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AutoNation Reports 38 Percent Growth in First Quarter Earnings Per Share From Continuing Operations

Apr. 27, 2000

Results Exceed Analysts' Expectations; Company Benefits from Strong New Vehicle Sales, Expense Reduction

FORT LAUDERDALE, Fla., April 27 /PRNewswire/ -- AutoNation, Inc. (NYSE: AN), America's largest automotive retailer, today reported that for the three months ended March 31, 2000, earnings per share from continuing operations rose 38 percent to $0.18 per share, or $64.7 million, from $0.13 per share or $58.4 million last year. The Company noted that earnings per share from continuing operations exceeded the analysts' consensus estimate for the quarter by three cents per share.

During the quarter, revenue from continuing operations rose nearly 15 percent to $5.23 billion from $4.56 billion for the same period last year, while operating income increased more than 24 percent to $115.5 million from $92.9 million last year.

AutoNation said that the improved operating performance was driven by strong new vehicle sales at its more than 400 vehicle franchises, cost reductions at both the corporate and store levels and by acquisitions.

Store performance margins for the three-month period ended March 31, 2000 improved 20 basis points to 3.2 percent or $165.8 million versus 3.0 percent or $138.9 million in the same period last year. Compared with the pro forma three-month period ended December 31, 1999, store performance margins in the first quarter of 2000 improved 50 basis points to 3.2 percent, versus 2.7 percent or $136 million.

"During the first quarter of 2000, AutoNation made significant progress toward its goal of becoming the industry's low cost provider," said Chief Executive Officer Michael J. Jackson. Mr. Jackson continued, "We reduced store-level SG&A expense as a percent of revenue to 9.8 percent, a 60 basis point improvement versus the same period last year and a 90 basis point improvement versus the pro forma results for the three months ended December 31, 1999."

Corporate overhead as a percent of sales decreased to 0.8 percent in the three-month period ended March 31, 2000, compared with one percent in the same period last year and 1.2 percent on a pro forma basis in the three-months ended December 31, 1999.

Mr. Jackson added, "On an annualized basis, we're on target to eliminate $100 million of overhead this year. This, combined with continued strong revenue and store performance growth, puts us on track to achieve our full- year earnings target of 90 cents per share."

Commenting on the Company's position as the largest retailer of automobiles via the Internet, Mr. Jackson said, "We continue to be encouraged by the rapid and profitable growth of our Internet-related business. AutoNation remains on track to achieve its 2000 objective of $1.5 billion in revenue from vehicle sales through the Internet sales channel."

Pro forma results for the three months ended December 31, 1999, referred to above, exclude certain charges primarily related to the previously announced closure of the Company's used vehicle megastores and other restructuring activities. Results also exclude the Company's automotive rental operations, which have been reflected as discontinued operations. For the three months ended March 31, 2000, the Company recorded a loss from discontinued operations of $2.4 million, net of taxes. Such amount represents the excess of actual losses incurred during the period of $24.5 million, net of taxes, over the Company's previously estimated losses. Earnings per share after discontinued operations were $0.17 per share, or $62.3 million versus $0.17 per share or $80.1 million last year. AutoNation continues to work on the previously announced tax-free spin-off of ANC Rental Corporation. Completion of the spin-off, which is anticipated by the end of the second quarter, is subject to certain conditions, including obtaining necessary approvals, completing the necessary debt re-financing for ANC Rental Corporation and completing the necessary filings with the SEC. The distribution ratio will be set at the time that AutoNation's Board of Directors declares record and distribution dates for the planned spin-off.

AutoNation, Inc. is America's largest automotive retailer, with more than 400 new vehicle franchises and $20 billion in annual revenue. Led by AutoNationDirect.com, the Company is also the largest automotive retailer on the Internet.

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, forecasts, estimates and expectations is contained in the Company's SEC filings.

                                 AUTONATION, INC.
            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data) Three Months Ended March 31, 2000 1999 (a) Revenue: New vehicle $ 3,219.6 61.5 $ 2,548.9 55.9 Used vehicle 1,047.9 20.0 1,122.9 24.6 Fixed operations 587.9 11.3 508.7 11.1 Other 374.8 7.2 382.2 8.4 5,230.2 100.0 4,562.7 100.0 Cost of operations 4,553.1 87.0 3,952.5 86.6 Gross margin 677.1 13.0 610.2 13.4 Store selling, general and administrative expenses 511.3 9.8 471.3 10.4 Store performance 165.8 3.2 138.9 3.0 Corporate overhead 39.5 0.8 46.0 1.0 Property carrying costs 10.8 0.2 -- -- Operating income 115.5 2.2 92.9 2.0 Net interest expense (8.2) (3.3) Other income (expense) (3.8) 1.7 Income from continuing operations before income taxes 103.5 91.3 Provision for income taxes 38.8 32.9 Income from continuing operations 64.7 58.4 Income (loss) from discontinued operations, net of income taxes and minority interest (2.4) 21.7 Net income $ 62.3 $ 80.1 Diluted income per common and common equivalent share: Continuing operations $0.18 $0.13 Discontinued operations (0.01) 0.04 Net income $0.17 $0.17 Weighted average common and common equivalent shares 367.5 465.0 Common shares outstanding 361.1 449.6 (a) Operating results for the three months ended March 31, 1999, have been restated to present the Company's automotive rental division as discontinued operations. AUTONATION, INC. UNAUDITED SAME STORE OPERATING DATA (In millions) Three Months Ended March 31, 2000 1999 % Change Revenue: New vehicle $ 2,467.6 $ 2,191.1 12.6 Used vehicle 753.1 769.2 (2.1) Fixed operations 437.5 413.8 5.7 Other 278.0 299.3 (7.1) $ 3,936.2 $ 3,673.4 7.2 Gross Margin $ 502.6 $ 478.5 5.0 % 12.8% 13.0% (0.2) S,G&A $ 366.8 $ 354.6 3.4 % 9.3% 9.6% (0.3) Store performance $ 135.8 $ 123.9 9.6 % 3.5% 3.4% 0.1
SOURCE AutoNation, Inc.
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