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Press release from PR Newswire

AutoNation Reports All-Time Record Quarterly EPS from Continuing Operations

Wednesday, April 25, 2012

AutoNation Reports All-Time Record Quarterly EPS from Continuing Operations06:48 EDT Wednesday, April 25, 2012- EPS from continuing operations for the first quarter of 2012 was an all-time record (1) $0.56, up 22% compared to the year-ago period - Operating income of $149 million, an increase of 6% compared to the year-ago period - Total revenue of $3.7 billion, up 10% compared to the year-ago period; revenue and gross profit for all major business sectors -- new vehicles, used vehicles, parts and service, and finance and insurance -- improved compared to the first quarter of 2011FORT LAUDERDALE, Fla., April 25, 2012 /PRNewswire/ -- AutoNation, Inc. (NYSE: AN), America's largest automotive retailer, today reported 2012 first quarter net income from continuing operations of $74 million, or $0.56 per share, compared to net income from continuing operations of $70 million, or $0.46 per share, for the same period in the prior year, a 22% improvement on a per-share basis.(Logo: http://photos.prnewswire.com/prnh/20001017/AUTONATIONLOGO )2012 first quarter revenue totaled $3.7 billion, compared to $3.3 billion in the year-ago period, an increase of 10%, driven primarily by stronger retail new vehicle unit sales.  AutoNation's new vehicle unit sales increased 8% on a same store basis and 10% overall.  According to CNW Research data, total U.S. industry retail new vehicle unit sales increased 7%.2012 first quarter gross profit totaled $603 million, compared to $566 million in the year-ago period, an increase of 6%, primarily due to an increase in finance and insurance gross profit, as well as an increase in retail new vehicle gross profit.  In the first quarter of 2011, gross profit was favorably impacted by $4.6 million, or $82 on a per new vehicle retailed basis, related to additional incentives on premium luxury vehicles previously sold.Mike Jackson, Chairman and Chief Executive Officer, said, "AutoNation delivered record EPS from continuing operations in the first quarter of 2012, as we drove increased profitability in each of our business sectors."Mr. Jackson added, "The renaissance in auto retail is well underway, reflected in a seasonally adjusted U.S. industry annual selling rate of 14.5 million units for the first quarter of 2012.  The American consumer has more choices than ever with improved fuel efficiency, better technology, and accelerated product offerings.  We have increased our 2012 U.S. industry new vehicle sales forecast to mid-14 million units, as we see continued momentum in U.S. auto sales."During the first quarter of 2012, AutoNation repurchased 11.7 million shares of common stock, or 9% of the shares outstanding as of December 31, 2011, for an aggregate purchase price of $405.4 million, and, from April 1 through April 24, 2012, AutoNation repurchased 2.1 million shares for an aggregate purchase price of $70.8 million.  As of April 24, 2012, there were approximately 122 million shares outstanding.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 Chrysler; the Import(2) segment is comprised of stores that sell vehicles manufactured primarily by Toyota, Honda, and Nissan; and the Premium Luxury(2) segment is comprised of stores that sell vehicles manufactured primarily by Mercedes, BMW, and Lexus. Segment results for the first quarter of 2012 were as follows:Domestic - Domestic segment income(3) was $50 million compared to year-ago segment income of $43 million.  First quarter Domestic retail new vehicle unit sales increased 16%. Import - Import segment income(3) was $62 million compared to year-ago segment income of $55 million.  First quarter Import retail new vehicle unit sales increased 6%. Premium Luxury - Premium Luxury segment income(3) was $59 million compared to year-ago segment income of $58 million.  First quarter Premium Luxury retail new vehicle unit sales increased 14%.The first quarter conference call may be accessed by telephone at (888) 769-8515 (password: AutoNation) at 11:00 a.m. Eastern Time or on AutoNation's investor relations website at investors.autonation.com. The webcast will also be available on our website under "Events & Presentations" following the call. A playback of the conference call will be available after 1:00 p.m. Eastern Time on April 25, 2012, through May 2, 2012 by calling (888) 568-0151 (password 75300).(1)As compared to adjusted EPS from continuing operations in prior periods. (2)As of March 31, 2012, we revised the basis of our segment reporting for our Import and Premium Luxury segments to reclassify five Audi franchises from the Import segment to the Premium Luxury segment. In connection with this change, we have reclassified historical amounts to conform to our current segment presentation. (3)Segment income is defined as operating income less floorplan interest expense.About AutoNation, Inc.AutoNation is transforming the automotive retail industry through bold leadership.  We deliver a superior automotive retail experience through our customer-focused sales and service processes.  Owning and operating 260 new vehicle franchises, which sell 32 brands across 15 states, AutoNation is America's largest automotive retailer, with state-of-the-art operations and the ability to leverage economies of scale that benefit the customer.  As an indication of our leadership position in our industry, AutoNation is a component of the S&P 500 Index.  AutoNation is driven to be the best-run, most profitable automotive retailer. Follow us at www.facebook.com/autonation and www.twitter.com/autonation. For additional information about AutoNation, please visit investors.autonation.com or www.autonation.com. 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," and variations of such words and similar expressions are intended to identify such forward-looking statements. Statements regarding our expectations for the automotive retail industry, as well as 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 generally; conditions in the credit markets and changes in interest rates; the success and financial viability of vehicle manufacturers and distributors with which we hold franchises; factors affecting our goodwill and other intangible asset impairment testing; natural disasters and other adverse weather events; restrictions imposed by vehicle manufacturers; the resolution of legal and administrative proceedings; regulatory factors affecting our business; 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.NON-GAAP FINANCIAL MEASURES This press release and the attached financial tables may contain certain non-GAAP financial measures as defined under SEC rules, such as adjusted net income and earnings per share from continuing operations, which exclude certain items disclosed in the attached financial tables. As required by SEC rules, the Company provides reconciliations of these measures to the most directly comparable GAAP measures. The Company believes that these non-GAAP financial measures improve the transparency of the Company's disclosure, provide 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 improve the period-to-period comparability of the Company's results from its core business operations.AUTONATION, INC. UNAUDITED CONDENSED CONSOLIDATED INCOME STATEMENTS($ in millions, except per share data)Three Months Ended March 31,20122011Revenue:New vehicle$           1,994.3$           1,785.1Used vehicle918.8831.4Parts and service599.9570.0Finance and insurance, net130.2110.7Other13.813.9Total revenue3,657.03,311.1Cost of sales:New vehicle1,860.31,659.8Used vehicle837.7753.3Parts and service349.7325.5Other6.36.3Total cost of sales3,054.02,744.9Gross profit603.0566.2Selling, general and administrative expenses432.9407.7Depreciation and amortization21.220.7Other expenses (income), net0.2(2.2)Operating income148.7140.0Non-operating income (expense) items:Floorplan interest expense(10.7)(11.2)Other interest expense(20.5)(16.3)Interest income0.10.3Other income, net2.01.7Income from continuing operations before income taxes119.6114.5Income tax provision46.144.2Net income from continuing operations73.570.3Loss from discontinued operations, net of income taxes(0.5)(0.9)Net income$           73.0$           69.4Diluted earnings (loss) per share:Continuing operations$          0.56$           0.46Discontinued operations$                -$          (0.01)Net income$           0.55$           0.46Weighted average common shares outstanding132.3151.8Common shares outstanding, net of treasury stock, at March 31124.3148.6  AUTONATION, INC.  UNAUDITED SUPPLEMENTARY DATA  ($ in millions, except per vehicle data) Operating HighlightsThree Months Ended March 31,20122011$ Variance% VarianceRevenue:New vehicle$            1,994.3$        1,785.1$              209.211.7   Retail used vehicle801.1727.473.710.1   Wholesale117.7104.013.713.2Used vehicle918.8831.487.410.5Parts and service599.9570.029.95.2Finance and insurance, net130.2110.719.517.6Other13.813.9(0.1)Total revenue$           3,657.0$        3,311.1$              345.910.4Gross profit:New vehicle$               134.0$           125.3$                 8.76.9   Retail used vehicle78.573.84.76.4   Wholesale2.64.3(1.7)Used vehicle81.178.13.03.8Parts and service250.2244.55.72.3Finance and insurance130.2110.719.517.6Other7.57.6(0.1)Total gross profit603.0566.236.86.5Selling, general and administrative expenses432.9407.7(25.2)(6.2)Depreciation and amortization21.220.7(0.5)Other expenses (income), net0.2(2.2)(2.4) Operating income 148.7140.08.76.2Non-operating income (expense) items:Floorplan interest expense(10.7)(11.2)0.5Other interest expense(20.5)(16.3)(4.2)Interest income0.10.3(0.2)Other income, net2.01.70.3Income from continuing operations before income taxes$               119.6$           114.5$                 5.14.5Retail vehicle unit sales:   New 61,51655,7105,80610.4   Used46,11642,0894,0279.6107,63297,7999,83310.1Revenue per vehicle retailed:   New $             32,419$         32,043$                 3761.2   Used$             17,371$         17,282$                   890.5Gross profit per vehicle retailed:   New $               2,178$           2,249$                 (71)(3.2)   Used$               1,702$           1,753$                 (51)(2.9)   Finance and insurance$               1,210$           1,132$                   786.9Operating Percentages Three Months Ended March 31, 2012 (%)2011 (%)Revenue mix percentages:New vehicle54.553.9Used vehicle25.125.1Parts and service16.417.2Finance and insurance, net3.63.3Other0.40.5100.0100.0Gross profit mix percentages:New vehicle22.222.1Used vehicle13.413.8Parts and service41.543.2Finance and insurance21.619.6Other1.31.3100.0100.0Operating items as a percentage of revenue:Gross profit:   New vehicle6.77.0   Used vehicle - retail9.810.1   Parts and service41.742.9   Total16.517.1Selling, general and administrative expenses11.812.3Operating income4.14.2Operating items as a percentage of total gross profit:Selling, general and administrative expenses71.872.0Operating income24.724.7  AUTONATION, INC.  UNAUDITED SUPPLEMENTARY DATA  ($ in millions, except per vehicle data) Segment Operating HighlightsThree Months Ended March 31,20122011$ Variance% VarianceRevenue:Domestic$           1,229.1$          1,096.3$               132.812.1Import1,366.61,257.6109.08.7Premium luxury1,022.2918.1104.111.3Corporate and other39.139.1--Total revenue$           3,657.0$          3,311.1$               345.910.4*Segment incomeDomestic$                49.7$              42.9$                   6.815.9Import61.955.06.912.5Premium luxury58.857.71.11.9Corporate and other(32.4)(26.8)(5.6)Total segment income138.0128.89.27.1Add:  Floorplan interest expense10.711.2(0.5)Operating income$              148.7$            140.0$                   8.76.2* Segment income is defined as operating income less floorplan interest expenseRetail new vehicle unit sales:Domestic20,51317,7362,77715.7Import31,03829,2301,8086.2Premium luxury9,9658,7441,22114.061,51655,7105,80610.4Brand Mix - New Vehicle Retail Units Sold Three Months Ended March 31, 2012 (%)2011 (%)Domestic:   Ford, Lincoln18.217.1   Chevrolet, Buick, Cadillac, GMC11.312.1   Chrysler, Jeep, Dodge3.82.6     Domestic total33.331.8Import:   Honda11.013.0   Toyota20.019.6   Nissan12.612.8   Other imports(1)6.97.1     Import total50.552.5Premium Luxury:   Mercedes-Benz7.76.8   BMW3.84.1   Lexus2.02.1   Other premium luxury (Audi, Land Rover, Porsche)(1)2.72.7     Premium Luxury total16.215.7100.0100.0(1)As of March 31, 2012, we revised the basis of segmentation for our Import and Premium Luxury segments to reclassify our Audi franchises from the Import segment to the Premium Luxury segment. In connection with this change, we have reclassified historical amounts to conform to our current segment presentation. We have five Audi franchises for which we reclassified revenue of $49.3 million and segment income of $3.5 million during the three months ended March 31, 2012, and revenue of $39.7 million and segment income of $2.5 million during the three months ended March 31, 2011.  AUTONATION, INC.  UNAUDITED SUPPLEMENTARY DATA, Continued  ($ in millions, except per share data) Capital Expenditures / Stock Repurchases Three Months Ended March 31, 20122011Capital expenditures (1)$                  29.1$                    24.7Acquisitions$                        -$                    64.2Proceeds from exercises of stock options$                    0.3$                    31.9Stock repurchases:Aggregate purchase price$                405.4$                    58.8Shares repurchased (in millions)11.71.8Floorplan Assistance and Expense Three Months Ended March 31, 20122011 Variance Floorplan assistance earned (included in cost of sales)$                  17.2$                    15.3$                   1.9Floorplan interest expense (new vehicles)(10.4)(10.6)0.2Net new vehicle inventory carrying benefit$                    6.8$                      4.7$                   2.1Balance Sheet and Other HighlightsMarch 31, 2012December 31, 2011March 31, 2011Cash and cash equivalents$                   76.3$                     86.6$                 84.3Inventory$              1,984.6$                1,809.2$            1,731.7Total floorplan notes payable$              2,016.3$                1,898.8$            1,652.1Non-vehicle debt$              1,918.9$                1,647.0$            1,336.9Equity$              1,568.1$                1,894.6$            2,138.6New days supply (industry standard of sellingdays, including fleet) 54 days  50 days  50 days Used days supply (trailing 31 days) (2) 29 days  31 days  33 days Key Credit Agreement Covenant Compliance CalculationsRatio of funded indebtedness/Adjusted EBITDA 2.98x Covenantless than 3.75x Ratio of funded indebtedness including floorplan/Total capitalization including floorplan56.0%Covenantless than65.0%(1)Includes accrued construction in progress and excludes property acquired under capital leases(2)As of December 31, 2011, we have revised our method of calculating used vehicle days supply from a dollar day supply to a unit day supply (including wholesale units). We have revised prior periods to conform to our revised method of calculation  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** 2012201120122011As reported$           73.0$          69.4$               0.55$              0.46Discontinued operations, net of income taxes0.50.9$                     -$              0.01From continuing operations, as reported73.570.3$               0.56$              0.46Adjusted $           73.5$          70.3$               0.56$              0.46*Please refer to the "Non-GAAP Financial Measures" section of the Press Release.**Earnings per share amounts are calculated discretely and therefore may not add up to the total.  AUTONATION, INC.  UNAUDITED SAME STORE DATA  ($ in millions, except per vehicle data) Operating HighlightsThree Months Ended March 31,20122011$ Variance% VarianceRevenue:New vehicle$           1,958.5$           1,785.1$              173.49.7   Retail used vehicle789.2727.461.88.5   Wholesale110.9104.06.96.6Used vehicle900.1831.468.78.3Parts and service593.0570.023.04.0Finance and insurance, net128.4110.717.716.0Other13.713.9(0.2)Total revenue$           3,593.7$           3,311.1$              282.68.5Gross profit:New vehicle$              131.7$              125.3$                 6.45.1   Retail used vehicle77.273.83.44.6   Wholesale2.64.3(1.7)Used vehicle79.878.11.72.2Parts and service247.1244.52.61.1Finance and insurance128.4110.717.716.0Other7.57.6(0.1)Total gross profit$              594.5$              566.2$                28.35.0Retail vehicle unit sales:   New 60,32755,7104,6178.3   Used45,49542,0893,4068.1105,82297,7998,0238.2Revenue per vehicle retailed:   New $            32,465$            32,043$                 4221.3   Used$            17,347$            17,282$                   650.4Gross profit per vehicle retailed:   New $              2,183$              2,249$                 (66)(2.9)   Used$              1,697$              1,753$                 (56)(3.2)   Finance and insurance$              1,213$              1,132$                   817.2Operating Percentages Three Months Ended March 31, 2012 (%)2011 (%)Revenue mix percentages:New vehicle54.553.9Used vehicle25.025.1Parts and service16.517.2Finance and insurance, net3.63.3Other0.40.5100.0100.0Gross profit mix percentages:New vehicle22.222.1Used vehicle13.413.8Parts and service41.643.2Finance and insurance21.619.6Other1.21.3100.0100.0Operating items as a percentage of revenue:Gross Profit:   New vehicle6.77.0   Used vehicle - retail9.810.1   Parts and service41.742.9   Total16.517.1   SOURCE AutoNation, Inc.For further information: Marc Cannon, +1-954-769-3146, cannonm@autonation.com; Investor contacts: Cheryl Scully, +1-954-769-7734, scullyc@autonation.com or Kate Keyser-Pearlman, +1-954-769-7342, keyserk1@autonation.com