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Press release from PR Newswire

AutoNation Reports All-Time Record Quarterly EPS from Continuing Operations

Thursday, July 19, 2012

AutoNation Reports All-Time Record Quarterly EPS from Continuing Operations06:45 EDT Thursday, July 19, 2012- Adjusted EPS from continuing operations for the second quarter of 2012 was an all-time record(1) $0.66, up 35% compared to second quarter 2011 EPS from continuing operations of $0.49 - On a GAAP basis, second quarter 2012 EPS from continuing operations was $0.64 - Demonstrated improved operating leverage of 69.8% (selling, general and administrative expenses as a percentage of gross profit), a 180 basis point improvement compared to the second quarter of 2011 - Total revenue of $3.9 billion, up 17% compared to the year-ago period; revenue for all major business sectors - new vehicles, used vehicles, parts and service, and finance and insurance - improved compared to second quarter of 2011FORT LAUDERDALE, Fla., July 19, 2012 /PRNewswire/ -- AutoNation, Inc. (NYSE: AN), America's largest automotive retailer, today reported 2012 second quarter adjusted net income from continuing operations of $82 million, or $0.66 per share, compared to net income from continuing operations of $73 million, or $0.49 per share, for the same period in the prior year, a 35% improvement on a per-share basis.  On a GAAP basis, second quarter 2012 net income from continuing operations was $79 million, or $0.64 per share.  Reconciliations of non-GAAP financial measures are included in the attached financial tables.(Logo: http://photos.prnewswire.com/prnh/20001017/AUTONATIONLOGO )2012 second quarter revenue totaled $3.9 billion, compared to $3.3 billion in the year-ago period, an increase of 17%, driven primarily by stronger retail new vehicle unit sales.  AutoNation's retail new vehicle unit sales increased 29%.  Based on CNW Research data, total U.S. industry retail new vehicle unit sales increased 15%.Mike Jackson, Chairman and Chief Executive Officer, said, "We delivered solid double-digit growth in operating income in the second quarter, driven by improved gross profit in our new vehicle, parts and service, and finance and insurance business sectors, as well as significantly improved operating leverage.  We are very pleased with our strong year-over-year growth in these areas of our business." Commenting on the automotive retail environment, Mr. Jackson added, "We continued to see a strong new vehicle selling environment in the second quarter, supported by genuine replacement demand, a healthy credit environment, and accelerated product offerings.  We are expecting industry new vehicle sales to reach mid-14 million units in 2012."During the second quarter of 2012, AutoNation repurchased 3.7 million shares of common stock for an aggregate purchase price of $126.2 million. As of June 30, 2012, there were 121 million shares outstanding. AutoNation today announced that the Board of Directors authorized the repurchase of up to an additional $250 million of AutoNation common stock.  With the increased authorization, AutoNation has approximately $368 million remaining Board authorization for share repurchase.  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, Hyundai and Nissan; and the Premium Luxury(2) segment is comprised of stores that sell vehicles manufactured primarily by Mercedes-Benz, BMW, Audi and Lexus. Segment results for the second quarter of 2012 were as follows:Domestic - Domestic segment income(3) was $54 million compared to year-ago segment income of $46 million.  Second quarter Domestic retail new vehicle unit sales increased 17%. Import - Import segment income(3) was $67 million compared to year-ago segment income of $63 million.  Second quarter Import retail new vehicle unit sales increased 44% as sales normalized from the tsunami effects from the prior year. Premium Luxury - Premium Luxury segment income(3) was $68 million compared to year-ago segment income of $60 million.  Second quarter Premium Luxury retail new vehicle unit sales increased 16%.For the six-month period ended June 30, 2012, the Company reported adjusted net income from continuing operations of $155 million, or $1.21 per share, compared to net income from continuing operations of $144 million, or $0.95 per share for the same period in the prior year, an improvement of 27% on a per-share basis.  On a GAAP basis, net income from continuing operations for the six-month period ended June 30, 2012 was $153 million, or $1.19 per share.  The Company's revenue for the six-month period ended June 30, 2012, totaled $7.6 billion, up 14% compared to $6.6 billion for the same period in the prior year.The second 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 http://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 July 19, 2012, through July 30, 2012 by calling (800) 337-6538 (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 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. (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 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 June 30,Six Months Ended June 30,2012201120122011Revenue:New vehicle$           2,196.1$           1,746.6$           4,190.4$           3,531.7Used vehicle947.4887.31,866.21,718.7Parts and service602.5572.01,202.41,142.0Finance and insurance, net145.1117.0275.3227.7Other13.413.427.227.3Total revenue3,904.53,336.37,561.56,647.4Cost of sales:New vehicle2,050.61,609.93,910.93,269.7Used vehicle870.3808.71,708.01,562.0Parts and service349.1326.8698.8652.3Other6.57.512.813.8Total cost of sales3,276.52,752.96,330.55,497.8Gross profit628.0583.41,231.01,149.6Selling, general and administrative expenses438.6417.6871.5825.3Depreciation and amortization20.821.142.041.8Franchise rights impairment4.2-4.2-Other expenses (income), net0.20.30.4(1.9)Operating income164.2144.4312.9284.4Non-operating income (expense) items:Floorplan interest expense(10.8)(10.9)(21.5)(22.1)Other interest expense(22.5)(15.9)(43.0)(32.2)Interest income0.10.30.20.6Other income (loss), net(1.4)0.50.62.2Income from continuing operations before income taxes129.6118.4249.2232.9Income tax provision50.645.196.789.3Net income from continuing operations79.073.3152.5143.6Loss from discontinued operations, net of income taxes(0.4)(1.4)(0.9)(2.3)Net income$                78.6$                71.9$              151.6$               141.3Diluted earnings (loss) per share*:Continuing operations$                0.64$                0.49$                1.19$                 0.95Discontinued operations$                      -$              (0.01)$              (0.01)$               (0.02)Net income$                0.64$                0.48$                1.18$                 0.94Weighted average common shares outstanding123.7150.0128.0150.9Common shares outstanding, net of treasury stock, at June 30120.6145.7120.6145.7* Earnings per share amounts are calculated discretely and therefore may not add up to the total.  AUTONATION, INC.  UNAUDITED SUPPLEMENTARY DATA  ($ in millions, except per vehicle data) Operating HighlightsThree Months Ended June 30, Six Months Ended June 30, 20122011$ Variance% Variance20122011$ Variance% VarianceRevenue:New vehicle$            2,196.1$        1,746.6$              449.525.7$     4,190.4$      3,531.7$          658.718.7  Retail used vehicle829.5786.043.55.51,630.61,513.4117.27.7  Wholesale117.9101.316.616.4235.6205.330.314.8Used vehicle947.4887.360.16.81,866.21,718.7147.58.6Parts and service602.5572.030.55.31,202.41,142.060.45.3Finance and insurance, net145.1117.028.124.0275.3227.747.620.9Other13.413.4-27.227.3(0.1)Total revenue$            3,904.5$        3,336.3$              568.217.0$     7,561.5$      6,647.4$          914.113.8Gross profit:New vehicle$               145.5$           136.7$                 8.86.4$       279.5$        262.0$           17.56.7  Retail used vehicle75.177.1(2.0)(2.6)153.6150.92.71.8  Wholesale2.01.50.54.65.8(1.2)Used vehicle77.178.6(1.5)(1.9)158.2156.71.51.0Parts and service253.4245.28.23.3503.6489.713.92.8Finance and insurance145.1117.028.124.0275.3227.747.620.9Other6.95.91.014.413.50.9Total gross profit628.0583.444.67.61,231.01,149.681.47.1Selling, general and administrative expenses438.6417.6(21.0)(5.0)871.5825.3(46.2)(5.6)Depreciation and amortization20.821.10.342.041.8(0.2)Franchise rights impairment4.2-(4.2)4.2-(4.2)Other expenses (income), net0.20.30.10.4(1.9)(2.3) Operating income 164.2144.419.813.7312.9284.428.510.0Non-operating income (expense) items:Floorplan interest expense(10.8)(10.9)0.1(21.5)(22.1)0.6Other interest expense(22.5)(15.9)(6.6)(43.0)(32.2)(10.8)Interest income0.10.3(0.2)0.20.6(0.4)Other income (loss), net(1.4)0.5(1.9)0.62.2(1.6)Income from continuing operations before income taxes$               129.6$           118.4$                11.29.5$       249.2$        232.9$           16.37.0Retail vehicle unit sales:   New 66,98751,82415,16329.3128,503107,53420,96919.5   Used46,23642,8333,4037.992,35284,9227,4308.7113,22394,65718,56619.6220,855192,45628,39914.8Revenue per vehicle retailed:   New $             32,784$         33,703$                (919)(2.7)$      32,609$       32,843$           (234)(0.7)   Used$             17,941$         18,350$                (409)(2.2)$      17,656$       17,821$           (165)(0.9)Gross profit per vehicle retailed:   New $               2,172$           2,638$                (466)(17.7)$       2,175$         2,436$           (261)(10.7)   Used$               1,624$           1,800$                (176)(9.8)$       1,663$         1,777$           (114)(6.4)   Finance and insurance$               1,282$           1,236$                    463.7$       1,247$         1,183$               645.4Operating Percentages Three Months Ended June 30,  Six Months Ended June 30, 2012 (%)2011 (%)2012 (%)2011 (%)Revenue mix percentages:New vehicle56.252.455.453.1Used vehicle24.326.624.725.9Parts and service15.417.115.917.2Finance and insurance, net3.73.53.63.4Other0.40.40.40.4100.0100.0100.0100.0Gross profit mix percentages:New vehicle23.223.422.722.8Used vehicle12.313.512.913.6Parts and service40.442.040.942.6Finance and insurance23.120.122.419.8Other1.01.01.11.2100.0100.0100.0100.0Operating items as a percentage of revenue:Gross profit:   New vehicle6.67.86.77.4   Used vehicle - retail9.19.89.410.0   Parts and service42.142.941.942.9   Total16.117.516.317.3Selling, general and administrative expenses11.212.511.512.4Operating income4.24.34.14.3Operating items as a percentage of total gross profit:Selling, general and administrative expenses69.871.670.871.8Operating income26.124.825.424.7  AUTONATION, INC.  UNAUDITED SUPPLEMENTARY DATA  ($ in millions, except per vehicle data) Segment Operating HighlightsThree Months Ended June 30, Six Months Ended June 30, 20122011$ Variance% Variance  20122011$ Variance% VarianceRevenue:Domestic$           1,295.1$          1,145.0$               150.113.1$          2,524.2$          2,241.1$            283.112.6Import1,475.81,165.9309.926.62,842.42,423.4419.017.3Premium luxury1,093.4989.2104.210.52,115.61,907.2208.410.9    Total segment revenue$           3,864.3$          3,300.1$               564.217.1$          7,482.2$          6,571.7$            910.513.9Corporate and other40.236.24.011.079.375.73.64.8    Total consolidated revenue$           3,904.5$          3,336.3$               568.217.0$          7,561.5$          6,647.4$            914.113.8*Segment incomeDomestic$                53.6$              46.4$                   7.215.5$            103.3$              89.1$              14.215.9Import67.262.54.77.5129.1117.411.710.0Premium luxury68.359.88.514.2127.1117.49.78.3    Total segment income189.1168.720.412.1359.5323.935.611.0Corporate and other(35.7)(35.2)(0.5)(68.1)(61.6)(6.5)Add:  Floorplan interest expense10.810.9(0.1)21.522.1(0.6)Operating income$              164.2$            144.4$                 19.813.7$            312.9$            284.4$              28.510.0* Segment income is defined as operating income less floorplan interest expenseRetail new vehicle unit sales:Domestic21,99318,7513,24217.342,50636,4876,01916.5Import33,71523,36610,34944.364,75352,59612,15723.1Premium luxury11,2799,7071,57216.221,24418,4512,79315.166,98751,82415,16329.3128,503107,53420,96919.5Brand Mix - New Vehicle Retail Units Sold Three Months Ended June 30,  Six Months Ended June 30, 2012 (%)2011 (%)2012 (%)2011 (%)Domestic:   Ford, Lincoln17.619.817.918.4   Chevrolet, Buick, Cadillac, GMC11.412.911.412.5   Chrysler, Jeep, Dodge3.83.53.83.0     Domestic total32.836.233.133.9Import:   Honda12.211.411.612.2   Toyota21.216.620.618.2   Nissan10.29.911.411.4   Other imports(1)6.87.26.87.1     Import total50.445.150.448.9Premium Luxury:   Mercedes-Benz7.38.37.57.5   BMW4.55.34.24.7   Lexus2.01.62.01.8   Other premium luxury (Audi, Land Rover, Porsche)(1)3.03.52.83.2     Premium Luxury total16.818.716.517.2100.0100.0100.0100.0(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 $47.6 million and segment income of $3.2 million during the three months ended June 30, 2011, and revenue of $87.3 million and segment income of $5.7 million during the six months ended June 30, 2011.  AUTONATION, INC.  UNAUDITED SUPPLEMENTARY DATA, Continued  ($ in millions, except per share data) Capital Expenditures / Stock Repurchases Three Months Ended June 30,  Six Months Ended June 30, 2012201120122011Capital expenditures(1)$                  47.9$                     38.9$                 77.0$                63.6Acquisitions$                        -$                           -$                       -$                64.2Proceeds from exercises of stock options$                    1.4$                       8.0$                   1.7$                39.9Stock repurchases:       Aggregate purchase price$                126.2$                   110.9$               531.6$              169.7       Shares repurchased (in millions)3.73.415.45.1Floorplan Assistance and Expense Three Months Ended June 30,  Six Months Ended June 30, 20122011 Variance 20122011 Variance Floorplan assistance earned (included in cost of sales)$                  18.5$                    13.7$                   4.8$                35.7$              29.0$            6.7Floorplan interest expense (new vehicles)(10.3)(10.3)-(20.7)(20.8)0.1       Net new vehicle inventory carrying benefit$                    8.2$                      3.4$                   4.8$                15.0$               8.2$            6.8Balance Sheet and Other HighlightsJune 30, 2012December 31, 2011June 30, 2011Cash and cash equivalents$                   62.1$                     86.6$                 81.8Inventory$              2,077.7$                1,809.2$            1,780.0Total floorplan notes payable$              2,122.0$                1,898.8$            1,673.0Non-vehicle debt$              2,028.5$                1,647.0$            1,445.0Equity$              1,528.2$                1,894.6$            2,116.1New days supply (industry standard of selling     days, including fleet) 60 days  50 days  59 days Used days supply (trailing calendar month days)(2) 31 days  31 days  36 days Key Credit Agreement Covenant Compliance CalculationsRatio of funded indebtedness/Adjusted EBITDA 3.05x Covenantless than 3.75x Ratio of funded indebtedness including floorplan/Total capitalization including floorplan57.6%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 June 30, Net Income  Diluted Earnings Per Share** 2012201120122011As reported$           78.6$          71.9$               0.64$              0.48Discontinued operations, net of income taxes0.41.4$                     -$              0.01From continuing operations, as reported79.073.3$               0.64$              0.49Franchise rights impairment2.6-$               0.02$                    -Adjusted $           81.6$          73.3$               0.66$              0.49Six Months Ended June 30, Net Income  Diluted Earnings Per Share** 2012201120122011As reported$          151.6$        141.3$               1.18$              0.94Discontinued operations, net of income taxes0.92.3$               0.01$              0.02From continuing operations, as reported152.5143.6$               1.19$              0.95Franchise rights impairment2.6-$               0.02$                    -Adjusted $          155.1$        143.6$               1.21$              0.95*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 June 30, Six Months Ended June 30, 20122011$ Variance% Variance20122011$ Variance% VarianceRevenue:New vehicle$           2,193.0$           1,746.6$              446.425.6$        4,151.4$        3,531.7$           619.717.5  Retail used vehicle827.2786.041.25.21,616.41,513.4103.06.8  Wholesale116.6101.315.315.1227.5205.322.210.8Used vehicle943.8887.356.56.41,843.91,718.7125.27.3Parts and service601.1572.029.15.11,194.11,142.052.14.6Finance and insurance, net144.8117.027.823.8273.2227.745.520.0Other13.313.4(0.1)27.027.3(0.3)Total revenue$           3,896.0$           3,336.3$              559.716.8$        7,489.6$        6,647.4$           842.212.7Gross profit:New vehicle$              145.2$              136.7$                 8.56.2$           276.9$           262.0$             14.95.7  Retail used vehicle75.077.1(2.1)(2.7)152.2150.91.30.9  Wholesale2.01.50.54.65.8(1.2)Used vehicle77.078.6(1.6)(2.0)156.8156.70.10.1Parts and service252.8245.27.63.1499.9489.710.22.1Finance and insurance144.8117.027.823.8273.2227.745.520.0Other6.85.90.914.313.50.8Total gross profit$              626.6$              583.4$                43.27.4$        1,221.1$        1,149.6$             71.56.2Retail vehicle unit sales:   New 66,82851,82415,00429.0127,155107,53419,62118.2   Used46,02942,8333,1967.591,52484,9226,6027.8112,85794,65718,20019.2218,679192,45626,22313.6Revenue per vehicle retailed:   New $            32,816$            33,703$                (887)(2.6)$         32,648$         32,843$             (195)(0.6)   Used$            17,971$            18,350$                (379)(2.1)$         17,661$         17,821$             (160)(0.9)Gross profit per vehicle retailed:   New $              2,173$              2,638$                (465)(17.6)$           2,178$           2,436$             (258)(10.6)   Used$              1,629$              1,800$                (171)(9.5)$           1,663$           1,777$             (114)(6.4)   Finance and insurance$              1,283$              1,236$                    473.8$           1,249$           1,183$                 665.6Operating Percentages Three Months Ended June 30,  Six Months Ended June 30, 2012 (%)2011 (%)2012 (%)2011 (%)Revenue mix percentages:New vehicle56.352.455.453.1Used vehicle24.226.624.625.9Parts and service15.417.115.917.2Finance and insurance, net3.73.53.63.4Other0.40.40.50.4100.0100.0100.0100.0Gross profit mix percentages:New vehicle23.223.422.722.8Used vehicle12.313.512.813.6Parts and service40.342.040.942.6Finance and insurance23.120.122.419.8Other1.11.01.21.2100.0100.0100.0100.0Operating items as a percentage of revenue:Gross Profit:   New vehicle6.67.86.77.4   Used vehicle - retail9.19.89.410.0   Parts and service42.142.941.942.9   Total16.117.516.317.3SOURCE 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