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AutoNation Achieves Record First Quarter; EPS Of $0.28 Beats Year-Ago Result By 65

Apr. 23, 2002
  • Higher Gross Margin Across All Business Areas

  • Benefits From Leveraging Cost Structure

  • FY 2002 Outlook Raised to $1.12 to $1.15

FORT LAUDERDALE, Fla., April 23 /PRNewswire-FirstCall/ -- AutoNation, Inc. (NYSE: AN), America's largest retailer of both new and used vehicles, today reported record first-quarter earnings per share of $0.28, or net income of $91.7 million, that exceeded by 65% the Company's year-ago earnings per share of $0.17, or net income of $59.9 million, as across-the- board growth in gross margin, lower inventory-carrying costs, a leveraged cost structure and the elimination of goodwill amortization drove results.

Commenting on the first-quarter performance, Mike Jackson, AutoNation's Chief Executive Officer said, "We're extremely pleased with our record quarter. We increased our gross margin, leveraged our cost structure and demonstrated again the resiliency of our automotive retail business model. Clearly, our focus on higher margins and improved operations is generating higher cash flow, which allows us to pursue opportunities for new acquisitions and share repurchases."

The record earnings for the quarter ended March 31, 2002 occurred as the overall U.S. market for new vehicles declined, leading to Company revenue of $4.8 billion, down from $4.9 billion a year ago. However, total gross margin for the period increased to $721.7 million, up 4.2% from $692.5 million a year ago, as gross margin grew for used vehicles, parts and service, finance and insurance, and new vehicles, which benefited from a $19 million reduction in inventory-carrying costs. As a result, gross margin as a percentage of total revenue rose to 15.2%, up 100 basis points from 14.2% a year ago.

Selling, general and administrative expenses (SG&A) as a percentage of total gross margin improved to 75.9% from 79.4% as initiatives aimed at creating operating efficiencies allowed the Company to further leverage its cost structure. Additionally, approximately $14 million ($0.04 per share) of after-tax goodwill amortization was eliminated in accordance with new accounting rules that went into effect on January 1, 2002. On a comparable basis, after eliminating goodwill amortization from 2001 results, first- quarter earnings per share rose 33% or $0.07 ($0.28 vs.$0.21).

Other Company highlights in the first quarter included:

  • Earnings before interest, taxes, depreciation and amortization (EBITDA) of $173.2 million, up 22% from $142.5 million a year ago and a first-quarter record.

  • The acquisitions of Chicago-based Laurel Group, which operates seven import/luxury new vehicle franchises, and Hudiburg Chevrolet in Fort Worth, Texas. Their estimated combined annual revenue is $440 million.

  • The repurchase of 2.8 million shares of common stock for $35.9 million at an average price of $12.87, leaving a board-authorized amount as of March 31, 2002 of $224.3 million for future repurchases.

Looking ahead, Mr. Jackson said, "While the U.S. new vehicle market is off from a year ago, stronger-than-expected consumer demand in the first quarter suggests 2002 should result in industry sales of over 16 million vehicles. AutoNation now anticipates it will achieve 2002 full-year earnings per share in the range of $1.12 to $1.15, and 2002 second-quarter earnings per share of $0.28 to $0.30."

AutoNation will discuss its first-quarter results, its earnings outlook and supporting assumptions later this morning during a 9:00 a.m., Eastern Time, conference call. To listen to the call, dial 877-260-8896 or listen via the audio webcast offered at 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 on April 23rd after 4:30 p.m., Eastern Time, through April 30, 2002. The playback can be accessed by calling 800-475-6701 (access code 630982) 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 both new and used vehicles. Ranked #101 on the 2002 Fortune 500 survey of America's largest corporations, AutoNation employs approximately 30,000 people and owns and operates 373 automotive retail franchises in 17 states. For additional information, please visit www.autonation.com, where consumers can find more than 100,000 vehicles 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 March 31,
                                                      2002              2001

        Revenue                                   $4,750.7          $4,887.6

        Cost of operations                         4,029.0           4,195.1

        Gross margin                                 721.7             692.5

        Selling, general and
         administrative expenses                     548.1             550.1
        Depreciation                                  15.7              15.6
        Amortization                                   0.6              20.0
        Loan and lease underwriting
         losses (income), net                        (0.2)               0.6
        Restructuring and impairment
         recoveries, net                                --             (0.8)
        Other losses                                   0.4                --

        Operating income                             157.1             107.0

        Other interest expense, net                  (8.4)             (9.6)
        Other expense                                (0.2)             (0.1)

        Income before income taxes                   148.5              97.3

        Provision for income taxes                    56.8              37.4

        Net income                                   $91.7             $59.9

        Diluted earnings per share                   $0.28             $0.17

        Weighted average common and
         common equivalent shares outstanding        325.9             344.3

        Common shares outstanding                    320.8             336.0


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

            Operating Highlights
                                            Three Months Ended March 31,





                                          2002      2001  $Variance  %Variance


       Revenue:
        New vehicle                   $2,813.1  $2,867.7    $(54.6)      (1.9)
        Used vehicle                     947.0     977.1     (30.1)      (3.1)
        Parts and service                611.9     601.5       10.4        1.7
        F&I                              121.1     111.5        9.6        8.6
        Other                            257.6     329.8     (72.2)     (21.9)

                                      $4,750.7  $4,887.6   $(136.9)      (2.8)

       Gross margin:
        New vehicle                     $203.7    $193.5      $10.2        5.3
        Used vehicle                     108.5     107.0        1.5        1.4
        Parts and service                264.8     257.8        7.0        2.7
        F&I                              121.1     111.5        9.6        8.6
        Other                             23.6      22.7        0.9        4.0

                                         721.7     692.5       29.2        4.2

       S,G&A - Store                     513.0     509.4      (3.6)      (0.7)
       Store performance                 208.7     183.1       25.6       14.0

       S,G&A - Corporate                  35.1      40.7        5.6       13.8
       Depreciation                       15.7      15.6      (0.1)         --
       Amortization                        0.6      20.0       19.4         --
       Loan and lease underwriting
        losses (income), net             (0.2)       0.6        0.8         --
       Restructuring and impairment
        recoveries, net                     --     (0.8)      (0.8)         --
       Other losses                        0.4        --      (0.4)         --
       Operating income                 $157.1    $107.0      $50.1       46.8

       Retail vehicle sales:
        New                            104,000   109,000    (5,000)      (4.6)
        Used                            63,000    65,000    (2,000)      (3.1)
                                       167,000   174,000    (7,000)      (4.0)

       Gross margin per vehicle retailed:
         New                            $1,959    $1,775      $184       10.4
         Used                           $1,722    $1,646       $76        4.6
         F&I                              $725      $641       $84       13.1

            Operating Percentages
                                                Three Months Ended March 31,
                                                     %2002             %2001

       Revenue mix percentages:
        New vehicle                                   59.2              58.7
        Used vehicle                                  19.9              20.0
        Parts and service                             12.9              12.3
        F&I                                            2.6               2.3
        Other                                          5.4               6.7
                                                     100.0             100.0

       Operating items as a percentage
        of revenue:
         Gross margin:
          New vehicle                                  7.2               6.7
          Used vehicle                                11.5              11.0
          Parts and service                           43.3              42.9
          F&I                                        100.0             100.0
          Other                                        9.2               6.9
           Total                                      15.2              14.2
         S,G&A - Store                                10.8              10.4
         Store performance                             4.4               3.7
         S,G&A - Corporate                             0.7               0.8
         Operating income                              3.3               2.2
         Net income                                    1.9               1.2

       Other operating items as a percentage
        of total gross margin:
         S,G&A - Store                                71.1              73.6
         Store performance                            28.9              26.4
         S,G&A - Corporate                             4.9               5.9
         Total S,G&A                                  75.9              79.4
         Operating income                             21.8              15.5


                                AUTONATION, INC.
                     UNAUDITED SUPPLEMENTARY DATA, Continued
                                 ($ in millions)





         Cash Flow Information                  Three Months Ended March 31,
                                                      2002              2001

      EBITDA                                        $173.2            $142.5

      Capital expenditures                           $28.7             $24.0
      Stock repurchases                              $35.9             $98.2
      Acquisitions                                  $127.7             $22.0


        Floorplan Assistance and Expense
                                                Three Months Ended March 31,
                                          2002       %         2001      %

      New vehicle gross margin,
       before floorplan                 $192.5       6.8     $201.2      7.0
      Floorplan assistance                29.4       1.0       37.9      1.3
      Floorplan interest expense        (18.2)     (0.6)     (45.6)    (1.6)

             New vehicle gross
              margin, as presented      $203.7       7.2     $193.5      6.7

        Balance Sheet and Other Highlights





                                   March 31,      December 31,     March 31,
                                       2002              2001          2001
      Cash and cash equivalents       $105.5            $128.1         $85.4
      Inventory                     $2,363.1          $2,178.5      $2,602.7
      Floorplan notes payable       $2,031.0          $1,900.7      $2,294.6
      Non-vehicle debt                $653.5            $655.2        $832.2
      Equity                        $3,903.0          $3,827.9      $3,803.4
      Days supply
       (trailing 30 days):
        New                          58 days           61 days       63 days
        Used                         37 days           35 days       35 days


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

             Operating Highlights
                                                Three Months Ended March 31,





                                        2002      2001   $Variance  %Variance
       Revenue:
        New vehicle                  $2,751.6  $2,808.8    $(57.2)     (2.0)
        Used vehicle                    929.4     956.9     (27.5)     (2.9)
        Parts and service               600.9     588.6       12.3       2.1
        F&I                             120.6     109.5       11.1      10.1
        Other                           298.9     314.7     (15.8)     (5.0)

                                     $4,701.4  $4,778.5    $(77.1)     (1.6)

       Gross margin:
        New vehicle                    $197.7    $189.8       $7.9       4.2
        Used vehicle                    105.6     106.6      (1.0)     (0.9)
        Parts and service               259.6     252.0        7.6       3.0
        F&I                             120.6     109.5       11.1      10.1
        Other                            19.6      18.9        0.7       3.7

                                        703.1     676.8       26.3       3.9

       S,G&A - Store                     499.2     495.7      (3.5)     (0.7)
       Store performance                 203.9     181.1       22.8      12.6

       Retail vehicle sales:
        New                            102,000   107,000    (5,000)     (4.7)
        Used                            62,000    63,000    (1,000)     (1.6)
                                       164,000   170,000    (6,000)     (3.5)

       Gross margin per
        vehicle retailed:
         New                            $1,938    $1,774      $164       9.2
         Used                           $1,703    $1,692       $11       0.7
         F&I                              $735      $644       $91      14.1

            Operating Percentages
                                                Three Months Ended March 31,
                                                     %2002             %2001

       Revenue mix percentages:
        New vehicle                                   58.5              58.8
        Used vehicle                                  19.8              20.0
        Parts and service                             12.8              12.3
        F&I                                            2.6               2.3
        Other                                          6.3               6.6

                                                     100.0             100.0

       Operating items as a percentage of revenue:
         Gross margin:
          New vehicle                                  7.2               6.8
          Used vehicle                                11.4              11.1
          Parts and service                           43.2              42.8
          F&I                                        100.0             100.0
          Other                                        6.6               6.0
           Total                                      15.0              14.2
         S,G&A - Store                                10.6              10.4
         Store performance                             4.3               3.8

       Other operating items as a
        percentage of total gross margin:
         S,G&A - Store                                71.0              73.2
         Store performance                            29.0              26.8



SOURCE AutoNation, Inc.

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

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