View all news

AutoNation Reports First-Quarter Earnings

Apr. 26, 2007

- Board authorized additional share repurchases of $500 million

FORT LAUDERDALE, Fla., April 26 /PRNewswire-FirstCall/ -- AutoNation, Inc. (NYSE: AN) America's largest automotive retailer, today reported earnings from continuing operations of $0.39 per share compared to year-ago earnings from continuing operations of $0.37 per share, an increase of 5%. The first- quarter EPS was positively affected by the accretive impact of share repurchases, including the $1.15 billion April 2006 share buyback, and certain tax adjustments, substantially offset by a decline in new vehicle sales especially in California and Florida.

In the first quarter, industry new vehicle retail sales for California and Florida were off approximately 13%, based on CNW Research data, in line with AutoNation's decline for new vehicle sales for California and Florida. Together, California and Florida represent approximately 50% of the Company's new vehicle business.

Commenting on the first-quarter and year ahead, Mike Jackson, chairman and chief executive officer said, "It is a very challenging economic environment for new vehicle sales, driven in large part by continued softening in the housing market and higher interest rates, especially in California and Florida." Mr. Jackson also noted, "As long as the housing market continues to be soft in California and Florida, it will continue to be a challenging market for new vehicle sales. AutoNation continues to have confidence in California and Florida and views them as healthy markets over the long term."

First quarter 2007 net income from continuing operations was $83 million compared to year-ago net income from continuing operations of $98 million. Results were negatively impacted by an after-tax $9 million increase ($15 million pre-tax) in other interest expense in 2007, primarily due to additional debt incurred in connection with our April 2006 share buyback which was accretive to EPS, as well as lower new vehicle sales especially in California and Florida. Additionally, the first quarter benefited from certain tax adjustments.

Separately, the Company's Board of Directors has authorized an additional $500 million for the repurchase of its common stock. The Company has $42.1 million remaining under the $250 million share repurchase program authorized in June 2006.

The first quarter conference call may be accessed at 11:00 a.m. Eastern Time by phone at 877-531-2987 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 2:30 p.m. Eastern Time April 26, 2007 through May 3, 2007 by calling 800-475-6701 (access code # 867361).

About AutoNation, Inc.

AutoNation, Inc., headquartered in Fort Lauderdale, Fla., is America's largest automotive retailer. A component of the Standard and Poor's 500 Index, AutoNation has approximately 25,000 full-time employees and owns and operates 327 new vehicle franchises in 16 states. For additional information, please visit http://corp.AutoNation.com or www.AutoNation.com, where more than 90,000 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 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 for the three-month period ended March 31, 2007 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 CONSOLIDATED INCOME STATEMENTS
                    ($ in millions, except per share data)


                                                  Three Months Ended March 31,
                                                    2007               2006

         Revenue:
            New vehicle                           $2,473.9           $2,638.4
            Used vehicle                           1,095.1            1,119.0
            Parts and service                        660.0              645.3
            Finance and insurance, net               149.1              149.6
            Other                                     17.2               18.8
         Total revenue                             4,395.3            4,571.1

         Cost of sales:
            New vehicle                            2,294.0            2,441.4
            Used vehicle                             989.8            1,006.3
            Parts and service                        371.8              361.3
            Other                                      6.6                7.8
         Total cost of sales                       3,662.2            3,816.8

         Gross profit                                733.1              754.3

         Selling, general and
          administrative expenses                    524.4              532.7
         Depreciation and amortization                21.3               19.4

         Operating income                            187.4              202.2

         Floorplan interest expense                  (32.8)             (31.2)
         Other interest expense                      (26.5)             (12.0)
         Interest income                               0.9                3.5
         Other gains, net                              0.2                -

         Income from continuing
          operations before income taxes             129.2              162.5

         Provision for income taxes                   46.3               64.5

         Net income from continuing
          operations                                  82.9               98.0

         Loss from discontinued
          operations, net of income
          taxes                                       (5.3)             (10.8)


         Net income                                  $77.6              $87.2


         Diluted earnings (loss) per
          share:
            Continuing operations                    $0.39              $0.37
            Discontinued operations                 $(0.03)            $(0.04)

            Net income                               $0.37              $0.33

         Weighted average common and
          common equivalent shares
          outstanding                                210.7              267.4

         Common shares outstanding, net
          of treasury stock                          209.7              264.5



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


                Operating Highlights          Three Months Ended March 31,

                                       2007      2006   $ Variance  % Variance
          Revenue:
            New vehicle              $2,473.9  $2,638.4    $(164.5)     (6.2)
              Retail used vehicle       885.7     904.6      (18.9)     (2.1)
              Wholesale                 209.4     214.4       (5.0)     (2.3)
            Used vehicle              1,095.1   1,119.0      (23.9)     (2.1)
            Parts and service           660.0     645.3       14.7       2.3
            Finance and insurance, net  149.1     149.6       (0.5)     (0.3)
            Other                        17.2      18.8       (1.6)
          Total revenue              $4,395.3  $4,571.1    $(175.8)     (3.8)


          Gross profit:
            New vehicle                $179.9    $197.0     $(17.1)     (8.7)
              Retail used vehicle       102.5     110.2       (7.7)     (7.0)
              Wholesale                   2.8       2.5        0.3
            Used vehicle                105.3     112.7       (7.4)     (6.6)
            Parts and service           288.2     284.0        4.2       1.5
            Finance and insurance       149.1     149.6       (0.5)     (0.3)
            Other                        10.6      11.0       (0.4)
          Total gross profit            733.1     754.3      (21.2)     (2.8)

          Selling, general and
           administrative expenses      524.4     532.7        8.3       1.6

          Depreciation and amortization  21.3      19.4       (1.9)
           Operating income             187.4     202.2      (14.8)     (7.3)

          Floorplan interest expense    (32.8)    (31.2)      (1.6)
          Other interest expense        (26.5)    (12.0)     (14.5)
          Interest income                 0.9       3.5       (2.6)
          Other gains, net                0.2         -        0.2
            Income from continuing
             operations before income
             taxes                     $129.2    $162.5     $(33.3)    (20.5)

          Retail vehicle unit sales:
               New                     79,894    87,464     (7,570)     (8.7)
               Used                    54,500    56,676     (2,176)     (3.8)
                                      134,394   144,140     (9,746)     (6.8)

          Revenue per vehicle retailed:
               New                    $30,965   $30,166       $799       2.6
               Used                   $16,251   $15,961       $290       1.8

          Gross profit per vehicle retailed:
               New                     $2,252    $2,252       $-           -
               Used                    $1,881    $1,944       $(63)     (3.2)
               Finance and insurance   $1,109    $1,038        $71       6.8


                Operating Percentages             Three Months Ended March 31,
                                                   %  2007           %  2006

            Revenue mix percentages:
               New vehicle                            56.3              57.7
               Used vehicle                           24.9              24.5
               Parts and service                      15.0              14.1
               Finance and insurance, net              3.4               3.3
               Other                                   0.4               0.4
                                                     100.0             100.0

            Gross profit mix percentages:
               New vehicle                            24.5              26.1
               Used vehicle                           14.4              14.9
               Parts and service                      39.3              37.7
               Finance and insurance                  20.3              19.8
               Other                                   1.5               1.5
                                                     100.0             100.0

            Operating items as a
             percentage of revenue:
               Gross profit:
                  New vehicle                          7.3               7.5
                  Used vehicle - retail               11.6              12.2
                  Parts and service                   43.7              44.0
                  Total                               16.7              16.5
               Selling, general and
                administrative expenses               11.9              11.7
               Operating income                        4.3               4.4

            Operating items as a
             percentage of total gross
             profit:
               Selling, general and
                administrative expenses               71.5              70.6
               Operating income                       25.6              26.8



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


            Cash Flow Information                 Three Months Ended March 31,
                                                      2007              2006

    Capital expenditures                             $42.4             $19.8
    Acquisitions                                        $-             $67.4
    Proceeds from exercises of stock options         $76.1             $32.3
    Stock repurchases:
        Aggregate purchase price                     $50.3                $-
        Shares repurchased (in millions)               2.3                 -


        Floorplan Assistance and Expense          Three Months Ended March 31,
                                                    2007    2006    Variance


    Floorplan assistance earned (included in
     cost of sales)                                $24.9    $26.2    $(1.3)
    Floorplan interest expense                     (32.8)   (31.2)    (1.6)

        Net floorplan cost                         $(7.9)   $(5.0)   $(2.9)


        Balance Sheet and Other Highlights

                             March 31, 2007  December 31, 2006  March 31, 2006

    Cash and cash equivalents     $42.8             $52.3            $258.1
    Inventory                  $2,258.2          $2,335.0          $2,585.0
    Total floorplan notes
     payable                   $2,048.7          $2,241.5          $2,296.9
    Non-vehicle debt           $1,374.5          $1,571.5            $523.6
    Equity                     $3,830.7          $3,712.7          $4,798.3
    New days supply (industry
     standard of selling days,
     including fleet)           52 days           51 days           54 days

    Used days supply (trailing
     30 days)                   38 days           42 days           41 days


            Brand Mix - New Vehicle Revenue %
                                                  Three Months Ended March 31,
                                                    % 2007            % 2006

        Detroit 3:
           Ford, Lincoln-Mercury                      14.7              17.3
           Chevrolet, Pontiac, Buick, Cadillac, GMC   14.0              13.9
           Chrysler, Jeep, Dodge                       7.0               8.3
             Detroit 3 total                          35.7              39.5

        Import Premium Luxury:
           Mercedes                                   12.0              10.5
           BMW                                         5.9               5.1
           Lexus                                       4.0               3.4
           Other premium luxury (Land Rover, Porsche)  2.9               2.8
             Premium Luxury total                     24.8              21.8

        Volume Imports:
           Honda                                       8.9               8.3
           Toyota                                     14.5              13.3
           Nissan                                      9.7              10.6
           Other imports                               6.4               6.5
             Import total                             39.5              38.7

                                                     100.0             100.0



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


    Comparable Basis Reconciliations*
                                          Three Months Ended March 31,
                                   Net Income       Diluted Earnings Per Share
                                2007        2006        2007        2006

    As reported                $77.6       $87.2       $0.37       $0.33

        Discontinued
         operations, net of
         income taxes            5.3        10.8       $0.03       $0.04


    From continuing operations,
     as reported                82.9        98.0       $0.39       $0.37
        Income tax adjustments  (5.1)          -      $(0.02)         $-

    Adjusted                   $77.8       $98.0       $0.37       $0.37

* 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         intensely competitive, low 16
     sales                                  million units

    SGA % reduction (over 2007, 2008       approximately 100 bp, excluding
     and 2009)                              stock option expense
     (SGA % of gross profit less
     floorplan interest expense)

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

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



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


        Operating Highlights              Three Months Ended March 31,
                                   2007        2006   $ Variance  % Variance
    Revenue:
        New vehicle              $2,436.3   $2,638.4    $(202.1)      (7.7)
          Retail used vehicle       875.5      904.6      (29.1)      (3.2)
          Wholesale                 202.5      213.8      (11.3)      (5.3)
        Used vehicle              1,078.0    1,118.4      (40.4)      (3.6)
        Parts and service           649.5      645.3        4.2        0.7
        Finance and insurance, net  149.1      149.6       (0.5)      (0.3)
        Other                         7.0        7.2       (0.2)
    Total revenue                $4,319.9   $4,558.9    $(239.0)      (5.2)


    Gross profit:
        New vehicle                $176.5     $197.0     $(20.5)     (10.4)
          Retail used vehicle       101.7      110.2       (8.5)      (7.7)
          Wholesale                   2.1        2.0        0.1
        Used vehicle                103.8      112.2       (8.4)      (7.5)
        Parts and service           282.7      283.3       (0.6)      (0.2)
        Finance and insurance       149.1      149.6       (0.5)      (0.3)
        Other                         6.7        6.5        0.2
    Total gross profit             $718.8     $748.6     $(29.8)      (4.0)


    Retail vehicle unit sales:
           New                     79,156     87,464     (8,308)      (9.5)
           Used                    54,189     56,676     (2,487)      (4.4)
                                  133,345    144,140    (10,795)      (7.5)

    Revenue per vehicle retailed:
           New                    $30,778    $30,166       $612        2.0
           Used                   $16,156    $15,961       $195        1.2

    Gross profit per vehicle retailed:
           New                     $2,230     $2,252       $(22)      (1.0)
           Used                    $1,877     $1,944       $(67)      (3.4)
           Finance and insurance   $1,118     $1,038        $80        7.7


        Operating Percentages                     Three Months Ended March 31,
                                                   %  2007           %  2006

    Revenue mix percentages:
        New vehicle                                   56.4              57.9
        Used vehicle                                  25.0              24.5
        Parts and service                             15.0              14.2
        Finance and insurance, net                     3.5               3.3
        Other                                          0.1               0.1
                                                     100.0             100.0


    Gross profit mix percentages:
        New vehicle                                   24.6              26.3
        Used vehicle                                  14.4              15.0
        Parts and service                             39.3              37.8
        Finance and insurance                         20.7              20.0
        Other                                          1.0               0.9
                                                     100.0             100.0


    Operating items as a percentage of revenue:
        Gross Profit:
           New vehicle                                 7.2               7.5
           Used vehicle - retail                      11.6              12.2
           Parts and service                          43.5              43.9
           Total                                      16.6              16.4

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

Categories: Press Releases
View all news