AutoNation Reports Record Second-Quarter EPS of $0.37, Exceeding Year-Ago Results by 16%
* Higher revenue and net income * Continued SG&A expense reduction * Sixth consecutive record quarter of EPS from continuing operations * Company raises full-year EPS outlook
FORT LAUDERDALE, Fla., July 24 -- AutoNation, Inc. , America's largest retailer of both new and used vehicles, today reported record second-quarter earnings per share of $0.37, 16% above a year- earlier $0.32 per share, driven by initiatives aimed at maximizing operating efficiencies that allowed the Company to further leverage its cost structure and the continued repurchase of outstanding shares. The Company reported operating income of $207 million and net income of $106 million, increases of 5% and 2%, respectively.
Total revenue for the second-quarter ended June 30, 2003 increased to $5.1 billion compared to $5.0 billion a year ago driven by revenue growth of 4% for new vehicles and 6% for finance and insurance. Selling, general and administrative expense (SG&A) was $549 million or 71.1% as a percentage of total gross profit, a 110 basis point improvement compared to a year ago.
Commenting on the second-quarter performance, AutoNation Chairman and Chief Executive Officer Mike Jackson said, "AutoNation delivered another record quarter of earnings per share coupled with increases in revenue and net income, demonstrating the strength of our operation and the commitment of our team. We benefited from the continued success of our cost containment initiatives and operational improvements, particularly in the area of new and used vehicles and finance and insurance, allowing us to expand our operating margin."
Other highlights in the second quarter include:
* The repurchase of 10.4 million of the Company's outstanding shares at a
cost of $149 million.
* Record finance and insurance gross profit per vehicle retailed of $804.
* The successful launch of two market brands, Power in Southern
California and Champion in Houston, Austin and Corpus Christi;
bringing the Company's number of branded markets to 13.
* The appointment of two new board members: Alan S. Dawes, vice chairman
and chief financial officer of Delphi Corporation, a leading
automotive electronics and components supplier; and Frederick J.
Schwab, former president and chief executive officer of Porsche Cars
North America, Inc., the North American operating unit of Porsche AG.
For the six-month period ended June 30, 2003, the Company earned net income from continuing operations of $318 million or $1.10 per share. Excluding the benefit of the first quarter 2003 IRS tax settlement, earnings per share from continuing operations was $0.66, a 10% increase versus the prior year. The Company's revenue for the six-month period totaled $9.5 billion, down 2% versus the prior year.
AutoNation also announced that it will now report new vehicle days supply utilizing the industry standard of selling days inclusive of fleet. Prior to this change, the Company reported new vehicle days supply using calendar days excluding fleet, which at the end of the second quarter stood at 72 days. Using the industry metric, the Company's new vehicle inventory at the end of the second quarter was 65 days, compared to the industry at 63 days.
Looking ahead, Mr. Jackson said, "While we are hopeful that efforts to stimulate the economy will take hold, we believe that the auto retail environment will remain challenging for the remainder of the year. Based on our performance this quarter, we are raising our full-year 2003 outlook for earnings per share from continuing operations by $0.07 to the range of $1.28 to $1.33, excluding the benefit of the first quarter tax settlement, and offer third-quarter earnings per share guidance of $0.34 to $0.36."
The Company's earnings outlook for the full year on a GAAP basis is $1.72 to $1.77 per share from continuing operations. The reconciliation of the Company's earnings estimate is set forth in the table below:
Revised full-year guidance $1.28 - $1.33 Q1 2003 income tax benefit from IRS settlement $0.44 Expected 2003 full-year GAAP EPS from continuing operations $1.72 - $1.77
AutoNation will discuss these results, the Company's outlook and supporting assumptions during a conference call and audio webcast this morning at 10:00 a.m. Eastern Time. To listen to the live conference call, dial (800) 288-8968 or listen to the audio webcast via the Internet at www.AutoNation.com by clicking on the "About Us" link, then clicking on "Investors" and then "Webcasts." A playback of the conference call will be available after 1:30 p.m. Eastern Time, through July 31, 2003 by calling (800) 475-6701 (access code #691101) or via the Internet as outlined above.
About AutoNation, Inc.
AutoNation, Inc., headquartered in Fort Lauderdale, Fla., is America's largest retailer of both new and used vehicles. Ranked No. 93 on the 2003 Fortune 500 and a component of the Standard and Poor's 500 Index, AutoNation employs approximately 28,500 people and owns and operates 370 new vehicle franchises in 17 states. For additional information, please visit http://corp.autonation.com/ or www.AutoNation.com, where more than 100,000 vehicles are available for sale.
AUTONATION, INC.
UNAUDITED CONSOLIDATED INCOME STATEMENTS
($ in millions, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
Revenue:
New vehicle $3,091.4 $2,980.2 $5,700.9 $5,793.3
Used vehicle 988.1 998.7 1,894.8 1,945.7
Parts and service 621.3 622.6 1,220.7 1,234.5
Finance and insurance 141.1 133.4 263.3 254.5
Other 226.7 280.7 448.2 538.3
Total revenue 5,068.6 5,015.6 9,527.9 9,766.3
Cost of sales:
New vehicle 2,867.9 2,744.5 5,280.4 5,335.7
Used vehicle 879.2 893.5 1,682.3 1,732.0
Parts and service 349.7 349.9 688.4 697.0
Other 199.7 258.6 396.6 492.6
Total cost of sales 4,296.5 4,246.5 8,047.7 8,257.3
Gross profit 772.1 769.1 1,480.2 1,509.0
Selling, general and
administrative expenses 548.9 555.6 1,071.9 1,103.7
Depreciation 16.9 16.9 33.8 32.6
Amortization 0.4 0.8 1.0 1.4
Loan and lease underwriting
income, net (3.1) (2.7) (6.0) (2.9)
Other losses 2.1 1.9 2.4 2.3
Operating income 206.9 196.6 377.1 371.9
Floorplan interest expense (19.5) (18.5) (39.0) (36.7)
Interest expense - IRS settlement (5.9) -- (7.8) --
Other interest expense (14.7) (12.1) (28.4) (23.8)
Interest income 0.9 2.8 2.0 6.1
Other income (expense) 5.2 (0.7) 6.3 (0.9)
Income from continuing operations
before income taxes 172.9 168.1 310.2 316.6
Provision for income taxes 66.6 64.3 119.5 121.1
Income tax benefit from IRS
settlement -- -- (127.5) --
Net tax provision (benefit) -
continuing operations 66.6 64.3 (8.0) 121.1
Net income from continuing
operations 106.3 103.8 318.2 195.5
Loss from discontinued operations,
net of income taxes -- -- (12.3) --
Net income before cumulative
effect of accounting change 106.3 103.8 305.9 195.5
Cumulative effect of accounting
change, net of income taxes -- -- (14.6) --
Net income $106.3 $103.8 $291.3 $195.5
Diluted earnings per share:
Continuing operations $0.37 $0.32 $1.10 $0.60
Discontinued operations -- -- (0.04) --
Cumulative effect of accounting
change -- -- (0.05) --
Net income $0.37 $0.32 $1.01 $0.60
Weighted average common and common
equivalent shares outstanding 285.2 328.8 289.6 327.4
Common shares outstanding 274.6 318.5 274.6 318.5
AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA
($ in millions, except gross profit per vehicle data)
Operating Highlights Three Months Ended June 30,
2003 2002 $ Variance % Variance
Revenue:
New vehicle $3,091.4 $2,980.2 $111.2 3.7
Used vehicle 988.1 998.7 (10.6) (1.1)
Parts and service 621.3 622.6 (1.3) (0.2)
Finance and insurance 141.1 133.4 7.7 5.8
Other 226.7 280.7 (54.0) (19.2)
$5,068.6 $5,015.6 $53.0 1.1
Gross profit:
New vehicle $223.5 $235.7 $(12.2) (5.2)
Used vehicle 108.9 105.2 3.7 3.5
Parts and service 271.6 272.7 (1.1) (0.4)
Finance and insurance 141.1 133.4 7.7 5.8
Other 27.0 22.1 4.9 22.2
772.1 769.1 3.0 0.4
Selling, general and
administrative expenses 548.9 555.6 6.7 1.2
Depreciation 16.9 16.9 --
Amortization 0.4 0.8 0.4
Loan and lease underwriting
income, net (3.1) (2.7) 0.4
Other losses 2.1 1.9 (0.2)
Operating income 206.9 196.6 10.3 5.2
Floorplan interest expense (19.5) (18.5) (1.0) (5.4)
Interest expense - IRS
settlement (5.9) -- (5.9)
Other interest expense (14.7) (12.1) (2.6) (21.5)
Interest income 0.9 2.8 (1.9) (67.9)
Other income (expense) 5.2 (0.7) 5.9
Income from continuing
operations before
income taxes $172.9 $168.1 $4.8 2.9
Retail vehicle sales:
New 109,684 110,138 (454) (0.4)
Used 65,857 64,745 1,112 1.7
175,541 174,883 658 0.4
Revenue per vehicle retailed:
New $28,185 $27,059 $1,126 4.2
Used $15,004 $15,425 $(421) (2.7)
Gross profit per vehicle
retailed:
New $2,038 $2,140 $(102) (4.8)
Used $1,654 $1,625 $29 1.8
Finance and insurance $804 $763 $41 5.4
Operating Highlights Six Months Ended June 30,
2003 2002 $ Variance % Variance
Revenue:
New vehicle $5,700.9 $5,793.3 $(92.4) (1.6)
Used vehicle 1,894.8 1,945.7 (50.9) (2.6)
Parts and service 1,220.7 1,234.5 (13.8) (1.1)
Finance and insurance 263.3 254.5 8.8 3.5
Other 448.2 538.3 (90.1) (16.7)
$9,527.9 $9,766.3 $(238.4) (2.4)
Gross profit:
New vehicle $420.5 $457.6 $(37.1) (8.1)
Used vehicle 212.5 213.7 (1.2) (0.6)
Parts and service 532.3 537.5 (5.2) (1.0)
Finance and insurance 263.3 254.5 8.8 3.5
Other 51.6 45.7 5.9 12.9
1,480.2 1,509.0 (28.8) (1.9)
Selling, general and
administrative expenses 1,071.9 1,103.7 31.8 2.9
Depreciation 33.8 32.6 (1.2)
Amortization 1.0 1.4 0.4
Loan and lease underwriting
income, net (6.0) (2.9) 3.1
Other losses 2.4 2.3 (0.1)
Operating income 377.1 371.9 5.2 1.4
Floorplan interest expense (39.0) (36.7) (2.3) 6.3
Interest expense - IRS
settlement (7.8) -- (7.8)
Other interest expense (28.4) (23.8) (4.6) 19.3
Interest income 2.0 6.1 (4.1) (67.2)
Other income (expense) 6.3 (0.9) 7.2
Income from continuing
operations before
income taxes $310.2 $316.6 $(6.4) (2.0)
Retail vehicle sales:
New 203,466 213,945 (10,479) (4.9)
Used 125,573 127,570 (1,997) (1.6)
329,039 341,515 (12,476) (3.7)
Revenue per vehicle retailed:
New $28,019 $27,078 $940 3.5
Used $15,089 $15,252 $(163) (1.1)
Gross profit per vehicle
retailed:
New $2,067 $2,139 $(72) (3.4)
Used $1,692 $1,675 $17 1.0
Finance and insurance $800 $745 $55 7.4
Operating Percentages Three Months Ended Six Months Ended
June 30, June 30,
% 2003 % 2002 % 2003 % 2002
Revenue mix percentages:
New vehicle 61.0 59.4 59.8 59.3
Used vehicle 19.5 19.9 19.9 19.9
Parts and service 12.3 12.4 12.8 12.6
Finance and insurance 2.8 2.7 2.8 2.6
Other 4.4 5.6 4.7 5.6
100.0 100.0 100.0 100.0
Operating items as a percentage
of revenue:
Gross profit:
New vehicle 7.2 7.9 7.4 7.9
Used vehicle 11.0 10.5 11.2 11.0
Parts and service 43.7 43.8 43.6 43.5
Finance and insurance 100.0 100.0 100.0 100.0
Other 11.9 7.9 11.5 8.5
Total 15.2 15.3 15.5 15.5
Selling, general and administrative
expenses 10.8 11.1 11.3 11.3
Operating income 4.1 3.9 4.0 3.8
Operating items as a percentage
of total gross profit:
Selling, general and administrative
expenses 71.1 72.2 72.4 73.1
Operating income 26.8 25.6 25.5 24.6
AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA, Continued
($ in millions, except per share data)
Cash Flow Information
Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
Capital expenditures,
excluding property
operating lease
buy-outs $25.4 $31.3 $49.3 $60.0
Property operating
lease buy-outs $1.0 $-- $9.8 $5.4
Stock repurchases $148.8 $115.2 $353.4 $151.1
Acquisitions $-- $3.9 $45.1 $131.6
Proceeds from
exercises of stock
options $25.8 $54.5 $38.7 $74.7
Floorplan Assistance
and Expense
Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 Variance 2003 2002 Variance
Floorplan assistance
(included in cost
of operations) $30.6 $33.5 $(2.9) $59.0 $63.0 $(4.0)
Floorplan interest
expense (19.5) (18.5) (1.0) (39.0) (36.7) (2.3)
Net inventory
carrying benefit
(cost) $11.1 $15.0 $(3.9) $20.0 $26.3 $(6.3)
Balance Sheet and Other Highlights
June 30, December 31, June 30,
2003 2002 2002
Cash and cash equivalents $235.4 $176.2 $100.2
Inventory $2,809.3 $2,598.4 $2,507.3
Floorplan notes payable $2,603.2 $2,302.5 $2,142.3
Non-vehicle debt $740.9 $651.3 $649.4
Equity $3,885.5 $3,910.2 $3,958.9
Days supply (industry
standard of selling,
days, including fleet):
New 65 days 63 days 56 days
Days supply (trailing 30 days):
New 72 days 79 days 66 days
Used 34 days 40 days 38 days
Comparable Basis Reconciliation
Net Income Diluted Earnings Per Share
Six Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
Net income, as
reported $291.3 $195.5 $1.01 $0.60
Discontinued operations 12.3 -- 0.04 --
Cumulative effect of
accounting change 14.6 -- 0.05 --
Net income from
continuing operations,
as reported 318.2 195.5 1.10 0.60
Income tax benefit
from IRS settlement (127.5) -- (0.44) --
Net income, excluding
income tax benefit
from IRS Settlement $190.7 $195.5 $ 0.66 $0.60
AUTONATION, INC.
UNAUDITED SAME STORE DATA
($ in millions, except gross profit per vehicle data)
Three Months Ended June 30,
Operating Highlights 2003 2002 $ Variance % Variance
Revenue:
New vehicle $3,038.1 $2,958.4 $79.7 2.7
Used vehicle 973.5 985.7 (12.2) (1.2)
Parts and service 612.7 614.4 (1.7) (0.3)
Finance and insurance 138.7 131.8 6.9 5.2
Other 203.0 273.1 (70.1) (25.7)
$4,966.0 $4,963.4 $2.6 0.1
Gross profit:
New vehicle $220.4 $234.0 $(13.6) (5.8)
Used vehicle 107.7 104.0 3.7 3.6
Parts and service 267.7 269.0 (1.3) (0.5)
Finance and insurance 138.7 131.8 6.9 5.2
Other 22.2 19.4 2.8 14.4
$756.7 $758.2 $(1.5) (0.2)
Store selling, general and
administrative expenses,
excluding depreciation and
amortization $506.3 $510.3 $4.0 0.8
Retail vehicle sales:
New 107,796 109,238 (1,442) (1.3)
Used 64,737 63,702 1,035 1.6
172,533 172,940 (407) (0.2)
Revenue per vehicle retailed:
New $28,184 $27,082 $1,102 4.1
Used $15,038 $15,474 $(436) (2.8)
Gross profit per vehicle retailed:
New $2,045 $2,142 $(97) (4.5)
Used $1,664 $1,633 $31 1.9
Finance and insurance $804 $762 $42 5.5
Six Months Ended June 30,
2003 2002 $ Variance % Variance
Revenue:
New vehicle $5,585.6 $5,749.7 $(164.1) (2.9)
Used vehicle 1,858.7 1,922.5 (63.8) (3.3)
Parts and service 1,195.9 1,216.8 (20.9) (1.7)
Finance and insurance 258.3 251.4 6.9 2.7
Other 411.6 522.8 (111.2) (21.3)
$9,310.1 $9,663.2 $(353.1) (3.7)
Gross profit:
New vehicle $412.9 $454.2 $(41.3) (9.1)
Used vehicle 209.3 211.6 (2.3) (1.1)
Parts and service 520.8 529.6 (8.8) (1.7)
Finance and insurance 258.3 251.4 6.9 2.7
Other 42.0 40.5 1.5 3.7
$1,443.3 $1,487.3 $(44.0) (3.0)
Store selling, general and
administrative expenses,
excluding depreciation and
amortization $977.9 $1,013.7 $35.8 3.5
Retail vehicle sales:
New 199,780 212,181 (12,401) (5.8)
Used 123,293 125,683 (2,390) (1.9)
323,073 337,864 (14,791) (4.4)
Revenue per vehicle retailed:
New $27,959 $27,098 $861 3.2
Used $15,075 $15,296 $(221) (1.4)
Gross profit per vehicle retailed:
New $2,067 $2,141 $(74) (3.5)
Used $1,698 $1,684 $14 0.8
Finance and insurance $800 $744 $56 7.5
Three Months Ended Six Months Ended
Operating Percentages June 30, June 30,
% 2003 % 2002 % 2003 % 2002
Revenue mix percentages:
New vehicle 61.2 59.6 60.0 59.5
Used vehicle 19.6 19.9 20.0 19.9
Parts and service 12.3 12.4 12.8 12.6
Finance and insurance 2.8 2.7 2.8 2.6
Other 4.1 5.4 4.4 5.4
100.0 100.0 100.0 100.0
Operating items as a percentage of
revenue:
Gross Profit:
New vehicle 7.3 7.9 7.4 7.9
Used vehicle 11.1 10.6 11.3 11.0
Parts and service 43.7 43.8 43.5 43.5
Finance and insurance 100.0 100.0 100.0 100.0
Other 10.9 7.1 10.2 7.7
Total 15.2 15.3 15.5 15.4
Store selling, general and
administrative expenses,
excluding depreciation
and amortization 10.2 10.3 10.5 10.5
Operating items as a percentage of
total gross profit:
Store selling, general and
administrative expenses,
excluding depreciation and
amortization 66.9 67.3 67.8 68.2
