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AUTONATION SETS Q4 RECORDS AS EPS RISES 29% TO $0.22, BEFORE ONE-TIME ITEMS

Feb. 07, 2002
Q4 EPS Beats Consensus Estimate by 16%

New & Used, Parts & Service, F&I Drive Same-store Sales Growth of 11%

Company Affirms High End of Full-year EPS Outlook of $0.98 to $1.03

FORT LAUDERDALE, Fla., Feb. 7 /PRNewswire-FirstCall/ -- AutoNation, Inc. (NYSE: AN), America's largest retailer of new and used vehicles, today announced it earned record fourth-quarter income before charges of $0.22 per share, or $72.2 million, that exceeded by 29% year-ago earnings of $0.17 per share, or $61.2 million, before one-time items. The $0.22 per share in the fourth quarter also exceeded the analysts' consensus estimate of $0.19 per share by 16%.

The results came on record fourth-quarter revenue of $5.1 billion, an increase of 10% from year-ago revenue of $4.7 billion. Before one-time items, the Company also generated record fourth-quarter earnings before interest, taxes, depreciation and amortization (EBITDA) of $169.7 million, an increase of 25% from year-ago EBITDA of $135.6 million.

Commenting on the quarter, Mike Jackson, AutoNation's Chief Executive Officer, said: "We'll remember this quarter for the courageous way auto manufacturers used bold incentives on new vehicles to get the country rolling again and for the way our stores responded by delivering record revenue, record earnings and record cash flow before one-time items. We also saw our total same-store revenue grow by 11%."

The Company said a 13% increase for new vehicles, a 12% increase for used vehicles, a 28% increase for finance and insurance products, and a 5% increase for parts and service drove same-store revenue growth. The higher-margin areas of used vehicles, finance and insurance, and parts and service also accounted for 67% of the Company's gross margin during the quarter.

Jackson added: "Even as we sold more new vehicles, our stores executed strategic initiatives that spread best practices, grew the higher-margin areas of our business and strengthened us as a specialty retailer."

Charges taken during the fourth quarter included:

  • A previously announced non-cash, pre-tax charge of $85.8 million ($52.3 million, after tax, or $0.16 per share) to increase reserves for auto loans and to cover costs from exiting that business. AutoNation's franchised dealerships continue to offer consumer auto loans through third parties.
  • A $20 million charge ($12.7 million, after tax, or $0.04 per share) included in net income from discontinued operations. The charge relates to the assumption of certain obligations of ANC Rental Corp., the Company's former vehicle rental business that recently declared bankruptcy. This and other actions have reduced the Company's remaining potential financial exposure related to ANC Rental to an estimated pre-tax range of $25 million to $60 million.

Including the above charges, AutoNation reported fourth-quarter net income of $6.9 million, or $0.02 per share, on revenue of $5.1 billion compared to net income a year ago of $73.7 million, or $0.21 per share, on revenue of $4.7 billion. The earnings in the year-earlier period included $0.04 per share of net gain from one-time items.

FULL-YEAR COMMENTS

Commenting on the Company's performance in 2001, Jackson said: "Entering the year, many questioned how auto retailers would perform in an economy facing a recession. At AutoNation, we generated same-store sales growth in our higher-margin areas and met our earnings targets while redeploying $708 million to pursue acquisitions, re-invest in our stores, repurchase our shares and pay down debt."

Jackson said AutoNation's 2001 accomplishments included:

  • Meeting or beating the consensus estimate of analysts in each of the year's quarters.
  • Record full-year earnings per share of $0.87, before one-time items.

    Generating earnings before interest, taxes, depreciation and amortization (EBITDA) of $587 million. Excluding one-time items, AutoNation's EBITDA totaled a record $663 million.

  • Repurchasing 27 million of its shares for $257 million, at an average price of $9.41 per share, leaving a board-authorized amount as of December 31, 2001 of $260 million for future repurchases.
  • Reducing non-vehicle debt, net of cash, by $246 million or 32% to $527 million since December 31, 2000.
  • Completing the Company's first-ever senior note offering. In preparing for the offer, AutoNation received an "investment grade" corporate debt rating from Standard & Poor's, marking the first time such a rating has been assigned to a public auto retailer.

Including the previously mentioned charges, the Company reported full-year net income of $232.3 million, or $0.69 per share, on revenue of $20.0 billion compared to net income in the prior year of $329.9 million, or $0.91 per share, on revenue of $20.6 billion. Excluding charges and one-time items for both full-year periods, AutoNation earned $290.8 million, or $0.87 per share, versus $304.5 million, or $0.84 per share, in the prior year.

Looking ahead, Mr. Jackson said: "This January's new-vehicle market was a pleasant surprise for the industry. AutoNation now anticipates it will achieve full-year 2002 earnings at the high end of our previous guidance of $0.98 to $1.03 per share. We also anticipate first-quarter earnings this year in the range of $0.20 to $0.22 per share. "

AutoNation will discuss its fourth-quarter and full-year results, its earnings outlook and supporting assumptions later this morning during an 11:00 a.m., Eastern Time, conference call. To listen to the call, dial 888-276-9996 or listen via the audio webcast offered at http://www.autonation.com by clicking on the "Corporate Site" link and then clicking on the webcast icon. A playback of the conference call will be available after 4:30 p.m., Eastern Time, through February 14, 2002. The playback can be accessed by calling 800-475-6701 (access code 620143) or by visiting the "Audio Presentation" section of the Investor Relations page of AutoNation's corporate site.

ABOUT AUTONATION, INC.

AutoNation, Inc., headquartered in Fort Lauderdale, Fla., is America's largest retailer of new and used vehicles. A Fortune 100 company, AutoNation employs approximately 31,000 people and owns and operates 368 automotive retail franchises in 17 states. For additional information, please visit http://www.autonation.com, where approximately 100,000 vehicles are available for sale.

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 earnings outlook.

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





                                      Three Months Ended       Year Ended
                                         December 31,          December 31,
                                       2001       2000      2001       2000

        Revenue                       $5,145.9  $4,699.3  $19,989.3 $20,599.0

        Cost of operations (1)         4,419.4   4,035.8   17,115.4  17,776.9

        Gross margin                     726.5     663.5    2,873.9   2,822.1

        Selling, general and
         administrative expenses         557.8     527.3    2,207.2   2,177.7
        Depreciation                      20.7      12.3       70.7      54.7
        Amortization                      20.4      20.4       81.2      79.1
        Loan and lease origination
        losses (income)(2)                82.7      (2.5)      89.6       6.0
        Restructuring and impairment
         charges (recoveries), net         0.5      (1.6)       4.5     (20.4)
        Other gains                        -         -        (19.3)      -

        Operating income                  44.4     107.6      440.0     525.0

        Other interest expense, net      (10.2)     (8.9)     (34.7)    (33.4)
        Other income (expense)            (2.1)     19.3       (4.5)     33.4

        Income from continuing
        operations before income
         taxes                            32.1     118.0      400.8     525.0

        Provision for income taxes        12.5      44.3      155.8     196.9

        Net income from continuing
         operations                       19.6      73.7      245.0     328.1

        Income (loss) from
         discontinued operations,
          net of income taxes            (12.7)      -        (12.7)      1.8

        Net income                     $   6.9  $   73.7  $   232.3 $   329.9

        Diluted earnings per share:
           Continuing operations       $  0.06  $   0.21  $    0.73  $   0.91
           Discontinued operations       (0.04)      -        (0.04)       -
           Net income                  $  0.02  $   0.21  $    0.69  $   0.91

        Weighted average common and
         common equivalent shares
          outstanding                    326.1     355.7      335.2     361.4

        Common shares outstanding        321.7     348.1      321.7     348.1



(1) Floorplan interest expense has been reclassified to cost of operations all periods presented (see supplemental schedules).

(2) Loan and lease origination losses (income) have been presented separately for all periods. Prior period amounts have been reclassified to conform to current presentation. AUTONATION, INC. UNAUDITED SUPPLEMENTARY DATA ($ in millions, except gross margin per vehicle data) Three Months Ended December 31, 2001 % 2000 % Operating Highlights: Revenue: New vehicle $3,196.0 62.1 $2,832.2 60.3 Used vehicle 955.1 18.6 865.2 18.4 Parts and service 590.7 11.5 571.5 12.2 F&I 125.7 2.4 100.6 2.1 Other 278.4 5.4 329.8 7.0 $5,145.9 100.0 $4,699.3 100.0 Gross margin: (1) New vehicle $ 229.0 7.2 $ 198.2 7.0 Used vehicle 100.3 10.5 97.4 11.3 Parts and service 255.3 43.2 246.7 43.2 F&I 125.7 100.0 100.6 100.0 Other 16.2 5.8 20.6 6.2 726.5 14.1 663.5 14.1 S,G&A - Store 528.5 10.3 491.6 10.5 Store performance 198.0 3.8 171.9 3.7 S,G&A - Corporate 29.3 0.6 35.7 0.8 Depreciation 20.7 0.4 12.3 0.3 Amortization 20.4 0.4 20.4 0.4 Loan and lease origination losses (income)(2) 82.7 1.6 (2.5) (0.1) Restructuring and impairment charges (recoveries), net 0.5 0.0 (1.6) (0.0) Other gains - - - - Operating income $ 44.4 0.9 $ 107.6 2.3 Retail vehicle sales: New 118,000 107,000 Used 64,000 56,000 182,000 163,000 Gross margin per vehicle retailed: New $ 1,941 $ 1,852 Used $ 1,567 $ 1,739 F&I $ 691 $ 617 EBITDA $ 83.4 $ 159.6 EBITDA, excluding one-time items $ 169.7 $ 135.6 Capital expenditures $77.3 $55.9

(1) Floorplan interest expense has been reclassified to cost of operations for all periods presented.

(2) Loan and lease origination losses (income) have been presented separately for all periods. Prior period amounts have been reclassified to conform to current presentation. AUTONATION, INC. UNAUDITED SUPPLEMENTARY DATA ($ in millions, except gross margin per vehicle data) Year Ended December 31, 2001 % 2000 % Operating Highlights: Revenue: New vehicle $12,000.0 60.0 $12,489.3 60.6 Used vehicle 3,883.2 19.4 3,860.2 18.7 Parts and service 2,404.9 12.0 2,334.9 11.3 F&I 489.6 2.4 431.8 2.1 Other 1,211.6 6.2 1,482.8 7.3 $19,989.3 100.0 $20,599.0 100.0 Gross margin: (1) New vehicle $ 837.9 7.0 $ 857.4 6.9 Used vehicle 426.5 11.0 437.4 11.3 Parts and service 1,039.2 43.2 999.7 42.8 F&I 489.6 100.0 431.8 100.0 Other 80.7 6.7 95.8 6.5 2,873.9 14.4 2,822.1 13.7 S,G&A - Store 2,072.0 10.4 2,021.6 9.8 Store performance 801.9 4.0 800.5 3.9 S,G&A - Corporate 135.2 0.7 156.1 0.8 Depreciation 70.7 0.4 54.7 0.3 Amortization 81.2 0.4 79.1 0.4 Loan and lease origination losses (income) (2) 89.6 0.4 6.0 0.0 Restructuring and impairment charges (recoveries), net 4.5 0.0 (20.4) (0.1) Other gains (19.3) (0.1) - - Operating income $ 440.0 2.2 $ 525.0 2.5 Retail vehicle sales: New 454,000 489,000 Used 258,000 255,000 712,000 744,000 Gross margin per vehicle retailed: New $1,846 $1,753 Used $1,653 $1,715 F&I $688 $580 EBITDA $587.4 $692.2 EBITDA, excluding one-time items $662.5 $643.5 Capital expenditures $163.6 $138.7

(1) Floorplan interest expense has been reclassified to cost of operations all periods presented.

(2) Loan and lease origination losses (income) have been presented separately for all periods. Prior period amounts have been reclassified to conform to current presentation. AUTONATION, INC. UNAUDITED SUPPLEMENTARY DATA, continued ($ in millions) Three Months Ended December 31, 2001 % 2000 % New vehicle gross margin, before floorplan $215.4 6.8 $200.6 7.1 Floorplan assistance 33.2 1.0 50.4 1.8 Floorplan interest expense (19.6) (0.6) (52.8) (1.9) New vehicle gross margin, as presented $229.0 7.2 $198.2 7.0 AUTONATION, INC. UNAUDITED SUPPLEMENTARY DATA, continued ($ in millions) Year Ended December 31, 2001 % 2000 % New vehicle gross margin, before floorplan $823.8 6.9 $862.0 6.9 Floorplan assistance 140.8 1.2 194.0 1.6 Floorplan interest expense (126.7) (1.1) (198.6) (1.6) New vehicle gross margin, as presented $837.9 7.0 $857.4 6.9 Balance Sheet and Other Highlights: December 31, 2001 December 31, 2000 Cash and cash equivalents $128.1 $84.6 Inventory 2,178.5 2,774.4 Floorplan notes payable 1,900.7 2,454.0 Non-vehicle debt 655.2 857.2 Equity 3,827.9 3,842.5 Days supply (trailing 30 days): New 61 days 83 days Used 35 days 43 days Net Income from Continuing Operations Three Months Ended Year Ended December 31, December 31, 2001 2000 2001 2000 As reported $19.6 73.7 $245.0 328.1 One-time items: Auto loan business increased reserves & exit costs 52.3 - 52.3 - Gain on sale of outdoor media business - (33.4) - (33.4) Asset write-down - minority equity investments - 21.9 - 21.9 Gain on sale of Republic Services stock - (2.8) - (15.0) Gain on sale of Flemington dealer group - - (11.8) - Other items, net 0.3 1.8 5.3 1.2 Excluding one-time items $72.2 61.2 $290.8 302.8 Diluted Earnings Per Share from Continuing Operations Three Months Ended Year Ended December 31, December 31, 2001 2000 2001 2000 As reported $0.06 0.21 $0.73 0.91 One-time items: Auto loan business increased reserves & exit costs 0.16 - 0.16 - Gain on sale of outdoor media business - (0.09) - (0.09) Asset write-down - minority equity investments - 0.06 - 0.06 Gain on sale of Republic Services stock - (0.01) - (0.04) Gain on sale of Flemington dealer group - - (0.04) - Other items, net - - 0.02 Excluding one-time items $0.22 0.17 $0.87 0.84 AUTONATION, INC. UNAUDITED SAME STORE DATA ($ in millions, except gross margin per vehicle data) Three Months Ended December 31, 2001 % 2000 % Revenue: New vehicle $3,089.3 61.7 $2,740.2 60.6 Used vehicle 927.0 18.5 827.3 18.3 Parts and service 577.3 11.6 551.8 12.2 F&I 121.5 2.4 95.3 2.1 Other 292.9 5.8 305.8 6.8 $5,008.0 100.0 $4,520.4 100.0 Gross margin: (1) New vehicle $221.2 7.2 $192.8 7.0 Used vehicle 97.3 10.5 93.1 11.3 Parts and service 249.3 43.2 238.0 43.1 F&I 121.5 100.0 95.3 100.0 Other 10.6 3.6 19.3 6.3 699.9 14.0 638.5 14.1 S,G&A - Store 503.9 10.1 469.8 10.4 Store performance $196.0 3.9 $168.7 3.7 Retail vehicle sales: New 114,000 103,000 Used 62,000 54,000 176,000 157,000 Gross margin per vehicle retailed: New $1,940 $1,872 Used $1,569 $1,724 F&I $ 690 $ 607

(1) Floorplan interest expense has been reclassified to cost of operations for all periods presented. AUTONATION, INC. UNAUDITED SAME STORE DATA ($ in millions, except gross margin per vehicle data) Year Ended December 31, 2001 % 2000 % Revenue: New vehicle $11,441.0 59.9 $11,974.5 61.2 Used vehicle 3,701.1 19.4 3,625.8 18.5 Parts and service 2,305.7 12.1 2,224.2 11.4 F&I 463.8 2.4 411.8 2.1 Other 1,178.3 6.2 1,342.7 6.8 $19,089.9 100.0 $19,579.0 100.0 Gross margin: (1) New vehicle $800.4 7.0 $827.9 6.9 Used vehicle 407.5 11.0 410.5 11.3 Parts and service 996.4 43.2 951.4 42.8 F&I 463.8 100.0 411.8 100.0 Other 67.1 5.7 73.1 5.4 2,735.2 14.3 2,674.7 13.7 S,G&A - Store 1,963.1 10.3 1,909.8 9.8 Store performance $772.1 4.0 $764.9 3.9 Retail vehicle sales: New 431,000 470,000 Used 246,000 239,000 677,000 709,000 Gross margin per vehicle retailed: New $1,857 $1,761 Used $1,657 $1,718 F&I $685 $581

(1) Floorplan interest expense has been reclassified to cost of operations for all periods presented.

SOURCE AutoNation, Inc.

CONTACT: Oscar Suris of AutoNation, +1-954-769-3576, or suriso@autonation.com/

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