstanding, net of treasury stock, at period end


91.6


100.7


91.6


100.7





















* Earnings per share amounts are calculated discretely and therefore may not add up to the total due to rounding.

 

 

 AUTONATION, INC. 

 UNAUDITED SUPPLEMENTARY DATA 

 ($ in millions, except per vehicle data) 









































Operating Highlights


Three Months Ended December 31,


 Twelve Months Ended December 31, 





2017


2016


$ Variance


% Variance


2017


2016


$ Variance


% Variance

Revenue:



















New vehicle

$

3,345.3

$

3,187.8

$

157.5


4.9

$

12,180.8

$

12,255.8

$

(75.0)


(0.6)



  Retail used vehicle


1,138.4


1,111.3


27.1


2.4


4,577.1


4,481.7


95.4


2.1



  Wholesale


69.7


106.2


(36.5)


(34.4)


301.3


513.6


(212.3)


(41.3)



Used vehicle


1,208.1


1,217.5


(9.4)


(0.8)


4,878.4


4,995.3


(116.9)


(2.3)



Finance and insurance, net


247.2


216.5


30.7


14.2


939.2


894.6


44.6


5.0


Total variable operations


4,800.6


4,621.8


178.8


3.9


17,998.4


18,145.7


(147.3)


(0.8)


Parts and service


854.1


822.5


31.6


3.8


3,398.3


3,321.4


76.9


2.3


Other


28.8


36.2


(7.4)




137.9


141.9


(4.0)



Total revenue


$          5,683.5


$          5,480.5


$             203.0


3.7


$       21,534.6


$       21,609.0


$            (74.4)


(0.3)







































Gross profit:



















New vehicle

$

161.1

$

165.6

$

(4.5)


(2.7)

$

588.4

$

635.8

$

(47.4)


(7.5)



  Retail used vehicle


75.2


69.8


5.4


7.7


308.0


334.9


(26.9)


(8.0)



  Wholesale


2.8


(4.4)


7.2




7.2


(17.3)


24.5





Used vehicle


78.0


65.4


12.6


19.3


315.2


317.6


(2.4)


(0.8)



Finance and insurance


247.2


216.5


30.7


14.2


939.2


894.6


44.6


5.0


Total variable operations


486.3


447.5


38.8


8.7


1,842.8


1,848.0


(5.2)


(0.3)


Parts and service


374.7


354.6


20.1


5.7


1,490.7


1,434.7


56.0


3.9


Other


6.2


7.0


(0.8)




25.5


30.5


(5.0)



Total gross profit


867.2


809.1


58.1


7.2


3,359.0


3,313.2


45.8


1.4




















Selling, general, and administrative expenses


622.1


584.2


(37.9)


(6.5)


2,436.2


2,349.4


(86.8)


(3.7)




















Depreciation and amortization


40.6


36.4


(4.2)




158.6


143.4


(15.2)



Other income, net


(24.8)


(48.1)


(23.3)




(79.2)


(69.1)


10.1



 Operating income 


229.3


236.6


(7.3)


(3.1)


843.4


889.5


(46.1)


(5.2)




















Non-operating income (expense) items:



















Floorplan interest expense


(26.3)


(20.1)


(6.2)




(97.0)


(76.5)


(20.5)





Other interest expense


(32.2)


(29.6)


(2.6)




(120.2)


(115.5)


(4.7)





Interest income


0.2


0.3


(0.1)




1.0


1.1


(0.1)





Other income, net


2.9


0.3


2.6




9.3


3.7


5.6



Income from continuing operations before income taxes

$

173.9

$

187.5

$

(13.6)


(7.3)

$

636.5

$

702.3

$

(65.8)


(9.4)




















Retail vehicle unit sales:



















New 


87,234


84,622


2,612


3.1


329,116


337,622


(8,506)


(2.5)



Used


55,944


55,213


731


1.3


234,148


225,713


8,435


3.7





143,178


139,835


3,343


2.4


563,264


563,335


(71)


-




















Revenue per vehicle retailed:



















New 

$

38,349

$

37,671

$

678


1.8

$

37,011

$

36,300

$

711


2.0



Used

$

20,349

$

20,128

$

221


1.1

$

19,548

$

19,856

$

(308)


(1.6)




















Gross profit per vehicle retailed:



















New 

$

1,847

$

1,957

$

(110)


(5.6)

$

1,788

$

1,883

$

(95)


(5.0)



Used

$

1,344

$

1,264

$

80


6.3

$

1,315

$

1,484

$

(169)


(11.4)



Finance and insurance

$

1,727

$

1,548

$

179


11.6

$

1,667

$

1,588

$

79


5.0



Total variable operations(1)

$

3,377

$

3,232

$

145


4.5

$

3,259

$

3,311

$

(52)


(1.6)









































Operating Percentages


 Three Months Ended December 31, 


 Twelve Months Ended December 31, 













2017 (%)


2016 (%)


2017 (%)


2016 (%)




























Revenue mix percentages:



















New vehicle


58.9


58.2


56.6


56.7











Used vehicle


21.3


22.2


22.7


23.1











Parts and service


15.0


15.0


15.8


15.4











Finance and insurance, net


4.3


4.0


4.4


4.1











Other


0.5


0.6


0.5


0.7













100.0


100.0


100.0


100.0




























Gross profit mix percentages:



















New vehicle


18.6


20.5


17.5


19.2











Used vehicle


9.0


8.1


9.4


9.6











Parts and service


43.2


43.8


44.4


43.3











Finance and insurance


28.5


26.8


28.0


27.0











Other


0.7


0.8


0.7


0.9













100.0


100.0


100.0


100.0




























Operating items as a percentage of revenue:



















Gross profit:



















   New vehicle


4.8


5.2


4.8


5.2











   Used vehicle - retail


6.6


6.3


6.7


7.5











   Parts and service


43.9


43.1


43.9


43.2











   Total


15.3


14.8


15.6


15.3











Selling, general, and administrative expenses


10.9


10.7


11.3


10.9











Operating income


4.0


4.3


3.9


4.1




























Operating items as a percentage of total gross profit:



















Selling, general, and administrative expenses


71.7


72.2


72.5


70.9











Operating income


26.4


29.2


25.1


26.8















































(1)

Total variable operations gross profit per vehicle retailed is calculated by dividing the sum of new vehicle, retail used vehicle, and finance and insurance gross profit by total retail vehicle unit sales.









 

 

 AUTONATION, INC. 

 UNAUDITED SUPPLEMENTARY DATA 

 ($ in millions) 






































Segment Operating Highlights


Three Months Ended December 31,


 Twelve Months Ended December 31, 




2017


2016


$ Variance


% Variance


2017


2016


$ Variance


% Variance





































Revenue:


















Domestic

$

1,895.1

$

1,921.8

$

(26.7)


(1.4)

$

7,452.8

$

7,810.0

$

(357.2)


(4.6)


Import


1,749.9


1,684.0


65.9


3.9


6,873.4


6,886.1


(12.7)


(0.2)


Premium luxury


1,937.8


1,799.7


138.1


7.7


6,832.7


6,665.3


167.4


2.5


    Total


5,582.8


5,405.5


177.3


3.3


21,158.9


21,361.4


(202.5)


(0.9)


Corporate and other


100.7


75.0


25.7


34.3


375.7


247.6


128.1


51.7


    Total consolidated revenue

$

5,683.5

$

5,480.5

$

203.0


3.7

$

21,534.6

$

21,609.0

$

(74.4)


(0.3)





































Segment income*:


















Domestic

$

66.6

$

64.2

$

2.4


3.7

$

257.1

$

311.1

$

(54.0)


(17.4)


Import


75.2


66.8


8.4


12.6


303.1


296.8


6.3


2.1


Premium luxury


105.5


93.4


12.1


13.0


348.8


350.2


(1.4)


(0.4)


    Total 


247.3


224.4


22.9


10.2


909.0


958.1


(49.1)


(5.1)



















Corporate and other


(44.3)


(7.9)


(36.4)




(162.6)


(145.1)


(17.5)



Add:  Floorplan interest expense


26.3


20.1


6.2




97.0


76.5


20.5



Operating income

$

229.3

$

236.6

$

(7.3)


(3.1)

$

843.4

$

889.5

$

(46.1)


(5.2)



















* Segment income represents income for each of our reportable segments and is defined as operating income less floorplan interest expense.



























Retail new vehicle unit sales:


















Domestic


28,263


28,711


(448)


(1.6)


111,028


118,867


(7,839)


(6.6)


Import


38,641


36,488


2,153


5.9


150,422


150,005


417


0.3


Premium luxury


20,330


19,423


907


4.7


67,666


68,750


(1,084)


(1.6)




87,234


84,622


2,612


3.1


329,116


337,622


(8,506)


(2.5)






































Brand Mix - Retail New Vehicle Units Sold




















 Three Months Ended December 31, 


 Twelve Months Ended December 31, 












2017 (%)


2016 (%)


2017 (%)


2016 (%)




























Domestic:


















   Ford, Lincoln


13.0


13.8


13.6


14.7










   Chevrolet, Buick, Cadillac, GMC


11.1


10.7


10.7


11.1










   Chrysler, Dodge, Jeep, Ram


8.3


9.4


9.4


9.4










     Domestic total


32.4


33.9


33.7


35.2




























Import:


















   Toyota


17.9


17.7


18.6


17.6










   Honda


12.9


12.0


13.1


12.4










   Nissan


6.6


6.6


6.8


7.6










   Other Import


6.9


6.8


7.2


6.8










     Import total


44.3


43.1


45.7


44.4




























Premium Luxury:


















   Mercedes-Benz


9.5


9.6


8.1


8.6










   BMW


5.4


5.3


4.7


4.5










   Lexus


2.7


3.1


2.6


2.7










   Audi


2.6


2.4


2.4


2.2










   Other Premium Luxury (Land Rover, Porsche)


3.1


2.6


2.8


2.4










     Premium Luxury total


23.3


23.0


20.6


20.4






























100.0


100.0


100.0


100.0









 

 

 AUTONATION, INC

 UNAUDITED SUPPLEMENTARY DATA, Continued

 ($ in millions)






























































Capital Expenditures / Stock Repurchases


 Three Months Ended December 31,


 Twelve Months Ended December 31,









2017


2016


2017


2016





















Capital expenditures (1)

$

108.3

$

71.4

$

332.9

$

253.2






Cash paid for acquisitions, net of cash acquired (2)

$

20.0

$

47.9

$

76.8

$

410.4






Proceeds from exercises of stock options

$

15.0

$

0.6

$

39.7

$

8.4






Stock repurchases:















Aggregate purchase price

$

-

$

26.4

$

434.9

$

497.0







Shares repurchased (in millions)


-


0.6


10.1


10.5





































Floorplan Assistance and Expense


 Three Months Ended December 31,


 Twelve Months Ended December 31,





2017


2016


 Variance


2017


2016


 Variance

















Floorplan assistance earned (included in cost of sales)


$                    33.4


$                   31.7


$                     1.7


$                 122.1


$                 124.0


$                   (1.9)


New vehicle floorplan interest expense


(24.1)


(18.6)


(5.5)


(90.4)


(71.5)


(18.9)


















Net new vehicle inventory carrying benefit


$                     9.3


$                   13.1


$                    (3.8)


$                   31.7


$                   52.5


$                  (20.8)

































Balance Sheet and Other Highlights
































December 31, 2017


December 31, 2016

























Cash and cash equivalents

$

69.2

$

64.8










Inventory

$

3,365.6

$

3,520.1










Total floorplan notes payable

$

3,806.9

$

3,849.2










Non-vehicle debt

$

2,703.7

$

2,720.6










Equity

$

2,369.3

$

2,310.3










New days supply (industry standard of selling days)


 53 days


 61 days










Used days supply (trailing calendar month days)


 43 days


 44 days
























































Key Credit Agreement Covenant Compliance Calculations(3)





























Leverage ratio




 2.82x










Covenant

less than or equal to


 4.25x

























Capitalization ratio




62.4%










Covenant

less than or equal to


70.0%








































(1)

Includes accrued construction in progress and excludes property associated with capital leases entered into during the period










(2)

Excludes capital leases and deferred purchase price commitments










(3)

Calculated in accordance with our credit agreement as filed with the SEC









 

 

 AUTONATION, INC. 

 UNAUDITED SAME STORE DATA 

 ($ in millions, except per vehicle data) 









































Operating Highlights


Three Months Ended December 31,


 Twelve Months Ended December 31, 





2017


2016


$ Variance


% Variance


2017


2016


$ Variance


% Variance

Revenue:



















New vehicle

$

3,291.5

$

3,119.4

$

172.1


5.5

$

11,818.8

$

11,886.8

$

(68.0)


(0.6)



  Retail used vehicle


1,110.7


1,086.1


24.6


2.3


4,420.1


4,333.7


86.4


2.0



  Wholesale


66.0


103.2


(37.2)


(36.0)


286.1


495.1


(209.0)


(42.2)



Used vehicle


1,176.7


1,189.3


(12.6)


(1.1)


4,706.2


4,828.8


(122.6)


(2.5)



Finance and insurance, net


243.7


212.9


30.8


14.5


918.5


871.3


47.2


5.4


Total variable operations


4,711.9


4,521.6


190.3


4.2


17,443.5


17,586.9


(143.4)


(0.8)


Parts and service


841.0


806.1


34.9


4.3


3,307.3


3,220.3


87.0


2.7


Other


28.4


35.7


(7.3)




137.0


140.8


(3.8)



Total revenue

$

5,581.3

$

5,363.4

$

217.9


4.1

$

20,887.8

$

20,948.0

$

(60.2)


(0.3)







































Gross profit:



















New vehicle

$

158.1

$

162.7

$

(4.6)


(2.8)

$

569.3

$

622.8

$

(53.5)


(8.6)



  Retail used vehicle


73.9


68.2


5.7


8.4


299.9


323.8


(23.9)


(7.4)



  Wholesale


0.5


(4.2)


4.7




0.6


(15.9)


16.5





Used vehicle


74.4


64.0


10.4


16.3


300.5


307.9


(7.4)


(2.4)



Finance and insurance


243.7


212.9


30.8


14.5


918.5


871.3


47.2


5.4


Total variable operations


476.2


439.6


36.6


8.3


1,788.3


1,802.0


(13.7)


(0.8)


Parts and service


369.1


347.3


21.8


6.3


1,451.5


1,389.9


61.6


4.4


Other


6.1


6.8


(0.7)




24.9


29.9


(5.0)